Altisource Asset Management Corporation Reports Third Quarter 2020 Results
November 06 2020 - 7:30AM
Altisource Asset Management Corporation (“AAMC” or the “Company”)
(NYSE American: AAMC) today announced financial and operating
results for the third quarter of 2020.
Third Quarter 2020 Highlights and Recent
Developments
- Negotiated and executed a Termination and Transition Agreement
(the “Termination Agreement”) with Front Yard Residential
Corporation (“Front Yard”) on terms resulting in payments to AAMC
of over $54 million plus management fees through the date that
Front Yard delivers written notice to AAMC that the transition has
been satisfactorily completed.
- Further developed new business lines for AAMC, including
formation of an investment fund, targeted commencement of a
short-term investor loan aggregation business and the establishment
of strategic relationships with real estate loan originators.
“We expect that our new business lines will leverage our history
and experience in asset management, real estate investing and real
estate operations,” stated Indroneel Chatterjee, Co-Chief Executive
Officer. “We have taken steps to reduce our annual operating
expenses, including reductions in our physical office footprint and
the optimization of our workforce upon the termination of our asset
management agreement with Front Yard. We expect that AAMC will be
able to generate management fees and returns on its own investments
through each of our new opportunities, and we are targeting the
achievement of positive net income for both 2020 and 2021. We
believe these new business initiatives will benefit our
stockholders over the long term.”
Third Quarter 2020 Financial Results
AAMC’s net income for the third quarter of 2020 was $11.8
million, or $7.20 per diluted common share, which included a $0.1
million change in the fair value of its shares of Front Yard common
stock, compared to a net loss of $3.5 million, or $2.25 per diluted
common share, which included a $(1.1) million change in the fair
value of its shares of Front Yard common stock, for the third
quarter of 2019.
AAMC's net income for the nine months ended September 30, 2020
was $0.2 million, or $0.07 per diluted common share, which included
a $(5.8) million change in the fair value of its shares of Front
Yard common stock, compared to a net loss of $1.1 million, or $0.77
per diluted common share, which included a $4.6 million change in
the fair value of its shares of Front Yard common stock, for the
nine months ended September 30, 2019.
About AAMC
AAMC is an asset management company that provides portfolio
management and corporate governance services to investment
vehicles. Additional information is available at
www.altisourceamc.com.
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 risks and uncertainties to which forward-looking statements are
subject include, but are not limited to: our ability to implement
our business strategy and the business strategy of Front Yard;
risks associated with the termination of our asset management
agreement with Front Yard, including the potential effects that the
termination can have on our new business initiatives, results of
operations and financial condition; our ability to successfully
complete the transition period under the Termination Agreement; our
ability to retain and recruit key employees; our ability to develop
and implement new businesses or, to the extent such businesses are
developed, our ability to make them successful or sustain the
performance of any such businesses; our ability to build, retain
and maintain our strategic relationships; our ability to obtain
additional asset management clients; the potential for the COVID-19
pandemic to adversely affect our business, financial position,
operations, business prospects, customers, employees and
third-party service providers; our ability to effectively compete
with our competitors; Front Yard's ability to complete its
announced merger transaction, which could affect the value of the
shares of Front Yard held by us or to be acquired as part of the
Termination Agreement; the failure of our service providers to
effectively perform their obligations under their agreements with
us; our ability to effectively manage the performance of Front Yard
through the termination of the asset management agreement with
Front Yard pursuant to the Termination Agreement; developments in
the litigations regarding AAMC's redemption obligations under the
Certificate of Designations of its Series A Convertible Preferred
Stock (the “Series A Shares”), including AAMC's ability to obtain
declaratory relief confirming that AAMC was not obligated to redeem
any of the Series A Shares on the March 15, 2020 redemption date
since AAMC did not have funds legally available to redeem all, but
not less than all, of the Series A Shares requested to be redeemed
on that redemption date; general economic and market conditions;
governmental regulations, taxes and policies and other risks and
uncertainties detailed in the “Risk Factors” and other sections
described from time to time in the Company’s current and future
filings with the Securities and Exchange Commission. The foregoing
list of factors should not be construed as exhaustive.
The statements made in this press release are current as of the
date of this press release only. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements or any other information contained herein, whether as a
result of new information, future events or otherwise.
Altisource Asset Management
Corporation Condensed Consolidated Statements of
Operations (In thousands, except share and per
share amounts)(Unaudited)
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Expenses: |
|
|
|
|
|
|
|
Salaries and employee benefits |
$ |
1,668 |
|
|
$ |
2,827 |
|
|
$ |
8,081 |
|
|
$ |
8,634 |
|
Legal and professional
fees |
1,455 |
|
|
351 |
|
|
4,681 |
|
|
1,964 |
|
General and
administrative |
559 |
|
|
658 |
|
|
1,709 |
|
|
1,690 |
|
Total expenses |
3,682 |
|
|
3,836 |
|
|
14,471 |
|
|
12,288 |
|
|
|
|
|
|
|
|
|
Other income
(loss): |
|
|
|
|
|
|
|
Change in fair value of Front
Yard common stock |
65 |
|
|
(1,072 |
) |
|
(5,848 |
) |
|
4,597 |
|
Dividend income on Front Yard
common stock |
— |
|
|
244 |
|
|
244 |
|
|
731 |
|
Other income |
5 |
|
|
40 |
|
|
29 |
|
|
130 |
|
Total other income (loss) |
70 |
|
|
(788 |
) |
|
(5,575 |
) |
|
5,458 |
|
|
|
|
|
|
|
|
|
Net loss from continuing
operations before income taxes |
(3,612 |
) |
|
(4,624 |
) |
|
(20,046 |
) |
|
(6,830 |
) |
Income tax (benefit)
expense |
(523 |
) |
|
843 |
|
|
(1,091 |
) |
|
29 |
|
Net loss from continuing operations |
(3,089 |
) |
|
(5,467 |
) |
|
(18,955 |
) |
|
(6,859 |
) |
|
|
|
|
|
|
|
|
Discontinued
operations:(1) |
|
|
|
|
|
|
|
Income from operations related
to Front Yard, net of tax |
14,843 |
|
|
1,944 |
|
|
19,117 |
|
|
5,785 |
|
Gain on discontinued operations |
14,843 |
|
|
1,944 |
|
|
19,117 |
|
|
5,785 |
|
|
|
|
|
|
|
|
|
Net income (loss) |
11,754 |
|
|
(3,523 |
) |
|
162 |
|
|
(1,074 |
) |
Amortization of preferred
stock issuance costs |
— |
|
|
(52 |
) |
|
(42 |
) |
|
(155 |
) |
Net income (loss) attributable to common stockholders |
$ |
11,754 |
|
|
$ |
(3,575 |
) |
|
$ |
120 |
|
|
$ |
(1,229 |
) |
|
|
|
|
|
|
|
|
Earnings (loss) per
share of common stock – basic: |
|
|
|
|
|
|
|
Continuing operations –
basic |
$ |
(1.89 |
) |
|
$ |
(3.47 |
) |
|
$ |
(11.69 |
) |
|
$ |
(4.42 |
) |
Discontinued operations –
basic |
9.09 |
|
|
1.22 |
|
|
11.76 |
|
|
3.65 |
|
Earnings (loss) per basic
common share |
$ |
7.20 |
|
|
$ |
(2.25 |
) |
|
$ |
0.07 |
|
|
$ |
(0.77 |
) |
Weighted average common stock
outstanding – basic |
1,632,117 |
|
|
1,590,739 |
|
|
1,625,727 |
|
|
1,587,448 |
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share of common stock – diluted: |
|
|
|
|
|
|
|
Continuing operations –
diluted |
$ |
(1.89 |
) |
|
$ |
(3.47 |
) |
|
$ |
(11.69 |
) |
|
$ |
(4.42 |
) |
Discontinued operations –
diluted |
9.09 |
|
|
1.22 |
|
|
11.76 |
|
|
3.65 |
|
Earnings (loss) per diluted
common share |
$ |
7.20 |
|
|
$ |
(2.25 |
) |
|
$ |
0.07 |
|
|
$ |
(0.77 |
) |
Weighted average common stock
outstanding – diluted |
1,632,117 |
|
|
1,590,739 |
|
|
1,625,727 |
|
|
1,587,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
___________________(1) Discontinued operations includes (i) the
management fee revenues generated under our asset management
agreements with Front Yard, (ii) expense reimbursements from Front
Yard and the underlying expenses, (iii) the results of operations
of our India and Cayman Islands subsidiaries, (iv) the employment
costs associated with certain individuals wholly dedicated to Front
Yard and (v) the costs associated with our lease in Charlotte,
North Carolina, that is expected to be assumed by Front Yard.
Altisource Asset Management
Corporation Condensed Consolidated Balance
Sheets (In thousands, except share and per share
amounts)
|
September 30, 2020 |
|
December 31, 2019 |
|
(unaudited) |
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
30,711 |
|
|
$ |
18,906 |
|
Front Yard common stock, at
fair value |
14,198 |
|
|
20,046 |
|
Receivable from Front
Yard |
34,967 |
|
|
5,014 |
|
Prepaid expenses and other
assets |
1,659 |
|
|
1,009 |
|
Current assets held for
sale |
2,619 |
|
|
2,176 |
|
Total current assets |
84,154 |
|
|
47,151 |
|
|
|
|
|
Non-current
assets: |
|
|
|
Right-of-use lease assets |
675 |
|
|
732 |
|
Other non-current assets |
1,287 |
|
|
1,470 |
|
Non-current assets held for
sale |
3,705 |
|
|
3,895 |
|
Total non-current assets |
5,667 |
|
|
6,097 |
|
Total assets |
$ |
89,821 |
|
|
$ |
53,248 |
|
|
|
|
|
Current
liabilities: |
|
|
|
Accrued salaries and employee
benefits |
$ |
3,991 |
|
|
$ |
3,762 |
|
Accounts payable and accrued
liabilities |
2,920 |
|
|
1,165 |
|
Contract liability to Front
Yard |
33,733 |
|
|
— |
|
Short-term lease
liabilities |
75 |
|
|
71 |
|
Current liabilities held for
sale |
2,001 |
|
|
2,002 |
|
Total current liabilities |
42,720 |
|
|
7,000 |
|
|
|
|
|
Non-current
liabilities: |
|
|
|
Non-current lease
liabilities |
620 |
|
|
675 |
|
Non-current liabilities held
for sale |
3,317 |
|
|
3,543 |
|
Total non-current liabilities |
3,937 |
|
|
4,218 |
|
Total liabilities |
46,657 |
|
|
11,218 |
|
|
|
|
|
Commitments and
contingencies |
— |
|
|
— |
|
|
|
|
|
Redeemable preferred
stock: |
|
|
|
Preferred stock, $0.01 par
value, 250,000 shares issued and outstanding as of
September 30, 2020 and December 31, 2019; redemption
value $250,000 |
250,000 |
|
|
249,958 |
|
|
|
|
|
Stockholders'
deficit: |
|
|
|
Common stock, $0.01 par value,
5,000,000 authorized shares; 2,942,597 and 1,632,117 shares issued
and outstanding, respectively, as of September 30, 2020 and
2,897,177 and 1,598,512 shares issued and outstanding,
respectively, as of December 31, 2019 |
29 |
|
|
29 |
|
Additional paid-in
capital |
45,865 |
|
|
44,646 |
|
Retained earnings |
23,782 |
|
|
23,662 |
|
Accumulated other
comprehensive loss |
(84 |
) |
|
(33 |
) |
Treasury stock, at cost,
1,310,480 shares as of September 30, 2020 and 1,298,665 shares
as of December 31, 2019 |
(276,428 |
) |
|
(276,232 |
) |
Total stockholders' deficit |
(206,836 |
) |
|
(207,928 |
) |
Total liabilities and equity |
$ |
89,821 |
|
|
$ |
53,248 |
|
|
|
|
|
|
|
|
|
FOR FURTHER INFORMATION CONTACT:Investor
RelationsT: +1-704-885-2461E: IR@AltisourceAMC.com
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