Investor Relations

Find timely information for shareholders here or contact us directly.


Contact us
<< Back
Jul 21, 2016

Altisource Announces Second Quarter Results; Strong Progress on Strategic Initiatives

LUXEMBOURG, July 21, 2016 (GLOBE NEWSWIRE) -- Altisource Portfolio Solutions S.A. ("Altisource") (NASDAQ:ASPS) today reported financial results for the second quarter of 2016, generating strong cash flows from operations and service revenue growth.  Compared to the first quarter of 2016, service revenue growth was driven by an increase in the number of non-Ocwen and Ocwen homes sold on Hubzu® and a higher volume of property preservation referrals.  Compared to the second quarter of 2015, service revenue growth was driven by a higher volume of property preservation referrals, growth in the percentage of homes sold through auction on Hubzu and growth in the number of non-Ocwen homes sold on Hubzu.

Compared to the first quarter of 2016, growth in diluted earnings per share and adjusted diluted earnings per share(1) was primarily from changes in service revenue mix and greater gains on debt repurchases, partially offset by lower technology revenue from Ocwen and transaction costs associated with the purchase of Altisource Residential Corporation ("RESI") stock.  Compared to the second quarter of 2015, the decline in diluted earnings per share and adjusted diluted earnings per share(1) was primarily from changes in service revenue mix, greater investment in our growth initiatives, lower technology revenue from Ocwen, transaction costs associated with the purchase of RESI stock and the inclusion of one-time Equator® and HLSS gains in the second quarter of 2015, partially offset by greater gains on debt repurchases. 

Second Quarter 2016 Results Compared to First Quarter 2016 and Second Quarter 2015:

  • Service revenue of $241.3 million, a 3% increase compared to the first quarter 2016 and a 2% increase compared to the second quarter 2015
  • Net income attributable to Altisource of $20.0 million, an 8% increase compared to the first quarter 2016 and a 56% decrease compared to the second quarter 2015
  • Adjusted net income attributable to Altisource(1) of $31.0 million, a 5% increase compared to the first quarter 2016 and a 34% decrease compared to the second quarter 2015
  • Diluted earnings per share of $1.02, an 11% increase compared to the first quarter 2016 and a 54% decrease compared to the second quarter 2015
  • Adjusted diluted earnings per share(1) of $1.58, a 7% increase compared to the first quarter 2016 and a 31% decrease compared to the second quarter 2015
  • Cash from operations of $40.4 million, a 39% increase compared to the first quarter 2016 and a 43% decrease compared to the second quarter 2015

"I am very pleased with our performance in the second quarter of 2016 and through the first half of the year.  We are executing well against our strategic initiatives and believe we are on track to achieve or exceed adjusted diluted earnings per share(1) of $6.00 per share, the midpoint of our updated scenarios(2)," said Chief Executive Officer William B. Shepro.  

Shepro further commented, "We continue to make strong progress in growing our sales pipeline and developing a compelling suite of real estate and mortgage marketplace services. We have grown adjusted service revenue unrelated to Ocwen(1) by more than 40% in each of the last two years and anticipate the growth to exceed this in 2016. We believe this positions us to transform Altisource into a larger, more profitable company with a diversified and growing revenue base." 

Second Quarter 2016 highlights include:

Initiatives

  • Began providing property inspection and preservation services for a top four bank
  • Received approval from a top ten bank client to also provide it with short sale services
  • Executed a contract with a mortgage insurance company to manage its REO(3)
  • Selected by a top ten bank to provide Equator software to manage its short sales; this bank is evaluating Altisource for additional services
  • Grew second quarter 2016 service revenue in the Origination Solutions businesses by 20% over the first quarter of 2016

Capital Allocation

  • Repurchased $51.0 million of our senior secured term loan at a weighted average discount of 13.2%, recognizing a net gain of $5.5 million on the early extinguishment of debt
  • Repurchased $8.1 million of our common stock (0.3 million shares at an average price of $26.74 per share)
  • Purchased 1.6 million shares of RESI's common stock for $18.8 million

__________________________

(1) This is a non-GAAP measure that is defined and reconciled to the corresponding GAAP measure herein.
(2) The 2016 scenarios have been adjusted to reflect our results for the first half of the year and anticipated performance for the balance of the year.  The mid-point of the scenarios for adjusted diluted earnings per share remains the same as previously communicated.
(3) Executed in July 2016

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 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.  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,
    
   2016 2015 2016 2015
          
Service revenue         
Mortgage Services  $194,110  $165,674  $377,272  $310,055 
Financial Services  19,734  23,350   39,810  45,663 
Technology Services  38,100  55,992  78,747  107,962 
Eliminations  (10,620) (8,421) (20,225) (19,269)
Total service revenue  241,324  236,595   475,604  444,411 
Reimbursable expenses  13,783  30,830  29,237  62,786 
Non-controlling interests  692  896  1,090  1,606 
Total revenue  255,799  268,321  505,931  508,803 
Cost of revenue  160,588  137,329  313,997  278,199 
Reimbursable expenses  13,783  30,830  29,237  62,786 
Gross profit  81,428  100,162  162,697  167,818 
Selling, general and administrative expenses  54,207  51,566  107,823  103,972 
Change in the fair value of Equator Earn Out  —  (7,591) —  (7,591)
Income from operations  27,221  56,187  54,874  71,437 
Other income (expense), net:         
Interest expense  (5,988) (7,195) (12,529) (14,355)
Gain (loss) on HLSS equity securities and dividends received  —  1,431  —  (1,854)
Other income (expense), net  2,744  821  2,717   824 
Total other income (expense), net  (3,244) (4,943) (9,812) (15,385)
          
Income before income taxes and non-controlling interests  23,977  51,244  45,062  56,052 
Income tax provision  (3,291) (4,398) (5,484) (4,798)
          
Net income  20,686  46,846  39,578  51,254 
Net income attributable to non-controlling interests  (692) (896) (1,090) (1,606)
          
Net income attributable to Altisource  $19,994  $45,950  $38,488  $49,648 
          
Earnings per share:         
Basic  $1.08  $2.35  $2.06  $2.50 
Diluted  $1.02  $2.22  $1.94  $2.38 
          
Weighted average shares outstanding:         
Basic  18,437  19,571  18,646  19,870 
Diluted  19,604  20,669  19,822  20,830 
          
Comprehensive income:         
Net income  $ 20,686  $46,846  $39,578  $51,254 
Other comprehensive income (loss), net of tax:          
Unrealized loss on securities, net of income tax benefit of $3,249, $0, $2,960, $0  (7,871) —  (7,172) — 
          
Comprehensive income, net of tax  12,815  46,846  32,406  51,254 
Comprehensive income attributable to non-controlling interests  (692) (896)  (1,090) (1,606)
          
Comprehensive income attributable to Altisource  $12,123  $45,950  $31,316  $49,648 


 
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
SEGMENT FINANCIAL INFORMATION
(in thousands)
(unaudited)
 
   Three months ended June 30, 2016
   Mortgage
Services		 Financial
Services		 Technology
Services		 Corporate
Items and
Eliminations		 Consolidated
Altisource
            
Revenue           
Service revenue  $194,110  $19,734  $38,100  $(10,620) $241,324 
Reimbursable expenses  13,759   24  —  —  13,783 
Non-controlling interests  692  —  —  —  692 
   208,561  19,758  38,100  (10,620) 255,799 
Cost of revenue  127,626  14,149  42,424  (9,828) 174,371 
Gross profit (loss)  80,935  5,609  (4,324) (792) 81,428 
Selling, general and administrative expenses  28,607  4,204  7,440  13,956  54,207 
Income (loss) from operations  52,328  1,405  (11,764) (14,748) 27,221 
Total other income (expense), net  35  22  93  (3,394) (3,244)
            
Income (loss) before income taxes and
non-controlling interests		  $52,363  $1,427  $(11,671) $(18,142) $23,977 


 
   Three months ended June 30, 2015
   Mortgage
Services		 Financial
Services		 Technology
Services		 Corporate
Items and
Eliminations		 Consolidated
Altisource
            
Revenue           
Service revenue  $165,674  $23,350  $55,992  $(8,421) $236,595 
Reimbursable expenses   30,791  39  —  —  30,830 
Non-controlling interests  896  —  —  —  896 
   197,361  23,389  55,992  (8,421) 268,321 
Cost of revenue  112,710  15,537  47,423  (7,511) 168,159 
Gross profit (loss)  84,651  7,852  8,569  (910) 100,162 
Selling, general and administrative expenses  25,228  4,588  7,246  14,504  51,566 
Change in the fair value of Equator Earn Out  —  —  (7,591) —  (7,591)
Income (loss) from operations  59,423  3,264  8,914  (15,414) 56,187 
Total other income (expense), net   23  2  (18) (4,950) (4,943)
            
Income (loss) before income taxes and
non-controlling interests		  $59,446  $3,266   $8,896  $(20,364) $51,244 


 
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
SEGMENT FINANCIAL INFORMATION
(in thousands)
(unaudited)
 
   Six months ended June 30, 2016
   Mortgage
Services		  Financial
Services		 Technology
Services		 Corporate
Items and
Eliminations		 Consolidated
Altisource
            
Revenue           
Service revenue  $377,272  $39,810  $78,747  $(20,225) $475,604 
Reimbursable expenses  29,185  52  —  —  29,237 
Non-controlling interests  1,090  —  —  —  1,090 
   407,547  39,862  78,747  (20,225) 505,931 
Cost of revenue  249,144  28,407  84,317  (18,634) 343,234 
Gross profit (loss)  158,403  11,455  (5,570) (1,591) 162,697 
Selling, general and administrative expenses  55,576  8,513  13,998  29,736  107,823 
Income (loss) from operations  102,827  2,942  (19,568) (31,327) 54,874 
Total other income (expense), net  49  35  100  (9,996) (9,812)
             
Income (loss) before income taxes and
non-controlling interests		  $102,876  $2,977  $(19,468) $(41,323) $45,062 


 
   Six months ended June 30, 2015
   Mortgage
Services		 Financial
Services		 Technology
Services		 Corporate
Items and
Eliminations		 Consolidated
Altisource
            
Revenue           
Service revenue  $310,055  $45,663  $107,962  $(19,269) $444,411 
Reimbursable expenses  62,706  80  —  —  62,786 
Non-controlling interests  1,606  —  —  —  1,606 
   374,367  45,743  107,962  (19,269) 508,803 
Cost of revenue  227,514  30,640  100,146  (17,315) 340,985 
Gross profit (loss)  146,853  15,103  7,816  (1,954) 167,818 
Selling, general and administrative expenses  45,789  9,303  14,561  34,319  103,972  
Change in the fair value of Equator Earn Out  —  —  (7,591 ) —  (7,591)
Income (loss) from operations  101,064  5,800  846  (36,273) 71,437 
Total other income (expense), net   19  (10) (17) (15,377) (15,385)
            
Income (loss) before income taxes and
non-controlling interests		  $101,083  $5,790  $829  $(51,650) $56,052 


 
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
 
   June 30, December 31,
   2016 2015
ASSETS
Current assets:     
Cash and cash equivalents  $120,486  $179,327 
Available for sale securities  38,087  — 
Accounts receivable, net  100,165  105,023 
Prepaid expenses and other current assets  27,747  21,751 
Total current assets  286,485   306,101 
      
Premises and equipment, net  114,576  119,121 
Goodwill  81,406  82,801 
Intangible assets, net  173,406   197,003 
Deferred tax assets, net  6,917  3,619 
Other assets  12,686  13,153 
      
Total assets  $675,476  $721,798 
      
LIABILITIES AND EQUITY
Current liabilities:     
Accounts payable and accrued expenses  $88,748  $91,871 
Current portion of long-term debt  5,945  5,945 
Deferred revenue  11,717  15,060 
Other current liabilities  14,309  16,266 
Total current liabilities  120,719  129,142 
      
Long-term debt, less current portion  469,776  522,233 
Other non-current liabilities  16,561  18,153 
      
Equity:     
Common stock ($1.00 par value; 25,413 shares authorized and issued and 18,350
outstanding as of June 30, 2016;  25,413 shares authorized and issued and 19,021
outstanding as of December 31, 2015)		  25,413  25,413 
Additional paid-in capital  99,890  96,321 
Retained earnings  403,460  369,270 
Accumulated other comprehensive loss  (7,172)  — 
Treasury stock, at cost (7,063 shares as of June 30, 2016 and 6,392 shares as of
December 31, 2015)		  (454,488) (440,026)
Altisource equity  67,103  50,978 
      
Non-controlling interests  1,317  1,292 
Total equity  68,420   52,270 
      
Total liabilities and equity  $675,476  $721,798 


 
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
   Six months ended June 30,
   2016 2015
Cash flows from operating activities:     
Net income  $39,578  $51,254 
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation and amortization  18,346  18,432 
Amortization of intangible assets  24,967  17,877 
Loss on HLSS equity securities and dividends received, net  —  1,854 
Change in the fair value of acquisition related contingent consideration  193  (7,346)
Share-based compensation expense  3,569  1,315 
Bad debt expense  1,041  2,143 
Gain on early extinguishment of debt  (5,464) (1,114)
Amortization of debt discount  201  255 
Amortization of debt issuance costs  557  585 
Deferred income taxes  18  5 
Loss on disposal of fixed assets  9  20 
Changes in operating assets and liabilities:     
Accounts receivable  3,407  (6,726)
Prepaid expenses and other current assets  (6,012) 4,480 
Other assets  447  1,338 
Accounts payable and accrued expenses  (4,454) (28,557)
Other current and non-current liabilities  (6,998) (1,008)
Net cash provided by operating activities  69,405  54,807 
      
Cash flows from investing activities:     
Additions to premises and equipment  (12,441) (21,421)
Purchase of available for sale securities  (48,219) (29,966)
Proceeds received from sale of and dividends from HLSS equity securities  —  28,112 
Other investing activities  (10) (4 )
Net cash used in investing activities  (60,670) (23,279)
      
Cash flows from financing activities:     
Repayment and repurchases of long-term debt  (47,751) (17,701)
Proceeds from stock option exercises  986  203 
Purchase of treasury stock  (19,746) (43,965)
Distributions to non-controlling interests  (1,065) (1,347)
Net cash used in financing activities  (67,576) (62,810)
      
Net decrease in cash and cash equivalents  (58,841) (31,282)
Cash and cash equivalents at the beginning of the period  179,327  161,361 
      
Cash and cash equivalents at the end of the period  $120,486  $130,079 
      
Supplemental cash flow information:     
Interest paid  $11,694  $13,345 
Income taxes paid, net  5,618  3,490 
      
Non-cash investing and financing activities:     
Increase (decrease) in payables for purchases of premises and equipment  $1,369  $(4,091)
          

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

Adjusted net income attributable to Altisource, adjusted diluted earnings per share and adjusted service revenue unrelated to Ocwen 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 intangible asset amortization expense (net of tax) and deducting the gain associated with the reduction of the Equator earn out liability (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 intangible asset amortization expense (net of tax) less the gain associated with the reduction of the Equator earn out liability (net of tax) by the weighted average number of diluted shares. Adjusted service revenue unrelated to Ocwen is calculated by reducing the amortization of deferred revenue recorded in connection with the 2013 Equator acquisition from the applicable GAAP service revenue amount. Reconciliations of the non-GAAP measures to the corresponding GAAP measures are as follows:

 
   Three months ended
 June 30,		 Six months ended
 June 30,
    
   2016 2015 2016 2015
          
Net income attributable to Altisource  $19,994  $45,950  $38,488  $49,648 
          
Amortization of intangible assets  12,756  8,986  24,967  17,877 
Tax benefit on amortization of intangible assets  (1,751) (771) (3,038) (1,530)
Amortization of intangible assets, net of tax  11,005  8,215  21,929  16,347 
          
Gain on Equator earn out liability  —  (7,591) —  (7,591)
Tax provision from the gain on Equator earn out liability  —  651  —  651 
Gain on Equator earn out liability, net of tax  —  (6,940) —  (6,940)
          
Adjusted net income attributable to Altisource  $30,999  $47,225   $60,417  $59,055 
          
Diluted earnings per share  $1.02  $2.22  $1.94  $2.38 
          
Amortization of intangible assets, net of tax, per diluted share  0.56  0.40  1.11  0.78 
Gain on Equator earn out liability, net of tax, per diluted share  —  (0.34) —   (0.33)
          
Adjusted diluted earnings per share  $1.58  $2.28  $3.05  $2.84 
          
Weighted average shares outstanding - diluted  19,604  20,669  19,822  20,830 
              


   Years ended December 31,
    2015   2014   2013 
Service revenue unrelated to Ocwen  $193,430  $167,342  $100,236 
Less: Amortization of Equator acquisition deferred revenue   —   (32,109)  (4,587)
Adjusted service revenue unrelated to Ocwen  $193,430  $135,233  $95,649 
               

 

__________________________

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

CONTACT:

Michelle D. Esterman

Chief Financial Officer

T: +352 2469 7950

E: Michelle.Esterman@altisource.lu

Source: Altisource Portfolio Solutions S.A.

News Provided by Acquire Media