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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): April 28, 2016

 
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 April 28, 2016, Altisource Portfolio Solutions S.A. (“Altisource”) issued a press release announcing financial results for its quarter ended March 31, 2016. 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 April 28, 2016




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:  April 28, 2016

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



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 STRONG FIRST QUARTER RESULTS

Luxembourg, April 28, 2016 - Altisource Portfolio Solutions S.A. (“Altisource”) (NASDAQ: ASPS) today reported strong financial results for the first quarter 2016, generating the highest first quarter revenue and service revenue in Altisource’s history. Compared to the first quarter of 2015, revenue growth was driven by a higher volume of property inspection and preservation referrals and growth in the number of non-Ocwen homes sold on Hubzu.

Diluted earnings per share of $0.92 and Adjusted diluted earnings per share(1) of $1.47 for the first quarter of 2016 were significantly higher than the first quarter of 2015 primarily from service revenue growth coupled with the benefit of the 2015 cost reduction initiative.

First Quarter 2016 Results Compared to First Quarter 2015:

•
Service revenue of $234.3 million, a 13% increase
•
Net income attributable to Altisource of $18.5 million, a 400% increase
•
Adjusted net income attributable to Altisource(1) of $29.4 million, a 148% increase
•
Diluted earnings per share of $0.92, a 411% increase
•
Adjusted diluted earnings per share(1) of $1.47, a 163% increase
•
Cash from operations of $29.0 million compared to cash used in operations of $(15.9) million

“I am very pleased with our first quarter financial results. We continue to make strong gains to diversify and grow our customer base. Service revenue unrelated to Ocwen for the first quarter of 2016 was 22% higher than the fourth quarter of 2015 and 38% higher than the first quarter of 2015,” said Chief Executive Officer William B. Shepro.

Shepro further commented, “First quarter 2016 service revenue of $234.3 million is 26% of the mid-point of our full year 2016 scenarios and adjusted diluted earnings per share of $1.47 is 25% of the mid-point. Given the fact that the 2nd and 3rd quarters have historically been our seasonally strongest of the year, we believe we are well positioned to achieve the mid-point of our 2016 financial scenarios.”

First quarter 2016 highlights include:

Initiatives
•
Launched the Owners.com® buyer rebate program in Atlanta and South Florida
•
Supported Altisource Residential Corporation’s acquisition of more than 600 properties
•
Completed the integration work for our new top-4 bank customer and plan to commence property inspection and preservation services in early May 2016
•
Launched VendorlyTM, a vendor oversight platform for Lenders One members
Capital Allocation
•
Repurchased $11.7 million of our common stock (0.5 million shares at an average price of $25.17 per share)
•
Purchased 2.5 million shares of Altisource Residential Corporation’s common stock for $29.4 million in the open market
•
On April 6, 2016, we repurchased $28.0 million of our senior secured term loan for $24.3 million (a 13.1% discount)
__________________________
(1)
This is a non-GAAP measure that is defined and reconciled to the corresponding GAAP measure herein.

1


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 first 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 AND COMPREHENSIVE INCOME
(in thousands, except per share data)
(unaudited) 
 
 
Three months ended March 31,
 
 
2016
 
2015
 
 
 
 
 
Service revenue
 
 
 
 
Mortgage Services
 
$
183,162

 
$
144,381

Financial Services
 
20,076

 
22,313

Technology Services
 
40,647

 
51,970

Eliminations
 
(9,605
)
 
(10,848
)
 Total service revenue
 
234,280

 
207,816

Reimbursable expenses
 
15,454

 
31,956

Non-controlling interests
 
398

 
710

Total revenue
 
250,132

 
240,482

Cost of revenue
 
153,409

 
140,870

Reimbursable expenses
 
15,454

 
31,956

Gross profit
 
81,269

 
67,656

Selling, general and administrative expenses
 
53,616

 
52,406

Income from operations
 
27,653

 
15,250

Other income (expense), net:
 
 
 
 
Interest expense
 
(6,541
)
 
(7,160
)
Other than temporary impairment loss on securities
 
—

 
(3,285
)
Other income (expense), net
 
(27
)
 
3

       Total other income (expense), net
 
(6,568
)
 
(10,442
)
 
 
 
 
 
Income before income taxes and non-controlling interests
 
21,085

 
4,808

Income tax provision
 
(2,193
)
 
(400
)
 
 
 
 
 
Net income
 
18,892

 
4,408

Net income attributable to non-controlling interests
 
(398
)
 
(710
)
 
 
 
 
 
Net income attributable to Altisource
 
$
18,494

 
$
3,698

 
 
 
 
 
Earnings per share:
 
 
 
 
Basic
 
$
0.98

 
$
0.18

Diluted
 
$
0.92

 
$
0.18

 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
Basic
 
18,855

 
20,172

Diluted
 
20,040

 
20,995

 
 
 
 
 
Comprehensive income:
 
 
 
 
Net income
 
$
18,892

 
$
4,408

Other comprehensive income, net of tax:
 
 
 
 
Unrealized gain on securities, net of income tax expense of $289 and $0
 
699

 
—

 
 
 
 
 
Comprehensive income, net of tax
 
19,591

 
4,408

Comprehensive income attributable to non-controlling interests
 
(398
)
 
(710
)
 
 
 
 
 
Comprehensive income attributable to Altisource
 
$
19,193

 
$
3,698


3


ALTISOURCE PORTFOLIO SOLUTIONS S.A.
SEGMENT FINANCIAL INFORMATION
(in thousands)
(unaudited) 

 
 
Three months ended March 31, 2016
 
 
Mortgage
Services
 
Financial
Services
 
Technology
Services
 
Corporate
Items and
Eliminations
 
Consolidated
Altisource
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 

 
 

 
 

 
 

Service revenue
 
$
183,162

 
$
20,076

 
$
40,647

 
$
(9,605
)
 
$
234,280

Reimbursable expenses
 
15,426

 
28

 
—

 
—

 
15,454

Non-controlling interests
 
398

 
—

 
—

 
—

 
398

 
 
198,986

 
20,104

 
40,647

 
(9,605
)
 
250,132

Cost of revenue
 
121,518

 
14,258

 
41,893

 
(8,806
)
 
168,863

Gross profit (loss)
 
77,468

 
5,846

 
(1,246
)
 
(799
)
 
81,269

Selling, general and administrative expenses
 
26,969

 
4,309

 
6,558

 
15,780

 
53,616

Income (loss) from operations
 
50,499

 
1,537

 
(7,804
)
 
(16,579
)
 
27,653

Other income (expense), net
 
14

 
13

 
7

 
(6,602
)
 
(6,568
)
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes and
    non-controlling interests
 
$
50,513

 
$
1,550

 
$
(7,797
)
 
$
(23,181
)
 
$
21,085


 
 
Three months ended March 31, 2015
 
 
Mortgage
Services
 
Financial
Services
 
Technology
Services
 
Corporate
Items and
Eliminations
 
Consolidated
Altisource
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 

 
 

 
 

 
 

 
 

Service revenue
 
$
144,381

 
$
22,313

 
$
51,970

 
$
(10,848
)
 
$
207,816

Reimbursable expenses
 
31,915

 
41

 
—

 
—

 
31,956

Non-controlling interests
 
710

 
—

 
—

 
—

 
710

 
 
177,006

 
22,354

 
51,970

 
(10,848
)
 
240,482

Cost of revenue
 
114,804

 
15,103

 
52,723

 
(9,804
)
 
172,826

Gross profit (loss)
 
62,202

 
7,251

 
(753
)
 
(1,044
)
 
67,656

Selling, general and administrative expenses
 
20,561

 
4,715

 
7,315

 
19,815

 
52,406

Income (loss) from operations
 
41,641

 
2,536

 
(8,068
)
 
(20,859
)
 
15,250

Other income (expense), net
 
(4
)
 
(12
)
 
1

 
(10,427
)
 
(10,442
)
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes and
    non-controlling interests
 
$
41,637

 
$
2,524

 
$
(8,067
)
 
$
(31,286
)
 
$
4,808





4


ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited) 
 
 
March 31,
 
December 31,
 
 
2016

2015
ASSETS
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
159,705

 
$
179,327

Available for sale securities
 
30,417

 
—

Accounts receivable, net
 
97,645

 
105,023

Prepaid expenses and other current assets
 
26,721

 
21,751

Total current assets
 
314,488

 
306,101

 
 
 
 
 
Premises and equipment, net
 
116,937

 
119,121

Goodwill
 
82,801

 
82,801

Intangible assets, net
 
184,792

 
197,003

Deferred tax assets, net
 
3,330

 
3,619

Other assets
 
13,246

 
13,153

 
 
 
 
 
Total assets
 
$
715,594

 
$
721,798

 
 
 
 
 
LIABILITIES AND EQUITY
Current liabilities:
 
 
 
 
Accounts payable and accrued expenses
 
$
80,768

 
$
91,871

Current portion of long-term debt
 
5,945

 
5,945

Deferred revenue
 
12,634

 
15,060

Other current liabilities
 
18,276

 
16,266

Total current liabilities
 
117,623

 
129,142

 
 
 
 
 
Long-term debt, less current portion
 
521,185

 
522,233

Other non-current liabilities
 
14,821

 
18,153

 
 
 
 
 
Equity:
 
 
 
 
Common stock ($1.00 par value; 25,413 shares authorized and issued and 18,603 outstanding as of March 31, 2016; 25,413 shares authorized and issued and 19,021 outstanding as of December 31, 2015)
 
25,413

 
25,413

Additional paid-in capital
 
98,198

 
96,321

Retained earnings
 
385,452

 
369,270

Accumulated other comprehensive income
 
699

 
—

Treasury stock, at cost (6,810 shares as of March 31, 2016 and 6,392 shares as of December 31, 2015)
 
(449,039
)
 
(440,026
)
Altisource equity
 
60,723

 
50,978

 
 
 
 
 
Non-controlling interests
 
1,242

 
1,292

Total equity
 
61,965

 
52,270

 
 
 
 
 
Total liabilities and equity
 
$
715,594

 
$
721,798



5


ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited) 
 
Three months ended March 31,
 
2016
 
2015
 
 
 
 
Cash flows from operating activities:
 

 
 

Net income
$
18,892

 
$
4,408

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization
9,208

 
8,826

Amortization of intangible assets
12,211

 
8,891

Other than temporary impairment loss on HLSS securities
—

 
3,285

Change in the fair value of acquisition related contingent consideration
96

 
148

Share-based compensation expense
1,877

 
443

Bad debt expense
876

 
607

Amortization of debt discount
116

 
127

Amortization of debt issuance costs
322

 
351

Deferred income taxes
—

 
(24
)
Gain on disposal of fixed assets
(10
)
 
(19
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
6,502

 
(15,140
)
Prepaid expenses and other current assets
(4,970
)
 
2,413

Other assets
(109
)
 
127

Accounts payable and accrued expenses
(12,133
)
 
(27,559
)
Other current and non-current liabilities
(3,844
)
 
(2,822
)
Net cash provided by (used in) operating activities
29,034

 
(15,938
)
 
 
 
 
Cash flows from investing activities:
 
 
 
Additions to premises and equipment
(5,984
)
 
(3,931
)
Purchase of available for sale securities
(29,429
)
 
(29,966
)
Other investing activities
16

 
(4
)
Net cash used in investing activities
(35,397
)
 
(33,901
)
 
 

 
 

Cash flows from financing activities:
 
 
 
Repayment of long-term debt
(1,486
)
 
(1,486
)
Proceeds from stock option exercises
366

 
203

Purchase of treasury stock
(11,691
)
 
(3,959
)
Distributions to non-controlling interests
(448
)
 
(657
)
Net cash used in financing activities
(13,259
)
 
(5,899
)
 
 
 
 
Net decrease in cash and cash equivalents
(19,622
)
 
(55,738
)
Cash and cash equivalents at the beginning of the period
179,327

 
161,361

 
 
 
 
Cash and cash equivalents at the end of the period
$
159,705

 
$
105,623

 
 
 
 
Supplemental cash flow information:
 
 
 
Interest paid
$
6,104

 
$
6,655

Income taxes paid, net
3,830

 
1,520

 
 
 
 
Non-cash investing and financing activities:
 
 
 
Increase (decrease) in payables for purchases of premises and equipment
$
1,030

 
$
(3,638
)

6


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 intangible asset amortization expense (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) to GAAP net income attributable to Altisource by the weighted average number of diluted shares. Reconciliations of the non-GAAP measures to the corresponding GAAP measures are as follows:
 
Three months ended March 31,
 
2016
 
2015
 
 
 
 
Net income attributable to Altisource
$
18,494

 
$
3,698

 
 
 
 
Amortization of intangible assets
12,211

 
8,891

Tax benefit on amortization of intangible assets
(1,270
)
 
(741
)
Amortization of intangible assets, net of tax
10,941

 
8,150

 
 
 
 
Adjusted net income attributable to Altisource
$
29,435

 
$
11,848

 
 
 
 
Diluted earnings per share
$
0.92

 
$
0.18

 
 
 
 
Amortization of intangible assets, net of tax, per diluted share
0.55

 
0.39

 
 
 
 
Adjusted diluted earnings per share
$
1.47

 
$
0.56

 
 
 
 
Weighted average shares outstanding - diluted
20,040

 
20,995


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


7