ASPS - Earnings call transcript Q2 2019 | Altisource Portfolio Solutions S.A.

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Operator

Good day, ladies and gentlemen, and welcome to the Altisource Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will be given at that time. [Operator instructions] As a reminder, today’s conference is being recorded.

I would now like to turn the call over to Ms. Officer. Financial Chief Esterman, Michelle

Michelle Esterman

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

statements, include actual risks cause involve a to differ. Our and forward-looking number that uncertainties remarks which today could results of

in XX-K, well company's new slides events. and quarterly describe review Forward-Looking as risk may different Please the release, lead the Form result update future Statements no results. earnings section statements our factors that factors We of contained XX-Q as or a which obligation in as XXXX these the to information Form to undertake

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

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

Bill Shepro

Good morning and our today's with pleased Michelle. quarter. for you I'm second call. joining thank Thanks,

We in make good and Altisource on larger to opportunities. streamlining our continue focusing progress

supported began new completed We of majority the RESI BRS of the to residential sale the migration our sold investment business. in inventory, shares, loan servicing the and Ocwen's a selling system Services Financial

XX% marketable sale by the million. adjusting less the Financial a of to After securities business, for Services reduced quarter July net debt second we net year debt $XXX from ago

win our business develop our to pipeline. and continue larger onboard respect opportunities, new to With we and

explore that our collection value. reflect doesn't undervalued could to of unlock Altisource of continue value believe this plan we As substantially inherent and is businesses, ways we to the

X, we EBITDA revenue. million adjusted per pre-tax and of see million can million million of diluted $XX.X income of generated on earnings $X.XX $X.X adjusted of you income, $XXX.X of operating service As adjusted on share, $XX.X adjusted slide

to migration by platform, delayed cash earnings receivable its referral flow which were accounts During volume Ocwen's quarter, and revenue our second and new the impacted servicing collections.

million income collections by most pre-tax $XX We the the accounts return to estimate impacted the $X.X that $X.X that a this receive largely and impacted timing million we referrals anticipate are year, adjusted half of by will believe second to of and receivables million. these We items and normal in temporarily more receivable level. will

quarter by revenue from the Second migration. X.X% assets impacted of with the system servicing margins sale associated the income adjusted operating in delay were of and referrals BRS Ocwen's mix

first BRS adjusted margins Excluding sale, quarter. to just QX operating the the XX% were similar

detailed quarter release earnings to discussion a second XX-Q last compared of operating period and our provide Our results, same the year.

From BRS the perspective, quarter. by cash growing $XX.X a flow homes from second Operating operating the benefited referrals delay the I just and receivables million in negatively the cash discussed. cash the and in of sale was generated we impacted of

With respect we to securities, $XXX marketable to quarter time our for RESI in With over of in to to shares activities, the the plan RESI shares million of received million use and marketable and our $XXX,XXX investing $X.X to respect with million securities. from we ended cash sale $X.X We debt. proceeds capital Altisource to shares, continue repay to sell and financing the and repurchase expenditures. $X.X used debt repay million

slide scenarios. to Turning six and our

year is scenarios. Now full that we our transaction the Financial Services updated complete,

delay million not midpoint in certain with scenario sale can Services of overhead earnings onboardings. slide, reflects and is see pre-tax adjusted This primarily the per and customer share you for to As the and business sale that reduce included is take $XX the adjusted on income will the Financial $X.XX. time our updated the

Ocwen be the busy had worked businesses from $X.XX. stage midpoint these We a migration to simplify our per and on quarter our servicing to separate strategic assisted investments, system. scenarios a adjusted several recently scenarios its Adding earlier separate. that plans businesses that mind transactions, our the executing We very earnings in at Altisource. completed include would to to back new we in losses earlier share Keep stage of plan our

the we RESI respect closing transactions, We to our million sold costs. Financial With the for sold million July, million. strategic owned, of vast our for business majority we and XXX,XXX the properties Buy-Renovate-Lease-Sell Services shares, sold RESI of $X.X X.X worth of transaction $XX and in $XX less million representing shares

closing $XX $X transaction the the receive and less remaining costs of At scheduled upfront closing. million closing, to on one-year are anniversary and we received million payment, the

obligations, these to businesses our separate funding we Altisource upside. potential for earlier-stage to benefit from future and enabling the eliminate As while businesses, plan to continue

eliminate plan funding venture cash investors burn. business a can what this create Pointillist We a quarter year bringing approach a it if million sooner. standalone separating and and We with taking large operating anticipate believe been businesses into these Owners.com the in and as on not value and has next companies of with the similar $X.X visibility

Turning system. and Ocwen's to We loans to receiving Ocwen the interfaces in referrals. its a transferring to servicing assisted continue migration necessary new establishing

Ocwen of centers component are so archive This savings. will system. can associated move an complete closely planned with our the us Project forward allow with housekeeping of our our to we now to the that important Catalyst We working the migration to data transition with cloud, its

balance of sheet, these value actions the our strengthen businesses visibility earlier-stage bring our will our to more believe our simplify on focus We opportunities. larger and to Altisource increase

customer customer U.S. are on a of great already to launches larger pre- portion our this walk This see can We Hubzu. provide we win the existing a believe is recent on in is and which planned fourth a field institutional real and post-foreclosure to X, their in existing Equator by grow of through referrals recent they our of were a investors highlighted our the slide. to for like receiving selected anticipate mortgage an services I'd customer, estate and several you slide is as one on and example our largest you portfolio. ability accelerating. of relationships the of wins We progress program opportunities are quarter. of that As and

provide agreement a five Top field an first to servicer with the quarter, we In services. signed

Over the live end month. of engaged went this anticipate states vendors believe this in being in the these are and the XX We two few customer of we one by last in states we weeks, by states. six

Also, servicer. brokerage, in XX to management, services receive the from estate referrals first and we a started new to real field REO quarter provide Top asset auction

of During its the us. REO the portfolio second bulk the customer transfer quarter, legacy to completed

with agreement FHA servicer with referrals for the REO in non-bank signed foreclosure signed provide Top to services auction field quarter. in XX and We a We receiving auctions an referrals anticipate an We portfolio. their receiving agreement servicer for began a and July. fourth

auction receiving services REO provide servicer entire from referrals began field brokerage portfolio. estate to We REO real on management, their asset and a REO services and

We receiving from of customers also began referrals the second another our quarter. during

we businesses than to is more worth believe value. like current why great our substantially I'd making explain collection Altisource's enterprise Altisource's are businesses of Finally, progress.

We and are have business in the NRZ of the agreements meaningful some with long-term industry in largest winning Ocwen a and servicers with environment. new low-delinquency

build countercyclical combine economy, that streams. any We customer anticipate to Altisource wins base of opportunity. these When attractive more very represents you diversified the and attractive strong with our a softening revenue are going

This to of forms of As we the shares time businesses businesses, ways the more may value certain from inherent potential explore or in strategic plan sale believe we doesn't exploring investments shareholder to our or to include Altisource, to and one continue of of repurchase price value. other time reflect our transactions. our share maximize of third-party

develop employees to our Altisource's the for and for opening the commitment would leadership larger our and provide team I results and showing simplify like and Before Altisource, call great thank our questions, they customers. opportunities are up we for focus service as

of will benefit opportunities our but employees. to provide shareholders, rely Our believe the acceleration only significant for models people. in on We business seeing believe not of an We business service employees' and the reasons wins. our career are is new strength results we our also commitment that one strategy

I'd open Operator? questions. the now for like to up call

Operator

[Operator Family of Lee Omega the Office. from come from Cooperman line question Instructions] Our first will

Lee Cooperman

is full mispriced and number or why money cash achieved. results on Thank terms the would believe granularity you're the And one. be can consider very to the you. a you generation That of go detail sale that more you've stock the as you business that entire you I'm wondering And the is is Number in It year the more amount expectations what the for divisional of would two, spent value. dispositions? company stock relative frustrating if now you've to repurchase third, as to into looking at? opposed of just

Bill Shepro

Lee, good morning. So,

Let me take those order. in

have with being believe to stock mispriced, a very collection businesses So the Lee, valuable. we respect that are we of

they you Those look our Equator. than at businesses higher Altisource were -- operation. when well. got believe We've the at a And which we've them mortgage trade at solutions believe and enterprise have businesses. calling at value look services performing includes they're them And if at are if we're you origination you the individually. look what individually, a for currently got today, we very We trading field multiple we and marketplace

very businesses sales we're more sales also if of substantially the believe good today, combine on very opinion. time we the are I believe we strong trading than the than softening our that in economy the for And they're of really we believe a -- we're is And collection those and making wins wins as spent worth The individually walking you are buy call. stock progress. those any accelerating through

Leon Cooperman

weighing Are taxation. company, be tax you liabilities sold if in avoiding the you entire you other dispositions? would In words, double and

tax you you Have sell capital you that into If assuming off a weighed you individual individual unrealized trigger sell have as consideration? your build businesses, liability divisions, businesses. gains, would you which good

Bill Shepro

have and taken consideration let I'll Michelle Yes, we Lee, into respond. that

Michelle Esterman

Yes.

is structure taxation believe way us. about we've in we that have would in Luxembourg that I for Bill do transactions So said that beat and We believe think could thought what NOLs large such and true. a

Bill Shepro

then cash, And in of sorry we... terms

Lee Cooperman

good. Good,

The other questions.

Bill Shepro

Yes.

we're the cash Ocwen's I million we we quarter of transition in collected and pays its between than looking with more operating of adjusted terms still goes in generated the $XX cash and to working and the was $XX in closely think about think the for a of making year. have Ocwen that good change And progress progress we product second we -- at million on vendors. year, million down now should believe we very servicing $XX for did. really the those of way saw well, the $XX million We're collections the in we very that full revenue bring And it In anticipate which year. to the assuming end receivables

Lee Cooperman

cash you have company the would you excess now? in say And

Bill Shepro

Yes.

to that since required is use as that sell So by quarter Services we required the sold the of we debt. we stock used Financial pay money agreement. our to and our to Lee, business as debt down cash the down second we're the end the RESI pay also And

And our comfortable comfortable our with very so we're again, -- with cash position.

Lee Cooperman

at low-end outstanding there million shares XX generation about $XX cash are So the what million now?

Bill Shepro

roughly. Yes,

Lee Cooperman

about in $X So cash? a you're generating share

Bill Shepro

outstanding And about a XX.X diluted shares Yes. on basis. million fully

Lee Cooperman

Right, would something the was this try the right, the last If courageous question? right. somebody And what whole to and buy to is wanted entity, about Board consider?

Bill Shepro

I believe are the collection to So think I we're our is Lee more today. than -- said we've much Right lot for than in -- of don't say trading businesses going a know we prepared more worth remarks. money that and Altisource as now

at think businesses, include it of leave raising our we're for options. continue I now. look – so businesses, we'll options, And that which our may in and to And at the include earlier-stage other which equity to just some some selling going

Lee Cooperman

you. Thank

Bill Shepro

Thanks, Lee.

Operator

Mike Securities. Thank from question next you. from be Grondahl And coming will our Northland

begin. may You

Mike Grondahl

Hi. Yeah. and Bill Michelle. Good morning,

switching Just you that that'll to you gives is it a come servicing see is of like sales timing? comes Ocwen that Have you you back? in when begun back? yet? decrease And say the do XXX% systems. And confidence Would it what kind Hubzu think

Bill Shepro

Yeah.

the there basically, we pick – that's But work a primary that So the why the associated of down system. already is normal and delinquent associated you revenue believe QC at switching with in our more if per look – of management the goes reason granular to look servicing that the is One loan, inside and yes, one at and of two the referrals both we're starting a delay just we're see reasons. is we up, it's sort switching of Altisource, at come systems system because then REO level reasons Mike. referrals

what million? and is the second period Ocwen of entity was in that And that's And the Michelle, We that in service changing part roughly provides its $XX also a as servicers servicing about number resulted a delay loans. their believe the there's that grace us – the legal cost referrals. servicing

Michelle Esterman

$XX revenue. of million

Bill Shepro

to Yeah, the the million we by million down to when earnings. are starting $XX referrals we million of yes, revenue. $X.X And to we break up. of And Mike $X.X then it got pick product, see

Mike Grondahl

got it. NRZ, behavior any of from field services? it, kind Got coming And in what's Any change there?

Bill Shepro

business it's far as as we been can tell, No, usual as Mike.

Mike Grondahl

And Got then with it. the..,

Bill Shepro

going a five the we've we large a states, are making so launch, going owner that's we're to business of largest bank. to new in lot same And last that making year, see believe win added end by XX with We're month. – that Top in just we're is the by the of be of interesting making growth in the far this starting we very, to quarter. month what estate landed hopefully real fourth it's this very customers. But a then – the is way to over beginning And progress month we're we accelerate. And adding

So also finally very an getting We And really have onboarding. negotiating making with progress all clients through acceleration and with of of in some pleased of after requirements agreements, making we're control the that we're the finally cases inside very compliance, winning we're and onboarded the years deal have progress a that pleased we're business. in Hubzu. seen actually

So as pleased see with we're starting there acceleration, the we're really to well.

Mike Grondahl

Good, good.

terms of the from have those? Services sale XQ of both you rough BRZ, contribution In and of the do Financial

Bill Shepro

So with homes actually in respect business at loss. buy-renovate-sell a Michael, the sold – those to we

they And on for margins the impact negative had quarter. so a our

think about breaking of $XX of two million with $X sold in but not million. for book I that I year. today, $XXX,XXX the homes of the I value sales yet. think on business, out pre-tax then price haven't Services And balance we're own the Financial a we think we was approximately And detail, it

Mike Grondahl

For And the the year, – go okay. then ahead. midpoint

Bill Shepro

sale. approximately you'll million the built anticipate updated that into in sale gain That's business $XX July, is gain the scenarios. roughly from of an we see our The from

Mike Grondahl

Okay, okay.

adjusted simply from Financial it decrease the like and Can components? looks us will under it understand help you kind Your walking if Can dropped us down? EPS you give of the you that of kind $X.XX. new to it bridge guidance, a Is Services just the $X.XX BRS?

Bill Shepro

Sure, yeah.

to then business Altisource Services sold still And to think eliminate. costs a a that the we large is component are when Financial carve-out a didn't So that get some that business. at about as you there left sell have work are

to business additional need that some to eliminate. are there to So costs related to continue that we're going

these starting be to from earnings to from that So as the our our of to lastly, business And it's costs point the we And then in as that this the impact going time. then we delay some some loss additional well of a modeled originally those eliminate. in we see what We're onboarding have that but expected lower will think I year. to at it's accelerate it's work little balance customers. debt bit full of

And little interest so is expense bit a higher.

Mike Grondahl

and you the million going trends you update did course Is right like seeing be and I And update a Owners both the think so there? then give said more would an kind or you're say it. -- over little $X.X you're Pointillist on to of on Pointillist? And invest year, could bit just Got that you in the now great? of

Bill Shepro

Yes.

be then be own even though a statement balance our our their with respect we've separate establish to going the with they're -- the a legal in agreed And run is to company. company. And on we've sheet $X.X completed have as Board worked and our is to standalone. million on the to put income So consolidated this we'll essentially plan plan documentation all Pointillist and and

and on basis our be be the to upon future of anything plan the it performance do of in assessment unrestricted we length an to subsidiary them arm's business. it And have will will an with be is for -- our the based

our specificity update the that's they're very making pilot agreements both and so partners. provide during names signing channel They some later very a We'll pipeline pipeline a making the of Pointillist. attractive household but with a And that's terms They're and progress attractive an very, have good direct signed good more quarter. in a through for and call, plan programs pipeline very progress. on

pleased. we're So very

thing. little to Owners, the a The essentially are but strategy is transactions just And same on up bit we're do to It's something working with working with we're catching further Mike all we do behind. similar Owners. with the

we're Owners, bit. We're And continuing perspective, a continuing is a changing our net to very progress. good model little -- make from revenue

from because a but to very revenue very what revenue is of the which our anticipated what net still net attractive evolving making. little anticipated. our slowed we're little growth So model really be had on we're gross But bit commission, is is progress we growth going is pleased a keep bit we're the a to under down the basis -- matters the originally with more

Mike Grondahl

And it. you Is there of be? that then where still is there? are Project Kind got Catalyst to it, there? a you of Got wood kind of where chop to lot want it

Bill Shepro

largest to I going the Catalyst the get Yes. we're to going from be Project mean still benefit center. data is

So we're own cloud. off completely centers moving for of the part most data our going lease or in we centers the into be to the data

year that estimate we us could the million to about complete million save $XX process. And once next we $X that

basis $XX So million to $X about run on year. a a million rate

consolidation robotics to that's a our important of some Project at efficiencies building And of very automation facilities the we're so and businesses. Catalyst. initiatives where improve component still There's some some some

Mike Grondahl

in business, $XX selling so million Services gain And that it. the is from Got included the follow-up, one last Financial the $X.XX?

Bill Shepro

No.

sort because it's out -- adjust So out adjusted of that's earnings. adjusted our we of -- because --

it's it's of taken but in GAAP, out included So adjusted.

Mike Grondahl

Okay.

benefit. that clean. is So It sort include the doesn't $X.XX of

Thank you. good. Okay

Bill Shepro

reconciliation in Mike appendix. you'll And Yes. that of the see a

Mike Grondahl

got Okay, it.

Operator

the closing Shepro time. remarks. no I'm I'd like further questions back to to And showing at for call Bill turn this Instructions] [Operator

Bill Shepro

your the Appreciate everyone for Great. call. attending support. Thanks

Operator

participating Ladies does and today's gentlemen thank This and Everyone great conclude you day. the all may have program disconnect. for conference. you in a

Altisource Portfolio Solutions (ASPS) 25 Jul 192019 Q2 Earnings call transcript