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): October 23, 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 October 23, 2014, Altisource Portfolio Solutions S.A. (“Altisource”) issued a press release announcing financial results for its quarter ended September 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 October 23, 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:  October 23, 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 THIRD QUARTER RESULTS

 

Luxembourg, October 23, 2014 - Altisource Portfolio Solutions S.A. (“Altisource” and NASDAQ: ASPS) today reported strong third quarter year-over-year growth in service revenue, net income attributable to shareholders and diluted earnings per share.

 

Third Quarter 2014 Results Compared to Third Quarter 2013:

 

·                  Service revenue of $247.7 million, a 37% increase

·                  Net income attributable to Altisource of $42.3 million, a 17% increase

·                  Diluted earnings per share of $1.79, a 26% increase

 

“During the third quarter 2014, we continued to execute on our objective of increasing shareholder value by repurchasing Altisource shares, making acquisitions that support our vision to become the premier real estate and mortgage marketplace and investing in the organic development of new and next generation products and services,” said Chairman William Erbey.

 

William Shepro, Chief Executive Officer, further commented, “We continue our track record of year-over-year revenue and earnings growth and remain focused on our strategic initiatives to achieve longer-term revenue growth with a diversified customer base. Compared to the second quarter of 2014, we believe a portion of the lower service revenue in the third quarter of 2014 is not lost, but will be shifted to future periods.  Further, operating income as a percentage of service revenue in our segments remained relatively consistent in the third quarter of 2014 compared to the second quarter of 2014, except for Technology Services where we continue investing in the development of our new and next generation products.  Unlike many companies, we expense internal software development costs.”

 

Third quarter 2014 highlights include:

 

·                  The average number of loans serviced by Ocwen on REALServicing was 2.3 million for the third quarter of 2014, an increase of 83% compared to the third quarter of 2013

·                  The average number of delinquent non-Government-Sponsored Enterprise loans serviced by Ocwen on REALServicing was 347 thousand for the third quarter of 2014, an increase of 15% compared to the third quarter of 2013

·                  On September 12, 2014, we acquired Mortgage Builder for $15.7 million in cash at closing and up to $7.0 million of additional consideration (subject to attaining certain revenue targets)

 

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·                  We repurchased 1.3 million shares of our common stock under our stock repurchase program at an average price of $102.45 per share during the third quarter of 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 third 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						Nine months ended
		September 30,						September 30,
		2014			2013			2014			2013
Service revenue
Mortgage Services		$	170,018		$	134,317		$	504,989		$	350,581
Financial Services		26,803			27,168			76,496			66,259
Technology Services		61,726			25,175			167,213			70,189
Eliminations		(10,836		)	(6,268		)	(27,863		)	(17,411		)
		247,711			180,392			720,835			469,618
Reimbursable expenses		39,149			29,496			100,220			73,061
Non-controlling interests		828			947			1,974			3,093
Total revenue		287,688			210,835			823,029			545,772
Cost of revenue		149,575			104,765			420,308			275,134
Reimbursable expenses		39,149			29,496			100,220			73,061
Gross profit		98,964			76,574			302,501			197,577
Selling, general and administrative expenses		46,748			31,519			139,303			80,027
Income from operations		52,216			45,055			163,198			117,550
Other income (expense), net:
Interest expense		(6,480		)	(6,188		)	(16,040		)	(14,302		)
Other income (expense), net		131			(253		)	135			529
Total other income (expense), net		(6,349		)	(6,441		)	(15,905		)	(13,773		)
Income before income taxes and non-controlling interests		45,867			38,614			147,293			103,777
Income tax provision		(2,752		)	(1,659		)	(9,300		)	(6,227		)
Net income		43,115			36,955			137,993			97,550
Net income attributable to non-controlling interests		(828		)	(947		)	(1,974		)	(3,093		)
Net income attributable to Altisource		$	42,287		$	36,008		$	136,019		$	94,457
Earnings per share:
Basic		$	1.96		$	1.56		$	6.16		$	4.07
Diluted		$	1.79		$	1.42		$	5.63		$	3.77
Weighted average shares outstanding:
Basic		21,626			23,025			22,071			23,185
Diluted		23,640			25,333			24,152			25,070
Transactions with related parties included above:
Revenue		$	178,151		$	143,557		$	502,736		$	354,889
Cost of revenue		11,062			5,045			27,904			13,959
Selling, general and administrative expenses		267			613			(464		)	329
Other income		—			—			—			773

 

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

 

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

 

		September 30,			December 31,
		2014			2013
ASSETS
Current assets:
Cash and cash equivalents		$	176,589		$	130,429
Accounts receivable, net		159,965			104,787
Prepaid expenses and other current assets		17,454			10,891
Deferred tax assets, net		2,837			2,837
Total current assets		356,845			248,944
Premises and equipment, net		115,773			87,252
Deferred tax assets, net		158			622
Goodwill		72,384			99,414
Intangible assets, net		250,315			276,162
Other assets		21,117			17,658
Total assets		$	816,592		$	730,052
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	99,598		$	84,706
Current portion of long-term debt		5,945			3,975
Deferred revenue		13,504			36,742
Other current liabilities		9,683			10,131
Total current liabilities		128,730			135,554
Long-term debt, less current portion		584,028			391,281
Other non-current liabilities		14,572			45,476
Equity:
Common stock ($1.00 par value; 100,000 shares authorized; 25,413 issued and 20,747 outstanding as of September 30, 2014; 25,413 issued and 22,629 outstanding as of December 31, 2013)		25,413			25,413
Additional paid-in capital		90,911			89,273
Retained earnings		369,952			239,561
Treasury stock, at cost (4,666 shares as of September 30, 2014 and 2,784 shares as of December 31, 2013)		(398,217		)	(197,548		)
Altisource equity		88,059			156,699
Non-controlling interests		1,203			1,042
Total equity		89,262			157,741
Total liabilities and equity		$	816,592		$	730,052

 

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ALTISOURCE PORTFOLIO SOLUTIONS S.A.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

		Nine months ended
		September 30,
		2014			2013
Cash flows from operating activities:
Net income		$	137,993		$	97,550
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		21,086			13,791
Amortization of intangible assets		29,290			18,857
Change in the fair value of Equator Earn Out		(37,924		)	—
Goodwill impairment		37,473			—
Share-based compensation expense		1,638			2,076
Equity in losses of investment in affiliate		—			176
Bad debt expense		4,667			1,338
Amortization of debt discount		191			184
Amortization of debt issuance costs		799			702
Deferred income taxes		464			—
Loss on disposal of fixed assets		98			1,178
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		(58,725		)	3,762
Prepaid expenses and other current assets		(6,525		)	(6,142		)
Other assets		(1,656		)	(1,871		)
Accounts payable and accrued expenses		14,968			4,574
Other current and non-current liabilities		(18,141		)	(1,535		)
Net cash provided by operating activities		125,696			134,640
Cash flows from investing activities:
Additions to premises and equipment		(48,119		)	(20,528		)
Acquisition of businesses, net of cash acquired		(14,931		)	(204,567		)
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		(63,344		)	(137,497		)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		198,000			201,000
Repayment of long-term debt and payments on capital lease obligations		(3,474		)	(2,736		)
Debt issuance costs		(2,608		)	(2,400		)
Proceeds from stock option exercises		2,523			4,710
Purchase of treasury stock		(208,820		)	(87,418		)
Contributions from non-controlling interests		—			18
Distributions to non-controlling interests		(1,813		)	(3,234		)
Net cash (used in) provided by financing activities		(16,192		)	109,940
Net increase in cash and cash equivalents		46,160			107,083
Cash and cash equivalents at the beginning of the period		130,429			105,502
Cash and cash equivalents at the end of the period		$	176,589		$	212,585
Supplemental cash flow information:
Interest paid		$	15,049		$	13,592
Income taxes paid, net		12,112			2,360
Non-cash investing and financing activities:
Increase in payables for purchases of premises and equipment		$	482		$	1,947
Decrease in acquisition of businesses from subsequent working capital true-ups		(3,711		)	(2,039		)

 

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