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Oct 23, 2014

Altisource Announces Third Quarter Results

LUXEMBOURG, October 23, 2014 (GLOBE NEWSWIRE) -- Altisource Portfolio Solutions S.A. ("Altisource") (Nasdaq:ASPS) today reported strong third quarter year-over-year growth in service revenue, net income attributable to shareholders and diluted earnings per share.

Third Quarter 2014 Results Compared to Third Quarter 2013:

  • Service revenue of $247.7 million, a 37% increase
  • Net income attributable to Altisource of $42.3 million, a 17% increase
  • Diluted earnings per share of $1.79, a 26% increase

"During the third quarter 2014, we continued to execute on our objective of increasing shareholder value by repurchasing Altisource shares, making acquisitions that support our vision to become the premier real estate and mortgage marketplace and investing in the organic development of new and next generation products and services," said Chairman William Erbey.

William Shepro, Chief Executive Officer, further commented, "We continue our track record of year-over-year revenue and earnings growth and remain focused on our strategic initiatives to achieve longer-term revenue growth with a diversified customer base. Compared to the second quarter of 2014, we believe a portion of the lower service revenue in the third quarter of 2014 is not lost, but will be shifted to future periods. Further, operating income as a percentage of service revenue in our segments remained relatively consistent in the third quarter of 2014 compared to the second quarter of 2014, except for Technology Services where we continue investing in the development of our new and next generation products. Unlike many companies, we expense internal software development costs."

Third quarter 2014 highlights include:

  • The average number of loans serviced by Ocwen on REALServicing was 2.3 million for the third quarter of 2014, an increase of 83% compared to the third quarter of 2013
  • The average number of delinquent non-Government-Sponsored Enterprise loans serviced by Ocwen on REALServicing was 347 thousand for the third quarter of 2014, an increase of 15% compared to the third quarter of 2013
  • On September 12, 2014, we acquired Mortgage Builder for $15.7 million in cash at closing and up to $7.0 million of additional consideration (subject to attaining certain revenue targets)
  • We repurchased 1.3 million shares of our common stock under our stock repurchase program at an average price of $102.45 per share during the third quarter of 2014

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 third quarter results. A link to the live audio webcast will be available on the Company'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 is a premier marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries offering both distribution and content. We leverage proprietary business process, vendor and electronic payment management software and behavioral science based analytics to improve outcomes for marketplace participants.  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
September 30,		 Nine months ended
September 30,
  2014 2013 2014 2013
         
Service revenue        
Mortgage Services $ 170,018 $ 134,317 $ 504,989 $ 350,581
Financial Services 26,803 27,168 76,496 66,259
Technology Services 61,726 25,175 167,213 70,189
Eliminations (10,836) (6,268) (27,863) (17,411)
  247,711 180,392 720,835 469,618
Reimbursable expenses 39,149 29,496 100,220 73,061
Non-controlling interests 828 947 1,974 3,093
Total revenue 287,688 210,835 823,029 545,772
Cost of revenue 149,575 104,765 420,308 275,134
Reimbursable expenses 39,149 29,496 100,220 73,061
Gross profit 98,964 76,574 302,501 197,577
Selling, general and administrative expenses 46,748 31,519 139,303 80,027
Income from operations 52,216 45,055 163,198 117,550
Other income (expense), net:        
Interest expense (6,480) (6,188) (16,040) (14,302)
Other income (expense), net 131 (253) 135 529
Total other income (expense), net (6,349) (6,441) (15,905) (13,773)
Income before income taxes and non-controlling interests 45,867 38,614 147,293 103,777
Income tax provision (2,752) (1,659) (9,300) (6,227)
Net income 43,115 36,955 137,993 97,550
Net income attributable to non-controlling interests (828) (947) (1,974) (3,093)
 
Net income attributable to Altisource		 $ 42,287 $ 36,008 $ 136,019 $ 94,457
         
Earnings per share:        
Basic $ 1.96 $ 1.56 $ 6.16 $ 4.07
Diluted $ 1.79 $ 1.42 $ 5.63 $ 3.77
         
Weighted average shares outstanding:        
Basic 21,626 23,025 22,071 23,185
Diluted 23,640 25,333 24,152 25,070
         
Transactions with related parties included above:        
Revenue $ 178,151 $ 143,557 $ 502,736 $ 354,889
Cost of revenue 11,062 5,045 27,904 13,959
Selling, general and administrative expenses 267 613 (464) 329
Other income -- -- -- 773
 
 
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
 
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
 
  September 30, December 31,
  2014 2013
ASSETS
     
Current assets:    
Cash and cash equivalents $ 176,589 $ 130,429
Accounts receivable, net 159,965 104,787
Prepaid expenses and other current assets 17,454 10,891
Deferred tax assets, net 2,837 2,837
Total current assets 356,845 248,944
     
Premises and equipment, net 115,773 87,252
Deferred tax assets, net 158 622
Goodwill 72,384 99,414
Intangible assets, net 250,315 276,162
Other assets 21,117 17,658
     
Total assets $ 816,592 $ 730,052
 
LIABILITIES AND EQUITY
 
Current liabilities:		    
Accounts payable and accrued expenses $ 99,598 $ 84,706
Current portion of long-term debt 5,945 3,975
Deferred revenue 13,504 36,742
Other current liabilities 9,683 10,131
Total current liabilities 128,730 135,554
     
Long-term debt, less current portion 584,028 391,281
Other non-current liabilities 14,572 45,476
 
Equity:		    
Common stock ($1.00 par value; 100,000 shares authorized;
25,413 issued and 20,747 outstanding as of September 30, 2014;
25,413 issued and 22,629 outstanding as of December 31, 2013)		 25,413 25,413
Additional paid-in capital 90,911 89,273
Retained earnings 369,952 239,561
Treasury stock, at cost (4,666 shares as of September 30, 2014
and 2,784 shares as of December 31, 2013)		 (398,217) (197,548)
Altisource equity 88,059 156,699
     
Non-controlling interests 1,203 1,042
Total equity 89,262 157,741
     
Total liabilities and equity $ 816,592 $ 730,052
 
 
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
  Nine months ended September 30,
  2014 2013
 
Cash flows from operating activities:		    
Net income $ 137,993 $ 97,550
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 21,086 13,791
Amortization of intangible assets 29,290 18,857
Change in the fair value of Equator Earn Out (37,924) --
Goodwill impairment 37,473 --
Share-based compensation expense 1,638 2,076
Equity in losses of investment in affiliate -- 176
Bad debt expense 4,667 1,338
Amortization of debt discount 191 184
Amortization of debt issuance costs 799 702
Deferred income taxes 464 --
Loss on disposal of fixed assets 98 1,178
Changes in operating assets and liabilities, net of effects of acquisitions:    
Accounts receivable (58,725) 3,762
Prepaid expenses and other current assets (6,525) (6,142)
Other assets (1,656) (1,871)
Accounts payable and accrued expenses 14,968 4,574
Other current and non-current liabilities (18,141) (1,535)
Net cash provided by operating activities 125,696 134,640
     
Cash flows from investing activities:    
Additions to premises and equipment (48,119) (20,528)
Acquisition of businesses, net of cash acquired (14,931)  (204,567)
Proceeds from loan to Ocwen --  75,000
Proceeds from sale of equity affiliate -- 12,648
Other investing activities (294) (50)
Net cash used in investing activities (63,344) (137,497)
     
Cash flows from financing activities:    
Proceeds from issuance of long-term debt 198,000 201,000
Repayment of long-term debt and payments on capital lease obligations (3,474) (2,736)
Debt issuance costs (2,608) (2,400)
Proceeds from stock option exercises 2,523 4,710
Purchase of treasury stock (208,820) (87,418)
Contributions from non-controlling interests -- 18
Distributions to non-controlling interests (1,813) (3,234)
Net cash (used in) provided by financing activities (16,192) 109,940
     
Net increase in cash and cash equivalents 46,160 107,083
Cash and cash equivalents at the beginning of the period 130,429 105,502
     
Cash and cash equivalents at the end of the period $ 176,589 $ 212,585
     
Supplemental cash flow information:    
Interest paid $ 15,049 $ 13,592
Income taxes paid, net 12,112 2,360
     
Non-cash investing and financing activities:    
Increase in payables for purchases of premises and equipment $ 482 $ 1,947
Decrease in acquisition of businesses from subsequent working capital true-ups (3,711) (2,039) 
CONTACT: Michelle D. Esterman

         Chief Financial Officer

         T: +352 2469 7950

         E: Michelle.Esterman@altisource.lu
Source: Altisource Portfolio Solutions S.A.

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