ASPS - Earnings call transcript Q3 2017 | Altisource Portfolio Solutions S.A.

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Operator

Good day, ladies and gentlemen, and welcome to Altisource's Third Quarter Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would like to introduce your host for today's conference, Mr. Indroneel Chatterjee, Chief Financial Officer. Sir?

Indroneel Chatterjee

provide first XX-Q remind available and website www.altisource.com. We earnings that on operator. may at Form investors release, quarterly These you, want you to the our find Thank useful. information additional slides are

than projections The which disclaims and scenarios. obligation projections otherwise. pursuant no facts, scenarios in forward-looking in contains is actual be of reconciliation enter statements. of no the of, harbor issued our be differ with and the Investment results actual XX, There securities financial relied Cooperative all. Statements of of to press Further becomes the Agreement filed made to are should and release not as and occur financial our agreement regarding federal measures to scenarios in New These Agreement might earlier intent unduly well letter Today's non-GAAP non-GAAP should call, discussion GAAP. that whether measures. Agreement in presentation conference of Corp. determined XX-Q instead into developments filed earnings these not today, in or to to will the that the forward-looking in of addition safe Agreement, their release this Our Appendix XXXX, a the equivalents be disclosure an non-GAAP same Agreement presentation agreements a intent available, also Cooperative the this Factors set respect relied related makes Brokerage X-K include a Residential and financial in slides forth and contains Altisource financial our non-GAAP company with amended Brokerage statements a A and as letter August will includes an The any filings. future to the Form during financial new or statements, unduly Altisource are intent upon. regardless calculated cause the statements materially our either with New representation is on contained that financial to of discussed differently information The historical GAAP described today our companies. slides. those included The and Services revise Residential reach are but be can These law. forward-looking be in our update our other information terms the prepared financial in other should as be projections not may presentation the measures basis that information provisions amended accordance upon. also or financial today. or than measures on financial are results timely into publicly call. will considered be Altisource the at or slides that assurance Services Today's Services earlier a any or to, public entered and the

the turn Bill call would to today's Bill. Shepro, is Officer. our Executive now over call for I me Chief like to Joining

William Shepro

of business progress Good morning, on update brief our strategy, to investments Today today's for NRZ. of core diversified and overview our X plan with and call. in financial lines allocation an the and thank on agreements joining growth, I you capital are performance provide our the making our a we status

from revenue quarter, of operations strengthening and per Indroneel going Michelle Altisource had and diluted I'd CFO. and to on $XXX.X to $X.XX available earnings a our strong start, this share our are with business sell-side service Indroneel's me with million. institutions. relations adjusted respond the Esterman morning of Indroneel cash to questions. welcome financial units capital as are million, on of and structure, $XX.X like Chatterjee Both buy-side with optimization of focus and Before our I initially to

add you and was $XX.X from business, our buy-renovate-sell million. estate operations real cash investments short-term the If in back

REO As same XXXX. we XX% customers. earnings servicing this We the operating of earnings was the absolute due investments in than was we scenarios do and full in from by Year-to-date to per support scenarios earnings were the our exceed within lower the with per offset preservation growth updated modest - anticipate scenarios revenue lower infrastructure to our adjusted midpoint and been year is $X.XXX revenue CapEx, per substantially the On to share XXXX, nonperforming lower expansion at with which can because XXXX CapEx year-to-date same anticipated be XXXX earnings our portfolio to Slide our that other XXXX. and a will We same of the scenario impacted driven share preservation earnings flow, growth year XXXX. from midpoint operating $X.XX businesses midpoint our lower year Compared Adjusted The able same impact At anticipate updated to requirements portfolio call. you diluting service adjusted see of our the shared of the we of of on full per our to on margin low-margin The XXXX. share Brokerage scenarios. range services the property We other runoff, XX% on were of period XXXX loans the from decline largely by largely property is a service Ocwen, less $XXX revenue XX% and in of million a buy-renovate-sell Slides NRZ management and that of the services and than rate diluted revenue adjusted for cash also cash the midpoint decline an business. relationship in decline share customer businesses. will last reflect represents business the noncore share of not full Ocwen's XX% of diluted transition time, mix, capitalize. basis, service CapEx, higher-margin less lower technology the the of are business, past. in per X, was Agreement diluted than growth smaller X% the RESI's shown adjusted declined in period have X lower in Cooperative year-to-date and decline period in of flow, lower X the

I as Before flow. capital Altisource that like businesses, generates established our discuss capital-light our attractive I to would was company discuss core allocation cash strategy. a

and X balanced in is XX.X%, strategy newer XXXX, our offerings, $XXX.X managing and positioned acquiring par and The years turbulent and gain. further customer operations cash deploying value balance in our scaling allocation companies expand in repurchasing strategy, firm manner, we environment secured that products our discount capital opportunities we've Our sheet developing and and at million generating taken of as present the debt disciplined an in service has a our on line of a term base the opportunistically during for a while $X.X our past strengthened million purchased our round out centered loan us our services. our longer-term senior during growth. shares, investing our cross-sell our capital of with In average actions

per million million our of and securities. share common to cash marketable million. We to million of of We repurchase price debt at shares the million average approximately count an stock quarter also and share our marketable $XXX.X X.X net with ended XX.X securities outstanding third of less $XX $XX.XX, bringing $XXX.X used

can reduction X, debt XX% program. see the securities As the we net buyback beginning in this less discounted you Slide of XXXX, on marks our year since marketable of a began

generation. of Despite attractive unit acquisitions track servicer are record our in made acquisitions decisions non-Ocwen a volumes, and out our segment, Slide On market includes growth businesses. grown highlight customer we've other to and profitably we performance. cash we The lower and solutions of servicer with businesses. have flow businesses borne the business servicer our since the solutions investment our free XXXX margins, their roughly non-Ocwen origination line X, of delinquencies solutions mortgage Our in lead and that investments assessment origination major which generate strong and

the in quarter. solutions back investments, achieved third add you margins growth If modest origination business our our in we

solutions these originations to As cost leverage fixed the our continues efficiencies we from to grow, able margins. should and technology realize improving significantly the business be our investments,

developing estate market that and mortgage the we've ability includes our our our real on expansive businesses the solutions the products real on strong real which market offer estate achieved estate newer anticipate mortgage and of to a customers will also segment, in achieve consumer investor investments estate We based in market market our return businesses. to on our businesses. is we success suite in This real

to Trelix Connect, home our technology; address the operations Mortgage significant investments solutions real ResCap customers acquisition in business, our are now leverages business. the with search Homeward of the noteXchange, we origination estate generate in the a rental before continue consumers real Builder, engine diligence other successful business, are estate cross-sell due and associated of operating. investor in estate experience In asset business, to manner business and home solutions rental our of nonperforming platform and investments loan products loan and me and to scale and developing In we purchase buy-renovate-lease-and-sell and data Let origination Owners.com become buying to made our we services investing to dispose our large sales the some each growing servicer Hubzu business, the facilitate services the FHA and servicers are platform and investing a are we've we home trend invested and very buy in acquisition The on consumer turn to EBITDA. are evolving real to the our loans and transactions. and homes. markets our grow of management the products in foreclosure CWCOT Hubzu In GSEs, Owners.com fee-based the the we origination which in data of which businesses home. to address technology; for developing historical in and our our products and sale they REO. revenue auction we with the In and making

$X can anticipate projections in in growth economic noting with substantially of just decrease we million projections referrals. NRZ and revenue through the forecast approximately we our estimate X, have the delinquencies, These XXXX, a on Slide standard a Ocwen, and see burn-down $XXX does we of and or NRZ As worth the EBITDA the our potential portfolios generate XXXX, last portfolio consistent to that from an underlying not the assume Ocwen exceeded service January you provided of will downturn. you of we of MSRs. runoff and billion from of It's that characteristics assume

serve progress to making continue sheet to plan repurchases stock. with returns and opportunistic Given from repurchases and the attractive flows we the our strong NRZ customers, common for strengthen new the Ocwen we believe our portfolios, of existing cash debt balance contractual are generate our shareholders. discounted and We and and debt

for the solutions we we to Now and to recognize related our vendor each growth Slide businesses. discuss core very XX solutions origination can that customers, fourth progress That new X are provides our our lenders we lines. active for translating pipeline I the see earlier in on-boarding and through new to on strong servicers scenarios, third and we our existing and and of growth our highlight specific early with to on the performance businesses, expansion non-Ocwen that existing growing you we an sales business business, to behind quarter were that the into anticipated slide, core year. primarily footprint acceleration prospects are beginning customers an said, believe recent wins notable go will is existing Beginning origination customers. timing going X are XXXX and with the growing as their highlights wins of as trend new with of on continues. in solutions the the I We X a consolidate service occur the business the update servicer quarter. as making see and in the customer

strong and our pipeline. We developing also sales progress in business new winning made

for nonbank services online using These to provide a include, front, wins. portfolio. portfolio. large a were provide servicer recently short-sale REO REO and by we a REO a and of notification services portion Hubzu brokerage services top-X services its new by and brokerage; the inspection its of a platform. and title; end-to-end customer the bank also auction to to We auction for bank selected meaningful several property received portion preservation; On top-XX valuation; provide were of selected by We

to customers begin referrals perspective, sales the expect in receiving we very of first busy. quarter We From from pipeline remain XXXX. these a

customer top-X on existing with In existing Hubzu. having other addition to pilot and we to programs GSE many an X provide pre-REO are bank active auction opportunities, customers conversations online

discussions a to solutions its to We existing of servicer customer are lending correspondent services provide top-XX bank related suite division. origination also having with an

We recent of the and will optimistic by non-Ocwen strong anticipate and us quarter they I programs wins business businesses. our first these are XXXX. non-NRZ servicer the and pipeline accelerate of well will to end launch the solutions position growth originations that our across our of

Turning to convert Marcello implemented August real Internet operating continuously lead estate our Mastioni joining, model the Initially, been has solutions. Marcello performance. to clients. to improving consumer into active from hired Since Owners.com's leads an improve to ability business. in applied Expedia model We this agile to has

quarter to We relatively flat XX% maintaining XXX flat fourth the doubled performance active sales expenses. has more relatively third with and number the result, believe that actions revenue in a leads increased we quarter a this line and while to call. transactions, that support purchase quarter's quarter, of taking take the earnings transactions will slower XXXX. be seasonally unit the on we to clients XXXX, by became XXXX and achieving anticipate are business estimated From As of XXX. the quarter guided percentage we XXX between In the to quarter, last during than in this of fourth completed improve over we second perspective, marketing transactions of plan we

managing the this of services for by investor Finally, estate our and outsourced its business providing its real RESI. business solutions revenue transition. continues Historically, nonperforming and earnings loan generated majority REO

With margin two, BRS are on return three XXXX, at which buying believe desire large addressable targeted areas, acquiring growing renovates, our estate homes, directly costs; rental RESI of XX% in there on is directly services We management absolute a opportunity yields. rental NPLs substantially business institutional and To investor given throughout impacting continued ABS buys, the the sales. for providing significant REO and developing capitalize and before that and internal position grow and that before our strategy investment scale, business, investments well to program, competitive significant with renovation investor contacts, for economies profitability a securitization clients investments and integrated we believe and As portfolio large real market, our real vertically internal operations, heritage to its of target has of legacy we decline NPL opportunity. yields from on related property our Altisource of leases market investors' very focused changing revenue at meaningfully and three, expected, data attractive more the X% advantages sells for key to sourcing this compression earnings. estate one, to source costs; a homes us and developing its this

lower business. unit the BRS Although unit addressable per per the are revenue in and businesses, greater average renovation are margins our profit and historical much the than market,

NRZ with a mortgage we the MSRs with Agreement, the the to extend to terms September, Ocwen were anticipated our providing Altisource to Services amendment services an are and the by entered them. Effective acquired provided relationship on XX to first NRZ. Ocwen's on to a provide to until PHH a Agreement services received services our succeed. of our mortgage contractual development a ROI working services of and I'd letter Our brokerage services the transferring be portfolio. look as as certain XX, to of Altisource NRZ that will to bright We MSR with businesses In established X agreement provider of the position entered very and were NRZ the continued MSRs or Operator? mortgage now directly we outsourced leading Agreement. existing on client core forward Altisource In we pipeline, In October term Pursuant REO to of that the the provide brokerage Brokerage the provide these our to and NRZ partners NRZ Services very open servicing making active parties XX, sales into NRZ. Altisource to the believe agreement, and industry. the January portfolios the for are newer wins, we brokerage and estate businesses questions. have pave into conclusion, cash August, other good their client that Altisource's rely and recent to finalize they base grow call answering of agreement. relationship industry. Under flows in for services across future. to strong negotiating late good Ocwen's also as the that notice strengthens expanding began path believe Altisource a the On progress we a our that Cooperative on like strong footprint August intent, acquired NRZ our historically will real up

Operator

[Operator Instructions].

Lee Our first is question of Omega. Cooperman from

Leon Cooperman

Slide at those $X.XX XX see million, million in an look XX trend, to you ominous you your $X.XX If handout, to trailing million $X.XX months. to $X.XX million

You have businesses back have versus mind? in earnings do guys buying your XXXX clear guidance improved to because I'm for you Or to have persist you in of just yet is not non-Ocwen an that stock. what to your continue is view optimistic obviously your in curious, XXXX? expect

William Shepro

So this is Bill. Lee,

our finalized next for haven't We plan year...

Leon Cooperman

number, specific a for I'm looking not direction. looking just for I'm

would decline decline have year specifics. If to getting another of and X.XX, increase? expect you Without reverse average or you X.XX, year take a directionally have we a into X.XX, an would

William Shepro

support because we were We're a in don't we it's of dollars believe a back those growth, we you last again, this numbers or No, they're But if year those investments. to than X ago, and growth. And believe those call, I our next was as lower to look have believe, share. the be maybe mentioned Sure. it Lee. the to going year, you I in which, our couple investments at making add will make calls if

we those making the deliver in So run, attractive to feel and it's for earnings shareholders. our a long that we very investments are going very confident because revenue

those So making we're that's investments. why

Leon Cooperman

hope, I right, you're obviously. logical. That's

that, So million tell do cash a lower in either reinvest or buy me that also, if giving with with in their agreement, run answer taking is? in you business you still to minimum some you It debt do $XXX and you before off to essential marketable with the your are better unless we the feel seems balance the more NRZ cash to keep? you a me could thing. the the back the greater them. agreement cash What clarity money in to think think degree? more more would that relationship the or you to you you RESI keep had securities And number balance Or you put with equity the own RESI RESI than have address it's own was right have stock like and

William Shepro

me both. cover let Yes,

So of limited as business first, in have we model cash prepared that requirements. lot generates free Lee, remarks, discussed the and a a we has capital

So, obviously, a question. think good it's we

environment we in years, operating to level we a higher maintain the the of that marketable Given over delevering. cash few thought also while securities prudent it operate and was last

the Lee, reevaluate environment of beginning need cash improves, this we're amount As to securities maintain. to and marketable we

need But million... number go we and how ongoing need our of needs, that, based assessment So run thinking that's cash business. million is could about That $XX today, up or we we are today, our down $XX estimating it we're approximately about that to on

Leon Cooperman

in million RESI? So how in we RESI? from do you have have me away there's invested remind How that? And $XXX much much

William Shepro

roughly. million, $XX Roughly

Leon Cooperman

somewhere towards $XX you're million, between and million could be $XXX So heading spent.

William Shepro

RESI. answer me let your Yes, question on

core an our stock past, So to as discussed in important have But is strategy. clearly, I owning long-term isn't the RESI RESI customer.

want will how we reducing continue spend there. as over for to, that look of to also So our look position Lee, we we money, time, to

Leon Cooperman

got market price, cash terms $XXX of you. if a Got of percentage stock the excess think cap obvious. in of the you million million company. XX a Obviously, it's pretty significant shares, $XX you of It's

very get earnings just security. would it be you a if can So turned around undivided really

earnings then mistake get buying you're around back all turned a If making you the can't stock.

William Shepro

that's so And NRZ Ocwen way slide it, a like revenue, we look going to time. over what out know we Yes. we on Lee, and at the and put look the

to The It's business. have. growth we earlier inflection tailwinds now we in be headwinds in is, feel going inflection not we're years, making period prospects. very then our we're just progress, non-Ocwen an in good we period to very couple have growing better the there's progress that's we that But so going making next the our a hit And were good much year. of year about

Operator

Our next of question from Grondahl Northland securities. Mike

Michael Grondahl

$XXX,XXX, it's time Hey, increased to was is increase What from Bill, first non-GSE $XXX,XXX in probably sequentially. number's years instead driving several at $XXX,XXX? the that one of first delinquent the decreasing that that, loans

William Shepro

as a saw came bit. Mike, have is loan So rates think down the that hurricanes around in what's And is that gone borrowers up, plans what non-GSE both forbearance you working, because delinquency working And Ocwen with is delinquent saw is that's or seeing servicers and I though you're interesting what Texas our we with per impacting up. go Florida, revenue little service particular, are modifications. the primarily its other delinquencies

on a And of would have anticipated the some hasn't come to we fruition. so loan normally delinquent work

impacted doing basic but work some inspection So are we have are by very expect you I and some so, of think services borrowers with preservation other been those as would working the servicers, normally in, that coming or storms. work rightfully closely the are property

Michael Grondahl

it. Got

where you a NRZ, and number comparable from EBITDA the show for for slide do you then And that? into Okay. Ocwen the revenue XXXX visibility have and

William Shepro

exceeded our originally we now. I and Mike, the what at done to it don't not have it do. It's so right well no, fingertips expected answer is

Michael Grondahl

Got non-Ocwen growth, high think there? revenue for range year we should about level, it. of And then some type the next what

William Shepro

through going our still we're budget. Mike, So

growth tree's the these very some finalized we numbers XXXX, we think toward plan. our customers meaningful shaken new attractive But to of I haven't with very the the and customer the and end sort think yet, next that's - pipeline year. we're bit been going a talking wins Although, of about have

So more to come.

Operator

Credit next Our question's of from Kamali Suisse. Ramin

Ramin Kamali

Ocwen brokerage time established will to you've be currently with understand on the question quick over assets that from NRZ services. agreement a Just moving the I a and NRZ.

X, the what to brokerage is day as agreement then expect traveled would the what's day incremental everything on contribution transferred is X? assuming you services the again rate well, run secondarily, on be assuming services top line? assuming And a So all up signed

William Shepro

If at looked because we've we it mind, don't haven't you combined. -

at looked haven't We it separately.

transferred we you if signed agreements answer mind, don't So with of year, at at had then service as of I another of the if customers. of NRZ another roughly and the we question came year, the - beginning - But our MSRs this represented revenue, would've the XXX% won't XX% of marquee would've way. the that had roughly XX% the and then of XX% our other beginning from from NRZ list Ocwen and this

our will this customer base our suite. the So effect of certainly product have diversifying across

Ramin Kamali

Agreement would too, assuming Services change? Then established you a those percentages how

William Shepro

I other included working Agreement fully Cooperative will documents to Services signed. NRZ the both we the mean, with very I Agreement, that. closely So and I mean we're the get Brokerage that anticipate finalize

Ramin Kamali

we as dollar flow cash this, of but thinking everything stock decent kind can towards still kind should like You about you at of throw on - amount versus be how a pressed of about previous of investing? just this know EBITDA. But buyback just LTM cash you versus again, can the incremental And caller talk I use? lower deleveraging use as prioritization even you off far

Indroneel Chatterjee

with of at also if our pretty and and trade look the fixed the probable because debt, that's both our contractual look customers. at opportunistic I Ramin, attractive mean core it's leverage revenues at delevering you stock ratios, be anticipated at you maturity. and competitive X% Indroneel. agreements LIBOR It's And the look Clearly, either-or. debt trading It's it's to buybacks. our we coverage charge in at not the would given terms trading X%. from credits

debt pursue we we when to can. So continue as and buybacks

as cash debt intrinsic minus that clients as new our goes, in all our we adjusted it's stock revenues of intrinsic are present or getting estimation the of per for of far contractual our believe trading we below from flows the revenues, back when probability from share. value stock anticipated We the As define buying value. value

and in of So cash buy going not run stock we around as of as Clearly the when buybacks that by But's some significant of being to go flows to the million need either-or. have those business the it's value to attractive. we anticipated generated very the portfolio pursue is intrinsic we mentioned amounts trades the continue because the past you, and business, mentioned amount $XX have below so we out and around we think it. certainly we debt and cash we're

You don't double really rate of kind to buy X% a see market. tenure lot at of paper X-year the opportunities a of for in the

Ramin Kamali

I then stock for … And in RESI guess, new Okay. plans

William Shepro

add. there's to Beyond Lee, mentioned nothing I what to further

Operator

Seth Our Capital. next question is from Decade Glasser of

Seth Glasser

don't Is can there with sort the And walk believe any really of use much again - to REALServicing? that on longer of then through to you of you stated case? the to financial expect be update platform, why I not even you you've can use regard Ocwen's were you provide what's that, a happening beyond no that know impact if Ocwen

William Shepro

to moving announced or So, moving through and move REALServicing. they're I plan creating think, that the going - evaluating process then Ocwen's of of off a

revenue generated the million in breakeven. the of it's of $X think I roughly million we and quarter $X.X revenue and third roughly

the largely as with it. associated moves so it's managing off And system, Ocwen costs variable

to reduce can And system providers variable service we So whatever perspective, systems our a to very receive it's to those to for costs. from referrals. like customary Altisource Ocwen their services connect move were to,

Seth Glasser

it. Got

so basically headcount could saying? Okay, what be to decline is cut the the costs all match other revenue you're and of

William Shepro

the some things but to related relatively about small I in costs and talked will Yes. severance be I'll modest. there mention shutdown that like past just

Operator

from questions next Scott Our Burg of Deer Road. Park

Scott Burg

sort And kind should be hoping of your piece. guys view looking and/or monetizing get maybe My for that be one on of day? to terms then value I Owners.com. question we kind and in should regards potentially to the that outlook we at guidance is at of you looking was the that with also how strategy see any of

William Shepro

Yes, so thanks Scott.

our all So the our auctions estate online for in we that sorry, mortgage to of multiple inspection developed insurance residential of provide players Owners our brokerage, property real Owners.com. the the we've leveraging business, is leverage our our real one technology-enabled services we homeowners as business with And services Hubzu - brokerage. estate insurance mortgage - dominant like customers online platform. business, title our are And capabilities the

So online, from and as Altisource. a solution they get online, can associated more spending buying home with of all for experience the a typical where same great have time now at services time the search for the average a a and that we is more searching home home consumer get the

confident be investments can making So in, related it's are running all developing history and at business created. we've a successful we that we it's at that and given we but given these feel successfully our products a Hubzu business

are the with also lot the rental Expedia, excited doing leadership very who's the having subsidiary was space team hiring a in experience Marcello, this space. home Expedia, HomeAway worked of at of at We very in which direct similar got about the something there but

very Altisource. So longer-term growth but investment those contributor and exciting believe it's we we over a into have advantages can with meaningful a turn this for - the really

Operator

Our of Management. Asset CIFC next Matt Gruppo question's from

Matthew Gruppo

me. few a for Just

how you'd a bit touched the on that just or little you but it thoughts going to to forward? if You Any like leverage allocation. capital target previously a back ratio maintain have getting on

Indroneel Chatterjee

it's Matt, Indroneel. Hey,

just leverage But we We getting target it's at haven't think yield come ratio. pretty look our just and up X% today debt's where trading with attractive. the a we

short well. the maturity to focus maturity obviously continue to yield debt buying on So and given attractive our back we as the

like time. see to at would that's I point what this think we in

William Shepro

to include sub-X, our is incredibly our I debt low, is ratio X very my the recollection EBITDA And you it's if marketable securities. think today,

Matthew Gruppo

makes incorporating of a how sort in reference should And numbers, then of $XXX of to that be this and gross So the overhead? Is you're is on X, since portfolios? Slide profit EBITDA million question from one the NRZ other considering interpret how Ocwen it not kind we segment just this to thinking XXXX?

William Shepro

it's and for a internal Matt, So, some business It generate. expense customers doesn't very the that to sales, perfect need anymore. what but not believe because rough these generate, will proxy NRZ don't sell interest will include costs example, we business and it's of you Ocwen like

performing. are rough it very of yes, So is a those good how approximation businesses

Matthew Gruppo

guess, I question it guess between differentiate be how auction.com do your competitors you Okay. And one whether Hubzu. or in then marketplace, the Xome? on I that specifically

William Shepro

Sure.

business, reference Hubzu Hubzu have our homes during focused years. for and selling or players the there, dominant and at REO. become REO auction.com And the investments last and where made So quite are we couple Auction.com chain Hubzu scenario, has off in we focused they moving on space. Altisource homes before on That primarily that homes. historically of homes. that a auction believe the is at distressed in recently more bit an over we've focusing just online on up selling We

and are homes focused basically trend before you the of that's REO, become short remarks, as to sell before seeing on in mentioned sell servicers foreclosure So through online sale very on also And become a are process disposing REO. I to my Hubzu the sale. homes they their to where homes they

they're foreclosure as short the as and well homes foreclosure courthouse CWCOT the to So sales FHA's the using auction, at sale. auction, program sell the step

good on capability we and can time money with homes our selling moving that the some to are compete they become very listen some start as before pipeline, very, we auction.com. that Hubzu REO. on chain customer you our into a spent wins so and Hubzu our making have we do developing diversifying value progress but and by head the to base They so And our of earlier

We we auction.coms business. the the for opportunity very about think Hubzu. we believe and tremendous So presents excited this firm likes of a win with we compete the to can are

Matthew Gruppo

but the be in then might come one just across And couldn't last Okay. me. I This it. from XX-Q

of dedicated Just that's towards the today? the amount program capital buy-renovate-sell

William Shepro

have of level commercial approval so and between for on roughly in into And think our thing well. with as outstanding. next out, So retail board Hubzu, we'll and getting we think Altisource approve we that's there office as something buildings online, I'd auction could some business competitive time, is evaluating, difference relatively to there and into. that a are and background other commercial auction.com centers to - work board plan, million reevaluate appropriate close $XX have program, million modest the excitement would the has cash what's this I the to our we We to business. off think the spend the the auction.com investment developed we we only be go of be By space over roughly $XX inside we the way, we year given a have point about

Operator

of Shakar Lenkov [ph] Park. Napier from questions next Our

Unidentified Analyst

I I the of X next wanted you now. is us thing. this then that congratulations the an looked up and bunch the conversations wanted first just give these to of XXXX? for those answered some perspective portfolios of Slide portfolios the portfolio Ocwen in on the helpful But second, sort of that role. what down and - us like you're ask, Indroneel, questions on on ramp most to years. understanding opportunities you that - sort XXXX around but growth, how on over managing of context for you're for guess - having follow NRZ grow slide, my very a Wanted one were giving that could to that them what is actually you really think And with grow in appreciate

William Shepro

you is very to take. what have you we as here now as have counterparties And a where this I fingertips direction the historically - with don't relationships taken get to are or we could - in our grow but just forecast 'XX, additional we've continue with the from don't was Ocwen going growing. part? And I going can be we What we assuming try in think you What growth we point to it them doing we're right can assumption there's at filings are that NRZ. it and extend think to and our clear, conservative find their our that's any the 'XX after with and So closely second to the them. call. I to to our think But usual just obviously, work to business it we're with

Unidentified Analyst

a - before Okay, follow-up EBITDA actually on presume? the that. number, I that quick corporate These numbers is and overhead, just

William Shepro

Yes. corporate So interest overhead, before expense. that yes, which includes is

Operator

[ph] And Harrington of David MJS. question's next our from

Unidentified Analyst

that did what earlier and notional volume auction? just you versus of mentioned, market been terms of auction.com. the sense Hubzu I kind questions you answered but have give other. you Owners.com, - transactions Do does you in have for And can of, kind share of Can Most one of us versus give my of want Hubzu to go a back to data? think transactions of sense versus market have I - a generated do us you by

William Shepro

- same and look Yes, selling largely, we And website of we roughly just many marketed website you occasionally are to were homes are so if each month. on look being homes we think our sold. number the and see their how to

process. mentioned, I foreclosure a auction.com's to through selling REO be least it or a through and doing As at lot more the the more we're auction appears lot

so today Now when our X probably have - customers. talked we small we X, - customers about

We of nonbank we one a couple bank, with leveraging then about where bank we big have going - a big of and top-X to talked auction about to a pipeline, win and with Hubzu are a larger well wins larger top-XX we be customer - banks another of their then process. as the top-X leveraging X GSE, bank also sort pre-REO talking auction again, are where a as couple to homes. And bank have a we a

they large a if market they management homes foreclosure they think get managed options at or become REO there's have the each X if of REO become month, management X opportunity generally to to sold don't initiated, GSEs, me firms either a for of maybe couple in-house and asset firms. you modified like or the XX,XXX them, think, foreclosures the for the it before and it's asset those example, fingertips, but new numbers, about XX,XXX, to re-performing. And about might the or got to But work every hold use So to month, think market these notes, the those in-house - XX,XXX you there's I - leveraged we some say, my do REO. something others is percentage a I certain of

So the market process, it's focused GSEs in That's something as addressable to opening auction.com the been that's has the there. been move FHA why than probably historically. the very and much earlier up larger

last the making We now we have talk about total on of adding excluding the last moving customers. unit the very over XXX we about very, And the we far per good I so go and quarter, we after side very addressable XX% a XXX, sales think with referrals. of we NRZ And October. then sales to think and what which terms about XXX me, I historically in sold slides, market. And think, progress away And sales, here. we is stay And But the we - sales. are Ocwen, month to REO think if focused increase sold in want take RESI roughly this our if received number quarter, is I quarter. prior received, homes, revenue referrals XXX the in attractive you of new

while onboard a new clients. So it takes when you

the under make marketing then onboard and you the with have home start the sold. to the you've to You home, contract the to technology, respect client, got get to connectivity have

the that some becomes process But you take time. does get it very attractive. revenue, very, is - once through So

Operator

Jaffray. Piper from Our Barker Kevin of question's next

Kevin Barker

I've investments over run to expect Do similar and on the rate B your bit this your your $XX exceed midpoint million what little - at, close of And XX% you expect noticed estimating A this X you your investments a year to do investments? at into of have XXXX? been investments. of a running continue to year scenario

William Shepro

year And to my we So yes, grow this Kevin, in exceed talked those other that's we to make largely prepared believe will of the the businesses, and remarks. we likely I will planned reflective that investments continue we down. come timing as those about

Kevin Barker

hitting you or the close investment businesses down they're like to peak saying year you you're its peak? grow the period? Do is the investment next believe or hit So to period has going come as its

William Shepro

investments are making So growth. Kevin, these in we're our

the revenue we our happen; complete need are is, going example, as be investments investment we as down about, continue And to as make are going going is going to a add talked investments we've the for to two, be to clients, and originations, cycle. we going so, one of the things percentage X additional to the down; as

both to leading lead scale, these So our more ability we attractive very also to improve some But go making firmly still growth margins. we better to will investments. in investments and believe time have to that

Kevin Barker

years breakeven or some the you you going of made At the down point to that what the on positive you inflection some Okay, business? feel hit investments do like couple of some talked a and to EBITDA points non-NRZ then of start about turn see non-Ocwen, you're road.

William Shepro

prepared I So in are just on making solutions. clear, servicer the we to said remarks, be as Kevin, money

investor If you money making originations, in we originations, to we want not our we solutions. making in are we in as making real are money made as estate back margins investments but money, add attractive make, we are

real there. we But consumer not us we something have some out believe time. It's time. is business estate going tomorrow. to take believe today, advantages some we money Our This where is it's going to that's profitable turn strong take some not some very to advantages. making we going have distinct competitive we're but But

of So originations going the And to you we making out next our meaningfully but believe are towards look material X marketing the loans, prospects. year, expense. revenue And believe we are in good if money. our we're X without business to very investments, increasing and we're making then add long-term manner we add a that's in bet the we we fourth, back a consumer,

that. good about feel we So

Kevin Barker

X on Okay, midpoint million Ocwen $XXX investment, mentioned And XXXX scenario $XXX the EBITDA worth from and NRZ you your was before and in then million portfolios. Slide of XXXX.

see to bleed the near inflection that sustain finally the would to from going imply EBITDA this is you're making the able or in positive you're order third be something future? numbers XXXX So places it that to in money from that there other imply to the year. that revenue Is going that there stop? party to point you in in the not Or where would would need EBITDA have hit

William Shepro

I the dollars prepared attractive very profit, absolute will grow, of Lee, fee-based discussed to we in we runoff that we developing I going the margins just at look, normal as that's offset But a over grow the will Ocwen NRZ, as assuming business. down. which And of the we time the believe of losses. Kevin, as responded remarks, business, come So Ocwen, some businesses, attractive I or a attractive have other we're to think

in of the the investments which We've business, company made don't we over would If record don't need have earnings most to dollars shut think off a per good time. making existing today, period we we that our investments attractive flow couple investments we - you all we share. of a a sustain decision more of which these of longer have a track cash and very as free make generate to

expect assumptions offset time of will about to we we it. and revenue to decent and pipelines So period. of have we company our a it we and takes through continue one a amount long we further so to Ocwen are exciting NRZ pipeline And inflection eventually the our going have grow to making we've clients, we from happen transition is time, grow - get a those that in and investments. just point. as growth them The make clients very our most a no we We from and as had very

Kevin Barker

one question. then And Okay. final

some are your activity some active in considering M&A bolt-on that support or mentioned now? offerings acquisitions you XXXX. of some right XXXX, You of may the M&A being Are - from you

William Shepro

making. on the of Generally organic Kevin, always we're going Look, eye we keep in focused growth speaking, investments market. the and an on very we're what's

Operator

Compass from Fred Small question's Point. Our next of

Frederick Small

to comes Hubzu? guess, 'XX just, trying EBITDA up So on from X, I'm just following How the I projections in that. Slide or of understand 'XX much

William Shepro

make We business, going. all on and money out, can foreclosure attractive know very make that but very title think Hubzu. trustee evaluation money break our you're our I make attractive our property business, Fred, don't margins. we business, inspection So business, look, We our I preservation I tell attractive you, on where very

coming the revenue it falls second probably inspection be would that's largest the be from and property from down Hubzu preservation the and there, so would then there. biggest, And contributor

Frederick Small

understand trying I'm XXXX context thanks. in Okay, to of slide. the the of the sort numbers

be NRZ that that XX% said been of and revenue gets I - Is everything think [indiscernible] that it's NRZ this you service Ocwen the before XX%. transferred 'XX, over, would would've year, beginning at starting

William Shepro

it's Really rough number. rough really numbers. Yes, a

other XX%. MSRs revenue the revenue. service roughly the if the our roughly as marquee Ocwen XXXX they be and were forma of correlated would would represent we pro of a XX% you're NRZ work, XX% represent owned would last highly and XXX% If receiving including customers the

Frederick Small

- midpoint terms I 'XX revenue drives is XX%. at Okay, difference service for of what Ocwen, so there a - big - the the XX%, over of look contribution? on NRZ percentage that those NRZ in on around part Is revenue the of if the scenarios maybe little

William Shepro

things. would been our it rough Fred, would've rough to mind we are in we - going - look, it you also exercise. think think we estimate. as through be. forma next These we year. have a Thank pro numbers what keep so that's other Also What are And how

Frederick Small

just so Okay, understand. to

look in say what I XX%. of I scenario, X the XX% okay, it' Slide then the if been the that's at 'XX I think So midpoint it And about number mean, for the would've that implies or million the about made, is that I margin guess, slide is is EBITDA that way that before Is and $XXX that the EBITDA gross, EBITDA - of slide gross way is million. like margin, $XXX [indiscernible]

William Shepro

you're think I line. if some off the with about oranges slide. mixing just might I talk to it It better and respect apples be

walk I think slide on concepts. if it can probably But make you're of do confusing wouldn't to it you different like. a We through you sense the couple call. the

Frederick Small

in economics for of are NRZ slide in that there projections? margin which this 'XX, , what's you're that's that - is EBITDA changing showing assume guess, But that I 'XX I the Okay. in the year? some XX% with that's covered because

William Shepro

for out … so year Fred, we it separately haven't broken this

Frederick Small

have Did argument... And a about of selling part Okay. that thought secondarily on third-party? then look or the of flow you that cash The you or at to sort contract that. all,

William Shepro

ahead. go - Third-party

Frederick Small

the cash third market's at party Is lines. the something something ASPS, or and businesses can contract all is payoff look the part in that that argument, a The other potentially flow that? along right, of but ASPS, undervalued [indiscernible] you that and of reinvest to you'd is sell those at cash take that, then undervalued that

William Shepro

with business that very all, we sure you business organically. with our making and off we is that goes undervalued. well. of focused running thought growing right we the relationship first Fred, our are establishing believe now agree I NRZ, on And that,

but area. focus our at options look we course always Of that's

Frederick Small

quick can the you I Number or in look at quantify revenue more questions. the Slide maybe one, Two sets? aggregate Okay. segments if pretax X XX, or opportunity the at all opportunity X from

William Shepro

large to or think not up I've revenue. said represent origination one that very of million grow and each solutions break platform $X very we're can in or attractive going individually. Fred, the Hubzu margins. those a past, the The more are believe clients $X month business, we We as opportunities out million in

think gave about So it. we excited we're we we you margins dedicating And a and there. what pretty to toward sense how can buy-renovate-sell are as type of business capital we make much the

I can you math do information. based on So that some think

Frederick Small

which in the all What's the to then, option? don't to just as you is other response making investments investments. And [indiscernible] make you're question the have that well Okay. these

William Shepro

have business. a good the are investments investments we growth. of we're free Look, clients not is investments to those making making and to making run to generate cross-sell cash largely them. we history they're our grow investing My attractive needed in our And are us so allow flow those - think point to and very needed run grow. we day-to-day that We're

Frederick Small

way don't about we of the Okay. other the to investments if you I it? that businesses, about gross think those opportunities, don't become those - But - make don't make sort at business mean those beginning these initiatives those if year, of the then this the talked but profitable. Is you

William Shepro

profitable to can those origination the making I those not can servicer make make wins about, We be business That's investments margins other investments clients, if very all and we're investments. talked Ocwen it we investments with business and continue we In the our very what solutions making that other the are NRZ so solutions, to said. on margins grow we attractive clients, we these grow. could we those so we didn't more similar with make without can to scale making also than today

stop, to make can margins we these more very efficient. investments to think we if to it's allow scale but be attractively grow So essentially us and we

Operator

We of follow-up from Lee have a Omega. Cooperman

Leon Cooperman

said less listened been I've seeing a for that's price hearing, big everything flow, improving no hearing contrary as shareholder know. is gentleman what you the the you've long free But very concentrate basically environment, of there's objective optimistic I on and what a I've regulatory outlook, mean recommending ownership, I'm the a analyst, and stock. price I'm call time this is, I'm to not now carefully a cash half on cheap the there but stock. than to advocating valuation, necessarily okay, has

Okay.

out, some rid we valuable We and wanted them to very have them big we at price. separate them get out businesses can a of if separate

cash We have that $XXX on excess these sheet, guys balance you have market million of ever get thought thing me a $XXX cap, calls? questioners equity of private? dummies of like million taking the on the are rid quarterly And

William Shepro

to Well itself. really through to the callers focus going it's our relevant mean, to on we I strategic shareholder but for value clearly very And you point very some you business the questions. going Yeah, think And evaluate get believe know now exciting to points your a of going appreciate inflection we'll know through be point, we but a always made the look objectives I to sort talk always about are that we in our you of this the not and is options of firm. right which are look, I terms building company. drive focus we're going primary think couple we the want we business. inflection and

Leon Cooperman

it's a would say? story So really XXXX you

William Shepro

come, our - always sort frankly, some, set inflection. we're base to we valuable. will of earnings have happens of very customers base that are Everyone and we're for decline. to the those customer to, offset to very to And but focusing from even NRZ focuses be we but other attractive a we the attractive and if have large very we growth have other more Ocwen definitely going didn't and Look, a we just continue we to It NRZ. and related even that's businesses - get just Ocwen and got that to with work we it revenue on Lee, on work coming are the a be the if just down that business of doing to think

are continue and to The going improve grow. to other businesses

Leon Cooperman

and my big at say. have so saying, whole I have I go misinterpret you enchilada. leave That's believe you if a should But on the everything it. killer it instinct don't you're smile what a I'll for face would that.

Operator

will there closing questions queue. no other in Mr. time this is At I Chatterjee turn to remarks. for

Operator

participation Ladies and today's in today's This for concludes you conference. gentlemen, conference. thank your

disconnect. now may You

Altisource Portfolio Solutions (ASPS) 27 Oct 172017 Q3 Earnings call transcript