Altisource Portfolio Solutions S.A. (“Altisource” or the “Company”)
(NASDAQ:ASPS) today reported financial results for the fourth
quarter and full year 2017, reporting full year service revenue of
$899.6 million and fourth quarter 2017 service revenue of $207.3
million. Full year 2017 net income attributable to Altisource
was $308.9 million, or $16.53 per diluted share, and adjusted net
income attributable to Altisource(1) for the full year 2017 was
$52.3 million, or adjusted diluted earnings per share(1) of
$2.80. Fourth quarter 2017 net income attributable to
Altisource was $286.4 million, or $15.72 per diluted share and
adjusted net income attributable to Altisource(1) for the fourth
quarter 2017 was $9.8 million, or adjusted diluted earnings per
share(1) of $0.54.
“In 2017, we generated service revenue and
adjusted diluted earnings per share(1) that were 105% and 102%,
respectively, of our scenario mid-point. We also continued
our long history of strong cash flow generation with $110.5 million
of adjusted cash flows from operating activities(1),” said Chief
Executive Officer William B. Shepro.
Mr. Shepro further commented, “Importantly,
during the fourth quarter of 2017, we had strong sales momentum
which we continued to build upon in the first quarter of
2018. We are also making meaningful investments to support
our competitive positioning and the tremendous opportunities that
our newer businesses represent. We believe these investments,
our customer relationships and recent momentum of customer wins
position us well for 2018 and beyond.”
In the fourth quarter of 2017, the Company
recognized a net income tax benefit of $284.1 million relating to
the merger of two of the Company’s Luxembourg subsidiaries, the
impact of statutory tax rate changes in the U.S. and Luxembourg,
and foreign income tax reserves. In December 2017, the
Company merged two of its Luxembourg subsidiaries in connection
with an internal restructuring plan designed to simplify and
streamline the Company’s structure. For Luxembourg tax
purposes, the transaction was recognized at fair value and
generated a net operating loss of $1.3 billion. The
Luxembourg net operating loss is not subject to any limitation on
its usage and has a 17 year life.
2017 Highlights(2)
Corporate
- Generated $66.1 million of cash flows from operating activities
and $110.5 million of adjusted cash flows from operating
activities(1)
- Ended 2017 with $154.2 million of cash, cash equivalents and
marketable securities
- Repurchased 1.6 million shares of our common stock at an
average price of $23.84 per share
- Repurchased $60.1 million par value of our senior secured term
loan at a weighted average discount of 10.7%, recognizing a net
gain of $5.6 million on the early extinguishment of debt
- Recognized a net income tax benefit of $284.1 million in the
fourth quarter of 2017 relating to the merger of two of the
Company’s Luxembourg subsidiaries, the impact of statutory tax rate
changes in the U.S. and Luxembourg and foreign income tax
reserves
- Amended our senior secured term loan to allow the Company to
directly repurchase its debt in the open market and permit the
internal restructuring of our Luxembourg subsidiaries
Servicer Solutions
- Selected by 9 bank and non-bank loan servicers to provide
property preservation and inspection services, real estate
brokerage and auction services, or title insurance and settlement
services
- Selected as a service provider by 4 servicers in the first
quarter of 2018
- Grew non-Ocwen Financial Corporation (“Ocwen”) and non-NRZ
(defined below) service revenue by 9% compared to 2016
- Maintained Altisource as one of the leading REO asset managers
and online auctioneers of residential real estate through its
Hubzu.com platform
- Entered into agreements with New Residential Investment Corp.
(individually, together with one or more of its subsidiaries, or
one or more of its subsidiaries individually, “NRZ”) that establish
Altisource as the exclusive provider of REO brokerage services for
mortgage servicing rights that NRZ agreed to acquire from
Ocwen
- Entered into a non-binding Letter of Intent (subsequently
amended) to enter into a Services Agreement with NRZ to provide
fee-based services for mortgage servicing rights that NRZ agreed to
acquire from Ocwen
Origination Solutions
- Approved as a loan fulfillment provider for residential loan
securitizations by Standard & Poor’s Financial Services LLC,
Moody’s Investors Service, Inc., Kroll Bond Rating Agency, Inc.,
DBRS, Inc. and Fitch Ratings Inc. (acceptance by Fitch as a
reviewer of loans for securitizations was received in January
2018)
- Selected by 7 lenders in 2017 and early 2018 to provide
platform solutions including loan fulfillment services, loan
processing services, or CastleLine® certification and insurance
services
Consumer Real Estate
Solutions
- Grew Owners.com® residential purchases and sales by 713% in
2017 from 106 transactions in 2016 to 862 transactions in 2017
- Launched Owners.com Loans to broker mortgages to Owners.com
home buyers to deliver an integrated solution for consumers and
grow revenue per sale
- Implemented an agile operating model inspired by best-in-class
Internet companies
Real Estate Investor
Solutions
- Purchased 257 homes and sold 158 homes in the
buy-renovate-lease-sell business in 2017 compared to 119 home
purchases and 14 home sales in 2016
- Increased the inventory of homes in the buy-renovate-lease-sell
business by 94% to 204 homes as of December 31, 2017 compared to
December 31, 2016
- Received a residential rental property management vendor rating
of MOR RV2 from Morningstar Credit Ratings, LLC
Fourth Quarter 2017 Results Compared to
Third Quarter 2017 and Fourth Quarter 2016:
- Service revenue of $207.3 million, an 8% decrease compared to
the third quarter 2017 and a 9% decrease compared to the fourth
quarter 2016
- Income (loss) before income taxes and non-controlling interests
was $3.1 million for the fourth quarter 2017 compared to $10.4
million for the third quarter 2017 and a loss of $(19.5) million
for the fourth quarter 2016
- Pretax income (loss) attributable to Altisource(1) of $2.5
million for the fourth quarter 2017 compared to $9.6 million for
the third quarter 2017 and a loss of $(20.3) million for the fourth
quarter 2016
- Adjusted pretax income attributable to Altisource(1) of $10.7
million, a 41% decrease compared to the third quarter 2017 and a
43% decrease compared to the fourth quarter 2016
- Net income (loss) attributable to Altisource of $286.4 million
for the fourth quarter 2017 compared to $7.0 million for the third
quarter 2017 and a loss of $(20.4) million for the fourth quarter
2016
- Adjusted net income attributable to Altisource(1) of $9.8
million, a 27% decrease compared to the third quarter 2017 and an
8% decrease compared to the fourth quarter 2016
- Diluted earnings per share of $15.72 for the fourth quarter
2017 compared to $0.38 for the third quarter 2017 and a loss of
$(1.08) for the fourth quarter 2016
- Adjusted diluted earnings per share(1) of $0.54, a 26% decrease
compared to the third quarter 2017 and a 2% decrease compared to
the fourth quarter 2016
- Cash from operations of $19.0 million, a 45% decrease compared
to the third quarter 2017 and a 9% decrease compared to the fourth
quarter 2016
- Adjusted cash flows from operating activities less additions to
premises and equipment(1) of $20.7 million, a 51% decrease compared
to the third quarter 2017 and a 13% increase compared to the fourth
quarter 2016
Full Year 2017 Results Compared to Full
Year 2016
- Service revenue of $899.6 million, a 5% decrease compared to
the year ended December 31, 2016
- Income before income taxes and non-controlling interests of
$35.4 million, a 20% decrease compared to the year ended
December 31, 2016
- Pretax income attributable to Altisource(1) of $32.6 million, a
22% decrease compared to the year ended December 31, 2016
- Adjusted pretax income attributable to Altisource(1) of $68.0
million, a 42% decrease compared to the year ended
December 31, 2016
- Net income attributable to Altisource of $308.9 million, a 977%
increase compared to the year ended December 31, 2016
- Adjusted net income attributable to Altisource(1) of $52.3
million, a 42% decrease compared to the year ended
December 31, 2016
- Diluted earnings per share of $16.53, a 1,032% increase
compared to the year ended December 31, 2016
- Adjusted diluted earnings per share(1) of $2.80, a 39% decrease
compared to the year ended December 31, 2016
- Cash from operations of $66.1 million, a 48% decrease compared
to the year ended December 31, 2016
- Adjusted cash flows from operating activities less additions to
premises and equipment(1) of $99.9 million, a 14% decrease compared
to the year ended December 31, 2016
________________________
(1) This is a non-GAAP measure that is defined
and reconciled to the corresponding GAAP measure herein.(2) Applies
to 2017 unless otherwise indicated.
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, various risks relating to the transactions described
herein, including in respect of the satisfaction of closing
conditions to New Residential Investment Corp.’s acquisition of the
covered MSR portfolios, including obtaining the necessary
third-party approvals; uncertainties as to the timing or completion
of transfers related to New Residential Investment Corp.’s
acquisition of the covered MSR portfolios; potential litigation
relating to the transactions; the possibility of early termination
of the Cooperative Brokerage Agreement; the possibility that
Altisource and New Residential Investment Corp. will not be able to
negotiate a satisfactory services agreement; the inability to
obtain, or delays in achieving, the expected benefits of the
transactions, as well as, 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. EST
today to discuss our fourth quarter and full year 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 an
integrated service provider and marketplace for the real estate and
mortgage industries. Combining operational excellence with a
suite of innovative services and technologies, Altisource helps
solve the demands of the ever-changing markets we serve.
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)
|
|
Three months ended
December 31, |
|
Year ended
December 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
Service revenue |
|
|
|
|
|
|
|
|
Mortgage
Market |
|
$ |
171,056 |
|
|
$ |
189,774 |
|
|
$ |
754,058 |
|
|
$ |
774,514 |
|
Real
Estate Market |
|
22,172 |
|
|
16,000 |
|
|
86,821 |
|
|
84,805 |
|
Other
Businesses, Corporate and Eliminations |
|
14,079 |
|
|
21,439 |
|
|
58,682 |
|
|
83,280 |
|
Total
service revenue |
|
207,307 |
|
|
227,213 |
|
|
899,561 |
|
|
942,599 |
|
Reimbursable
expenses |
|
8,126 |
|
|
10,694 |
|
|
39,912 |
|
|
52,011 |
|
Non-controlling
interests |
|
633 |
|
|
720 |
|
|
2,740 |
|
|
2,693 |
|
Total revenue |
|
216,066 |
|
|
238,627 |
|
|
942,213 |
|
|
997,303 |
|
Cost of revenue |
|
153,495 |
|
|
162,115 |
|
|
659,953 |
|
|
638,034 |
|
Reimbursable
expenses |
|
8,126 |
|
|
10,694 |
|
|
39,912 |
|
|
52,011 |
|
Gross profit |
|
54,445 |
|
|
65,818 |
|
|
242,348 |
|
|
307,258 |
|
Selling, general and
administrative expenses |
|
45,849 |
|
|
52,446 |
|
|
192,642 |
|
|
214,155 |
|
Litigation settlement
loss, net of $4,000 insurance recovery |
|
— |
|
|
28,000 |
|
|
— |
|
|
28,000 |
|
Income (loss) from
operations |
|
8,596 |
|
|
(14,628 |
) |
|
49,706 |
|
|
65,103 |
|
Other income (expense),
net: |
|
|
|
|
|
|
|
|
Interest
expense |
|
(5,391 |
) |
|
(5,931 |
) |
|
(22,253 |
) |
|
(24,412 |
) |
Other
income (expense), net |
|
(93 |
) |
|
1,022 |
|
|
7,922 |
|
|
3,630 |
|
Total
other income (expense), net |
|
(5,484 |
) |
|
(4,909 |
) |
|
(14,331 |
) |
|
(20,782 |
) |
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes and non-controlling interests |
|
3,112 |
|
|
(19,537 |
) |
|
35,375 |
|
|
44,321 |
|
Income tax benefit
(provision) |
|
283,871 |
|
|
(127 |
) |
|
276,256 |
|
|
(12,935 |
) |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
286,983 |
|
|
(19,664 |
) |
|
311,631 |
|
|
31,386 |
|
Net income attributable
to non-controlling interests |
|
(633 |
) |
|
(720 |
) |
|
(2,740 |
) |
|
(2,693 |
) |
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Altisource |
|
$ |
286,350 |
|
|
$ |
(20,384 |
) |
|
$ |
308,891 |
|
|
$ |
28,693 |
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
16.16 |
|
|
$ |
(1.08 |
) |
|
$ |
16.99 |
|
|
$ |
1.53 |
|
Diluted |
|
$ |
15.72 |
|
|
$ |
(1.08 |
) |
|
$ |
16.53 |
|
|
$ |
1.46 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
17,724 |
|
|
18,788 |
|
|
18,183 |
|
|
18,696 |
|
Diluted |
|
18,211 |
|
|
18,788 |
|
|
18,692 |
|
|
19,612 |
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss): |
|
|
|
|
|
|
|
|
Net
income (loss) |
|
$ |
286,983 |
|
|
$ |
(19,664 |
) |
|
$ |
311,631 |
|
|
$ |
31,386 |
|
Other
comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
Unrealized gain (loss) on securities, net of income tax benefit
(provision) of $(843), $(169), $(921), $720, respectively |
|
2,266 |
|
|
411 |
|
|
2,478 |
|
|
(1,745 |
) |
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss), net of tax |
|
289,249 |
|
|
(19,253 |
) |
|
314,109 |
|
|
29,641 |
|
Comprehensive income
attributable to non-controlling interests |
|
(633 |
) |
|
(720 |
) |
|
(2,740 |
) |
|
(2,693 |
) |
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss) attributable to Altisource |
|
$ |
288,616 |
|
|
$ |
(19,973 |
) |
|
$ |
311,369 |
|
|
$ |
26,948 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALTISOURCE PORTFOLIO SOLUTIONS
S.A.SEGMENT FINANCIAL
INFORMATION(1)(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended December 31,
2017 |
|
|
|
|
|
|
|
|
MortgageMarket |
|
Real EstateMarket |
|
OtherBusinesses,Corporate
andEliminations |
|
ConsolidatedAltisource |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenue |
|
|
|
|
|
|
|
$ |
171,056 |
|
|
$ |
22,172 |
|
|
$ |
14,079 |
|
|
$ |
207,307 |
|
Reimbursable expenses |
|
|
|
|
|
|
|
7,815 |
|
|
301 |
|
|
10 |
|
|
8,126 |
|
Non-controlling interests |
|
|
|
|
|
|
|
633 |
|
|
— |
|
|
— |
|
|
633 |
|
|
|
|
|
|
|
|
|
179,504 |
|
|
22,473 |
|
|
14,089 |
|
|
216,066 |
|
Cost of revenue |
|
|
|
|
|
|
|
123,565 |
|
|
24,483 |
|
|
13,573 |
|
|
161,621 |
|
Gross profit
(loss) |
|
|
|
|
|
|
|
55,939 |
|
|
(2,010 |
) |
|
516 |
|
|
54,445 |
|
Selling, general and
administrative expenses |
|
|
|
|
|
|
|
27,722 |
|
|
4,634 |
|
|
13,493 |
|
|
45,849 |
|
Income (loss) from
operations |
|
|
|
|
|
|
|
28,217 |
|
|
(6,644 |
) |
|
(12,977 |
) |
|
8,596 |
|
Total other income
(expense), net |
|
|
|
|
|
|
|
(66 |
) |
|
(4 |
) |
|
(5,414 |
) |
|
(5,484 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes and non-controlling interests |
|
|
|
|
|
|
|
$ |
28,151 |
|
|
$ |
(6,648 |
) |
|
$ |
(18,391 |
) |
|
$ |
3,112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended December 31,
2016 |
|
|
MortgageMarket |
|
Real EstateMarket |
|
OtherBusinesses,Corporate
andEliminations |
|
ConsolidatedAltisource |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
Service
revenue |
|
$ |
189,774 |
|
|
$ |
16,000 |
|
|
$ |
21,439 |
|
|
$ |
227,213 |
|
Reimbursable expenses |
|
10,308 |
|
|
361 |
|
|
25 |
|
|
10,694 |
|
Non-controlling interests |
|
720 |
|
|
— |
|
|
— |
|
|
720 |
|
|
|
200,802 |
|
|
16,361 |
|
|
21,464 |
|
|
238,627 |
|
Cost of revenue |
|
138,128 |
|
|
16,620 |
|
|
18,061 |
|
|
172,809 |
|
Gross profit
(loss) |
|
62,674 |
|
|
(259 |
) |
|
3,403 |
|
|
65,818 |
|
Selling, general and
administrative expenses |
|
31,010 |
|
|
4,536 |
|
|
16,900 |
|
|
52,446 |
|
Litigation settlement
loss, net of $4,000 insurance recovery |
|
— |
|
|
— |
|
|
28,000 |
|
|
28,000 |
|
Income (loss) from
operations |
|
31,664 |
|
|
(4,795 |
) |
|
(41,497 |
) |
|
(14,628 |
) |
Total other income
(expense), net |
|
10 |
|
|
(5 |
) |
|
(4,914 |
) |
|
(4,909 |
) |
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes and non-controlling interests |
|
$ |
31,674 |
|
|
$ |
(4,800 |
) |
|
$ |
(46,411 |
) |
|
$ |
(19,537 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Effective January 1, 2017, our
reportable segments changed as a result of a change in the way our
Chief Executive Officer (our chief operating decision maker)
manages our businesses, allocates resources and evaluates
performance, and the related changes in our internal
organization. Prior year comparable period segment
disclosures have been restated to conform to the current year
presentation.
ALTISOURCE PORTFOLIO SOLUTIONS
S.A.SEGMENT FINANCIAL
INFORMATION(1)(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31,
2017 |
|
|
|
|
|
|
|
|
MortgageMarket |
|
Real EstateMarket |
|
OtherBusinesses,Corporate
andEliminations |
|
ConsolidatedAltisource |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenue |
|
|
|
|
|
|
|
$ |
754,058 |
|
|
$ |
86,821 |
|
|
$ |
58,682 |
|
|
$ |
899,561 |
|
Reimbursable expenses |
|
|
|
|
|
|
|
36,886 |
|
|
2,966 |
|
|
60 |
|
|
39,912 |
|
Non-controlling interests |
|
|
|
|
|
|
|
2,740 |
|
|
— |
|
|
— |
|
|
2,740 |
|
|
|
|
|
|
|
|
|
793,684 |
|
|
89,787 |
|
|
58,742 |
|
|
942,213 |
|
Cost of revenue |
|
|
|
|
|
|
|
545,507 |
|
|
96,967 |
|
|
57,391 |
|
|
699,865 |
|
Gross profit
(loss) |
|
|
|
|
|
|
|
248,177 |
|
|
(7,180 |
) |
|
1,351 |
|
|
242,348 |
|
Selling, general and
administrative expenses |
|
|
|
|
|
|
|
114,215 |
|
|
18,718 |
|
|
59,709 |
|
|
192,642 |
|
Income (loss) from
operations |
|
|
|
|
|
|
|
133,962 |
|
|
(25,898 |
) |
|
(58,358 |
) |
|
49,706 |
|
Total other income
(expense), net |
|
|
|
|
|
|
|
72 |
|
|
(4 |
) |
|
(14,399 |
) |
|
(14,331 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes and non-controlling interests |
|
|
|
|
|
|
|
$ |
134,034 |
|
|
$ |
(25,902 |
) |
|
$ |
(72,757 |
) |
|
$ |
35,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31,
2016 |
|
|
MortgageMarket |
|
Real EstateMarket |
|
OtherBusinesses,Corporate
andEliminations |
|
ConsolidatedAltisource |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
Service
revenue |
|
$ |
774,514 |
|
|
$ |
84,805 |
|
|
$ |
83,280 |
|
|
$ |
942,599 |
|
Reimbursable expenses |
|
50,117 |
|
|
1,785 |
|
|
109 |
|
|
52,011 |
|
Non-controlling interests |
|
2,693 |
|
|
— |
|
|
— |
|
|
2,693 |
|
|
|
827,324 |
|
|
86,590 |
|
|
83,389 |
|
|
997,303 |
|
Cost of revenue |
|
546,540 |
|
|
64,566 |
|
|
78,939 |
|
|
690,045 |
|
Gross profit |
|
280,784 |
|
|
22,024 |
|
|
4,450 |
|
|
307,258 |
|
Selling, general and
administrative expenses |
|
121,508 |
|
|
23,291 |
|
|
69,356 |
|
|
214,155 |
|
Litigation settlement
loss, net of $4,000 insurance recovery |
|
— |
|
|
— |
|
|
28,000 |
|
|
28,000 |
|
Income (loss) from
operations |
|
159,276 |
|
|
(1,267 |
) |
|
(92,906 |
) |
|
65,103 |
|
Total other income
(expense), net |
|
154 |
|
|
(5 |
) |
|
(20,931 |
) |
|
(20,782 |
) |
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes and non-controlling interests |
|
$ |
159,430 |
|
|
$ |
(1,272 |
) |
|
$ |
(113,837 |
) |
|
$ |
44,321 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Effective January 1, 2017, our
reportable segments changed as a result of a change in the way our
Chief Executive Officer (our chief operating decision maker)
manages our businesses, allocates resources and evaluates
performance, and the related changes in our internal
organization. Prior year comparable period segment
disclosures have been restated to conform to the current year
presentation.
ALTISOURCE PORTFOLIO SOLUTIONS
S.A.CONSOLIDATED BALANCE
SHEETS(in thousands, except per share
data)
|
|
|
December 31, |
|
2017 |
|
2016 |
|
|
|
|
ASSETS |
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
105,006 |
|
|
$ |
149,294 |
|
Available
for sale securities |
49,153 |
|
|
45,754 |
|
Accounts
receivable, net |
52,740 |
|
|
87,821 |
|
Prepaid
expenses and other current assets |
64,742 |
|
|
42,608 |
|
Total
current assets |
271,641 |
|
|
325,477 |
|
|
|
|
|
Premises and equipment,
net |
73,273 |
|
|
103,473 |
|
Goodwill |
86,283 |
|
|
86,283 |
|
Intangible assets,
net |
120,065 |
|
|
155,432 |
|
Deferred tax assets,
net |
303,707 |
|
|
7,292 |
|
Other assets |
10,195 |
|
|
11,255 |
|
|
|
|
|
Total assets |
$ |
865,164 |
|
|
$ |
689,212 |
|
|
|
|
|
LIABILITIES AND EQUITY |
Current
liabilities: |
|
|
|
Accounts
payable and accrued expenses |
$ |
84,400 |
|
|
$ |
83,135 |
|
Accrued
litigation settlement |
— |
|
|
32,000 |
|
Current
portion of long-term debt |
5,945 |
|
|
5,945 |
|
Deferred
revenue |
9,802 |
|
|
8,797 |
|
Other
current liabilities |
9,414 |
|
|
19,061 |
|
Total
current liabilities |
109,561 |
|
|
148,938 |
|
|
|
|
|
Long-term debt, less
current portion |
403,336 |
|
|
467,600 |
|
Other non-current
liabilities |
12,282 |
|
|
10,480 |
|
|
|
|
|
Commitments,
contingencies and regulatory matters |
|
|
|
|
|
|
|
Equity: |
|
|
|
Common
stock ($1.00 par value; 100,000 shares authorized, 25,413 issued
and 17,418 outstanding as of December 31, 2017; 25,413 shares
authorized and issued and 18,774 outstanding as of
December 31, 2016) |
25,413 |
|
|
25,413 |
|
Additional paid-in capital |
112,475 |
|
|
107,288 |
|
Retained
earnings |
626,600 |
|
|
333,786 |
|
Accumulated other comprehensive income (loss) |
733 |
|
|
(1,745 |
) |
Treasury
stock, at cost (7,995 shares as of December 31, 2017 and 6,639
shares as of December 31, 2016) |
(426,609 |
) |
|
(403,953 |
) |
Altisource equity |
338,612 |
|
|
60,789 |
|
|
|
|
|
Non-controlling interests |
1,373 |
|
|
1,405 |
|
Total
equity |
339,985 |
|
|
62,194 |
|
|
|
|
|
Total liabilities and
equity |
$ |
865,164 |
|
|
$ |
689,212 |
|
|
|
|
|
|
|
|
|
ALTISOURCE PORTFOLIO SOLUTIONS
S.A.CONSOLIDATED STATEMENTS OF CASH
FLOWS(in thousands)
|
|
|
For the years ended
December 31, |
|
2017 |
|
2016 |
|
|
|
|
Cash flows from
operating activities: |
|
|
|
Net income |
$ |
311,631 |
|
|
$ |
31,386 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
Depreciation and amortization |
36,447 |
|
|
36,788 |
|
Amortization of intangible assets |
35,367 |
|
|
47,576 |
|
Change in
the fair value of acquisition related contingent consideration |
24 |
|
|
(3,555 |
) |
Share-based compensation expense |
4,255 |
|
|
6,188 |
|
Bad debt
expense |
5,116 |
|
|
1,829 |
|
Gain on
early extinguishment of debt |
(5,637 |
) |
|
(5,464 |
) |
Amortization of debt discount |
301 |
|
|
413 |
|
Amortization of debt issuance costs |
833 |
|
|
1,141 |
|
Deferred
income taxes |
(297,336 |
) |
|
(2,597 |
) |
Loss on
disposal of fixed assets |
2,768 |
|
|
1,765 |
|
Changes
in operating assets and liabilities, net of effects of
acquisitions: |
|
|
|
Accounts
receivable |
29,965 |
|
|
15,980 |
|
Prepaid
expenses and other current assets |
(22,134 |
) |
|
(20,881 |
) |
Other
assets |
770 |
|
|
1,053 |
|
Accounts
payable and accrued expenses |
2,576 |
|
|
(9,113 |
) |
Other
current and non-current liabilities |
(38,864 |
) |
|
24,309 |
|
Net cash provided by
operating activities |
66,082 |
|
|
126,818 |
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Additions
to premises and equipment |
(10,514 |
) |
|
(23,269 |
) |
Acquisition of businesses, net of cash acquired |
— |
|
|
(9,409 |
) |
Purchase
of available for sale securities |
— |
|
|
(48,219 |
) |
Change in
restricted cash |
290 |
|
|
674 |
|
Other
investing activities |
188 |
|
|
— |
|
Net cash used in
investing activities |
(10,036 |
) |
|
(80,223 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Repayments and repurchases of long-term debt |
(59,761 |
) |
|
(50,723 |
) |
Proceeds
from stock option exercises |
2,374 |
|
|
9,558 |
|
Excess
tax benefit on stock-based compensation |
— |
|
|
4,779 |
|
Purchase
of treasury shares |
(39,011 |
) |
|
(37,662 |
) |
Distributions to non-controlling interests |
(2,772 |
) |
|
(2,580 |
) |
Payment
of tax withholding on issuance of restricted shares |
(1,164 |
) |
|
— |
|
Net cash used in
financing activities |
(100,334 |
) |
|
(76,628 |
) |
|
|
|
|
Net decrease in cash
and cash equivalents |
(44,288 |
) |
|
(30,033 |
) |
Cash and cash
equivalents at the beginning of the period |
149,294 |
|
|
179,327 |
|
|
|
|
|
Cash and cash
equivalents at the end of the period |
$ |
105,006 |
|
|
$ |
149,294 |
|
|
|
|
|
Supplemental cash flow
information: |
|
|
|
Interest
paid |
$ |
21,210 |
|
|
$ |
22,717 |
|
Income
taxes paid, net |
18,332 |
|
|
18,327 |
|
|
|
|
|
Non-cash investing and
financing activities: |
|
|
|
(Decrease) increase in payables for purchases of premises and
equipment |
$ |
(1,311 |
) |
|
$ |
404 |
|
|
|
|
|
|
|
|
|
ALTISOURCE PORTFOLIO SOLUTIONS
S.A.NON-GAAP MEASURES(in
thousands, except per share
data)(unaudited)
Pretax income (loss) attributable to Altisource,
adjusted pretax income attributable to Altisource, adjusted net
income attributable to Altisource, adjusted diluted earnings per
share, adjusted cash flows from operating activities and adjusted
cash flows from operating activities less additions to premises and
equipment, which are presented elsewhere in this earnings release,
are non-GAAP measures used by management, existing shareholders,
potential shareholders and other users of our financial information
to measure Altisource’s performance and do not purport to be
alternatives to income (loss) before income taxes and
non-controlling interests, net income (loss) attributable to
Altisource, diluted earnings (loss) per share and cash flows from
operating activities as measures of Altisource’s performance.
We believe these measures are useful to management, existing
shareholders, potential shareholders and other users of our
financial information in evaluating operating profitability and
cash flow generation more on the basis of continuing cost and cash
flows as they exclude amortization expense related to acquisitions
that occurred in prior periods, as well as the effect of more
significant non-recurring items from earnings and cash flows from
operating activities. We believe these measures are also
useful in evaluating the effectiveness of our operations and
underlying business trends in a manner that is consistent with
management’s evaluation of business performance. Furthermore,
we believe the exclusion of more significant non-recurring items
enables comparability to prior period performance and trend
analysis.
It is management’s intent to provide non-GAAP
financial information to enhance the understanding of Altisource’s
GAAP financial information, and it should be considered by the
reader in addition to, but not instead of, the financial statements
prepared in accordance with GAAP. Each non-GAAP financial
measure is presented along with the corresponding GAAP measure so
as not to imply that more emphasis should be placed on the non-GAAP
measure. The non-GAAP financial information presented may be
determined or calculated differently by other companies. The
non-GAAP financial information should not be unduly relied
upon.
Pretax income (loss) attributable to Altisource
is calculated by deducting non-controlling interests from income
(loss) before income taxes and non-controlling interests.
Adjusted pretax income attributable to Altisource is calculated by
adding intangible asset amortization expense and the litigation
settlement loss, net of $4.0 million insurance recovery to, and
deducting non-controlling interests from, income (loss) before
income taxes and non-controlling interests. Adjusted net
income attributable to Altisource is calculated by adding
intangible asset amortization expense (net of tax) and net
litigation settlement loss, net of insurance recovery (net of tax)
and adding or deducting certain income tax related items relating
to the Luxembourg subsidiary merger, other income tax rate changes
in Luxembourg and the United States and an increase in foreign
income tax reserves (and related interest) from 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)
and net litigation settlement loss (net of tax) and adding or
deducting certain income tax related items described above, by the
weighted average number of diluted shares. Adjusted cash
flows from operating activities is calculated by adding the cash
payment related to the net litigation settlement loss and the
increase in short-term investments in real estate to cash flows
from operating activities. Adjusted cash flows from operating
activities less additions to premises and equipment is calculated
by adding the cash payment related to the net litigation settlement
loss and the increase in short-term investments in real estate to,
and deducting additions to premises and equipment from, cash flows
from operating activities.
Reconciliations of the non-GAAP measures to the
corresponding GAAP measures are as follows:
|
|
|
|
|
|
|
Three months ended
December 31, |
|
Three months ended September 30, |
|
Years ended
December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes and non-controlling interests |
$ |
3,112 |
|
|
$ |
(19,537 |
) |
|
$ |
10,357 |
|
|
$ |
35,375 |
|
|
$ |
44,321 |
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interests |
(633 |
) |
|
(720 |
) |
|
(805 |
) |
|
(2,740 |
) |
|
(2,693 |
) |
Pretax
income (loss) attributable to Altisource |
2,479 |
|
|
(20,257 |
) |
|
9,552 |
|
|
32,635 |
|
|
41,628 |
|
Intangible asset amortization expense |
8,224 |
|
|
11,144 |
|
|
8,604 |
|
|
35,367 |
|
|
47,576 |
|
Litigation settlement loss, net of $4,000 insurance recovery |
— |
|
|
28,000 |
|
|
— |
|
|
— |
|
|
28,000 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted pretax income
attributable to Altisource |
$ |
10,703 |
|
|
$ |
18,887 |
|
|
$ |
18,156 |
|
|
$ |
68,002 |
|
|
$ |
117,204 |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Altisource |
$ |
286,350 |
|
|
$ |
(20,384 |
) |
|
$ |
6,961 |
|
|
$ |
308,891 |
|
|
$ |
28,693 |
|
|
|
|
|
|
|
|
|
|
|
Intangible asset amortization expense, net of tax |
7,597 |
|
|
6,477 |
|
|
6,452 |
|
|
27,523 |
|
|
36,819 |
|
Certain
income tax related items, net |
(284,108 |
) |
|
— |
|
|
— |
|
|
(284,108 |
) |
|
— |
|
Net
litigation settlement loss, net of tax |
— |
|
|
24,583 |
|
|
— |
|
|
— |
|
|
24,583 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
attributable to Altisource |
$ |
9,839 |
|
|
$ |
10,676 |
|
|
$ |
13,413 |
|
|
$ |
52,306 |
|
|
$ |
90,095 |
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss)
per share |
$ |
15.72 |
|
|
$ |
(1.08 |
) |
|
$ |
0.38 |
|
|
$ |
16.53 |
|
|
$ |
1.46 |
|
|
|
|
|
|
|
|
|
|
|
Impact of
using diluted share count instead of basic share count for a loss
per share |
— |
|
|
0.01 |
|
|
— |
|
|
— |
|
|
— |
|
Intangible asset amortization expense, net of tax, per diluted
share |
0.42 |
|
|
0.34 |
|
|
0.35 |
|
|
1.47 |
|
|
1.88 |
|
Certain
income tax related items, net |
(15.60 |
) |
|
— |
|
|
— |
|
|
(15.20 |
) |
|
— |
|
Net
litigation settlement loss, net of tax, per diluted share |
— |
|
|
1.28 |
|
|
— |
|
|
— |
|
|
1.25 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted
earnings per share |
$ |
0.54 |
|
|
$ |
0.55 |
|
|
$ |
0.73 |
|
|
$ |
2.80 |
|
|
$ |
4.59 |
|
|
|
|
|
|
|
|
|
|
|
Calculation of the
impact of intangible asset amortization expense, net of tax |
|
|
|
|
|
|
|
|
|
Intangible asset amortization expense |
$ |
8,224 |
|
|
$ |
11,144 |
|
|
$ |
8,604 |
|
|
$ |
35,367 |
|
|
$ |
47,576 |
|
Tax
benefit from intangible asset amortization |
(627 |
) |
|
(4,667 |
) |
|
(2,152 |
) |
|
(7,844 |
) |
|
(10,757 |
) |
Intangible asset amortization expense, net of tax |
7,597 |
|
|
6,477 |
|
|
6,452 |
|
|
27,523 |
|
|
36,819 |
|
Diluted
share count |
18,211 |
|
|
19,246 |
|
|
18,429 |
|
|
18,692 |
|
|
19,612 |
|
|
|
|
|
|
|
|
|
|
|
Intangible asset
amortization expense, net of tax, per diluted share |
$ |
0.42 |
|
|
$ |
0.34 |
|
|
$ |
0.35 |
|
|
$ |
1.47 |
|
|
$ |
1.88 |
|
|
|
|
|
|
|
|
|
|
|
Certain income tax
related items, net, resulting from: |
|
|
|
|
|
|
|
|
|
Luxembourg subsidiaries merger, net |
$ |
(300,908 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(300,908 |
) |
|
$ |
— |
|
Other
income tax rate changes |
6,270 |
|
|
— |
|
|
— |
|
|
6,270 |
|
|
— |
|
Foreign
income tax reserves |
10,530 |
|
|
— |
|
|
— |
|
|
10,530 |
|
|
— |
|
Certain
income tax related items, net |
(284,108 |
) |
|
— |
|
|
— |
|
|
(284,108 |
) |
|
— |
|
Diluted
share count |
18,211 |
|
|
19,246 |
|
|
18,429 |
|
|
18,692 |
|
|
19,612 |
|
|
|
|
|
|
|
|
|
|
|
Certain income tax
related items, net, per diluted share |
$ |
(15.60 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(15.20 |
) |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
Calculation of the
impact of net litigation settlement loss, net of tax |
|
|
|
|
|
|
|
|
|
Net
litigation settlement loss |
$ |
— |
|
|
$ |
28,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
28,000 |
|
Tax
benefit from net litigation settlement loss |
— |
|
|
(3,417 |
) |
|
— |
|
|
— |
|
|
(3,417 |
) |
Net
litigation settlement loss, net of tax |
— |
|
|
24,583 |
|
|
— |
|
|
— |
|
|
24,583 |
|
Diluted
share count |
18,211 |
|
|
19,246 |
|
|
18,429 |
|
|
18,692 |
|
|
19,612 |
|
|
|
|
|
|
|
|
|
|
|
Net litigation
settlement loss, net of tax, per diluted share |
$ |
— |
|
|
$ |
1.28 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1.25 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities |
$ |
18,953 |
|
|
$ |
20,783 |
|
|
$ |
34,612 |
|
|
$ |
66,082 |
|
|
$ |
126,818 |
|
Net
litigation settlement loss payment |
— |
|
|
— |
|
|
— |
|
|
28,000 |
|
|
— |
|
Increase
in short-term investments in real estate |
4,761 |
|
|
4,330 |
|
|
9,530 |
|
|
16,380 |
|
|
13,025 |
|
Adjusted cash flows
from operating activities |
23,714 |
|
|
25,113 |
|
|
44,142 |
|
|
110,462 |
|
|
139,843 |
|
Less:
Additions to premises and equipment |
(3,029 |
) |
|
(6,744 |
) |
|
(1,827 |
) |
|
(10,514 |
) |
|
(23,269 |
) |
|
|
|
|
|
|
|
|
|
|
Adjusted cash flows
from operating activities less additions to premises and
equipment |
$ |
20,685 |
|
|
$ |
18,369 |
|
|
$ |
42,315 |
|
|
$ |
99,948 |
|
|
$ |
116,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTACT: |
Indroneel
Chatterjee |
Chief Financial
Officer |
T: +352 2469
7988 |
E:
Indroneel.Chatterjee@altisource.com |
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