Altisource Portfolio Solutions S.A. (“Altisource” or the “Company”)
(NASDAQ: ASPS), a leading provider and marketplace for the real
estate and mortgage industries, today reported financial results
for the third quarter 2023.
“I am pleased with our third quarter
performance. We generated $874 thousand of Adjusted
EBITDA(2), a $4.4 million improvement over the second quarter of
2023 and a $7.3 million improvement over the same quarter in
2022. For the first nine months of 2023, we improved Adjusted
EBITDA by $16.1 million compared to the same period last
year. We also generated $18.4 million in net proceeds from
the September sale of equity and used $10 million of the proceeds
to reduce the principal balance of our term loan. As a
result of the debt reduction, we eliminated 966,038 penny warrants,
can exercise an option to extend the maturity date of our term loan
and revolver by one year to April 2026(4), and estimate we will
save approximately $3.4 million per year in interest expense(5),”
said Chairman and Chief Executive Officer William B. Shepro.
Mr. Shepro further commented, “We are
positioning Altisource to take advantage of what we see as
significant potential opportunities with existing and new customers
in both of our segments over the coming years as the default market
continues to normalize and we gain traction with our newer
solutions that strengthen loan originators’ performance. Our sales
pipeline and wins remain strong, and we are aggressively managing
our expenses. We believe the strength of our sales wins and
pipeline, cost savings initiatives, normalization of the default
market and increasing consumer stress, position Altisource for
positive adjusted EBITDA in the fourth quarter and full year and
attractive growth as we look to 2024 with potential upside if
mortgage delinquency rates rise.”
Third Quarter
2023
Highlights(1)
Corporate and Financial:
- Third quarter
Adjusted earnings before interest, tax, depreciation and
amortization (“EBITDA”)(2) of $0.9 million and year-to-date
September 2023 Adjusted EBITDA(2) of $(1.1) million was $7.3
million and $16.1 million, respectively, better than the same
periods in 2022
- Generated $18.4
million in net proceeds from the September sale of equity and used
$10 million of the proceeds to reduce the principal balance of our
term loans
- Ended the third
quarter 2023 with $36.6 million of cash and cash equivalents and
$15.0 million available under a revolving credit facility
- Ended the third
quarter 2023 with $185.3 million of net debt(2)
- In July 2023,
the Company began to implement a company-wide cost reduction plan
which is estimated to reduce annual cash operating expenses by
$13.5 million once complete, which is estimated to be the second
half of 2024. The Company believes it is on track to achieve the
plan with September 2023 adjusted compensation costs approximately
$0.9 million ($10.5 million annualized) lower than the average
second quarter costs
Business and Industry:
- Industrywide
foreclosure initiations were 10% higher for the three months ended
September 30, 2023 and 7% lower for the nine months ended September
30, 2023 compared to the same periods in 2022 (and 28% and 30%
lower than the same pre-COVID-19 periods in 2019)(3)
- Industrywide
foreclosure sales were 8% lower for the three months ended
September 30, 2023 and 11% higher for the nine months ended
September 30, 2023 compared to the same periods in 2022 (although
still 46% and 46% lower than the same pre-COVID-19 periods in
2019)(3)
- Industrywide
early-stage mortgage delinquencies (30-days late) increased by 9.4%
and borrowers who’ve missed two payments (60-days past due)
increased by 10.7% in September 2023 compared to June 2023(3)
- The weighted
average sales pipeline in the Servicer and Real Estate segment
represents $23 million to $28 million of estimated annual revenue
on a stabilized basis based upon our forecasted probability of
closing
- The weighted
average sales pipeline in the Origination segment represents $18
million to $23 million of estimated annual revenue on a stabilized
basis based upon our forecasted probability of closing
- The Servicer and
Real Estate segment and Origination segment had sales wins which we
estimate represent $15.3 million and $1.7 million,
respectively, of annualized revenue on a stabilized basis
- In July 2023,
the Servicer and Real Estate segment won business from a new
reverse mortgage servicer customer that we estimate will generate
$12.8 million in annual revenue and $3 million to $5 million per
year in Adjusted EBITDA across the default solutions; referrals
began in the third quarter of 2023 with revenue and earnings
stabilization anticipated by the middle of 2024, if not sooner
Third Quarter
2023 Financial Results
- Service revenue of $34.1
million
- Loss before income taxes and
non-controlling interests of $(10.9) million
- Net loss attributable to Altisource
of $(11.3) million
- Adjusted
EBITDA(2) of $0.9 million
Third Quarter
2023 Results Compared to the
Third Quarter 2022
(unaudited):
| (in thousands, except per
share data) |
Third Quarter 2023 |
|
Third Quarter 2022 |
|
% Change |
|
Year-to-Date September 30, 2023 |
|
Year-to-Date September 30, 2022 |
|
% Change |
|
Service revenue |
$ |
34,112 |
|
|
$ |
36,290 |
|
|
(6 |
) |
|
$ |
104,356 |
|
|
$ |
111,691 |
|
|
(7 |
) |
| Loss from operations |
|
(3,545 |
) |
|
|
(10,563 |
) |
|
66 |
|
|
|
(13,944 |
) |
|
|
(29,349 |
) |
|
52 |
|
| Adjusted operating
loss(2) |
|
(1,954 |
) |
|
|
(7,422 |
) |
|
74 |
|
|
|
(2,013 |
) |
|
|
(20,514 |
) |
|
90 |
|
| Loss before income taxes and
non-controlling interests |
|
(10,862 |
) |
|
|
(14,453 |
) |
|
25 |
|
|
|
(40,398 |
) |
|
|
(39,396 |
) |
|
(3 |
) |
| Pretax loss attributable to
Altisource(2) |
|
(10,924 |
) |
|
|
(14,586 |
) |
|
25 |
|
|
|
(40,553 |
) |
|
|
(39,864 |
) |
|
(2 |
) |
| Adjusted pretax loss
attributable to Altisource(2) |
|
(9,333 |
) |
|
|
(11,445 |
) |
|
18 |
|
|
|
(28,622 |
) |
|
|
(31,029 |
) |
|
8 |
|
| Adjusted EBITDA(2) |
|
874 |
|
|
|
(6,454 |
) |
|
114 |
|
|
|
(1,146 |
) |
|
|
(17,208 |
) |
|
93 |
|
| Net loss attributable to
Altisource |
|
(11,342 |
) |
|
|
(14,389 |
) |
|
21 |
|
|
|
(43,139 |
) |
|
|
(42,074 |
) |
|
(3 |
) |
| Adjusted net loss attributable
to Altisource(2) |
|
(9,838 |
) |
|
|
(11,303 |
) |
|
13 |
|
|
|
(31,066 |
) |
|
|
(31,823 |
) |
|
2 |
|
| Diluted loss per share |
|
(0.51 |
) |
|
|
(0.89 |
) |
|
43 |
|
|
|
(2.10 |
) |
|
|
(2.62 |
) |
|
20 |
|
| Adjusted diluted loss per
share(2) |
|
(0.44 |
) |
|
|
(0.70 |
) |
|
37 |
|
|
|
(1.51 |
) |
|
|
(1.98 |
) |
|
24 |
|
| Net cash used in operating
activities |
|
(6,655 |
) |
|
|
(6,509 |
) |
|
(2 |
) |
|
|
(17,595 |
) |
|
|
(32,293 |
) |
|
46 |
|
| Net cash used in operating
activities less additions to premises and equipment(2) |
|
(6,655 |
) |
|
|
(6,738 |
) |
|
1 |
|
|
|
(17,595 |
) |
|
|
(33,156 |
) |
|
47 |
|
- Third quarter and
year-to-date September 30, 2023 loss before income taxes and
non-controlling interests includes $0.1 million and $3.4 million,
respectively, of debt amendment costs (no comparative amount for
the third quarter and year-to-date 2022). Third quarter and
year-to-date September 30, 2023 loss before income taxes and
non-controlling interests includes $2.2 million and $1.1 million,
respectively, of other income related to the change in fair value
of warrant liability (no comparative amount for the third quarter
and year-to-date 2022)
________________________
(1) Applies to 2023
unless otherwise indicated(2) This is a non-GAAP measure that is
defined and reconciled to the corresponding GAAP measure herein(3)
Based on data from Black Knight’s Mortgage Monitor and First Look
reports with data through September 2023(4) Such extension is (1)
subject to the representations and warranties being true and
correct as of such date and there being no default, or event of
default, being in existence as of such date and (2) conditioned
upon the Company’s payment of a 2% PIK extension fee on or before
April 30, 2025(5) This estimate is based on interest rates in
effect during the third quarter of 2023
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 that relate to, among other
things, future events or our future performance or financial
condition. These statements may be identified by words such as
“anticipate,” “intend,” “expect,” “may,” “could,” “should,”
“would,” “plan,” “estimate,” “seek,” “believe,” “potential” or
“continue” or the negative of these terms and comparable
terminology. Such statements are based on expectations as to the
future and are not statements of historical fact. Furthermore,
forward-looking statements are not guarantees of future performance
and involve a number of assumptions, risks and uncertainties that
could cause actual results to differ materially. Important factors
that could cause actual results to differ materially from those
suggested by the forward-looking statements include, but are not
limited to, the risks discussed in Item 1A of Part I “Risk Factors”
in our Form 10-K filing with the Securities and Exchange
Commission, as the same may be updated from time to time in our
Form 10-Q filings. We caution you not to place undue reliance on
these forward-looking statements which reflect our view only as of
the date of this report. We are under no obligation (and expressly
disclaim any obligation) to update or alter any forward-looking
statements contained herein to reflect any change in our
expectations with regard thereto or change in events, conditions or
circumstances on which any such statement is based. The risks and
uncertainties to which forward-looking statements are subject
include, but are not limited to, risks related to the COVID-19
pandemic, customer concentration, the timing of the anticipated
increase in default related referrals following the expiration of
foreclosure and eviction moratoriums and forbearance programs, the
timing of the expiration of such moratoriums and programs, and any
other delays occasioned by government, investor or servicer
actions, the use and success of our products and services, our
ability to retain existing customers and attract new customers and
the potential for expansion or changes in our customer
relationships, technology disruptions, our compliance with
applicable data requirements, our use of third party vendors and
contractors, our ability to effectively manage potential conflicts
of interest, macro-economic and industry specific conditions, our
ability to effectively manage our regulatory and contractual
obligations, the adequacy of our financial resources, including our
sources of liquidity and ability to repay borrowings and comply
with our Credit Agreement, including the financial and other
covenants contained therein, as well as Altisource’s ability to
retain key executives or employees, behavior of customers,
suppliers and/or competitors, technological developments,
governmental regulations, taxes and policies. The financial
projections and scenarios contained in this press release are
expressly qualified as forward-looking statements and, as with
other forward-looking statements, should not be unduly relied upon.
We undertake no obligation to update these statements, scenarios
and projections as a result of a change in circumstances, new
information or future events.
Webcast
Altisource will host a webcast at 08:30 a.m. EDT
today to discuss our third quarter. 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.
|
FOR FURTHER INFORMATION CONTACT: |
| |
|
Michelle D. Esterman |
|
Chief Financial Officer |
|
T: (770) 612-7007 |
|
E: Michelle.Esterman@altisource.com |
|
|
|
ALTISOURCE PORTFOLIO SOLUTIONS S.A.CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS(in
thousands, except per share
data)(unaudited) |
|
|
| |
|
Three months endedSeptember
30, |
|
Nine months endedSeptember
30, |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| |
|
|
|
|
|
|
|
|
|
Service revenue |
|
$ |
34,112 |
|
|
$ |
36,290 |
|
|
$ |
104,356 |
|
|
$ |
111,691 |
|
|
Reimbursable expenses |
|
|
2,039 |
|
|
|
1,957 |
|
|
|
6,398 |
|
|
|
6,158 |
|
|
Non-controlling interests |
|
|
62 |
|
|
|
133 |
|
|
|
155 |
|
|
|
468 |
|
|
Total revenue |
|
|
36,213 |
|
|
|
38,380 |
|
|
|
110,909 |
|
|
|
118,317 |
|
|
Cost of revenue |
|
|
29,024 |
|
|
|
34,387 |
|
|
|
89,684 |
|
|
|
104,611 |
|
|
Gross profit |
|
|
7,189 |
|
|
|
3,993 |
|
|
|
21,225 |
|
|
|
13,706 |
|
|
Selling, general and administrative expenses |
|
|
10,734 |
|
|
|
14,556 |
|
|
|
35,169 |
|
|
|
43,055 |
|
| |
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(3,545 |
) |
|
|
(10,563 |
) |
|
|
(13,944 |
) |
|
|
(29,349 |
) |
|
Other income (expense), net: |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(9,890 |
) |
|
|
(4,349 |
) |
|
|
(26,554 |
) |
|
|
(11,439 |
) |
|
Change in fair value of warrant liability |
|
|
2,225 |
|
|
|
— |
|
|
|
1,145 |
|
|
|
— |
|
|
Debt amendment costs |
|
|
(59 |
) |
|
|
— |
|
|
|
(3,402 |
) |
|
|
— |
|
|
Other income (expense), net |
|
|
407 |
|
|
|
459 |
|
|
|
2,357 |
|
|
|
1,392 |
|
|
Total other income (expense), net |
|
|
(7,317 |
) |
|
|
(3,890 |
) |
|
|
(26,454 |
) |
|
|
(10,047 |
) |
| |
|
|
|
|
|
|
|
|
| Loss before income taxes and
non-controlling interests |
|
|
(10,862 |
) |
|
|
(14,453 |
) |
|
|
(40,398 |
) |
|
|
(39,396 |
) |
|
Income tax (provision) benefit |
|
|
(418 |
) |
|
|
197 |
|
|
|
(2,586 |
) |
|
|
(2,210 |
) |
| |
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(11,280 |
) |
|
|
(14,256 |
) |
|
|
(42,984 |
) |
|
|
(41,606 |
) |
| Net income attributable to
non-controlling interests |
|
|
(62 |
) |
|
|
(133 |
) |
|
|
(155 |
) |
|
|
(468 |
) |
| |
|
|
|
|
|
|
|
|
|
Net loss attributable to Altisource |
|
$ |
(11,342 |
) |
|
$ |
(14,389 |
) |
|
$ |
(43,139 |
) |
|
$ |
(42,074 |
) |
| |
|
|
|
|
|
|
|
|
|
Loss per share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.51 |
) |
|
$ |
(0.89 |
) |
|
$ |
(2.10 |
) |
|
$ |
(2.62 |
) |
|
Diluted |
|
$ |
(0.51 |
) |
|
$ |
(0.89 |
) |
|
$ |
(2.10 |
) |
|
$ |
(2.62 |
) |
| |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
22,181 |
|
|
|
16,087 |
|
|
|
20,538 |
|
|
|
16,051 |
|
|
Diluted |
|
|
22,181 |
|
|
|
16,087 |
|
|
|
20,538 |
|
|
|
16,051 |
|
| |
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
Comprehensive loss, net of tax |
|
$ |
(11,280 |
) |
|
$ |
(14,256 |
) |
|
$ |
(42,984 |
) |
|
$ |
(41,606 |
) |
|
Comprehensive income attributable to non-controlling interests |
|
|
(62 |
) |
|
|
(133 |
) |
|
|
(155 |
) |
|
|
(468 |
) |
| |
|
|
|
|
|
|
|
|
|
Comprehensive loss attributable to Altisource |
|
$ |
(11,342 |
) |
|
$ |
(14,389 |
) |
|
$ |
(43,139 |
) |
|
$ |
(42,074 |
) |
|
ALTISOURCE PORTFOLIO SOLUTIONS S.A.CONSOLIDATED BALANCE
SHEETS(in thousands, except for per share
data)(unaudited) |
| |
September 30,2023 |
|
December 31,2022 |
| |
|
|
|
|
ASSETS |
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
36,640 |
|
|
$ |
51,025 |
|
|
Accounts receivable, net of allowance for doubtful accounts of
$3,379 and $4,363, respectively |
|
12,981 |
|
|
|
12,989 |
|
|
Prepaid expenses and other current assets |
|
11,217 |
|
|
|
23,544 |
|
|
Total current assets |
|
60,838 |
|
|
|
87,558 |
|
| |
|
|
|
|
Premises and equipment, net |
|
2,168 |
|
|
|
4,222 |
|
|
Right-of-use assets under operating leases |
|
3,628 |
|
|
|
5,321 |
|
|
Goodwill |
|
55,960 |
|
|
|
55,960 |
|
|
Intangible assets, net |
|
27,818 |
|
|
|
31,730 |
|
|
Deferred tax assets, net |
|
4,982 |
|
|
|
5,048 |
|
|
Other assets |
|
7,242 |
|
|
|
5,429 |
|
| |
|
|
|
|
Total assets |
$ |
162,636 |
|
|
$ |
195,268 |
|
| |
|
|
|
|
LIABILITIES AND DEFICIT |
|
Current liabilities: |
|
|
|
|
Accounts payable and accrued expenses |
$ |
31,032 |
|
|
$ |
33,507 |
|
|
Deferred revenue |
|
3,303 |
|
|
|
3,711 |
|
|
Other current liabilities |
|
2,299 |
|
|
|
2,867 |
|
|
Total current liabilities |
|
36,634 |
|
|
|
40,085 |
|
| |
|
|
|
|
Long-term debt |
|
211,980 |
|
|
|
245,493 |
|
|
Deferred tax liabilities, net |
|
8,724 |
|
|
|
9,028 |
|
|
Other non-current liabilities |
|
18,232 |
|
|
|
19,536 |
|
| |
|
|
|
|
Commitments, contingencies and regulatory matters |
|
|
|
| |
|
|
|
|
Equity (deficit): |
|
|
|
|
Common stock ($1.00 par value; 100,000 shares authorized, 29,963
issued and 26,482 outstanding as of September 30, 2023; 16,129
outstanding as of December 31, 2022) |
|
29,963 |
|
|
|
25,413 |
|
|
Additional paid-in capital |
|
176,128 |
|
|
|
149,348 |
|
|
Retained earnings |
|
(166,125 |
) |
|
|
118,948 |
|
|
Treasury stock, at cost (3,481 shares as of September 30, 2023
and 9,284 shares as of December 31, 2022) |
|
(153,561 |
) |
|
|
(413,358 |
) |
|
Altisource deficit |
|
(113,595 |
) |
|
|
(119,649 |
) |
| |
|
|
|
|
Non-controlling interests |
|
661 |
|
|
|
775 |
|
|
Total deficit |
|
(112,934 |
) |
|
|
(118,874 |
) |
| |
|
|
|
|
Total liabilities and deficit |
$ |
162,636 |
|
|
$ |
195,268 |
|
|
ALTISOURCE PORTFOLIO SOLUTIONS S.A.CONSOLIDATED STATEMENTS
OF CASH FLOWS(in thousands)(unaudited) |
|
|
| |
Nine months endedSeptember
30, |
|
|
|
2023 |
|
|
|
2022 |
|
| |
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
Net loss |
$ |
(42,984 |
) |
|
$ |
(41,606 |
) |
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
Depreciation and amortization |
|
1,933 |
|
|
|
2,700 |
|
|
Amortization of right-of-use assets under operating leases |
|
1,351 |
|
|
|
2,254 |
|
|
Amortization of intangible assets |
|
3,912 |
|
|
|
3,849 |
|
|
PIK accrual |
|
4,777 |
|
|
|
— |
|
|
Share-based compensation expense |
|
3,918 |
|
|
|
3,899 |
|
|
Bad debt expense |
|
319 |
|
|
|
578 |
|
|
Amortization of debt discount |
|
2,846 |
|
|
|
495 |
|
|
Amortization of debt issuance costs |
|
1,846 |
|
|
|
712 |
|
|
Deferred income taxes |
|
(224 |
) |
|
|
(329 |
) |
|
Loss on disposal of fixed assets |
|
121 |
|
|
|
1 |
|
|
Change in fair value of warrant liability |
|
(1,145 |
) |
|
|
— |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
|
(311 |
) |
|
|
3,095 |
|
|
Prepaid expenses and other current assets |
|
12,350 |
|
|
|
160 |
|
|
Other assets |
|
(1,891 |
) |
|
|
363 |
|
|
Accounts payable and accrued expenses |
|
(2,475 |
) |
|
|
(5,014 |
) |
|
Current and non-current operating lease liabilities |
|
(1,351 |
) |
|
|
(2,444 |
) |
|
Other current and non-current liabilities |
|
(587 |
) |
|
|
(1,006 |
) |
|
Net cash used in operating activities |
|
(17,595 |
) |
|
|
(32,293 |
) |
| |
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
Additions to premises and equipment |
|
— |
|
|
|
(863 |
) |
|
Proceeds from the sale of business |
|
— |
|
|
|
346 |
|
|
Net cash used in investing activities |
|
— |
|
|
|
(517 |
) |
| |
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
Proceeds from issuance of common stock, net of issuance costs |
|
20,461 |
|
|
|
— |
|
|
Proceeds from sale of treasury stock, net of transaction costs |
|
18,374 |
|
|
|
— |
|
|
Debt issuance and amendment costs |
|
(4,886 |
) |
|
|
— |
|
|
Repayments of long-term debt |
|
(30,000 |
) |
|
|
— |
|
|
Distributions to non-controlling interests |
|
(269 |
) |
|
|
(892 |
) |
|
Payments of tax withholding on issuance of restricted share units
and restricted shares |
|
(511 |
) |
|
|
(1,051 |
) |
|
Net cash provided by (used in) financing activities |
|
3,169 |
|
|
|
(1,943 |
) |
| |
|
|
|
|
Net decrease in cash, cash equivalents and restricted cash |
|
(14,426 |
) |
|
|
(34,753 |
) |
|
Cash, cash equivalents and restricted cash at the beginning of the
period |
|
54,273 |
|
|
|
102,149 |
|
| |
|
|
|
|
Cash, cash equivalents and restricted cash at the end of the
period |
$ |
39,847 |
|
|
$ |
67,396 |
|
| |
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
Interest paid |
$ |
16,989 |
|
|
$ |
10,167 |
|
|
Income taxes (refunded) paid, net |
|
(4,034 |
) |
|
|
2,556 |
|
|
Acquisition of right-of-use assets with operating lease
liabilities |
|
329 |
|
|
|
797 |
|
|
Reduction of right-of-use assets from operating lease modifications
or reassessments |
|
(671 |
) |
|
|
(172 |
) |
| |
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
Net decrease in payables for purchases of premises and
equipment |
$ |
— |
|
|
$ |
(65 |
) |
|
Warrants issued in connection with Amended Credit Agreement |
|
8,096 |
|
|
|
— |
|
ALTISOURCE PORTFOLIO SOLUTIONS
S.A.NON-GAAP MEASURES(in
thousands, except per share
data)(unaudited)
Adjusted operating loss, pretax loss
attributable to Altisource, adjusted pretax loss attributable to
Altisource, adjusted EBITDA, adjusted net loss attributable to
Altisource, adjusted diluted loss per share, net cash used in
operating activities less additions to premises and equipment and
net debt, 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 loss from operations, loss before income taxes and
non-controlling interests, net loss attributable to Altisource,
diluted loss per share, net cash used in operating activities and
long-term debt, including current portion, 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 and non-cash
share-based compensation, as well as the effect of more significant
non-operational items from earnings, cash flows from operating
activities and long-term debt net of cash on-hand. 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-operational items enables comparability to prior period
performance and trend analysis. Specifically, management uses
adjusted net loss attributable to Altisource to measure the
on-going after tax performance of the Company because the measure
adjusts for the after tax impact of more significant non-recurring
items, amortization expense relating to prior acquisitions (some of
which fluctuates with revenue from certain customers and some of
which is amortized on a straight-line basis) and non-cash
share-based compensation expense which can fluctuate based on
vesting schedules, grant date timing and the value attributable to
awards. We believe adjusted net loss attributable to Altisource is
useful to existing shareholders, potential shareholders and other
users of our financial information because it provides an after-tax
measure of Altisource’s on-going performance that enables these
users to perform trend analysis using comparable data. Management
uses adjusted diluted loss per share to further evaluate adjusted
net loss attributable to Altisource while taking into account
changes in the number of diluted shares over the comparable
periods. We believe adjusted diluted loss per share is useful to
existing shareholders, potential shareholders and other users of
our financial information because it also enables these users to
evaluate adjusted net loss attributable to Altisource on a per
share basis. Management uses Adjusted EBITDA to measure the
Company’s overall performance (with the adjustments discussed
earlier with regard to adjusted net loss attributable to
Altisource) without regard to its capitalization (debt vs. equity)
or its income taxes and to perform trend analysis of the Company’s
performance over time. Our effective income tax rate can vary based
on the jurisdictional mix of our income. Additionally, as the
Company’s capital expenditures have significantly declined over
time, it provides a measure for management to evaluate the
Company’s performance without regard to prior capital expenditures.
Management also uses Adjusted EBITDA as one of the measures in
determining bonus compensation for certain employees. We believe
Adjusted EBITDA is useful to existing shareholders, potential
shareholders and other users of our financial information for the
same reasons that management finds the measure useful. Management
uses net debt in evaluating the amount of debt the Company has that
is in excess of cash and cash equivalents. We believe net debt is
useful to existing shareholders, potential shareholders and other
users of our financial information for the same reasons management
finds the measure useful.
Altisource operates in several countries,
including Luxembourg, India, the United States and Uruguay. The
Company has differing effective tax rates in each country and these
rates may change from year to year. In determining the tax effects
related to the adjustments in calculating adjusted net loss
attributable to Altisource and adjusted diluted loss per share, we
use the tax rate in the country in which the adjustment applies or,
if the adjustment is recognized in more than one country, we
separate the adjustment by country, apply the relevant tax rate for
each country to the applicable adjustment, and then sum the result
to arrive at the total adjustment, net of tax. In 2019, the Company
recognized a full valuation allowance on its net deferred tax
assets in Luxembourg. Accordingly, for 2023 and 2022, the Company
has an effective tax rate of close to 0% in Luxembourg.
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.
Adjusted operating loss is calculated by
removing intangible asset amortization expense, share-based
compensation expense, cost of cost savings initiatives and other,
debt amendment costs and Unrealized gain on warrant liability from
loss from operations. Pretax loss attributable to Altisource is
calculated by removing non-controlling interests from loss before
income taxes and non-controlling interests. Adjusted pretax loss
attributable to Altisource is calculated by removing
non-controlling interests, intangible asset amortization expense,
share-based compensation expense, cost of cost savings initiatives
and other, debt amendment costs and unrealized gain on warrant
liability from loss before income taxes and non-controlling
interests. Adjusted EBITDA is calculated by removing the income tax
provision, interest expense (net of interest income), depreciation
and amortization, share-based compensation expense, cost of cost
savings initiatives and other, debt amendment costs and unrealized
gain on warrant liability from net loss attributable to Altisource.
Adjusted net loss attributable to Altisource is calculated by
removing intangible asset amortization expense (net of tax),
share-based compensation expense (net of tax), cost of cost savings
initiatives and other (net of tax), debt amendment costs,
unrealized gain on warrant liability and certain income tax related
items from net loss attributable to Altisource. Adjusted diluted
loss per share is calculated by dividing net loss attributable to
Altisource after removing intangible asset amortization expense
(net of tax), share-based compensation expense (net of tax), cost
of cost savings initiatives and other (net of tax), debt amendment
costs (net of tax), unrealized gain on warrant liability (net of
tax) and certain income tax related items by the weighted average
number of diluted shares. Net cash used in operating activities
less additions to premises and equipment is calculated by removing
additions to premises and equipment from net cash used in operating
activities. Net debt is calculated as long-term debt, including
current portion, minus cash and cash equivalents.
Reconciliations of the non-GAAP measures to the
corresponding GAAP measures are as follows:
| |
Three months endedSeptember
30, |
|
Nine months endedSeptember
30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
| |
|
|
|
|
|
|
|
|
Loss from operations |
$ |
(3,545 |
) |
|
$ |
(10,563 |
) |
|
$ |
(13,944 |
) |
|
$ |
(29,349 |
) |
| |
|
|
|
|
|
|
|
|
Intangible asset amortization expense |
|
1,352 |
|
|
|
1,281 |
|
|
|
3,912 |
|
|
|
3,849 |
|
|
Share-based compensation expense |
|
1,231 |
|
|
|
1,320 |
|
|
|
3,918 |
|
|
|
3,899 |
|
|
Cost of cost savings initiatives and other |
|
1,174 |
|
|
|
540 |
|
|
|
1,844 |
|
|
|
1,087 |
|
|
Debt amendment costs |
|
59 |
|
|
|
— |
|
|
|
3,402 |
|
|
|
— |
|
|
Unrealized gain on warrant liability |
|
(2,225 |
) |
|
|
— |
|
|
|
(1,145 |
) |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
Adjusted operating loss |
$ |
(1,954 |
) |
|
$ |
(7,422 |
) |
|
$ |
(2,013 |
) |
|
$ |
(20,514 |
) |
| |
|
|
|
|
|
|
|
|
Loss before income taxes and non-controlling interests |
$ |
(10,862 |
) |
|
$ |
(14,453 |
) |
|
$ |
(40,398 |
) |
|
$ |
(39,396 |
) |
| |
|
|
|
|
|
|
|
|
Non-controlling interests |
|
(62 |
) |
|
|
(133 |
) |
|
|
(155 |
) |
|
|
(468 |
) |
|
Pretax loss attributable to Altisource |
|
(10,924 |
) |
|
|
(14,586 |
) |
|
|
(40,553 |
) |
|
|
(39,864 |
) |
|
Intangible asset amortization expense |
|
1,352 |
|
|
|
1,281 |
|
|
|
3,912 |
|
|
|
3,849 |
|
|
Share-based compensation expense |
|
1,231 |
|
|
|
1,320 |
|
|
|
3,918 |
|
|
|
3,899 |
|
|
Cost of cost savings initiatives and other |
|
1,174 |
|
|
|
540 |
|
|
|
1,844 |
|
|
|
1,087 |
|
|
Debt amendment costs |
|
59 |
|
|
|
— |
|
|
|
3,402 |
|
|
|
— |
|
|
Unrealized gain on warrant liability |
|
(2,225 |
) |
|
|
— |
|
|
|
(1,145 |
) |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
Adjusted pretax loss attributable to Altisource |
$ |
(9,333 |
) |
|
$ |
(11,445 |
) |
|
$ |
(28,622 |
) |
|
$ |
(31,029 |
) |
| |
|
|
|
|
|
|
|
|
Net loss attributable to Altisource |
$ |
(11,342 |
) |
|
$ |
(14,389 |
) |
|
$ |
(43,139 |
) |
|
$ |
(42,074 |
) |
| |
|
|
|
|
|
|
|
|
Income tax provision (benefit) |
|
418 |
|
|
|
(197 |
) |
|
|
2,586 |
|
|
|
2,210 |
|
|
Interest expense (net of interest income) |
|
9,628 |
|
|
|
4,137 |
|
|
|
25,543 |
|
|
|
11,121 |
|
|
Depreciation and amortization |
|
1,931 |
|
|
|
2,135 |
|
|
|
5,845 |
|
|
|
6,549 |
|
|
Share-based compensation expense |
|
1,231 |
|
|
|
1,320 |
|
|
|
3,918 |
|
|
|
3,899 |
|
|
Cost of cost savings initiatives and other |
|
1,174 |
|
|
|
540 |
|
|
|
1,844 |
|
|
|
1,087 |
|
|
Debt amendment costs |
|
59 |
|
|
|
— |
|
|
|
3,402 |
|
|
|
— |
|
|
Unrealized gain on warrant liability |
|
(2,225 |
) |
|
|
— |
|
|
|
(1,145 |
) |
|
|
— |
|
| |
|
|
|
|
|
|
|
| Adjusted EBITDA |
$ |
874 |
|
|
$ |
(6,454 |
) |
|
$ |
(1,146 |
) |
|
$ |
(17,208 |
) |
| |
|
|
|
|
|
|
|
|
Net loss attributable to Altisource |
$ |
(11,342 |
) |
|
$ |
(14,389 |
) |
|
$ |
(43,139 |
) |
|
$ |
(42,074 |
) |
| |
|
|
|
|
|
|
|
|
Intangible asset amortization expense, net of tax |
|
1,332 |
|
|
|
1,279 |
|
|
|
3,887 |
|
|
|
3,842 |
|
|
Share-based compensation expense, net of tax |
|
1,089 |
|
|
|
1,148 |
|
|
|
3,365 |
|
|
|
3,446 |
|
|
Cost of cost savings initiatives and other, net of tax |
|
898 |
|
|
|
449 |
|
|
|
1,454 |
|
|
|
937 |
|
|
Debt amendment costs, net of tax |
|
59 |
|
|
|
— |
|
|
|
3,402 |
|
|
|
— |
|
|
Unrealized gain on warrant liability |
|
(2,225 |
) |
|
|
— |
|
|
|
(1,145 |
) |
|
|
— |
|
|
Certain income tax related items |
|
351 |
|
|
|
210 |
|
|
|
1,110 |
|
|
|
2,026 |
|
| |
|
|
|
|
|
|
|
|
Adjusted net loss attributable to Altisource |
$ |
(9,838 |
) |
|
$ |
(11,303 |
) |
|
$ |
(31,066 |
) |
|
$ |
(31,823 |
) |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
Diluted loss per share |
$ |
(0.51 |
) |
|
$ |
(0.89 |
) |
|
$ |
(2.10 |
) |
|
$ |
(2.62 |
) |
| |
|
|
|
|
|
|
|
|
Intangible asset amortization expense, net of tax, per diluted
share |
|
0.06 |
|
|
|
0.08 |
|
|
|
0.19 |
|
|
|
0.24 |
|
|
Share-based compensation expense, net of tax, per diluted
share |
|
0.05 |
|
|
|
0.07 |
|
|
|
0.16 |
|
|
|
0.21 |
|
|
Cost of cost savings initiatives and other, net of tax, per diluted
share |
|
0.04 |
|
|
|
0.03 |
|
|
|
0.07 |
|
|
|
0.06 |
|
|
Debt amendment costs, net of tax, per diluted share |
|
— |
|
|
|
— |
|
|
|
0.17 |
|
|
|
— |
|
|
Unrealized gain on warrant liability, net of tax, per diluted
share |
|
(0.10 |
) |
|
|
— |
|
|
|
(0.06 |
) |
|
|
— |
|
|
Certain income tax related items per diluted share |
|
0.02 |
|
|
|
0.01 |
|
|
|
0.05 |
|
|
|
0.13 |
|
| |
|
|
|
|
|
|
|
|
Adjusted diluted loss per share |
$ |
(0.44 |
) |
|
$ |
(0.70 |
) |
|
$ |
(1.51 |
) |
|
$ |
(1.98 |
) |
| |
|
|
|
|
|
|
|
| Calculation of the impact of
intangible asset amortization expense, net of tax |
|
|
|
|
|
|
|
|
Intangible asset amortization expense |
$ |
1,352 |
|
|
$ |
1,281 |
|
|
$ |
3,912 |
|
|
$ |
3,849 |
|
|
Tax benefit from intangible asset amortization |
|
(20 |
) |
|
|
(2 |
) |
|
|
(25 |
) |
|
|
(7 |
) |
|
Intangible asset amortization expense, net of tax |
|
1,332 |
|
|
|
1,279 |
|
|
|
3,887 |
|
|
|
3,842 |
|
|
Diluted share count |
|
22,181 |
|
|
|
16,087 |
|
|
|
20,538 |
|
|
|
16,051 |
|
| |
|
|
|
|
|
|
|
| Intangible asset amortization
expense, net of tax, per diluted share |
$ |
0.06 |
|
|
$ |
0.08 |
|
|
$ |
0.19 |
|
|
$ |
0.24 |
|
| |
|
|
|
|
|
|
|
| Calculation of the impact of
share-based compensation expense, net of tax |
|
|
|
|
|
|
|
|
Share-based compensation expense |
$ |
1,231 |
|
|
$ |
1,320 |
|
|
$ |
3,918 |
|
|
$ |
3,899 |
|
|
Tax benefit from share-based compensation expense |
|
(142 |
) |
|
|
(172 |
) |
|
|
(553 |
) |
|
|
(453 |
) |
|
Share-based compensation expense, net of tax |
|
1,089 |
|
|
|
1,148 |
|
|
|
3,365 |
|
|
|
3,446 |
|
|
Diluted share count |
|
22,181 |
|
|
|
16,087 |
|
|
|
20,538 |
|
|
|
16,051 |
|
| |
|
|
|
|
|
|
|
| Share-based compensation
expense, net of tax, per diluted share |
$ |
0.05 |
|
|
$ |
0.07 |
|
|
$ |
0.16 |
|
|
$ |
0.21 |
|
| |
|
|
|
|
|
|
|
| Calculation of the impact of
cost of cost savings initiatives and other, net of tax |
|
|
|
|
|
|
|
|
Cost of cost savings initiatives and other |
$ |
1,174 |
|
|
$ |
540 |
|
|
$ |
1,844 |
|
|
$ |
1,087 |
|
|
Tax benefit from cost of cost savings initiatives and other |
|
(276 |
) |
|
|
(91 |
) |
|
|
(390 |
) |
|
|
(150 |
) |
|
Cost of cost savings initiatives and other, net of tax |
|
898 |
|
|
|
449 |
|
|
|
1,454 |
|
|
|
937 |
|
|
Diluted share count |
|
22,181 |
|
|
|
16,087 |
|
|
|
20,538 |
|
|
|
16,051 |
|
| |
|
|
|
|
|
|
|
| Cost of cost savings
initiatives and other, net of tax, per diluted share |
$ |
0.04 |
|
|
$ |
0.03 |
|
|
$ |
0.07 |
|
|
$ |
0.06 |
|
| |
|
|
|
|
|
|
|
| Calculation of the impact of
debt amendment costs, net of tax |
|
|
|
|
|
|
|
|
Debt amendment costs |
$ |
59 |
|
|
$ |
— |
|
|
$ |
3,402 |
|
|
$ |
— |
|
|
Tax benefit from debt amendment costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Debt amendment costs, net of tax |
|
59 |
|
|
|
— |
|
|
|
3,402 |
|
|
|
— |
|
|
Diluted share count |
|
22,181 |
|
|
|
16,087 |
|
|
|
20,538 |
|
|
|
16,051 |
|
| |
|
|
|
|
|
|
|
|
Debt amendment costs, net of tax, per diluted share |
$ |
0.00 |
|
|
$ |
— |
|
|
$ |
0.17 |
|
|
$ |
— |
|
| |
|
|
|
|
|
|
|
| Calculation of the impact of
unrealized gain on warrant liability, net of tax |
|
|
|
|
|
|
|
|
Unrealized gain on warrant liability |
$ |
(2,225 |
) |
|
$ |
— |
|
|
$ |
(1,145 |
) |
|
$ |
— |
|
|
Tax benefit from unrealized gain on warrant liability |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Unrealized gain on warrant liability, net of tax |
|
(2,225 |
) |
|
|
— |
|
|
|
(1,145 |
) |
|
|
— |
|
|
Diluted share count |
|
22,181 |
|
|
|
16,087 |
|
|
|
20,538 |
|
|
|
16,051 |
|
| |
|
|
|
|
|
|
|
| Unrealized gain on warrant
liability, net of tax, per diluted share |
$ |
(0.10 |
) |
|
$ |
— |
|
|
$ |
(0.06 |
) |
|
$ |
— |
|
| |
|
|
|
|
|
|
|
| Certain income tax related
items resulting from: |
|
|
|
|
|
|
|
|
Foreign income tax reserves / other |
$ |
351 |
|
|
$ |
210 |
|
|
$ |
1,110 |
|
|
$ |
2,026 |
|
|
Certain income tax related items |
|
351 |
|
|
|
210 |
|
|
|
1,110 |
|
|
|
2,026 |
|
|
Diluted share count |
|
22,181 |
|
|
|
16,087 |
|
|
|
20,538 |
|
|
|
16,051 |
|
| |
|
|
|
|
|
|
|
| Certain income tax related
items per diluted share |
$ |
0.02 |
|
|
$ |
0.01 |
|
|
$ |
0.05 |
|
|
$ |
0.13 |
|
| |
|
|
|
|
|
|
|
| Net cash used in operating
activities |
$ |
(6,655 |
) |
|
$ |
(6,509 |
) |
|
$ |
(17,595 |
) |
|
$ |
(32,293 |
) |
|
Less: additions to premises and equipment |
|
— |
|
|
|
(229 |
) |
|
|
— |
|
|
|
(863 |
) |
| |
|
|
|
|
|
|
|
| Net cash used in operating
activities less additions to premises and equipment |
$ |
(6,655 |
) |
|
$ |
(6,738 |
) |
|
$ |
(17,595 |
) |
|
$ |
(33,156 |
) |
| |
September 30, 2023 |
|
September 30, 2022 |
| |
|
|
|
|
Senior Secured Term Loans |
$ |
221,981 |
|
|
$ |
247,204 |
|
|
Less: Cash and cash equivalents |
|
(36,640 |
) |
|
|
(63,812 |
) |
| |
|
|
|
|
Net debt |
$ |
185,341 |
|
|
$ |
183,392 |
|
_______________________
Note: Amounts may not add to the total due to
rounding.
Altisource Portfolio Sol... (NASDAQ:ASPS)
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Altisource Portfolio Sol... (NASDAQ:ASPS)
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