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8-K



 
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): October 22, 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
incorporation)
 
(Commission File Number)
 
(I.R.S. Employer
Identification No.)
 
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 October 22, 2015, Altisource Portfolio Solutions S.A. (“Altisource”) issued a press release announcing financial results for its quarter ended September 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 issued by Altisource Portfolio Solutions S.A. dated October 22, 2015

2
 
 
 



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:  October 22, 2015
 
 
Altisource Portfolio Solutions S.A.
 
 
 
By:
/s/ Michelle D. Esterman
 
Name:
Michelle D. Esterman
 
Title:
Chief Financial Officer

3
 
 
 

Exhibit


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 THIRD QUARTER FINANCIAL RESULTS

Luxembourg, October 22, 2015 - Altisource Portfolio Solutions S.A. (“Altisource” or the “Company”) (NASDAQ: ASPS) today reported strong third quarter results.

Third Quarter 2015 Results Compared to Third Quarter 2014:

•
Service revenue of $245.5 million, a 1% decrease
•
Net income attributable to Altisource of $37.0 million, a 12% decrease
•
Adjusted net income attributable to Altisource(1) of $46.4 million, a 10% decrease
•
Diluted earnings per share of $1.82, a 2% increase
•
Adjusted diluted earnings per share(1) of $2.27, a 4% increase

“We remain focused on providing high quality, compliant services to our customers and positioning the Company, through our strategic initiatives, for long term growth. We continue to execute with existing customers, on-board new customers and receive very good feedback on our offerings from the market. We believe we have the right strategic initiatives, with each addressing very large markets, in line with our core competencies and our competitive advantages,” said William B. Shepro, Chief Executive Officer.

Shepro further commented, “I am pleased with the financial results for the quarter. Compared to the third quarter of 2014, growth in our asset management business largely offset lost revenue from the November 2014 discontinuation of the lender placed insurance brokerage business, the full amortization of the Equator acquisition deferred revenue in November 2014 and fewer third quarter 2015 property valuation referrals. With a focus on growth through our four strategic initiatives, we have increased our investments in sales and marketing in 2015, primarily accounting for the lower net income.”

Third quarter 2015 highlights include:

•
The average number of loans serviced by Ocwen on REALServicing was 1.9 million for the third quarter 2015, a 15% decrease compared to the third quarter 2014
•
The Company repurchased 0.2 million shares of common stock at an average price of $26.88 per share
•
The Company repurchased a portion of the senior secured term loan with a par value of $11.0 million at an 11% discount; net income included an after-tax gain of $0.8 million on the early extinguishment of debt
•
The Company acquired CastleLine Holdings, LLC and its subsidiaries for $12.3 million in cash at closing, $10.5 million of cash payable over four years from the acquisition date and $14.4 million of restricted common shares of the Company (495 thousand shares)

__________________________
(1) This is a non-GAAP measure that is defined and reconciled to the corresponding GAAP measure herein.

1



•
Subsequent to the close of the third quarter, we acquired GoldenGator, LLC (doing business as RentRange®), REIsmart, LLC (doing business as InvestabilityTM) and Onit Solutions, LLC, a support company for RentRange and Investability. RentRange is a leading provider of rental home data and information to the financial services and real estate industries, delivering a wide assortment of address and geography level data, analytics and rent-based valuation solutions for single and multi-family properties. Investability is an online residential real estate search and acquisition platform that utilizes data and analytics to allow real estate investors to access the estimated cash flow, capitalization rate, net yield and market value of properties for sale in the United States.

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 third 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.


2



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,
 
2015
 
2014
 
2015
 
2014
Service revenue
 
 
 
 
 
 
 
Mortgage Services
$
182,222

 
$
170,819

 
$
492,277

 
$
507,317

Financial Services
21,314

 
26,803

 
66,977

 
76,496

Technology Services
51,437

 
60,925

 
159,399

 
164,885

Eliminations
(9,504
)
 
(10,836
)
 
(28,773
)
 
(27,863
)
     Total service revenue
245,469

 
247,711

 
689,880

 
720,835

Reimbursable expenses
26,456

 
39,149

 
89,242

 
100,220

Non-controlling interests
851

 
828

 
2,457

 
1,974

Total revenue
272,776

 
287,688

 
781,579

 
823,029

Cost of revenue
147,394

 
149,575

 
425,593

 
420,308

Reimbursable expenses
26,456

 
39,149

 
89,242

 
100,220

Gross profit
98,926

 
98,964

 
266,744

 
302,501

Selling, general and administrative expenses
51,338

 
46,748

 
147,719

 
139,303

Income from operations
47,588

 
52,216

 
119,025

 
163,198

Other income (expense), net:
 
 
 
 
 
 
 
Interest expense
(7,041
)
 
(6,480
)
 
(21,396
)
 
(16,040
)
Loss on sale of HLSS equity securities, net of dividends received
—

 
—

 
(1,854
)
 
—

Other income (expense), net
653

 
131

 
1,477

 
135

Total other income (expense), net
(6,388
)
 
(6,349
)
 
(21,773
)
 
(15,905
)
 
 
 
 
 
 
 
 
Income before income taxes and non-controlling interests
41,200

 
45,867

 
97,252

 
147,293

Income tax provision
(3,303
)
 
(2,752
)
 
(8,101
)
 
(9,300
)
Net income
37,897

 
43,115

 
89,151

 
137,993

Net income attributable to non-controlling interests
(851
)
 
(828
)
 
(2,457
)
 
(1,974
)
 
 
 
 
 
 
 
 
Net income attributable to Altisource
$
37,046

 
$
42,287

 
$
86,694

 
$
136,019

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic
$
1.94

 
$
1.96

 
$
4.42

 
$
6.16

Diluted
$
1.82

 
$
1.79

 
$
4.19

 
$
5.63

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
19,091

 
21,626

 
19,608

 
22,071

Diluted
20,411

 
23,640

 
20,688

 
24,152



3



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
 
September 30,
2015
 
December 31,
2014
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
150,147

 
$
161,361

Accounts receivable, net
128,897

 
112,183

Prepaid expenses and other current assets
21,708

 
23,567

Deferred tax assets, net
4,987

 
4,987

Total current assets
305,739

 
302,098

 
 
 
 
Premises and equipment, net
122,416

 
127,759

Goodwill
121,091

 
90,851

Intangible assets, net
217,251

 
245,246

Other assets
20,556

 
22,267

 
 
 
 
Total assets
$
787,053

 
$
788,221

LIABILITIES AND EQUITY
Current liabilities:
 
 
 
Accounts payable and accrued expenses
$
86,439

 
$
111,766

Current portion of long-term debt
5,945

 
5,945

Deferred revenue
9,421

 
9,829

Other current liabilities
15,414

 
13,227

Total current liabilities
117,219

 
140,767

 
 
 
 
Long-term debt, less current portion
551,691

 
582,669

Deferred tax liabilities, net
2,748

 
2,694

Other non-current liabilities
17,899

 
20,648

 
 
 
 
Equity:
 
 
 
Common stock ($1.00 par value; 25,413 shares authorized and issued and 19,051 outstanding as of September 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
94,767

 
91,509

Retained earnings
430,995

 
367,967

Treasury stock, at cost (6,362 shares as of September 30, 2015 and 5,134 shares as of
December 31, 2014)
(455,041
)
 
(444,495
)
Altisource equity
96,134

 
40,394

 
 
 
 
Non-controlling interests
1,362

 
1,049

Total equity
97,496

 
41,443

 
 
 
 
Total liabilities and equity
$
787,053

 
$
788,221




4



ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
Nine months ended September 30,
 
2015
 
2014
Cash flows from operating activities:
 

 
 

Net income
$
89,151

 
$
137,993

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 

Depreciation and amortization
27,637

 
21,086

Amortization of intangible assets
27,995

 
29,290

Goodwill impairment
—

 
37,473

Loss on sale of HLSS equity securities, net of dividends received
1,854

 
—

Change in the fair value of acquisition related contingent consideration
(7,302
)
 
(37,924
)
Share-based compensation expense
3,258

 
1,638

Bad debt expense
3,477

 
4,667

Gain on early extinguishment of debt
(1,986
)
 
—

Amortization of debt discount
379

 
191

Amortization of debt issuance costs
1,045

 
799

Deferred income taxes
54

 
464

Loss on disposal of fixed assets
50

 
98

Changes in operating assets and liabilities:
 
 
 

Accounts receivable
(19,681
)
 
(58,725
)
Prepaid expenses and other current assets
2,001

 
(6,525
)
Other assets
2,085

 
(1,656
)
Accounts payable and accrued expenses
(20,876
)
 
14,968

Other current and non-current liabilities
10

 
(18,141
)
Net cash provided by operating activities
109,151

 
125,696

 
 
 
 
Cash flows from investing activities:
 

 
 

Additions to premises and equipment
(27,670
)
 
(48,119
)
Acquisition of businesses, net of cash acquired
(11,193
)
 
(14,931
)
Purchase of HLSS equity securities
(29,966
)
 
—

Proceeds received from sale of and dividends from HLSS equity securities
28,112

 
—

Other investing activities
722

 
(294
)
Net cash used in investing activities
(39,995
)
 
(63,344
)
 
 
 
 
Cash flows from financing activities:
 

 
 

Proceeds from issuance of long-term debt
—

 
198,000

Repurchases and repayment of long-term debt
(29,087
)
 
(3,474
)
Debt issuance costs
—

 
(2,608
)
Proceeds from stock option exercises
332

 
2,523

Purchase of treasury stock
(48,971
)
 
(208,820
)
Distributions to non-controlling interests
(2,144
)
 
(1,813
)
Other financing activities
(500
)
 
—

Net cash used in financing activities
(80,370
)
 
(16,192
)
 
 
 
 
Net (decrease) increase in cash and cash equivalents
(11,214
)
 
46,160

Cash and cash equivalents at the beginning of the period
161,361

 
130,429

 
 
 
 
Cash and cash equivalents at the end of the period
$
150,147

 
$
176,589

 
 
 
 
Supplemental cash flow information:
 

 
 

Interest paid
$
19,770

 
$
15,049

Income taxes paid, net
6,638

 
12,112

 
 
 
 
Non-cash investing and financing activities:
 

 
 

Acquisition of businesses with restricted shares
$
14,427

 
$
—

(Decrease) increase in payables for purchases of premises and equipment
(5,326
)
 
482

Decrease in acquisition of businesses from subsequent working capital true-ups
—

 
(3,711
)

5



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 September 30,
 
Nine months ended September 30,
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
Net income attributable to Altisource
$
37,046

 
$
42,287

 
$
86,694

 
$
136,019

 
 
 
 
 
 
 
 
Amortization of intangible assets
10,118

 
9,717

 
27,995

 
29,290

Tax benefit on amortization of intangible assets
(811
)
 
(583
)
 
(2,332
)
 
(1,849
)
Amortization of intangible assets, net of tax
9,307

 
9,134

 
25,663

 
27,441

 
 
 
 
 
 
 
 
Adjusted net income attributable to Altisource
$
46,353

 
$
51,421

 
$
112,357

 
$
163,460

 
 
 
 
 
 
 
 
Diluted earnings per share
$
1.82

 
$
1.79

 
$
4.19

 
$
5.63

 
 
 
 
 
 
 
 
Amortization of intangible assets, net of tax, per diluted share
0.46

 
0.39

 
1.24

 
1.14

 
 
 
 
 
 
 
 
Adjusted diluted earnings per share
$
2.27

 
$
2.18

 
$
5.43

 
$
6.77

 
 
 
 
 
 
 
 
Weighted average shares outstanding - diluted
20,411

 
23,640

 
20,688

 
24,152



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


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