UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 23, 2015
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
(Exact name of Registrant as specified in its charter)
|
Luxembourg |
|
001-34354 |
|
98-0554932 |
|
(State or other jurisdiction of |
|
(Commission File Number) |
|
(I.R.S. Employer |
40, avenue Monterey
L-2163 Luxembourg
Grand Duchy of Luxembourg
(Address of principal executive offices including zip code)
+352 2469 7900
(Registrant’s telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On July 23, 2015, Altisource Portfolio Solutions S.A. (“Altisource”) issued a press release announcing financial results for its quarter ended June 30, 2015. A copy of the press release is attached hereto as Exhibit 99.1.
The information in this Item 2.02, including the information in Exhibit 99.1, is furnished solely pursuant to Item 2.02 of this Form 8-K. Consequently, it is not deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that Section. It may only be incorporated by reference in another filing under the Securities Exchange Act of 1934 or Securities Act of 1933 if such subsequent filing specifically references this Item 2.02 of this Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
|
Exhibit No. |
|
Description |
|
|
|
|
|
Exhibit 99.1 |
|
Press Release of Altisource Portfolio Solutions S.A. dated July 23, 2015 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 23, 2015
|
|
Altisource Portfolio Solutions S.A. | |
|
|
| |
|
|
By: |
/s/ Michelle D. Esterman |
|
|
Name: |
Michelle D. Esterman |
|
|
Title: |
Chief Financial Officer |
Exhibit 99.1
|
|
|
|
|
|
|
|
|
|
FOR IMMEDIATE RELEASE |
FOR FURTHER INFORMATION CONTACT: |
|
|
|
|
|
Michelle D. Esterman |
|
|
Chief Financial Officer |
|
|
T: +352 2469 7950 |
|
|
E: Michelle.Esterman@altisource.lu |
ALTISOURCE ANNOUNCES STRONG SECOND QUARTER RESULTS
Luxembourg, July 23, 2015 - Altisource Portfolio Solutions S.A. (“Altisource” or the “Company”) (NASDAQ: ASPS) today reported strong sequential quarter growth of service revenue, net income attributable to shareholders and diluted earnings per share.
Second Quarter 2015 Results Compared to First Quarter 2015 and Second Quarter 2014:
· Service revenue of $236.6 million, a 14% increase compared to the first quarter 2015 and a 10% decrease compared to the second quarter 2014
· Net income attributable to Altisource of $46.0 million compared to $3.7 million in the first quarter 2015 and $54.1 million in the second quarter 2014
· Adjusted net income attributable to Altisource(1) of $54.2 million compared to $11.8 million in the first quarter 2015 and $63.6 million in the second quarter 2014
· Diluted earnings per share of $2.22 compared to $0.18 in the first quarter 2015 and $2.24 in the second quarter 2014
· Adjusted diluted earnings per share(1) of $2.62 compared to $0.56 in the first quarter 2015 and $2.63 in the second quarter 2014
· Cash flows provided by (used in) operating activities of $70.7 million compared to $(15.9) million in the first quarter 2015 and $75.2 million in the second quarter 2014
“Altisource had a very strong quarter, marking the third highest service revenue quarter and the second highest net income quarter in the Company’s history. I am very proud of our team that came together over the last two quarters to align the Company’s costs with our revenue, accomplishing the objectives we established in the fourth quarter of last year. Our sales and marketing efforts are also yielding results. We are winning new engagements, one of which is to manage the REO and provide certain pre-foreclosure services to a top ten bank. Further, our sales pipeline is strong, and we are in varying stages of discussions with larger prospects,” said William B. Shepro, Chief Executive Officer.
Second quarter 2015 highlights include:
· The number of houses sold on Hubzu for customers other than Ocwen was 1,168 for the second quarter 2015, a 33% increase compared to the first quarter 2015 and 39 times higher than the second quarter 2014
· The average number of loans serviced by Ocwen on REALServicing was 2.2 million for the second quarter 2015, a 9% decrease compared to the first quarter 2015 and a 4% decrease compared to the second quarter 2014
(1) This is a non-GAAP measure that is defined and reconciled to the corresponding GAAP measure on page 6.
· The Company repurchased 1.4 million shares of common stock at an average price of $28.57 per share
· The Company repurchased a portion of the senior secured term loan with a par value of $16.0 million at a 9% discount and net income included an after-tax gain of $1.0 million on the early retirement of debt
· Net income included an after-tax gain of $6.9 million from the reversal of Equator related contingent consideration in connection with a $0.5 million payment to the former owners of Equator to extinguish any future earn out liability
· Subsequent to the close of the second quarter, we acquired CastleLine Holdings, LLC, a specialty risk management and insurance services firm. The acquisition aligns with Altisource’s strategy to continue helping the mortgage banking industry safely and securely increase production while reducing costs and mitigating risks
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 second 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. 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 |
|
Six months ended |
| ||||||||
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| ||||
|
Service revenue |
|
|
|
|
|
|
|
|
| ||||
|
Mortgage Services |
|
$ |
165,674 |
|
$ |
189,349 |
|
$ |
310,055 |
|
$ |
336,498 |
|
|
Financial Services |
|
23,350 |
|
25,436 |
|
45,663 |
|
49,693 |
| ||||
|
Technology Services |
|
55,992 |
|
57,111 |
|
107,962 |
|
103,960 |
| ||||
|
Eliminations |
|
(8,421 |
) |
(8,731 |
) |
(19,269 |
) |
(17,027 |
) | ||||
|
Total service revenue |
|
236,595 |
|
263,165 |
|
444,411 |
|
473,124 |
| ||||
|
Reimbursable expenses |
|
30,830 |
|
32,276 |
|
62,786 |
|
61,071 |
| ||||
|
Non-controlling interests |
|
896 |
|
631 |
|
1,606 |
|
1,146 |
| ||||
|
Total revenue |
|
268,321 |
|
296,072 |
|
508,803 |
|
535,341 |
| ||||
|
Cost of revenue |
|
137,329 |
|
151,723 |
|
278,199 |
|
270,733 |
| ||||
|
Reimbursable expenses |
|
30,830 |
|
32,276 |
|
62,786 |
|
61,071 |
| ||||
|
Gross profit |
|
100,162 |
|
112,073 |
|
167,818 |
|
203,537 |
| ||||
|
Selling, general and administrative expenses |
|
43,975 |
|
49,021 |
|
96,381 |
|
92,555 |
| ||||
|
Income from operations |
|
56,187 |
|
63,052 |
|
71,437 |
|
110,982 |
| ||||
|
Other income (expense), net: |
|
|
|
|
|
|
|
|
| ||||
|
Interest expense |
|
(7,195 |
) |
(4,784 |
) |
(14,355 |
) |
(9,560 |
) | ||||
|
Other than temporary impairment loss on HLSS equity securities |
|
— |
|
— |
|
(3,285 |
) |
— |
| ||||
|
Gain on sale of and dividends from HLSS equity securities |
|
1,431 |
|
— |
|
1,431 |
|
— |
| ||||
|
Other income (expense), net |
|
821 |
|
(43 |
) |
824 |
|
4 |
| ||||
|
Total other income (expense), net |
|
(4,943 |
) |
(4,827 |
) |
(15,385 |
) |
(9,556 |
) | ||||
|
Income before income taxes and non-controlling interests |
|
51,244 |
|
58,225 |
|
56,052 |
|
101,426 |
| ||||
|
Income tax provision |
|
(4,398 |
) |
(3,493 |
) |
(4,798 |
) |
(6,548 |
) | ||||
|
Net income |
|
46,846 |
|
54,732 |
|
51,254 |
|
94,878 |
| ||||
|
Net income attributable to non-controlling interests |
|
(896 |
) |
(631 |
) |
(1,606 |
) |
(1,146 |
) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Altisource |
|
$ |
45,950 |
|
$ |
54,101 |
|
$ |
49,648 |
|
$ |
93,732 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Earnings per share: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
$ |
2.35 |
|
$ |
2.45 |
|
$ |
2.50 |
|
$ |
4.20 |
|
|
Diluted |
|
$ |
2.22 |
|
$ |
2.24 |
|
$ |
2.38 |
|
$ |
3.84 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
|
Basic |
|
19,571 |
|
22,089 |
|
19,870 |
|
22,301 |
| ||||
|
Diluted |
|
20,669 |
|
24,166 |
|
20,830 |
|
24,415 |
| ||||
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
|
|
|
June 30, |
|
December 31, |
| ||
|
|
|
2015 |
|
2014 |
| ||
|
|
|
|
|
|
| ||
|
ASSETS |
|
|
|
|
| ||
|
Current assets: |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
130,079 |
|
$ |
161,361 |
|
|
Accounts receivable, net |
|
116,766 |
|
112,183 |
| ||
|
Prepaid expenses and other current assets |
|
19,087 |
|
23,567 |
| ||
|
Deferred tax assets, net |
|
4,987 |
|
4,987 |
| ||
|
Total current assets |
|
270,919 |
|
302,098 |
| ||
|
|
|
|
|
|
| ||
|
Premises and equipment, net |
|
126,637 |
|
127,759 |
| ||
|
Goodwill |
|
90,851 |
|
90,851 |
| ||
|
Intangible assets, net |
|
227,369 |
|
245,246 |
| ||
|
Other assets |
|
20,232 |
|
22,267 |
| ||
|
|
|
|
|
|
| ||
|
Total assets |
|
$ |
736,008 |
|
$ |
788,221 |
|
|
|
|
|
|
|
| ||
|
LIABILITIES AND EQUITY |
|
|
|
|
| ||
|
Current liabilities: |
|
|
|
|
| ||
|
Accounts payable and accrued expenses |
|
$ |
79,118 |
|
$ |
111,766 |
|
|
Current portion of long-term debt |
|
5,945 |
|
5,945 |
| ||
|
Deferred revenue |
|
9,012 |
|
9,829 |
| ||
|
Other current liabilities |
|
13,133 |
|
13,227 |
| ||
|
Total current liabilities |
|
107,208 |
|
140,767 |
| ||
|
|
|
|
|
|
| ||
|
Long-term debt, less current portion |
|
563,993 |
|
582,669 |
| ||
|
Deferred tax liabilities, net |
|
2,699 |
|
2,694 |
| ||
|
Other non-current liabilities |
|
13,205 |
|
20,648 |
| ||
|
|
|
|
|
|
| ||
|
Equity: |
|
|
|
|
| ||
|
Common stock ($1.00 par value; 25,413 shares authorized and issued and 18,737 outstanding as of June 30, 2015; 25,413 shares authorized and issued and 20,279 outstanding as of December 31, 2014) |
|
25,413 |
|
25,413 |
| ||
|
Additional paid-in capital |
|
92,824 |
|
91,509 |
| ||
|
Retained earnings |
|
415,914 |
|
367,967 |
| ||
|
Treasury stock, at cost (6,676 shares as of June 30, 2015 and 5,134 shares as of |
|
(486,556 |
) |
(444,495 |
) | ||
|
Altisource equity |
|
47,595 |
|
40,394 |
| ||
|
|
|
|
|
|
| ||
|
Non-controlling interests |
|
1,308 |
|
1,049 |
| ||
|
Total equity |
|
48,903 |
|
41,443 |
| ||
|
|
|
|
|
|
| ||
|
Total liabilities and equity |
|
$ |
736,008 |
|
$ |
788,221 |
|
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
|
|
Six months ended June 30, |
| ||||
|
|
|
2015 |
|
2014 |
| ||
|
|
|
|
|
|
| ||
|
Cash flows from operating activities: |
|
|
|
|
| ||
|
Net income |
|
$ |
51,254 |
|
$ |
94,878 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
| ||
|
Depreciation and amortization |
|
18,432 |
|
13,375 |
| ||
|
Amortization of intangible assets |
|
17,877 |
|
19,573 |
| ||
|
Goodwill impairment |
|
— |
|
37,473 |
| ||
|
Other than temporary impairment loss on HLSS equity securities |
|
3,285 |
|
— |
| ||
|
Gain on sale of and dividends from HLSS equity securities |
|
(1,431 |
) |
— |
| ||
|
Change in the fair value of acquisition related contingent consideration |
|
(7,346 |
) |
(37,924 |
) | ||
|
Share-based compensation expense |
|
1,315 |
|
1,130 |
| ||
|
Bad debt expense |
|
2,143 |
|
4,250 |
| ||
|
Gain on early extinguishment of debt |
|
(1,114 |
) |
— |
| ||
|
Amortization of debt discount |
|
255 |
|
90 |
| ||
|
Amortization of debt issuance costs |
|
585 |
|
483 |
| ||
|
Deferred income taxes |
|
5 |
|
462 |
| ||
|
Loss on disposal of fixed assets |
|
20 |
|
98 |
| ||
|
Changes in operating assets and liabilities: |
|
|
|
|
| ||
|
Accounts receivable |
|
(6,726 |
) |
(24,510 |
) | ||
|
Prepaid expenses and other current assets |
|
4,480 |
|
(5,131 |
) | ||
|
Other assets |
|
1,338 |
|
(2,089 |
) | ||
|
Accounts payable and accrued expenses |
|
(28,557 |
) |
21,319 |
| ||
|
Other current and non-current liabilities |
|
(1,008 |
) |
(11,950 |
) | ||
|
Net cash provided by operating activities |
|
54,807 |
|
111,527 |
| ||
|
|
|
|
|
|
| ||
|
Cash flows from investing activities: |
|
|
|
|
| ||
|
Additions to premises and equipment |
|
(21,421 |
) |
(30,522 |
) | ||
|
Purchase of HLSS equity securities |
|
(29,966 |
) |
— |
| ||
|
Proceeds received from sale of and dividends from HLSS equity securities |
|
28,112 |
|
— |
| ||
|
Other investing activities |
|
(4 |
) |
(294 |
) | ||
|
Net cash used in investing activities |
|
(23,279 |
) |
(30,816 |
) | ||
|
|
|
|
|
|
| ||
|
Cash flows from financing activities: |
|
|
|
|
| ||
|
Repayment of long-term debt |
|
(17,701 |
) |
(1,986 |
) | ||
|
Proceeds from stock option exercises |
|
203 |
|
639 |
| ||
|
Purchases of treasury stock |
|
(43,965 |
) |
(80,702 |
) | ||
|
Distributions to non-controlling interests |
|
(1,347 |
) |
(1,207 |
) | ||
|
Net cash used in financing activities |
|
(62,810 |
) |
(83,256 |
) | ||
|
|
|
|
|
|
| ||
|
Net decrease in cash and cash equivalents |
|
(31,282 |
) |
(2,545 |
) | ||
|
Cash and cash equivalents at the beginning of the period |
|
161,361 |
|
130,429 |
| ||
|
|
|
|
|
|
| ||
|
Cash and cash equivalents at the end of the period |
|
$ |
130,079 |
|
$ |
127,884 |
|
|
|
|
|
|
|
| ||
|
Supplemental cash flow information: |
|
|
|
|
| ||
|
Interest paid |
|
$ |
13,345 |
|
$ |
9,074 |
|
|
Income taxes paid, net |
|
3,490 |
|
1,561 |
| ||
|
|
|
|
|
|
| ||
|
Non-cash investing and financing activities: |
|
|
|
|
| ||
|
Decrease in payables for purchases of premises and equipment |
|
$ |
(4,091 |
) |
$ |
(3,339 |
) |
|
Decrease in acquisition of businesses from subsequent working capital true-ups |
|
— |
|
(3,711 |
) | ||
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 management, existing shareholders and potential shareholders to measure Altisource’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 |
|
Six months ended |
| ||||||||
|
|
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| ||||
|
Net income attributable to Altisource |
|
$ |
45,950 |
|
$ |
54,101 |
|
$ |
49,648 |
|
$ |
93,732 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Amortization of intangible assets |
|
8,986 |
|
10,107 |
|
17,877 |
|
19,573 |
| ||||
|
Tax benefit on amortization of intangible assets |
|
(771 |
) |
(606 |
) |
(1,530 |
) |
(1,264 |
) | ||||
|
Amortization of intangible assets, net of tax |
|
8,215 |
|
9,501 |
|
16,347 |
|
18,309 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Adjusted net income attributable to Altisource |
|
$ |
54,165 |
|
$ |
63,602 |
|
$ |
65,995 |
|
$ |
112,041 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Diluted earnings per share |
|
$ |
2.22 |
|
$ |
2.24 |
|
$ |
2.38 |
|
$ |
3.84 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Amortization of intangible assets, net of tax, per diluted share |
|
0.40 |
|
0.39 |
|
0.79 |
|
0.75 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Adjusted diluted earnings per share |
|
$ |
2.62 |
|
$ |
2.63 |
|
$ |
3.17 |
|
$ |
4.59 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Weighted average shares outstanding - diluted |
|
20,669 |
|
24,166 |
|
20,830 |
|
24,415 |
| ||||