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 fourth quarter and full year 2022.
“I am encouraged by our progress in 2022 and
early 2023 as we execute on our plan to recover from the impact of
the COVID-19 pandemic. In 2022, we grew revenue and Adjusted EBITDA
in our countercyclical Servicer and Real Estate segment as we began
to benefit from the restart of the default market, product mix and
cost savings. We also grew our sales pipeline and
wins, improved our Gross Profit margins to 15% from 4% and
reduced our Adjusted EBITDA loss by $15 million. In February, we
amended and extended our term loan and revolver to April 2025 with
an option to extend both to April 2026 upon satisfying certain
conditions,” said Chairman and Chief Executive Officer William B.
Shepro.
Mr. Shepro further commented, “As we look to
2023, we anticipate revenue growth, margin expansion and positive
Adjusted EBITDA driven by a continuing recovery of the default
market, sales pipeline growth and wins, a lower cost base and
scale. There is potential revenue and Adjusted EBITDA upside in our
countercyclical default business from a softening of the broader
economy and the significant number of servicing portfolios reported
to be in the market for sale if acquired by our customers.”
2022
Highlights(1)
Corporate and Financial:
- Focused on
growing the sales pipeline, improving operational efficiencies,
reducing costs, and strengthening liquidity as the Company
continued to seek to mitigate the impacts of the COVID-19 pandemic,
governmental moratoriums and loss mitigation measures that affect
the timing of the recovery of the market for default-related
services
- Reduced 2022
Corporate and Others costs by $31.0 million, representing a 32%
reduction, compared to 2021
- Ended 2022 with
$51.0 million of cash and cash equivalents
- Ended 2022 with
$196.2 million of net debt(3)
- Fourth quarter
Adjusted earnings before interest, tax, depreciation and
amortization (“EBITDA”)(3) of $0.6 million
- On February 14,
2023, the Company executed amendments to its senior secured term
loans and revolving credit facility (together, “Credit Agreements”)
that, among other things, extended the maturity dates to April
2025, with an option to extend to April 2026, subject to certain
terms and conditions(2)
- On February 14,
2023, Altisource generated approximately $21 million in net
proceeds from the sale of its common stock (after deducting the
underwriting discounts and commissions and other offering
expenses)
- On February 22,
2023, the Company used $20 million of the proceeds of the
offering to repay a portion of its 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 47% gross profit
growth on 4% service revenue growth compared to 2021
- Industrywide
foreclosure initiations were 368% higher in 2022, compared to 2021
(although still 45% lower than the pre-COVID-19 period in 2019)(4),
as the foreclosure market is beginning to recover following
expiration of the Federal government’s foreclosure moratorium on
July 31, 2021 and the Consumer Financial Protection Bureau’s
temporary loss mitigation measures on December 31, 2021
- Industrywide
foreclosure sales were 39% higher in 2022, compared to 2021
(although still 67% lower than the same pre-COVID-19 period in
2019)(4)
- The Servicer and
Real Estate segment and Origination segment had strong sales wins
which we estimate represent $9.4 million and $21.6 million,
respectively, of annualized revenue on a stabilized basis
- The weighted
sales pipeline in the Servicer and Real Estate segment at year-end
2022 represents $41 million to $51 million in estimated annual
revenue on a stabilized basis based upon our forecasted probability
of closing
- The weighted
sales pipeline in the Origination segment at year-end 2022
represents $20 million to $25 million in estimated annual revenue
on a stabilized basis based upon our forecasted probability of
closing
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(3)
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(3)
of $0.6 million
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 |
$ |
32,805 |
|
|
$ |
36,941 |
|
|
(11 |
) |
|
$ |
144,496 |
|
|
$ |
170,613 |
|
|
(15 |
) |
(Loss) income from operations |
|
(3,833 |
) |
|
|
76,127 |
|
|
(105 |
) |
|
|
(33,182 |
) |
|
|
28,968 |
|
|
(215 |
) |
Adjusted operating loss(3) |
|
(545 |
) |
|
|
(9,352 |
) |
|
94 |
|
|
|
(21,059 |
) |
|
|
(35,474 |
) |
|
41 |
|
(Loss) income before income taxes and non- controlling
interests |
|
(8,171 |
) |
|
|
72,325 |
|
|
(111 |
) |
|
|
(47,567 |
) |
|
|
15,285 |
|
|
(411 |
) |
Pretax (loss) income attributable to Altisource |
|
(8,288 |
) |
|
|
71,933 |
|
|
(112 |
) |
|
|
(48,152 |
) |
|
|
15,044 |
|
|
(420 |
) |
Adjusted pretax loss attributable to Altisource(3) |
|
(5,000 |
) |
|
|
(13,727 |
) |
|
64 |
|
|
|
(36,029 |
) |
|
|
(50,442 |
) |
|
29 |
|
Adjusted EBITDA(3) |
|
593 |
|
|
|
(8,839 |
) |
|
107 |
|
|
|
(16,615 |
) |
|
|
(31,663 |
) |
|
48 |
|
Net (loss) income attributable to Altisource |
|
(11,344 |
) |
|
|
70,558 |
|
|
(116 |
) |
|
|
(53,418 |
) |
|
|
11,812 |
|
|
N/M |
Adjusted net loss attributable to Altisource(3) |
|
(7,234 |
) |
|
|
(13,752 |
) |
|
47 |
|
|
|
(39,057 |
) |
|
|
(51,651 |
) |
|
24 |
|
Diluted (loss) earnings per share |
|
(0.70 |
) |
|
|
4.40 |
|
|
(116 |
) |
|
|
(3.32 |
) |
|
|
0.74 |
|
|
N/M |
Adjusted diluted loss per share(3) |
|
(0.45 |
) |
|
|
(0.86 |
) |
|
48 |
|
|
|
(2.43 |
) |
|
|
(3.22 |
) |
|
25 |
|
Net cash used in operating activities |
|
(12,595 |
) |
|
|
(19,272 |
) |
|
35 |
|
|
|
(44,888 |
) |
|
|
(60,405 |
) |
|
26 |
|
Net cash used in operating activities less additions
to premises and equipment |
|
(12,595 |
) |
|
|
(19,526 |
) |
|
35 |
|
|
|
(45,751 |
) |
|
|
(61,784 |
) |
|
26 |
|
_____________________________________ |
|
|
|
|
|
|
|
|
|
|
|
N/M — not meaningful. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 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 received the tax
refund in the first quarter 2023 and currently believes it will
receive the Pointillist sale escrow funds by year-end 2023 subject
to potential reduction for an escrow claim
______________________
|
(1) |
Applies to 2022 unless otherwise indicated |
|
(2) |
For additional information on our
Credit Agreements, refer to our SEC filings. The foregoing
description of the Credit Agreements does not purport to be
complete and is qualified in its entirety by reference to the filed
Credit Agreements |
|
(3) |
This is a non-GAAP measure that
is defined and reconciled to the corresponding GAAP measure
herein |
|
(4) |
Based on data from Black Knight’s
Mortgage Monitor reports through December 2022 |
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 8:30 a.m. EDT
today to discuss our fourth quarter and full year 2022 results. 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 INCOME (LOSS)(in thousands, except
per share data)
|
Three months
endedDecember 31, |
|
Year endedDecember 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
Service revenue |
$ |
32,805 |
|
|
$ |
36,941 |
|
|
$ |
144,496 |
|
|
$ |
170,613 |
|
Reimbursable expenses |
|
1,881 |
|
|
|
1,190 |
|
|
|
8,039 |
|
|
|
6,555 |
|
Non-controlling interests |
|
117 |
|
|
|
573 |
|
|
|
585 |
|
|
|
1,285 |
|
Total revenue |
|
34,803 |
|
|
|
38,704 |
|
|
|
153,120 |
|
|
|
178,453 |
|
Cost of revenue |
|
26,694 |
|
|
|
36,504 |
|
|
|
131,305 |
|
|
|
171,366 |
|
Gross profit |
|
8,109 |
|
|
|
2,200 |
|
|
|
21,815 |
|
|
|
7,087 |
|
Operating (income) expense: |
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
11,700 |
|
|
|
15,003 |
|
|
|
54,755 |
|
|
|
67,049 |
|
Loss (gain) on sale of business |
|
242 |
|
|
|
(88,930 |
) |
|
|
242 |
|
|
|
(88,930 |
) |
(Loss) income from operations |
|
(3,833 |
) |
|
|
76,127 |
|
|
|
(33,182 |
) |
|
|
28,968 |
|
Other income (expense), net: |
|
|
|
|
|
|
|
Interest expense |
|
(5,200 |
) |
|
|
(3,875 |
) |
|
|
(16,639 |
) |
|
|
(14,547 |
) |
Other income (expense), net |
|
862 |
|
|
|
73 |
|
|
|
2,254 |
|
|
|
864 |
|
Total other income (expense), net |
|
(4,338 |
) |
|
|
(3,802 |
) |
|
|
(14,385 |
) |
|
|
(13,683 |
) |
|
|
|
|
|
|
|
|
(Loss) income before income
taxes and non-controlling interests |
|
(8,171 |
) |
|
|
72,325 |
|
|
|
(47,567 |
) |
|
|
15,285 |
|
Income tax provision |
|
(3,056 |
) |
|
|
(1,375 |
) |
|
|
(5,266 |
) |
|
|
(3,232 |
) |
|
|
|
|
|
|
|
|
Net (loss) income |
|
(11,227 |
) |
|
|
70,950 |
|
|
|
(52,833 |
) |
|
|
12,053 |
|
Net income attributable to
non-controlling interests |
|
(117 |
) |
|
|
(392 |
) |
|
|
(585 |
) |
|
|
(241 |
) |
|
|
|
|
|
|
|
|
Net (loss) income attributable to Altisource |
$ |
(11,344 |
) |
|
$ |
70,558 |
|
|
$ |
(53,418 |
) |
|
$ |
11,812 |
|
|
|
|
|
|
|
|
|
(Loss) earnings per share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.70 |
) |
|
$ |
4.45 |
|
|
$ |
(3.32 |
) |
|
$ |
0.75 |
|
Diluted |
$ |
(0.70 |
) |
|
$ |
4.40 |
|
|
$ |
(3.32 |
) |
|
$ |
0.74 |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
16,095 |
|
|
|
15,839 |
|
|
|
16,070 |
|
|
|
15,839 |
|
Diluted |
|
16,095 |
|
|
|
16,043 |
|
|
|
16,070 |
|
|
|
16,063 |
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) income, net of tax |
|
(11,227 |
) |
|
|
70,950 |
|
|
|
(52,833 |
) |
|
|
12,053 |
|
Comprehensive income attributable to non-controlling interests |
|
(117 |
) |
|
|
(392 |
) |
|
|
(585 |
) |
|
|
(241 |
) |
|
|
|
|
|
|
|
|
Comprehensive (loss) income attributable to Altisource |
$ |
(11,344 |
) |
|
$ |
70,558 |
|
|
$ |
(53,418 |
) |
|
$ |
11,812 |
|
ALTISOURCE PORTFOLIO SOLUTIONS
S.A.CONSOLIDATED BALANCE
SHEETS(in thousands, except per share
data)
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
ASSETS |
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
51,025 |
|
|
$ |
98,132 |
|
Accounts receivable, net |
|
12,989 |
|
|
|
18,008 |
|
Prepaid expenses and other current assets |
|
23,544 |
|
|
|
21,864 |
|
Total current assets |
|
87,558 |
|
|
|
138,004 |
|
|
|
|
|
Premises and equipment, net |
|
4,222 |
|
|
|
6,873 |
|
Right-of-use assets under operating leases |
|
5,321 |
|
|
|
7,594 |
|
Goodwill |
|
55,960 |
|
|
|
55,960 |
|
Intangible assets, net |
|
31,730 |
|
|
|
36,859 |
|
Deferred tax assets, net |
|
5,048 |
|
|
|
6,386 |
|
Other assets |
|
5,166 |
|
|
|
6,132 |
|
|
|
|
|
Total assets |
$ |
195,005 |
|
|
$ |
257,808 |
|
|
|
|
|
LIABILITIES AND DEFICIT |
Current liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ |
33,507 |
|
|
$ |
46,535 |
|
Deferred revenue |
|
3,711 |
|
|
|
4,342 |
|
Other current liabilities |
|
2,867 |
|
|
|
3,870 |
|
Total current liabilities |
|
40,085 |
|
|
|
54,747 |
|
|
|
|
|
Long-term debt |
|
245,230 |
|
|
|
243,637 |
|
Deferred tax liabilities, net |
|
9,028 |
|
|
|
9,028 |
|
Other non-current liabilities |
|
19,536 |
|
|
|
19,266 |
|
|
|
|
|
Commitments, contingencies and regulatory matters |
|
|
|
|
|
|
|
Equity (deficit): |
|
|
|
Common stock ($1.00 par value; 100,000 shares authorized, 25,413
issued and 16,129 |
|
|
|
|
|
|
|
outstanding as of December 31, 2022; 15,911 outstanding as of
December 31, 2021) |
|
25,413 |
|
|
|
25,413 |
|
Additional paid-in capital |
|
149,348 |
|
|
|
144,298 |
|
Retained earnings |
|
118,948 |
|
|
|
186,592 |
|
Treasury stock, at cost (9,284 shares as of December 31, 2022
and 9,502 shares as of |
|
|
|
|
|
|
|
December 31, 2021) |
|
(413,358 |
) |
|
|
(426,445 |
) |
Altisource deficit |
|
(119,649 |
) |
|
|
(70,142 |
) |
|
|
|
|
Non-controlling interests |
|
775 |
|
|
|
1,272 |
|
Total deficit |
|
(118,874 |
) |
|
|
(68,870 |
) |
|
|
|
|
Total liabilities and deficit |
$ |
195,005 |
|
|
$ |
257,808 |
|
|
|
|
|
ALTISOURCE PORTFOLIO SOLUTIONS
S.A.CONSOLIDATED STATEMENTS OF CASH FLOWS(in
thousands)
|
For the years ended December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
Net (loss) income |
$ |
(52,833 |
) |
|
$ |
12,053 |
|
Adjustments to reconcile net (loss) income to net cash used in
operating activities: |
|
|
|
Depreciation and amortization |
|
3,440 |
|
|
|
4,592 |
|
Amortization of right-of-use assets under operating leases |
|
2,730 |
|
|
|
7,935 |
|
Amortization of intangible assets |
|
5,129 |
|
|
|
9,467 |
|
Share-based compensation expense |
|
5,050 |
|
|
|
2,825 |
|
Bad debt expense |
|
885 |
|
|
|
1,354 |
|
Amortization of debt discount |
|
661 |
|
|
|
665 |
|
Amortization of debt issuance costs |
|
932 |
|
|
|
847 |
|
Deferred income taxes |
|
1,098 |
|
|
|
(705 |
) |
Loss on disposal of fixed assets |
|
10 |
|
|
|
47 |
|
Loss (gain) on sale of business |
|
242 |
|
|
|
(88,930 |
) |
Other non-cash items |
|
— |
|
|
|
137 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
4,134 |
|
|
|
2,963 |
|
Prepaid expenses and other current assets |
|
(1,922 |
) |
|
|
1,146 |
|
Other assets |
|
341 |
|
|
|
902 |
|
Accounts payable and accrued expenses |
|
(12,964 |
) |
|
|
(8,442 |
) |
Current and non-current operating lease liabilities |
|
(2,911 |
) |
|
|
(8,803 |
) |
Other current and non-current liabilities |
|
1,090 |
|
|
|
1,542 |
|
Net cash used in operating activities |
|
(44,888 |
) |
|
|
(60,405 |
) |
|
|
|
|
Cash flows from investing activities: |
|
|
|
Additions to premises and equipment |
|
(863 |
) |
|
|
(1,379 |
) |
Proceeds from the sale of businesses |
|
346 |
|
|
|
104,141 |
|
Other investing activities |
|
(250 |
) |
|
|
— |
|
Net cash (used in) provided by investing activities |
|
(767 |
) |
|
|
102,762 |
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
Proceeds from revolving credit facility |
|
— |
|
|
|
20,000 |
|
Repayments of long-term debt and revolving credit facility |
|
— |
|
|
|
(20,000 |
) |
Debt issuance costs |
|
— |
|
|
|
(531 |
) |
Proceeds from convertible debt payable to related parties |
|
— |
|
|
|
1,200 |
|
Distributions to non-controlling interests |
|
(1,082 |
) |
|
|
(1,959 |
) |
Payments of tax withholding on issuance of restricted share units
and restricted shares |
|
(1,139 |
) |
|
|
(1,014 |
) |
Net cash used in financing activities |
|
(2,221 |
) |
|
|
(2,304 |
) |
|
|
|
|
Net (decrease) increase in cash, cash equivalents and restricted
cash |
|
(47,876 |
) |
|
|
40,053 |
|
Cash, cash equivalents and restricted cash at the beginning of the
period |
|
102,149 |
|
|
|
62,096 |
|
|
|
|
|
Cash, cash equivalents and restricted cash at the end of the
period |
$ |
54,273 |
|
|
$ |
102,149 |
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
Interest paid |
$ |
14,962 |
|
|
$ |
12,532 |
|
Income taxes paid, net |
|
3,299 |
|
|
|
2,455 |
|
Acquisition of right-of-use assets with operating lease
liabilities |
|
920 |
|
|
|
7,318 |
|
Reduction of right-of-use assets from operating lease modifications
or reassessments |
|
(463 |
) |
|
|
(6,119 |
) |
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
Net decrease in payables for purchases of premises and
equipment |
|
(64 |
) |
|
|
(116 |
) |
ALTISOURCE PORTFOLIO SOLUTIONS
S.A.NON-GAAP MEASURES(in thousands, except per share
data)(unaudited)
Adjusted operating loss, pretax (loss) income
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) income from operations, (loss) income before
income taxes and non-controlling interests, net (loss) income
attributable to Altisource, diluted (loss) earnings 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 and equity securities. We
deduct investment in equity securities from debt in arriving at
this measure because our Senior Secured Term Loan requires the
Company to use any proceeds from the sale of equity securities to
repay the Senior Secured Term Loan. 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 2022 and 2021, the Company
has an effective tax rate of close to 0% in Luxembourg.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 net loss attributable to Altisource, adjusted
diluted loss per share, and 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 operating loss is calculated by
removing intangible asset amortization expense, share-based
compensation expense, Pointillist losses, gain on sale of business
and cost of cost savings initiatives and other from (loss) income
from operations. Pretax (loss) income attributable to Altisource is
calculated by removing non-controlling interest from (loss) income
before income taxes and non-controlling interests. Adjusted pretax
loss attributable to Altisource is calculated by removing
non-controlling interest, intangible asset amortization expense,
share-based compensation expense, Pointillist losses, gain on sale
of business and cost of cost of cost savings initiatives and other
from (loss) income 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, intangible asset amortization expense,
share-based compensation expense, Pointillist losses, gain on sale
of business and cost of cost of cost savings initiatives and other
from net (loss) income 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, Pointillist losses, net of tax,
gain on sale of business, net of tax, cost of cost savings
initiatives and other, net of tax, and certain income tax related
items from net (loss) income attributable to Altisource. Adjusted
diluted loss per share is calculated by dividing net (loss) income
attributable to Altisource after removing intangible asset
amortization expense, net of tax, share-based compensation expense,
net of tax, Pointillist losses, net of tax, gain on sale of
business, net of tax, cost of cost savings initiatives and other,
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
endedDecember 31, |
|
Year endedDecember 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
(Loss) income from
operations |
$ |
(3,833 |
) |
|
$ |
76,127 |
|
|
$ |
(33,182 |
) |
|
$ |
28,968 |
|
|
|
|
|
|
|
|
|
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 |
|
— |
|
|
|
1,496 |
|
|
|
— |
|
|
|
8,612 |
|
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 operating loss |
$ |
(545 |
) |
|
$ |
(9,352 |
) |
|
$ |
(21,059 |
) |
|
$ |
(35,474 |
) |
|
|
|
|
|
|
|
|
(Loss) income before income
taxes and non-controlling interests |
$ |
(8,171 |
) |
|
$ |
72,325 |
|
|
$ |
(47,567 |
) |
|
$ |
15,285 |
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
(117 |
) |
|
|
(392 |
) |
|
|
(585 |
) |
|
|
(241 |
) |
Pretax (loss) income attributable to Altisource |
|
(8,288 |
) |
|
|
71,933 |
|
|
|
(48,152 |
) |
|
|
15,044 |
|
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 |
|
— |
|
|
|
1,315 |
|
|
|
— |
|
|
|
7,568 |
|
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 pretax loss
attributable to Altisource |
$ |
(5,000 |
) |
|
$ |
(13,727 |
) |
|
$ |
(36,029 |
) |
|
$ |
(50,442 |
) |
|
|
|
|
|
|
|
|
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 |
) |
|
|
|
|
|
|
|
|
Net (loss) income attributable
to Altisource |
$ |
(11,344 |
) |
|
$ |
70,558 |
|
|
$ |
(53,418 |
) |
|
$ |
11,812 |
|
|
|
|
|
|
|
|
|
Intangible asset amortization expense, net of tax |
|
1,278 |
|
|
|
1,282 |
|
|
|
5,119 |
|
|
|
9,454 |
|
Share-based compensation expense, net of tax |
|
1,001 |
|
|
|
238 |
|
|
|
4,447 |
|
|
|
2,522 |
|
Pointillist losses, net of tax |
|
— |
|
|
|
1,315 |
|
|
|
— |
|
|
|
7,568 |
|
Loss (gain) on sale of business, net of tax |
|
242 |
|
|
|
(88,930 |
) |
|
|
242 |
|
|
|
(88,930 |
) |
Cost of cost savings initiatives and other, net of tax |
|
508 |
|
|
|
351 |
|
|
|
1,446 |
|
|
|
3,183 |
|
Certain income tax related items |
|
1,081 |
|
|
|
1,434 |
|
|
|
3,107 |
|
|
|
2,740 |
|
|
|
|
|
|
|
|
|
Adjusted net loss attributable
to Altisource |
$ |
(7,234 |
) |
|
$ |
(13,752 |
) |
|
$ |
(39,057 |
) |
|
$ |
(51,651 |
) |
|
|
|
|
|
|
|
|
Diluted (loss) earnings per
share |
$ |
(0.70 |
) |
|
$ |
4.40 |
|
|
$ |
(3.32 |
) |
|
$ |
0.74 |
|
|
|
|
|
|
|
|
|
Intangible asset amortization expense, net of tax, per diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
share |
|
0.08 |
|
|
|
0.08 |
|
|
|
0.32 |
|
|
|
0.59 |
|
Share-based compensation expense, net of tax, per
diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
share |
|
0.06 |
|
|
|
0.01 |
|
|
|
0.28 |
|
|
|
0.16 |
|
Pointillist losses, net of tax, per diluted share |
|
— |
|
|
|
0.08 |
|
|
|
— |
|
|
|
0.47 |
|
Loss (gain) on sale of business, net of tax, per diluted share |
|
0.02 |
|
|
|
(5.54 |
) |
|
|
0.02 |
|
|
|
(5.54 |
) |
Cost of cost savings initiatives and other, net of tax, per |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
diluted share |
|
0.03 |
|
|
|
0.02 |
|
|
|
0.09 |
|
|
|
0.20 |
|
Certain income tax related items, per diluted share |
|
0.07 |
|
|
|
0.09 |
|
|
|
0.19 |
|
|
|
0.17 |
|
|
|
|
|
|
|
|
|
Adjusted diluted loss per
share |
$ |
(0.45 |
) |
|
$ |
(0.86 |
) |
|
$ |
(2.43 |
) |
|
$ |
(3.22 |
) |
|
|
|
|
|
|
|
|
Calculation of the impact of
intangible asset amortization |
|
|
|
|
|
|
|
expense, net of tax |
|
|
|
|
|
|
|
Intangible asset amortization expense |
$ |
1,280 |
|
|
$ |
1,284 |
|
|
$ |
5,129 |
|
|
$ |
9,467 |
|
Tax benefit from intangible asset amortization |
|
(2 |
) |
|
|
(2 |
) |
|
|
(10 |
) |
|
|
(13 |
) |
Intangible asset amortization expense, net of tax |
|
1,278 |
|
|
|
1,282 |
|
|
|
5,119 |
|
|
|
9,454 |
|
Diluted share count |
|
16,095 |
|
|
|
16,043 |
|
|
|
16,070 |
|
|
|
16,063 |
|
|
|
|
|
|
|
|
|
Intangible asset amortization
expense, net of tax, per diluted share |
$ |
0.08 |
|
|
$ |
0.08 |
|
|
$ |
0.32 |
|
|
$ |
0.59 |
|
|
|
|
|
|
|
|
|
Calculation of the impact of
share-based compensation expense, |
|
|
|
|
|
|
|
net of tax |
|
|
|
|
|
|
|
Share-based compensation expense |
$ |
1,151 |
|
|
$ |
321 |
|
|
$ |
5,050 |
|
|
$ |
2,831 |
|
Tax benefit from share-based compensation expense |
|
(150 |
) |
|
|
(77 |
) |
|
|
(603 |
) |
|
|
(303 |
) |
Share-based compensation expense, net of tax |
|
1,001 |
|
|
|
238 |
|
|
|
4,447 |
|
|
|
2,522 |
|
Diluted share count |
|
16,095 |
|
|
|
16,043 |
|
|
|
16,070 |
|
|
|
16,063 |
|
|
|
|
|
|
|
|
|
Share-based compensation
expense, net of tax, per diluted share |
$ |
0.06 |
|
|
$ |
0.01 |
|
|
$ |
0.28 |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
Calculation of the impact of
Pointillist losses, net of tax |
|
|
|
|
|
|
|
Pointillist losses |
$ |
— |
|
|
$ |
1,315 |
|
|
$ |
— |
|
|
$ |
7,568 |
|
Tax provision from Pointillist losses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Pointillist losses, net of tax |
|
— |
|
|
|
1,315 |
|
|
|
— |
|
|
|
7,568 |
|
Diluted share count |
|
16,095 |
|
|
|
16,043 |
|
|
|
16,070 |
|
|
|
16,063 |
|
|
|
|
|
|
|
|
|
Pointillist losses, net of
tax, per diluted share |
$ |
— |
|
|
$ |
0.08 |
|
|
$ |
— |
|
|
$ |
0.47 |
|
|
|
|
|
|
|
|
|
Calculation of the impact of
loss (gain) on sale of business, net |
|
|
|
|
|
|
|
of tax |
|
|
|
|
|
|
|
Loss (gain) on sale of business |
$ |
242 |
|
|
$ |
(88,930 |
) |
|
$ |
242 |
|
|
$ |
(88,930 |
) |
Tax provision from loss (gain) on sale of business |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss (gain) on sale of business, net of tax |
|
242 |
|
|
|
(88,930 |
) |
|
|
242 |
|
|
|
(88,930 |
) |
Diluted share count |
|
16,095 |
|
|
|
16,043 |
|
|
|
16,070 |
|
|
|
16,063 |
|
|
|
|
|
|
|
|
|
Loss (gain) on sale of
business, net of tax, per diluted share |
$ |
0.02 |
|
|
$ |
(5.54 |
) |
|
$ |
0.02 |
|
|
$ |
(5.54 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of the impact of
cost of cost savings initiatives and other, net of tax |
|
|
|
|
|
|
|
Cost of cost savings initiatives and other |
$ |
615 |
|
|
$ |
350 |
|
|
$ |
1,702 |
|
|
$ |
3,578 |
|
Tax (benefit) provision from cost of cost savings initiatives and
other |
|
(107 |
) |
|
|
1 |
|
|
|
(256 |
) |
|
|
(395 |
) |
Cost of cost savings initiatives and other, net of tax |
|
508 |
|
|
|
351 |
|
|
|
1,446 |
|
|
|
3,183 |
|
Diluted share count |
|
16,095 |
|
|
|
16,043 |
|
|
|
16,070 |
|
|
|
16,063 |
|
Cost of cost savings
initiatives and other, net of tax, per diluted share |
$ |
0.03 |
|
|
$ |
0.02 |
|
|
$ |
0.09 |
|
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
Certain income tax related
items resulting from: |
|
|
|
|
|
|
|
Foreign income tax reserves/other |
|
1,081 |
|
|
|
1,434 |
|
|
|
3,107 |
|
|
|
2,740 |
|
Certain income tax related items |
|
1,081 |
|
|
|
1,434 |
|
|
|
3,107 |
|
|
|
2,740 |
|
Diluted share count |
|
16,095 |
|
|
|
16,043 |
|
|
|
16,070 |
|
|
|
16,063 |
|
|
|
|
|
|
|
|
|
Certain income tax related
items, per diluted share |
$ |
0.07 |
|
|
$ |
0.09 |
|
|
$ |
0.19 |
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
Net cash used in operating
activities |
$ |
(12,595 |
) |
|
$ |
(19,272 |
) |
|
$ |
(44,888 |
) |
|
$ |
(60,405 |
) |
Less: additions to premises and equipment |
|
— |
|
|
|
(254 |
) |
|
|
(863 |
) |
|
|
(1,379 |
) |
|
|
|
|
|
|
|
|
Net cash used in operating
activities less additions to premises and equipment |
$ |
(12,595 |
) |
|
$ |
(19,526 |
) |
|
$ |
(45,751 |
) |
|
$ |
(61,784 |
) |
|
December 31, 2022 |
|
December 31, 2021 |
|
|
|
|
Senior secured term loan |
$ |
247,204 |
|
|
$ |
247,204 |
|
Revolving credit facility |
|
— |
|
|
|
— |
|
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.
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