ASPS - Earnings call transcript Q4 2018 | Altisource Portfolio Solutions S.A.

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Operator

Good day, ladies and gentlemen, and welcome to the Altisource Portfolio Solutions Fourth Quarter and Full Year 2018 Earnings Conference Call. [Operators Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Ms. Michelle Esterman, Chief Financial Officer. Ma’am, you may begin.

Michelle Esterman

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

obligation a include release statements that today as cause to looking well the factors results Please to actual risks the identified statements in remarks these or Our We our section that describes may could factors which results. information which lead include in risk and number a as undertake forward-looking as XX-K, uncertainties no update statements review forward new result different to XXXX differ. of of events. future company’s earnings

During GAAP appendix to In regarding is additional this non-GAAP the disclosures and release to included present measures. in slides. quarterly you’ll financial GAAP A reconciliation find non-GAAP our non-GAAP call measures of measures. and we’ll both the earnings quarterly slides,

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

Bill Shepro

we Good perspective, morning, income share financial XXXX generated term financial year our a Project objectives. financial operating From thank scenarios us and longer today’s our adjusted our help achieve focus the pretax of per for began and Altisource. our a strong to call. earnings for has midpoint adjusted been larger joining substantially businesses cash. productive on Michelle. Catalyst and certain Operationally, exceeded we organization, Thanks, exit streamline adjusted establish to opportunities you and and

work an the scenarios. discuss scenarios these income provide financial for than turning The $X with and the we’ve new This stage we on XXXX million XXXX and pretax continued the sets our and them what grow to financial each we Leveraging win in our adjusted are morning, We midpoint strengthen items $XX better growth I’ll we XXXX, closely leading relationships with work earnings our of and corner. largest anticipated done update XXXX. of achieving in in XXXX also to million our customers believe is continue business with institutions.

see cost seasonally strong second scenarios quarter fourth quarter, Notably, $XX the six than Catalyst XXXX, share can income seven, achieved until XXXX. second adjusted in that and fourth higher the earnings higher scenarios. you didn’t of XXXX driven midpoint of per our on first income, our quarter and of because fourth and in Project outperforming savings of As from significantly was quarters, slower the Slide in adjusted than than quarter was of income the the quarter third fourth than we we to expect and quarter typically pretax $X.XX diluted adjusted million is the anticipated adjusted XXXX. the generated by pretax stronger we which XX% achieve pretax midpoint XXXX strongest of a and

of the Slide perspective, year $XX to debt in further the to the less debt a December representing of of our of the capital from securities $XXX business. year debt our the end, continued homes million. $XXX million marketable $XXX April of XX% reducing buy-renovate-sell eight. Throughout at and ended Turning the million XXXX million net with from million book peak the million XXXX, in beginning extending we at by $XXX reduction for maturity $XXX XXXX a We April From after the value balance XXXX. refinanced to deleverage reducing from in approximately term to loan we date

to at XXXX. shares $XX of $XX.X stock, number We Altisource of outstanding end the also of the million repurchased million bringing

million During capital on generated XXXX, cash a operating spent modest strong and flows we adjusted million $XX $X expenditures. of

simplify reduce the decline have continued out footprint. to as requirements Our we and organization capital

financial streamlining organization objectives. in focus on our longer-term We our XXXX of second help half Catalyst opportunities, Project to the larger also achieve established and

evident quarter, we of businesses. property And a August business. business the to we Yard the part XXXX, fourth to buy-renovate-sell certain this homes the fourth Residential. aggressively XXXX established to XX% of As of until adjusted to XXXX. to implemented in began automation the other Front our migration $XX.X and to effort, pretax reduce of and elements operating higher the XXXX To management cost quarter the income center we In sold we financial plan streamline program income exit that XXXX. the will including data selling of was million year buy-renovate-sell in Certain benefiting expect our we’re in anticipate million the higher. our results. achieve to was end first in results. operations, remaining adjusted $XX.X majority quarter XXXX during We we be quarter towards of fourth initiatives, didn’t costs the cloud This exit quarter Fourth the the able savings our of XX% continue savings of was this and plan, than achieve

for to portfolios the of year, worked one transition certain PHH of providers grow role referrals as Ocwen lines, service to Ocwen with Altisource’s XX% affirm and establish a transition, a other business With XXXX. and Ocwen’s strategic Ocwen related last we through August provider NRZ up and to relationships to them. last strengthen of to Turning to for an from with our more we and buyer agreements Ocwen, system this to some approve and executed cover primarily costs Ocwen Altisources assignment our to to our use Throughout facilitate service to of or closely process our review permit servicing agreement customers. week, of potential

NRZ Ocwen’s brokerage and cooperative brokerage With it Altisource. to We’re we growth, pleased for MSRs to acquired the respect NRZ provide in REO XXXX. we with sign which from auction services be that this should and that Ocwen, by agreement under support with agreement executed Ocwen believe good very will

Ocwen. as agreement a a with other agreements we into direct direct provide agreements enter of with services provider to our Ocwen the relationships with position portfolios and a our provide the of XXXX. is services the the acquirers through Entering December establish to Both of the with Altisource expired on Ocwen. largest default-related in NRZ further industry. Since agreement multiple the acquired letter on other to intent service business the potential We into irrespective rights services continue and grow one expiration, an executed agreements receive provide to XX. has continued August service basis We the extending times, portfolios MSR from it Ocwen believe In these as business to transferred look to NRZ with our have all establish the default-related LOI with extend other the uninterrupted on NRZ. forward Altisource opportunity After dispute NRZ. Altisource under the NRZ to and that XXXX, services Ocwen we on to on and develop of subservicer, from servicing our provider avoid a we

to Turning we one I’ll largest largest of began executed and We short-sale some United to an Slide foreclosure customers. in provide of some estate business half REO, to referrals investors highlight and the States. year. institutions agreement In real with financial X continued the mortgage wins. second of institutional the win during notable and foreclosure the and receiving of and REO with more XXXX, our other the the auctions

expect to begin auction this We referrals receiving quarter. short-sale

large two made onboarding progress customers. also We

month. to and referrals REO customer and asset engaged began provide The us services management related first last we receiving

quarter to receiving begin to XXXX. customer engaged referrals field us second expect and services, we second of the provide in The

we customers on as Hubzu experienced trend REO other growth pipeline Slide Ocwen, from As Yard in customers, expand and receiving this NRZ to referrals foreclosure convert XX% auction newly and anticipate noted opportunities we customers onboarded continue to Front wins. existing begin X, growth We Residential than from inventory and in XXXX. with

Owners.com, brokerage. Turning our technology-enabled to real estate

in number XX% XXXX. We From consumer continue XXXX compared and continue an bundled choose to agents the make grew revenue buyers on by most with of by We our closing transactions tools. operational to that differentiating savings to real perspective, to markets and our great provide sellers service estate focus streamlining experience and expanded services. our to XX% strides. offerings enabling the we

of also tools. strong adoption experiencing newer We’re agent our

year. our in recent home end working tour customer the X,XXX I maps that highlighted quarter, drive through our sales revenue helping recognition, Pointillist app. double-digits two report will the to from rate growth was journey new the sales the in potentially from wins and we’re The an churn is and experience, X,XXX the customer an received the reports. Owners.com the sales the team lifetime For anticipate for enterprise Pointillist as validation this at in lower. and the be example, a journey modestly One, from signed the of a XXX% currently that enterprises home tour enterprises. were We increase customers leads visioning With accelerate approximately increase intelligence artificial over and with expanding We quarter, uses again working a high SaaS to our by for XXXX other value. to market increase XX% agents Last and leader last industry platform year Forrester Pointillist optimize be with recognized Pointillist, customers, In professional agreements journey Forrester with growth. three that provide customer enable fourth we ended large customers that customer credibility Owners.com’s and orchestration. agent with Wave reduce operating of analytics disruptive loss will journey customer

medium-term, incubate This while we XXXX Given potential burn. eliminating that anticipate Altisource’s basis. upside we us short-term the to run Owners Pointillist strategy raise Owners to from continue not the and and Pointillist allow cash benefit and will these that progress, capital should grow if standalone In a our on scenarios and reducing, to businesses. the reflect and continue

adjusted and the and per to Owners million, Turning in BRS of NPL higher of The XXXX of adjusted be we our continued service year the the flow At impact momentum normal midpoint to onboarding fewer $XX of XXXX establish to full scenarios, the portfolios. sale business revenue from We of of lower operating is of NPO by XXXX, million $XXX Slide from we lower property – $XX from earnings buy-renovate-sell than portfolios, share – RESIs $XX discontinuation GAAP financial $X.XX partially flow referrals business, XXXX the diminishing clients of our REO process income anticipate runoff the we adjusted pretax and from NRZ are that the the Pointillist. offset sale XXXX million. will is million, XX cash rental and operating of clients and and scenarios. impact the anticipated Ocwen, of management XX inventory. our revenue cash be from onboarded in XXXX of service

As income be on calls, equal than adjusted would to believe we that prior or XXXX. communicated better pretax XXXX we’ve

we a of million higher $X Project XXXX, $XX or XXXX impact achieved year on savings take solid – fourth income to accelerate for and Catalyst scenarios believe the early XX, for benefits from better XXXX midpoint for million debt, the can and and steps We you reducing our XXXX, in market is in adjusted because not capital company conclusion, XXXX projected to shown additional plan did than allocation than grow assumptions our year Altisource. X. taking of pretax full positions flown earnings the midpoint As see performance we’re on the was Slide our a an even our And Slide provides back us in Primarily on buying position Slide a XXXX, balanced was continue perspective, good scenarios. approach based XXXX. Project the we to XXXX in XXXX. our expect the actively a Catalyst better performance until that stock. quarter developing used XXXX by From XX financial In business, midpoint. in to our our conditions, investing million we scenario $XX XXXX

non-core from opportunities. and organization rationalizing We’re strategic businesses streamlining to on winning business focus customers, larger the

We call best Project team and the continue these the economy. to position will on growth. members. cash open as in like of phase Altisource to focused a and questions, customers team I’d believe competitiveness support careers. company high-quality and the softening we’ve the very next Catalyst the in generate who choices deleverage employees We recognize Altisource��s longer-term leadership services. flow a to also and and incredibly now to with thank benefit these up had We with very operator? to process, part like believe stronger our wish and we’re make difficult from position the our the providing their to attractive members a strong some I company of decision for difficult team have Through company’s will valued remained

Operator

[Operators comes with first from Grondahl Mike Instructions] question And Security. Northland our

Your line is open.

Mike Grondahl

Hey, Bill. thanks

with on or the So the opportunity NRZ? what’s we agreement going Sort Ocwen? or then takeaways the an two challenges LOI update what’s three how of interpret the on NRZ? or do And with from with the

Bill Shepro

Yes.

approximately strategic terms this we’re impact year, very servicing business but revenue, giving in historically I scenarios, its real which Ocwen working through servicing aside transition, for there’s – referrals the of them the impact reaffirmed the our it’s a ability very to formalized modest a as built is million. Ocwen So putting We’ve Altisource. clearly impact Ocwen is be the approve of is think, Ocwen. real to I to we’re our provider we into our think covering off $X which to revenue, ourselves of our little – Mike, transition our benefit the for now I with XXXX. think, think Ocwen now Ocwen, with August up of portion sale will received, related of we a a bit about to large benefit we a lines, financial that of the transition, individual and we’ve costs which servicing, And

revenue very it’s And to Ocwen good to impact for us. the able is it’s Ocwen year. very modest obviously, grow. So helps our It grow, to extent this

Mike Grondahl

Got it. Got it.

helpful. there you XX/XX. saying an you’re – after and agreement that’s And have still LOI, you your I sending referrals agreement place, but you previous NRZ, to an come on in still think they’re Okay, so in didn’t

could there? clarity just a little you If provide

Bill Shepro

little a so background. Yes, just

someone So MSRs, by we that we else. with the Agreement back signed dealt think serviced – Ocwen the or be Cooperative to on with assets owned owned or Brokerage are in REO NRZ And NRZ that XXXX. brokerage, so

We those those a with service which signed agreement an of We have deal that NRZ the in some to benefits provides Ocwen And services NRZ. there’s provider XX that believe, direct do December Mike, downstream us as Altisource Ocwen portfolios. LOI on all other to default-related with with portfolios. separate a the Ocwen having on because we services have separately agreements establish the with expired

one the the largest For example, did also would in we a with the if industry. MSRs Ocwen to providing servicer, the a still of be It’s direct sign we longer of if deal. was good no very deal services, buyers

the And expired. That the relationship. believe, since of some our agreement provider since those meantime, with with the the remain in So an the there continued conversations to controls referrals basis, believe, the we’re on to services we LOI, Ocwen benefits. on some are we we’ve expiration But of uninterrupted and We’ve XX. NRZ had portfolios. open and agreement to we receive Ocwen December formalizing

Mike Grondahl

Okay. savings the Project Catalyst. What do you think expense is in XXXX?

Bill Shepro

Yes.

at So little bit it Mike, we’re a looking differently now.

originally save, said, of, recall, a of, been exited $XX you we annualized moving could parts million. There’s where $XX an If at lot businesses. think, Altisource to we thought on we’ve I certain basis, we sort million

real getting of servicing get permitting off We’re – now to sooner. we’re off of Ocwen

was the put XXXX. up for Project than Catalyst us million out we these allowing So as or to achieve at today, looking midpoint higher is scenarios what that $X basically we’re now what’s helping to which achieve

even And But across increasing go our additional business year the we see company you though you’re towards the in perspective. – last through to for company-wide would so look take we’re in we’re do our our I really thought mix or little even bit, growth year time looking at or the on and corner of of our and going changing and what if growth this our margins the we is think that view if further you slides, sort from a that overall over XXXX. way that turning

Mike Grondahl

nice signings of What Slide outside listed you XXXX. you it. the is last looked look on And like It have in like? what had X Got question? some XQ pipeline

Bill Shepro

Yes.

most of signed, fees. There’s super Slide I very REO that pipeline think, level that So collectively that going. a perspective, reference that management sales a we are which good And referrals just pipeline yet close We normalized of a we’re could X, They’re customers. auction at on the say a asset we’re really REO those working first believe attractive couple getting that on. feeling in we’re from exciting. developing XXXX. don’t far month so to than deals we those to we I’d more getting Also, how XXX generate about transactions, and think REO is with

get and side, both pipeline to RFPs several customers, and we services lot continue of field that the the the with large of about. are traction developing we’re a middle we’re optimistic On small and in

So we’re feeling very developing. good about how the pipeline is

Mike Grondahl

okay. Thank it, Got you.

Operator

turn for to [Operators closing over Instructions] And Mr. any the not at showing call I’m now like time. to Shepro I’d questions any remarks. back further this

Bill Shepro

Thanks, We everyone great operator. appreciate call. a today’s joining Have day.

Operator

conference. thank may today’s you have in you day. a and all today’s participating Everyone, and gentlemen, disconnect. Ladies program, This concludes does for great

Altisource Portfolio Solutions (ASPS) 27 Feb 192018 Q4 Earnings call transcript