Altisource Announces Strong Fourth Quarter and Full Year Results
February 13 2014 - 7:30AM
Altisource Portfolio Solutions S.A. ("Altisource") (Nasdaq:ASPS)
today reported record fourth quarter and full year service revenue
and record full year net income attributable to shareholders. The
growth in service revenue and net income was primarily driven by
the continued growth of our largest customer, Ocwen Financial
Corporation ("Ocwen"), and growth of the Financial Services'
mortgage charge-off and customer relationship management
businesses.
Full Year 2013 Results Compared to 2012:
- Service revenue of $662.1 million, a 42% increase
- Net income attributable to Altisource of $130.0 million, a 17%
increase
- Diluted earnings per share of $5.19, a 17% increase
- Cash from operations of $185.5 million, a 59% increase
- Return on equity of 78%, compared to 58% in 2012
Fourth Quarter 2013 Results Compared to Fourth Quarter 2012:
- Service revenue of $192.4 million, a 58% increase
- Net income attributable to Altisource of $35.5 million, a 17%
increase
- Diluted earnings per share of $1.42, an 18% increase
- Cash from operations of $50.8 million, a 162% increase
"2013 was a very strong year for Altisource, growing both
organically as well as through strategic acquisitions. Earnings
growth was slower than revenue as we continued to invest in the
business to support our future growth. We are well positioned with
our core business and our growth initiatives for an even better
2014. Further, we intend to continue our aggressive share
repurchase program1," said Chairman William Erbey.
Full year and fourth quarter 2013 highlights include:
- The average number of loans serviced by Ocwen on REALServicing®
totaled 1.2 million in 2013 and 1.5 million in the fourth quarter
of 2013
- On November 15, 2013, we acquired Equator, LLC ("Equator"), a
national leader in mortgage and real estate related business
process management solutions, for an initial purchase price of
$63.4 million plus contingent earn-out consideration of up to an
additional $80 million over three years, subject to Equator
achieving annual performance targets
- On March 29, 2013, we completed the acquisition of the Homeward
Residential, Inc. fee-based businesses from Ocwen for an aggregate
purchase price of $75.8 million
- On April 12, 2013, we completed the Residential Capital, LLC
fee-based business transaction with Ocwen for an aggregate purchase
price of $128.8 million
- On May 7, 2013, we increased borrowings under our senior
secured term loan agreement to $400 million. Furthermore, on
December 9, 2013, we refinanced the senior secured term loan which,
among other changes, lowered the interest rate of the term
loan
- We repurchased 1.2 million shares of our common stock under our
stock repurchase program during 2013 at an average price of $116.99
per share
William Shepro, Chief Executive Officer, further commented,
"During 2013, we focused on providing high quality services to our
largest customer, Ocwen, improving our margins in our default
related services businesses and developing our growth engines. With
the progress made in 2013, we believe we are on track to achieve
pre-tax income as a percentage of service revenue of 47% in our
default related services businesses by the end of the first quarter
of 2014. Further, we continue to make good progress on our growth
initiatives and are optimistic that they will serve as an important
longer term component of our revenue and customer diversification
strategy."
Forward-Looking Statements
This press release contains forward-looking statements that
involve a number of risks and uncertainties. Those forward-looking
statements include all statements that are not historical fact,
including statements about management's beliefs and expectations.
Forward-looking statements are based on management's beliefs as
well as assumptions made by and information currently available to
management. Because such statements are based on expectations as to
future economic performance and are not statements of historical
fact, actual results may differ materially from those projected.
The Company undertakes no obligation to update any forward-looking
statements whether as a result of new information, future events or
otherwise. The risks and uncertainties to which forward-looking
statements are subject include, but are not limited to:
Altisource's ability to retain existing customers and attract new
customers; general economic and market conditions; governmental
regulations, taxes and policies; availability of adequate and
timely sources of liquidity; and other risks and uncertainties
detailed in the "Forward-Looking Statements," "Risk Factors" and
other sections of the Company's Form 10-K and other filings with
the Securities and Exchange Commission.
Webcast
Altisource will host a webcast at 11:00 a.m. EST today to
discuss our fourth quarter and full year results. A link to the
live audio webcast will be available on the Company's website
through the Investor Relations home page. Those who want to listen
to the call should go to the website 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 is a premier marketplace and transaction solutions
provider for the real estate, mortgage and consumer debt industries
offering both distribution and content. We leverage proprietary
business process, vendor and electronic payment management software
and behavioral science based analytics to improve outcomes for
marketplace participants. Additional information is available at
www.altisource.com.
1 February 2014, Altisource filed a
preliminary proxy with the Securities and Exchange Commission (the
"SEC"). We intend to file a definitive proxy followed by a
shareholder meeting to present a proposal for shareholder approval
to repurchase up to 15% of our common stock. Any solicitation of
approval of this proposal will be made only pursuant to such
definitive proxy, which you should review for more
information. You will be able to obtain a free copy of the
definitive proxy when it becomes available at the website
maintained by the SEC at www.sec.gov. |
|
ALTISOURCE PORTFOLIO
SOLUTIONS S.A. |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
(in thousands, except
per share data) |
|
|
|
|
|
|
Three months ended |
Years ended |
|
December 31, |
December 31, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Service revenue |
|
|
|
|
Mortgage Services |
$ 139,752 |
$ 91,982 |
$ 490,333 |
$ 351,908 |
Financial Services |
26,220 |
14,879 |
92,479 |
63,979 |
Technology Services |
33,702 |
20,205 |
103,891 |
74,189 |
Eliminations |
(7,233) |
(5,327) |
(24,644) |
(23,147) |
|
192,441 |
121,739 |
662,059 |
466,929 |
Reimbursable expenses |
29,417 |
18,301 |
102,478 |
96,147 |
Non-controlling interests |
727 |
1,061 |
3,820 |
5,284 |
Total revenue |
222,585 |
141,101 |
768,357 |
568,360 |
Cost of revenue |
114,868 |
69,115 |
390,002 |
270,054 |
Reimbursable expenses |
29,417 |
18,301 |
102,478 |
96,147 |
Gross profit |
78,300 |
53,685 |
275,877 |
202,159 |
Selling, general and administrative
expenses |
33,783 |
20,227 |
113,810 |
74,712 |
Income from operations |
44,517 |
33,458 |
162,067 |
127,447 |
Other income (expense), net: |
|
|
|
|
Interest expense |
(5,989) |
(1,171) |
(20,291) |
(1,210) |
Other income (expense),
net |
28 |
(688) |
557 |
(1,588) |
Total other income (expense),
net |
(5,961) |
(1,859) |
(19,734) |
(2,798) |
Income before income taxes and
non-controlling interests |
38,556 |
31,599 |
142,333 |
124,649 |
Income tax provision |
(2,313) |
(245) |
(8,540) |
(8,738) |
Net income |
36,243 |
31,354 |
133,793 |
115,911 |
Net income attributable to non-controlling
interests |
(727) |
(1,061) |
(3,820) |
(5,284) |
Net income attributable to Altisource |
$ 35,516 |
$ 30,293 |
$ 129,973 |
$ 110,627 |
|
|
|
|
|
Earnings per share: |
|
|
|
|
Basic |
$ 1.56 |
$ 1.30 |
$ 5.63 |
$ 4.74 |
Diluted |
$ 1.42 |
$ 1.20 |
$ 5.19 |
$ 4.43 |
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
Basic |
22,734 |
23,389 |
23,072 |
23,358 |
Diluted |
25,005 |
25,162 |
25,053 |
24,962 |
|
|
|
|
|
Transactions with related parties: |
|
|
|
|
Revenue |
$ 147,198 |
$ 80,736 |
$ 502,087 |
$ 338,227 |
Selling, general and
administrative expenses |
788 |
629 |
2,921 |
2,430 |
Other income |
-- |
86 |
773 |
86 |
|
ALTISOURCE PORTFOLIO
SOLUTIONS S.A. |
CONSOLIDATED BALANCE
SHEETS |
(in thousands, except
per share data) |
|
|
|
|
December 31, |
|
2013 |
2012 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 130,324 |
$ 105,502 |
Accounts receivable, net |
101,297 |
88,955 |
Prepaid expenses and other
current assets |
11,389 |
7,618 |
Deferred tax assets, net |
2,837 |
1,775 |
Total current assets |
245,847 |
203,850 |
Premises and equipment, net |
87,252 |
50,399 |
Deferred tax assets, net |
622 |
4,073 |
Intangible assets, net |
276,162 |
56,586 |
Goodwill |
97,375 |
14,915 |
Investment in Correspondent One |
-- |
12,729 |
Loan to Ocwen |
-- |
75,000 |
Other assets |
17,580 |
11,674 |
Total assets |
$ 724,838 |
$ 429,226 |
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
Accounts payable and accrued
expenses |
$ 79,492 |
$ 58,976 |
Current portion of long-term
debt |
3,975 |
2,000 |
Current portion of capital
lease obligations |
-- |
233 |
Deferred revenue |
36,742 |
2,482 |
Other current liabilities |
10,131 |
7,941 |
Total current liabilities |
130,340 |
71,632 |
|
|
|
Long-term debt, less current portion |
391,281 |
196,027 |
Other non-current liabilities |
45,476 |
1,738 |
|
|
|
Equity: |
|
|
Common stock ($1.00 par value;
100,000 shares authorized; 25,413 issued and 22,629 outstanding as
of December 31, 2013; 25,413 issued and 23,427 outstanding as of
December 31, 2012) |
25,413 |
25,413 |
Additional paid-in-capital |
89,273 |
86,873 |
Retained earnings |
239,561 |
124,127 |
Treasury stock, at cost (2,784
shares as of December 31, 2013 and 1,986 shares as of December 31,
2012) |
(197,548) |
(77,954) |
Altisource equity |
156,699 |
158,459 |
|
|
|
Non-controlling interests |
1,042 |
1,370 |
Total equity |
157,741 |
159,829 |
|
|
|
Total liabilities and equity |
$ 724,838 |
$ 429,226 |
|
ALTISOURCE PORTFOLIO
SOLUTIONS S.A. |
CONSOLIDATED STATEMENTS
OF CASH FLOWS |
(in
thousands) |
|
|
|
|
Years ended December
31, |
|
2013 |
2012 |
|
|
|
Cash flows from operating activities: |
|
|
Net income |
$ 133,793 |
$ 115,911 |
Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
Depreciation and
amortization |
19,056 |
12,776 |
Amortization of intangible
assets |
28,176 |
5,030 |
Share-based compensation
expense |
2,400 |
3,644 |
Equity in losses of and
impairment loss on investment in affiliate |
176 |
1,741 |
Bad debt expense |
2,549 |
3,049 |
Amortization of debt
discount |
223 |
27 |
Amortization of debt issuance
costs |
958 |
57 |
Deferred income taxes |
2,015 |
2,992 |
Loss on sale or disposal of
fixed assets |
1,309 |
445 |
Changes in operating assets and
liabilities, net of acquisitions: |
|
|
Accounts receivable |
(5,602) |
(39,999) |
Prepaid expenses and other
current assets |
(2,817) |
(2,616) |
Other assets |
(1,586) |
2,172 |
Accounts payable and accrued
expenses |
7,381 |
11,652 |
Other current and non-current
liabilities |
(2,557) |
(352) |
Net cash flows provided by operating
activities |
185,474 |
116,529 |
|
|
|
Cash flows from investing activities: |
|
|
Additions to premises and
equipment |
(34,134) |
(35,563) |
Acquisition of businesses, net
of cash acquired |
(267,946) |
-- |
Investment in equity
affiliate |
(50) |
-- |
Proceeds from sale of equity
affiliate |
12,648 |
-- |
Proceeds from loan to
Ocwen |
75,000 |
-- |
Loan to Ocwen |
-- |
(75,000) |
Change in restricted cash |
(1,462) |
-- |
Net cash flows used in investing
activities |
(215,944) |
(110,563) |
|
|
|
Cash flows from financing activities: |
|
|
Proceeds from issuance of
long-term debt |
200,502 |
198,000 |
Repayment of long-term
debt |
(3,496) |
-- |
Distribution of cash in
connection with the Separation of the Residential Asset
Businesses |
-- |
(105,000) |
Debt issuance costs |
(3,200) |
(4,317) |
Principal payments on capital
lease obligations |
(233) |
(603) |
Proceeds from stock option
exercises |
6,885 |
3,214 |
Purchases of treasury
stock |
(141,018) |
(16,781) |
Contributions from
non-controlling interests |
28 |
43 |
Distributions to
non-controlling interests |
(4,176) |
(7,145) |
Net cash flows provided by financing
activities |
55,292 |
67,411 |
|
|
|
|
|
|
Net increase in cash and cash
equivalents |
24,822 |
73,377 |
Cash and cash equivalents at the beginning of
the period |
105,502 |
32,125 |
|
|
|
Cash and cash equivalents at the end of the
period |
$ 130,324 |
$ 105,502 |
|
|
|
Supplemental cash flow information: |
|
|
Interest paid |
$ 19,325 |
$ 1,134 |
Income taxes paid, net |
3,671 |
4,912 |
|
|
|
Non-cash investing and financing
activities: |
|
|
Amortization of tax-deductible
goodwill |
-- |
3,334 |
Premises and equipment
purchased on account |
4,552 |
2,457 |
CONTACT: Michelle D. Esterman
Chief Financial Officer
T: +352 2469 7950
E: Michelle.Esterman@altisource.lu
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