ASPS Altisource Portfolio Solutions SA

 

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): July 24, 2014

 

 

ALTISOURCE PORTFOLIO SOLUTIONS S.A.

(Exact name of Registrant as specified in its charter)

 

 

 

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 July 24, 2014, Altisource Portfolio Solutions S.A. (“Altisource”) issued a press release announcing financial results for its quarter ended June 30, 2014.  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 of Altisource Portfolio Solutions S.A. dated July 24, 2014

 

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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:  July 24, 2014

 

 

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

 

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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 RECORD RESULTS

 

Luxembourg, July 24, 2014 - Altisource Portfolio Solutions S.A. (“Altisource” and NASDAQ: ASPS) today reported record second quarter service revenue, net income attributable to shareholders and diluted earnings per share.

 

Second Quarter 2014 Results Compared to Second Quarter 2013:

 

·                  Service revenue of $263.2 million, a 63% increase

·                  Net income attributable to Altisource of $54.1 million, a 75% increase

·                  Diluted earnings per share of $2.24, a 79% increase

·                  Cash from operations of $75.2 million, a 30% increase

 

“Next month marks our five year anniversary as a stand-alone public company.  During this five year period, we have had 43% cumulative annual service revenue growth, 47% cumulative annual earnings growth and have focused on providing best-in-class services, developing new services, driving down costs through efficiency initiatives and investing in our future.  This is exactly what we set out to do five years ago,” said Chairman William Erbey.

 

William Shepro, Chief Executive Officer, further commented, “We believe our strategic initiatives, coupled with our strong revenue, earnings and operating cash flow, position us for attractive growth in the next five years and beyond.  We plan to continue to invest in our next generation technology, develop our newer services and pursue potential acquisitions, in line with our marketplace strategy.  We also plan to continue our share repurchase program when the stock is trading at attractive prices.”

 

Second quarter 2014 highlights include:

 

·                  The average number of loans serviced by Ocwen on REALServicing  was 2.3 million for the second quarter of 2014, an increase of 118% compared to the second quarter of 2013

·                  The average number of delinquent non-Government-Sponsored Enterprise loans serviced by Ocwen on REALServicing was 352 thousand for the second quarter of 2014, an increase of 24% compared to the second quarter of 2013

·                  We repurchased 0.4 million shares of our common stock under our stock repurchase program at an average price of $108.24 per share during the second quarter of 2014

 

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·                  Altisource Residential Corporation, the company we provide rental management services to, increased its non-performing loan and real estate owned portfolio from 12,405 at March 31, 2014 to 14,907 at June 30, 2014

 

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. EDT today to discuss our second quarter 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.

 

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

		Three months ended						Six months ended
		June 30,						June 30,
		2014			2013			2014			2013
Service revenue
Mortgage Services		$	188,477		$	119,887		$	334,971		$	216,264
Financial Services		25,436			22,959			49,693			39,091
Technology Services		57,983			24,783			105,487			45,014
Eliminations		(8,731		)	(5,955		)	(17,027		)	(11,143		)
		263,165			161,674			473,124			289,226
Reimbursable expenses		32,276			23,299			61,071			43,565
Non-controlling interests		631			1,137			1,146			2,146
Total revenue		296,072			186,110			535,341			334,937
Cost of revenue		151,723			93,673			270,733			170,369
Reimbursable expenses		32,276			23,299			61,071			43,565
Gross profit		112,073			69,138			203,537			121,003
Selling, general and administrative expenses		49,021			29,828			92,555			48,508
Income from operations		63,052			39,310			110,982			72,495
Other income (expense), net:
Interest expense		(4,784		)	(4,902		)	(9,560		)	(8,114		)
Other income (expense), net		(43		)	77			4			782
Total other income (expense), net		(4,827		)	(4,825		)	(9,556		)	(7,332		)
Income before income taxes and non-controlling interests		58,225			34,485			101,426			65,163
Income tax provision		(3,493		)	(2,417		)	(6,548		)	(4,568		)
Net income		54,732			32,068			94,878			60,595
Net income attributable to non-controlling interests		(631		)	(1,137		)	(1,146		)	(2,146		)
Net income attributable to Altisource		$	54,101		$	30,931		$	93,732		$	58,449
Earnings per share:
Basic		$	2.45		$	1.34		$	4.20		$	2.51
Diluted		$	2.24		$	1.25		$	3.84		$	2.34
Weighted average shares outstanding:
Basic		22,089			23,161			22,301			23,267
Diluted		24,166			24,823			24,415			24,940

 

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

 

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

 

		June 30,			December 31,
		2014			2013
ASSETS
Current assets:
Cash and cash equivalents		$	127,884		$	130,429
Accounts receivable, net		125,047			104,787
Prepaid expenses and other current assets		16,022			10,891
Deferred tax assets, net		2,837			2,837
Total current assets		271,790			248,944
Premises and equipment, net		100,962			87,252
Deferred tax assets, net		160			622
Intangible assets, net		256,889			276,162
Goodwill		61,941			99,414
Other assets		19,258			17,658
Total assets		$	711,000		$	730,052
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	102,686		$	84,706
Current portion of long-term debt		3,975			3,975
Deferred revenue		21,785			36,742
Other current liabilities		8,957			10,131
Total current liabilities		137,403			135,554
Long-term debt, less current portion		389,385			391,281
Other non-current liabilities		11,733			45,476
Equity:
Common stock ($1.00 par value; 100,000 shares authorized; 25,413 issued and 21,941 outstanding as of June 30, 2014; 25,413 issued and 22,629 outstanding as of December 31, 2013)		25,413			25,413
Additional paid-in capital		90,403			89,273
Retained earnings		330,361			239,561
Treasury stock, at cost (3,472 shares as of June 30, 2014 and 2,784 shares as of December 31, 2013)		(274,679		)	(197,548		)
Altisource equity		171,498			156,699
Non-controlling interests		981			1,042
Total equity		172,479			157,741
Total liabilities and equity		$	711,000		$	730,052

 

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

		Six months ended
		June 30,
		2014			2013
Cash flows from operating activities:
Net income		$	94,878		$	60,595
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		13,375			9,306
Amortization of intangible assets		19,573			10,237
Change in the fair value of Equator Earn Out		(37,924		)	—
Goodwill impairment		37,473			—
Share-based compensation expense		1,130			1,519
Equity in losses of investment in affiliate		—			122
Bad debt expense		4,250			452
Amortization of debt discount		90			152
Amortization of debt issuance costs		483			451
Deferred income taxes		462			—
Loss on disposal of fixed assets		98			926
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		(24,510		)	(10,813		)
Prepaid expenses and other current assets		(5,131		)	(3,009		)
Other assets		(2,089		)	(1,440		)
Accounts payable and accrued expenses		21,319			917
Other current and non-current liabilities		(11,950		)	(1,947		)
Net cash provided by operating activities		111,527			67,468
Cash flows from investing activities:
Additions to premises and equipment		(30,522		)	(13,397		)
Acquisition of businesses, net of cash acquired		—			(215,700		)
Proceeds from loan to Ocwen		—			75,000
Proceeds from sale of equity affiliate		—			12,648
Other investing activities		(294		)	(50		)
Net cash used in investing activities		(30,816		)	(141,499		)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		—			201,000
Repayment of long-term debt and payments on capital lease obligations		(1,986		)	(1,733		)
Debt issuance costs		—			(2,400		)
Proceeds from stock option exercises		639			2,914
Purchase of treasury stock		(80,702		)	(51,573		)
Contributions from non-controlling interests		—			15
Distributions to non-controlling interests		(1,207		)	(1,889		)
Net cash (used in) provided by financing activities		(83,256		)	146,334
Net (decrease) increase in cash and cash equivalents		(2,545		)	72,303
Cash and cash equivalents at the beginning of the period		130,429			105,502
Cash and cash equivalents at the end of the period		$	127,884		$	177,805
Supplemental cash flow information:
Interest paid		$	9,074		$	7,562
Income taxes paid, net		1,561			1,165
Non-cash investing and financing activities:
(Decrease) increase in payables for purchases of premises and equipment		$	(3,339	)	$	891
(Decrease) increase in acquisition of businesses from subsequent working capital true-ups		(3,711		)	11,133

 

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