LUXEMBOURG, July 27, 2023 (GLOBE NEWSWIRE) -- Altisource Portfolio Solutions S.A. (“Altisource” or the “Company”) ( ASPS), a leading provider and marketplace for the real estate and mortgage industries, today reported financial results for the second quarter 2023.
“Our Adjusted EBITDA performance continues to improve over 2022. Second quarter Adjusted EBITDA was 47% better than the same period in 2022 and year-to-date Adjusted EBITDA was 81%, or $8.7 million better. Based on our current forecast, we anticipate roughly break-even Adjusted EBITDA for the third quarter and positive Adjusted EBITDA for the fourth quarter and full year. While our second quarter Adjusted EBITDA was impacted by an estimated $0.9 million from certain unexpected non-recurring items, we remain ahead of our Adjusted EBITDA plan for the first half of the year. Despite improving second quarter Adjusted EBITDA compared to the same period in 2022, interest expense from the higher interest rate environment and our amended term loan contributed to the greater second quarter 2023 Adjusted net loss. Second quarter service revenue was lower than the same quarter last year primarily from the exit of a low margin customer care business in the fourth quarter 2022, the decline in a customer's propensity to order service in two of our lower margin default related businesses and unexpected temporary delays in certain California foreclosures. We believe those temporary foreclosure holds are now behind us and that the associated revenue is largely deferred and not lost,” said Chairman and Chief Executive Officer William B. Shepro.
Mr. Shepro further commented, “We continue to position Altisource to take advantage of what we see as significant potential opportunities in the residential mortgage default market over the coming years as the market continues to normalize. Our sales pipeline and wins in both of our segments remain strong, and we continue to aggressively manage our expenses. Our consolidated weighted average pipeline at the end of the second quarter is an estimated $63 million of annual revenue on a stabilized basis, representing 48% of our annualized second quarter 2023 revenue. We are also winning new business. Since last quarter, we’ve won business that we estimate will generate $18.6 million of annual revenue on a stabilized basis. This includes a July win of $12.8 million from a new asset management client that we estimate will generate $3 million to $5 million per year in Adjusted EBITDA across Hubzu and most of our other default solutions. During the quarter, we continued to onboard and grow sales wins from 2022 and 2023, which combined are now at a $13 million annualized revenue run rate. Finally, from a cost perspective, in July we began to implement a company-wide cost reduction plan that we estimate will reduce annual cash operating expenses by $13.5 million once complete.”
Second Quarter 2023 Highlights(1)
Corporate and Financial:
- Ended the second quarter 2023 with $35.0 million of cash and cash equivalents and $15.0 million available under a revolving credit facility
- Ended the second quarter 2023 with $194.7 million of net debt(2)
- Second quarter Adjusted earnings before interest, tax, depreciation and amortization (“EBITDA”)(2) of $(3.5) million and year-to-date June 2023 EBITDA(2) of $(2.0) million was 47% and 81%, respectively, better than the same periods in 2022; second quarter 2023 EBITDA was negatively impacted by a temporary delay in certain California foreclosures (resulting in an estimated $(0.5) million reduction in EBITDA) and the settlement of a non-recurring litigation matter (resulting in a $(0.4) million reduction in EBITDA)
- Second quarter Adjusted EBITDA loss in the Corporate segment was $2.3 million, or 19%, better than the same quarter in 2022
- 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
Business and Industry:
- Industrywide foreclosure initiations were 13% lower for the six months ended June 30, 2023 compared to the same period in 2022 (and 31% lower than the same pre-COVID-19 period in 2019)(3)
- Industrywide foreclosure sales were 23% higher for the six months ended June 30, 2023 compared to the same period in 2022 (although still 46% lower than the same pre-COVID-19 period in 2019)(3)
- Industrywide early-stage mortgage delinquencies (30-days late) increased by 2.2% and borrowers who’ve missed two payments (60-days past due) increased by 1.7% in June 2023 compared to May 2023(3)
- The weighted average sales pipeline in the Servicer and Real Estate segment represents $34 million to $43 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 $22 million to $27 million of estimated annual revenue on a stabilized basis based upon our forecasted probability of closing; this includes $9 million in weighted revenue opportunities related to pricing proposals to Lenders One members and prospects for our newer reseller business
- The Servicer and Real Estate segment and Origination segment each had strong sales wins which we estimate represent $2.9 million and $2.9 million, respectively, of annualized revenue on a stabilized basis
- In July 2023, the Servicer and Real Estate segment won business from a new 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 are anticipated to begin in the third quarter of 2023 with revenue and earnings stabilization anticipated by the middle of 2024, if not sooner
Second Quarter 2023 Financial Results
- Service revenue of $33.2 million
- Loss before income taxes and non-controlling interests of $(18.2) million
- Net loss attributable to Altisource of $(18.9) million
- Adjusted EBITDA(2) of $(3.5) million
Second Quarter 2023 Results Compared to the Second Quarter 2022 (unaudited):
| (in thousands, except per share data) | Second Quarter 2023 | Second Quarter 2022 | % Change | Year-to-Date June 30, 2023 | Year-to-Date June 30, 2022 | % Change | |||||||||||||||
| Service revenue | $ | 33,173 | $ | 37,638 | (12 | ) | $ | 70,244 | $ | 75,401 | (7 | ) | |||||||||
| Loss from operations | (6,809 | ) | (10,459 | ) | 35 | (10,399 | ) | (18,786 | ) | 45 | |||||||||||
| Adjusted operating loss(2) | (2,333 | ) | (7,457 | ) | 69 | (59 | ) | (13,092 | ) | 100 | |||||||||||
| Loss before income taxes and non-controlling interests | (18,198 | ) | (13,800 | ) | (32 | ) | (29,536 | ) | (24,943 | ) | (18 | ) | |||||||||
| Pretax loss attributable to Altisource(2) | (18,211 | ) | (13,974 | ) | (30 | ) | (29,629 | ) | (25,278 | ) | (17 | ) | |||||||||
| Adjusted pretax loss attributable to Altisource(2) | (13,735 | ) | (10,972 | ) | (25 | ) | (19,289 | ) | (19,584 | ) | 2 | ||||||||||
| Adjusted EBITDA(2) | (3,491 | ) | (6,611 | ) | 47 | (2,020 | ) | (10,754 | ) | 81 | |||||||||||
| Net loss attributable to Altisource | (18,850 | ) | (15,495 | ) | (22 | ) | (31,797 | ) | (27,685 | ) | (15 | ) | |||||||||
| Adjusted net loss attributable to Altisource(2) | (14,140 | ) | (11,226 | ) | (26 | ) | (21,228 | ) | (20,520 | ) | (3 | ) | |||||||||
| Diluted loss per share | (0.90 | ) | (0.96 | ) | 6 | (1.62 | ) | (1.73 | ) | 6 | |||||||||||
| Adjusted diluted loss per share(2) | (0.68 | ) | (0.70 | ) | 3 | (1.08 | ) | (1.28 | ) | 16 | |||||||||||
| Net cash used in operating activities | (7,882 | ) | (8,874 | ) | 11 | (10,940 | ) | (25,784 | ) | 58 | |||||||||||
| Net cash used in operating activities less additions to premises and equipment(2) | (7,882 | ) | (9,434 | ) | 16 | (10,940 | ) | (26,418 | ) | 59 | |||||||||||
- Second quarter and year-to-date June 30, 2023 loss before income taxes and non-controlling interests includes $0.1 million and $3.3 million, respectively, of debt amendment costs (no comparative amount for the second quarter and year-to-date 2022). Second quarter and year-to-date June 30, 2023 loss before income taxes and non-controlling interests includes $1.8 million and $1.1 million, respectively, of other income related to the change in fair value of warrant liability (no comparative amount for the second quarter and year-to-date 2022)
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(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 through June 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 second 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: [email protected] |
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
(unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Service revenue | $ | 33,173 | $ | 37,638 | $ | 70,244 | $ | 75,401 | ||||||||
| Reimbursable expenses | 2,049 | 2,609 | 4,359 | 4,201 | ||||||||||||
| Non-controlling interests | 13 | 174 | 93 | 335 | ||||||||||||
| Total revenue | 35,235 | 40,421 | 74,696 | 79,937 | ||||||||||||
| Cost of revenue | 29,703 | 36,355 | 60,660 | 70,224 | ||||||||||||
| Gross profit | 5,532 | 4,066 | 14,036 | 9,713 | ||||||||||||
| Selling, general and administrative expenses | 12,341 | 14,525 | 24,435 | 28,499 | ||||||||||||
| Loss from operations | (6,809 | ) | (10,459 | ) | (10,399 | ) | (18,786 | ) | ||||||||
| Other income (expense), net: | ||||||||||||||||
| Interest expense | (9,904 | ) | (3,534 | ) | (16,664 | ) | (7,090 | ) | ||||||||
| Change in fair value of warrant liability | (1,774 | ) | — | (1,080 | ) | — | ||||||||||
| Debt amendment costs | (101 | ) | — | (3,343 | ) | — | ||||||||||
| Other income (expense), net | 390 | 193 | 1,950 | 933 | ||||||||||||
| Total other income (expense), net | (11,389 | ) | (3,341 | ) | (19,137 | ) | (6,157 | ) | ||||||||
| Loss before income taxes and non-controlling interests | (18,198 | ) | (13,800 | ) | (29,536 | ) | (24,943 | ) | ||||||||
| Income tax provision | (639 | ) | (1,521 | ) | (2,168 | ) | (2,407 | ) | ||||||||
| Net loss | (18,837 | ) | (15,321 | ) | (31,704 | ) | (27,350 | ) | ||||||||
| Net income attributable to non-controlling interests | (13 | ) | (174 | ) | (93 | |||||||||||
