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 preliminary
financial results for the fourth quarter and full year 2022.
Altisource also announced that it entered into a transaction
support agreement including a term sheet (the “Transaction Support
Agreement”) with lenders holding approximately 98% of the Company’s
term loans (the “Existing Term Loans”) that sets forth the
principal terms of, among other things, a proposed refinancing of
the Company’s Existing Term Loans and exchanging the Existing Term
Loans for Exchange First Lien Loans with a maturity date of April
2025 and an option to extend to April 2026, subject to certain
terms and conditions, execution of definitive agreements and
approval of lenders holding the requisite amount of the Company’s
Existing Term Loans. The Company is engaged in outreach
with the remaining lenders to obtain their agreement. This
description of the Transaction Support Agreement is not complete
and is qualified in its entirety by reference to the Transaction
Support Agreement, a copy of which is attached as an exhibit to the
Altisource 8-K dated February 3, 2023.
“I am pleased with our preliminary full year and
fourth quarter performance as we execute on our plan to recover
from the impact of the pandemic. For the year, we reduced our
preliminary Adjusted EBITDA loss by $15.0 million and improved
gross profit margins to 15% from 4% in 2021. For the fourth
quarter, we generated $0.6 million of preliminary Adjusted EBITDA,
a $9.4 million improvement compared to the fourth quarter
2021. I am also pleased that we executed the Transaction
Support Agreement with lenders holding approximately 98% of the
Company’s Existing Term Loans to amend and extend our senior
secured term loan facility,” said Chairman and Chief Executive
Officer William B. Shepro.
Mr. Shepro further commented, “As we look to
2023, industry trends and Company momentum should be in our
favor. The default market began to improve in 2022 with 409%
growth in foreclosure initiations and 39% growth in foreclosure
sales compared to 2021, although still not at 2019 pre-pandemic
levels. Our later stage and higher margin foreclosure and REO
auction services should benefit from the early 2022 foreclosure
initiations by late 2023 or early 2024. In the meantime, we
anticipate revenue growth from the early phases of the ongoing
recovery of the default market and conversion of the sales
pipeline. We also anticipate improving margins and positive
Adjusted EBITDA as we capitalize on scale and cost savings.
Our countercyclical default business could further benefit from
deteriorating economic conditions and the significant number of
servicing portfolios reported to be in the market for sale if
acquired by our customers.”
The Company has prepared the following
preliminary estimates of financial results for the three months and
year ended December 31, 2022 in good faith based upon the most
recent information available to management from the Company’s
internal reporting procedures as of the date of this press
release. The estimated amounts set forth herein are
preliminary, unaudited and subject to further completion, reflect
our current good faith estimates, are subject to additional
financial closing procedures and may be revised as a result of
management’s further review of the Company’s results and any
adjustments that may result from the completion of the audit of the
fiscal 2022 consolidated financial statements. The Company
and its auditors have not completed its normal quarterly review or
annual audit procedures as of and for the three months and year
ended December 31, 2022, and there can be no assurance that the
Company’s final results for this quarterly and annual period will
not differ from these estimates. Any such changes could be
material. During the course of the preparation of the
Company’s consolidated financial statements and related notes as of
and for the three months and year ended December 31, 2022 and their
audit (in the case of the Company’s financial statements), the
Company may identify items that would require it to make material
adjustments to the preliminary information presented below.
The Company expects to publicly report its final
consolidated financial statements and related notes as of and for
the quarter and year ended December 31, 2022 in March 2023.
The Company’s actual results may differ materially from the fourth
quarter and year end estimates below. These estimates should
not be viewed as a substitute for full audited or interim financial
statements prepared in accordance with GAAP. In addition, the
preliminary results for the three months ended December 31, 2022
are not necessarily indicative of future performance of any other
period. See “Forward-Looking Statements.”
Preliminary Fourth Quarter 2022
Highlights(1)
Corporate and Financial:
- Ended the fourth quarter 2022 with $51.0 million of cash and
cash equivalents
- Ended the fourth quarter 2022 with $196.2 million of net
debt(2)
- Fourth quarter Adjusted earnings before interest, tax,
depreciation and amortization (“EBITDA”)(2) of $0.6 million
- Reduced full year 2022 Corporate and Other Segment Adjusted
EBITDA loss(2) by $17.4 million, representing a 29% reduction,
compared to full year 2021
- Filed a Form S-3 Registration Statement to provide the Company
with the option to raise $100 million of capital through the sale
of equity, including a $25 million at-the-market offering (“ATM”)
feature; through February 2, 2023, the Company has not sold any
equity under the Form S-3 or ATM. The Company believes
raising equity capital that is used to reduce debt could be
accretive to shareholders and strengthen the Company’s balance
sheet
- In the first quarter of 2023, executed the Transaction Support
Agreement with lenders holding approximately 98% of the Company’s
Existing Term Loans, that sets forth the principal terms of, among
other things, a proposed refinancing of the Company’s Existing Term
Loans and exchanging the Existing Term Loans for Exchange First
Lien Loans with a maturity date of April 2025 and an option to
extend to April 2026, subject to certain terms and conditions,
execution of definitive agreements and approval of lenders holding
the requisite amount of the Company’s Existing Term Loans
Business and Industry:
- The Servicer and Real Estate segment continues to benefit from
the restart of the default business and efficiency initiatives with
40% full year Adjusted EBITDA(2) growth on 4% service revenue
growth compared to 2021
- Industrywide foreclosure initiations were 491% higher for the
fourth quarter 2022, compared to the same period in 2021 (although
still 40% lower than the same pre-COVID-19 period in 2019)(3), as
the foreclosure market is beginning to recover following expiration
of the Federal government’s foreclosure moratorium on July 31, 2021
and the CFPB’s temporary loss mitigation measures on December 31,
2021
- Industrywide foreclosure sales were 30% higher for the fourth
quarter 2022, compared to the same period in 2021 (although still
62% lower than the same pre-COVID-19 period in 2019)(3)
- The weighted sales pipeline in the Servicer and Real Estate
segment represents $41 million to $51 million in annual revenue on
a stabilized basis based upon our forecasted probability of
closing
- The weighted sales pipeline in the Origination segment
represents $20 million to $25 million in annual revenue on a
stabilized basis based upon our forecasted probability of
closing
- The Servicer and Real Estate segment and Origination segment
had strong sales wins that we estimate represent $2.2 million and
$1.8 million, respectively, of annualized revenue on a stabilized
basis
Preliminary 2022 Financial
Results
Full Year 2022
- Service revenue of $144.5 million
- Loss before income taxes and non-controlling interests of
$(47.6) million
- Net loss attributable to Altisource of $(53.4) million
- Adjusted EBITDA(2) of $(16.6) million
Fourth Quarter 2022
- Service revenue of $32.8 million
- Loss before income taxes and non-controlling interests of
$(8.2) million
- Net loss attributable to Altisource of $(11.3) million
- Adjusted EBITDA(2) of $0.6 million
Preliminary Fourth Quarter and Full Year
2022 Results Compared to the Fourth Quarter and Full Year 2021
(unaudited):
(in thousands, except per
share data) |
Fourth Quarter 2022 |
|
Fourth Quarter 2021 |
|
% Change |
|
Full Year 2022 |
|
Full Year 2021 |
|
% Change |
Service revenue: |
|
|
|
|
|
|
|
|
|
|
|
Servicer and Real Estate segment |
$ |
26,531 |
|
|
$ |
23,060 |
|
|
15 |
|
|
$ |
112,132 |
|
|
$ |
107,790 |
|
|
4 |
|
Origination segment |
|
6,274 |
|
|
|
12,469 |
|
|
(50 |
) |
|
|
32,364 |
|
|
|
58,002 |
|
|
(44 |
) |
Corporate and Other |
|
— |
|
|
|
1,412 |
|
|
(100 |
) |
|
|
— |
|
|
|
4,821 |
|
|
(100 |
) |
Total service revenue |
|
32,805 |
|
|
|
36,941 |
|
|
(11 |
) |
|
|
144,496 |
|
|
|
170,613 |
|
|
(15 |
) |
(Loss) income before income
taxes and non-controlling interests |
|
(8,171 |
) |
|
|
72,325 |
|
|
(111 |
) |
|
|
(47,567 |
) |
|
|
15,285 |
|
|
(411 |
) |
Net (loss) income attributable
to Altisource |
|
(11,344 |
) |
|
|
70,558 |
|
|
(116 |
) |
|
|
(53,418 |
) |
|
|
11,812 |
|
|
N/M |
|
Adjusted EBITDA(2) |
|
593 |
|
|
|
(8,839 |
) |
|
107 |
|
|
|
(16,615 |
) |
|
|
(31,663 |
) |
|
48 |
|
N/M — not meaningful.
- Preliminary fourth quarter and full year 2022 loss before
income taxes and non-controlling interests include:
- Incentive compensation accrual reversal of $4.2 million for the
fourth quarter and full year 2022 compared to $0.2 million for the
fourth quarter and full year 2021
- Technology and communications accrual reversal of $1.9 million
from the repricing of a technology agreement for the fourth quarter
and full year 2022, compared to $0.0 million for the fourth quarter
and full year 2021
- Expenses related to cost savings initiatives and other of $0.6
million and $1.7 million for the fourth quarter and full year 2022,
respectively, compared to $0.4 million and $3.6 million, for the
fourth quarter and full year 2021, respectively
- (Loss) gain on sale of the Pointillist business of $(0.2)
million for the fourth quarter and full year 2022 compared to $88.9
million, for the fourth quarter and full year 2021
- Losses from Pointillist of $0.0 million for the fourth quarter
and full year 2022 compared to $1.5 million and $8.6 million for
the fourth quarter and full year 2021, respectively
- In the fourth quarter 2022, the Company did not receive the
anticipated refund of approximately $5.0 million in U.S. taxes and
$3.5 million in escrow funds from the Pointillist sale. The
Company currently believes it will receive the tax refund in the
first quarter 2023 and the Pointillist sale escrow funds by
year-end 2023 subject to potential reduction for an escrow
claim
________________________
|
(1) |
Applies to Fourth Quarter 2022 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 reports through
October 2022 and Black Knight’s First Look press releases through
December 2022 |
ALTISOURCE PORTFOLIO SOLUTIONS
S.A.NON-GAAP MEASURES(in
thousands, except per share data)(preliminary and
unaudited)
Non-GAAP Financial Measures
Adjusted EBITDA 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
net (loss) income attributable to Altisource 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 more on
the basis of continuing costs 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 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 EBITDA to measure the
Company’s overall performance without regard to its capitalization
(debt vs. equity) or its income taxes and to perform trend analysis
of the Company’s performance over time. Adjusted EBITDA
adjusts net (loss) income attributable to Altisource for the 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. 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.
Following the 2019 creation of Pointillist as a
separate legal entity, Altisource had no ongoing obligation to fund
Pointillist, Pointillist was positioned to and focused on raising
third-party capital and Pointillist was an unrestricted subsidiary
under our Senior Secured Term Loan. Additionally, Pointillist
was not part of Altisource’s core, normal, recurring
business. For these reasons, in 2020 we began adding back the
losses of Pointillist in calculating Adjusted EBITDA.
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 EBITDA is calculated by removing the
income tax provision, interest expense (net of interest income),
depreciation and amortization, intangible asset amortization
expense, share-based compensation expense, Pointillist losses,
(loss) gain on sale of business and cost of cost savings
initiatives and other from net (loss) income attributable to
Altisource. Net debt is calculated as long-term debt, including
current portion, minus cash and cash equivalents.
Preliminary reconciliations of the non-GAAP
measures to the corresponding GAAP measures are as follows:
|
Three months
endedDecember 31, |
|
Year endedDecember 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Net (loss) income attributable
to Altisource |
$ |
(11,344 |
) |
|
$ |
70,558 |
|
|
$ |
(53,418 |
) |
|
$ |
11,812 |
|
|
|
|
|
|
|
|
|
Income tax provision |
|
3,056 |
|
|
|
1,375 |
|
|
|
5,266 |
|
|
|
3,232 |
|
Interest expense (net of interest income) |
|
4,853 |
|
|
|
3,859 |
|
|
|
15,974 |
|
|
|
14,559 |
|
Depreciation and amortization |
|
740 |
|
|
|
1,113 |
|
|
|
3,440 |
|
|
|
4,592 |
|
Intangible asset amortization expense |
|
1,280 |
|
|
|
1,284 |
|
|
|
5,129 |
|
|
|
9,467 |
|
Share-based compensation expense |
|
1,151 |
|
|
|
321 |
|
|
|
5,050 |
|
|
|
2,831 |
|
Pointillist losses |
|
— |
|
|
|
1,231 |
|
|
|
— |
|
|
|
7,196 |
|
Loss (gain) on sale of business |
|
242 |
|
|
|
(88,930 |
) |
|
|
242 |
|
|
|
(88,930 |
) |
Cost of cost savings initiatives and other |
|
615 |
|
|
|
350 |
|
|
|
1,702 |
|
|
|
3,578 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
593 |
|
|
$ |
(8,839 |
) |
|
$ |
(16,615 |
) |
|
$ |
(31,663 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Year endedDecember 31, |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
Servicer and Real Estate: |
|
|
|
|
|
|
|
Income before income taxes and non-controlling interests |
|
|
|
|
$ |
26,461 |
|
|
$ |
13,660 |
|
Depreciation and amortization expense |
|
|
|
|
|
982 |
|
|
|
1,096 |
|
Intangible asset amortization expense |
|
|
|
|
|
2,970 |
|
|
|
7,292 |
|
Share-based compensation |
|
|
|
|
|
652 |
|
|
|
(267 |
) |
Cost of cost savings initiatives and other |
|
|
|
|
|
195 |
|
|
|
502 |
|
Adjusted EBITDA |
|
|
|
|
$ |
31,260 |
|
|
$ |
22,283 |
|
|
|
|
|
|
|
|
|
Corporate and Others: |
|
|
|
|
|
|
|
Loss before income taxes and non-controlling interests |
|
|
|
|
$ |
(66,609 |
) |
|
$ |
(3,657 |
) |
Non-controlling interests |
|
|
|
|
|
— |
|
|
|
1,044 |
|
Interest expense, net of interest income |
|
|
|
|
|
15,974 |
|
|
|
14,559 |
|
Depreciation and amortization expense |
|
|
|
|
|
2,420 |
|
|
|
3,431 |
|
Share-based compensation |
|
|
|
|
|
4,045 |
|
|
|
3,201 |
|
Cost of cost savings initiatives and other |
|
|
|
|
|
903 |
|
|
|
2,775 |
|
Loss (gain) on sale of business |
|
|
|
|
|
242 |
|
|
|
(88,930 |
) |
Pointillist losses |
|
|
|
|
|
— |
|
|
|
7,196 |
|
Adjusted EBITDA |
|
|
|
|
$ |
(43,025 |
) |
|
$ |
(60,381 |
) |
|
December 31, 2022 |
|
December 31, 2021 |
Senior secured term loan |
$ |
247,204 |
|
|
$ |
247,204 |
|
Less: Cash and cash equivalents |
|
(51,025 |
) |
|
|
(98,132 |
) |
______________________________ |
|
|
|
|
|
|
|
Net debt |
$ |
196,179 |
|
|
$ |
149,072 |
|
Note: Amounts may not add to the total due to
rounding.
Disclaimer
This press release does not constitute an offer
to sell or buy, nor the solicitation of an offer to sell or buy,
any securities.
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 intends to host a webcast upon its
release of its Form 10-K to discuss our fourth quarter and full
year 2022 results. The date and time of the webcast will be
announced at a later date.
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. EstermanChief Financial OfficerT:
(770) 612-7007E: Michelle.Esterman@altisource.com
Altisource Portfolio Sol... (NASDAQ:ASPS)
Historical Stock Chart
From Feb 2024 to Mar 2024
Altisource Portfolio Sol... (NASDAQ:ASPS)
Historical Stock Chart
From Mar 2023 to Mar 2024