ASPS - Earnings call transcript Q3 2019 | Altisource Portfolio Solutions S.A.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Altisource Third Quarter 2019 Earnings Conference Call. At this time, all participants lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

hand over to today, your like Ms. now the to conference speaker I'd Financial Esterman, Officer. Michelle Chief you. Thank go Please ma'am. ahead,

Michelle Esterman

you, Thank Operator.

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

Form Our include in quarterly review Please the that which statements section forward-looking as results. involve risks different release, number of XX-Q differ. remarks uncertainties results that the lead may Form and contained to company's as today the slides earnings our and to in factors could XX-K, statements risk a cause well actual forward-looking describe which factors XXXX

statements undertake a feature new result obligation of or update We no these as information to events.

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

call today's Altisource's for Chairman me Officer. Executive is Joining Chief and Shepro, Bill

now would call over turn like the to Bill. to I

Bill Shepro

thank Good call. joining today's and you for morning

we experience third to new Were the made have would it usual. servicing financial the as for progress continued core businesses, with quarter, transition while the continuing not the During temporary we third quarter impact, company. from our Ocwen's to to streamline good system, a been business

our businesses. ongoing streamlining and Altisource core are on on financial focus morning I'll discuss growing performance, our This progress we making

servicing REO second temporary financial sold related license was of to adjusted the per of income migration referral Slide and on majority a quarter quarter inventory million continued on have lower volume Buy-Renovate and rates. system the on see can X. Ocwen generated and revenue of the negative reasons. a as services three of primary second revenue. diluted you in we pretax default Service than impact service REALservicing business result servicing Ocwen migration conversion We for the of share As assets system sell fees the $X.XX declined adjusted $X.X July and million five, on earnings $XXX.X

quarter lower of a third We structure that our We we by timing to anticipated third earnings been income reduce rates rates have rates the amount our this revenue. would cost adjusted were conversion conversion supported revenue the margin estimate approximately that operating anticipate million. Absent REO this estimate by of conversion couple are Pretax and negatively than the next since quarters. have the item normal course impacted would a greater over lower $X.X inventory believe similar XX%. returning quarter impact,

from debt RESI the business the We use the $XX of and cash sale during million repay to of services of quarter. financial shares sale

a remain $X.X reduce we us. repurchase Ocwen shares. if We for We also to had Altisource $XXX,XXX and $XX migration from not our for on and estimate debt CapEx system CapEx. impact have receivables that low shares nominal servicing anticipate cash the million continue higher million it We requirements to repurchase revenue will that to plan use and and operations temporary been would were

cash million. of and less of million securities and marketable $XXX net with quarter $XXX marketable the ended We securities debt,

earnings provide Q results operating of Our released to last compared in a detailed XX discussion year. our

just we our of X Slide scenarios. to scenarios, earnings share will first We of discussed. midpoint the timing the due of from XX% EPS our end quarters recovery servicing and of system our migration to of at the that scenarios for currently of the the I adjusted the Turning year per of the Ocwen three range year the the that of anticipate impact low-end

we growing very believe Altisource group have streamlining that markets. attractive in our base, focus are strategic we our and of operate revenue businesses a and large progress and With will on we making diversifying concentrated

last year, a our from portion stock. of we've progress use sales the financial rental business, highlights inventory management these business, property X RESI Slide we repay in debt. We the services to and of Since sold July of million made proceeds Altisource. CRS streamlining $XXX

anticipate which down a and we'll it position October created Pointillist in began we owners.com winding capital to also and We equity closing raise business. separate entity the

During owners.com into Pointillist moved when million and three cash separate first $XX X.X a invested of a generated the combined quarters losses into XXXX, Pointillist of we of additional in entity. we and million it

these the earlier Pointillist, of we the burn associated closing of and the are separation stage owners.com With eliminating cash businesses. with

company no that and participate an but Pointillist optimistic are from capital for to will the in raise attractive equity provide future has The Pointillist XXXX others ongoing We option obligation in an rounds. in future. exit Altisource funding

good very Ocwen marketplace core estate revenue services, onboarding our and and field businesses, NRZ, made customers and also customers than in real are solutions. and which mortgage from growing We progress other

a can higher and XX.X% this see the quarter seasonally to you basis third X, than Slide quarter As than XX.X% quarter was higher on the on revenue last continue. year. adjusted anticipate second We trend same

later select customers. had strong of solid client have the launches business launch with new progress highlights We and year scheduled quarter XX first Slide year. a this next of to program a and quarter pipeline of

engaged receiving quarter, States these referrals States. we by in this XX began the believe We field from one a are five servicer. of service few customer During a we top vendors in

the our referrals servicer, engagement We field pre-foreclosure expanded from REO in REO We services to servicer tier, a specialty auction top the third also non-bank with bank services, field quarter. include referrals. began receiving

expand existing for receiving services. FHA and our the entry customers portion of expect our customer, interested represents launching longer quarter, growth foreclosure demonstrate Several based the businesses. of from anticipate to XXXX, are field a investors the these for and suite client. and point we upon an in revenue the streamlining institutional is In existing an performance company real base, and mortgage diversification field In that of service attractive which one referrals anticipate the top auction and in quarter begin we benefits, investors of to servicer believe we U.S. first the foreclosure a launches program and relationships largest the of Altisource of post pre with the portfolio existing our countercyclical of scalable With ability term estate and fourth XX from services we

one are and residential estate services, the field largest the We residential One providers represent Cooperative of the of of market. real XX% of manager residential members origination lenders the loan auction more one online providers than of largest whose collectively the

develop continuing base and In business winning some customer a a declining to fault-related growing servicers environment, very and the attractive delinquency the we're of largest with GSE. and a

have which We customer large one of originators, the market loan members residential a includes also cooperative. lenders of base middle

strong our from default and grow are our convert delinquencies base. businesses We both believe origination we position to with attractive our from related attractive market to pipeline we volume a our should opportunities position and more benefit customer When scale, rise, also wins. in and of

Before leadership of call questions, team. would to opening the for Altisource's a founding I like member recognize

seen has friend Wilcox, and always this built to our and Kevin the for of filing, thank Kevin done. XK the his him of a I'd Chief As in build from transition Officer you contributions on recent work like Risk be period. leaving is Kevin may our very have and will firm a I'm Kevin the and Administration many company following to talent organization his to will continue team confident a leadership, bench strong commitment Altisource.

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

Operator

from Office. Cooperman Family question with comes [Operator Instructions] Lee first Our Omega

is now line open. Your

Lee Cooperman

earnings that locate not could the I get, to guidance what is put supplement? into your a want but supplement, you Just the

Bill Shepro

EPS Lee, in migration, morning. the -- scenarios. that Ocwen six our system what page end from on servicing will is Lee. we page -- given hi, on six. So, we lower the Good page impact is be the adjusted On the said And of anticipate

Lee Cooperman

I what find is Which supplemental? the can't

Bill Shepro

Looking, second. $X.XX. give me a

Lee Cooperman

any XXXX. $X.XX, comment about

Bill Shepro

Yes.

cloud. closed sold We've but this the at we're $XX moving also our center I'd stage year. NRZ. some losses the we when about which the past million growing And earlier going think Ocwen some keep businesses, there's or get savings -- number was earlier large cloud pretty puts moving to data some and we've of So, businesses, to going in eliminating same we time businesses, million the a $X about like, stage to to think some takes, and the from XXXX, we've eliminated to the we're

the year. and next puts takes, still we're for a numbers the lead with So finalizing

lot preliminary. think savings So, new -- this business. and We is offset those of the with we declines a largely can very

Lee Cooperman

a year do or to year better worst have We or year? expect about flat a

Bill Shepro

So, look, preliminary. very it's still, we're

last numbers our for a imagine. finalized Altisource We've as at of over year you made months. lot haven't last the including We can of changes couple

think year. So, I we're we can look a still look, of off after similar businesses. we some preliminary, something selling do even finalizing next those at But when

Lee Cooperman

Okay.

question this know The I about. much really don't on which second Pointillist,

back are equity doing we that? You're raise quarter. looking to every Why You're buying stock capital.

using our coming the money? probably expensive excess taking the have So be capital the we assume from your outside, would than Why capital. on miss are rather capital. own we than capital I from outside more me, own

Bill Shepro

Yes.

a think They in quite bit this is help an and model would -- a we of expertise it would from we benefit fintech benefit it way could in that Pointillist have in sort bringing SaaS venture that. the a So, of firms seasoned type think product. business us

Lee Cooperman

So, not looking so are you much looking for for their expertise. their money,

Bill Shepro

business, business. develop grow us can They Yes. the can help they us help

Lee Cooperman

Okay.

I get Okay. that.

with this forget along step buy buyer As back do when Okay. consistently buying results continue the buy been the lastly, stock. back over did own the about $XXX few but you are continued What you what to you're results back, and room And at years, in of then your think to you a your board board persistent and last the disappoint. guys and in shares? you a persistently had goes have stock we buy you back share, disappointed your

I you buy shareholders. So back you you stock? to explanation when owe you're buying think think what an do back

keep pay buying back? in the are and stock. You've a you your the dividend chosen of view not company that value you buying What's to back

Bill Shepro

brought starting The Yes. with And a believe new think have in our and and going to you year. look And we're the businesses. we're believe on strong growth next see the prospects. to this three growth we and all both very really attractive our it's attractive they three quarter we benefit We businesses into quarter set in and we of continue businesses, to efforts got if get core from next at, sequentially we've year-over-year. Lee of sales customers

till August, that we three that NRZ a a could creating attractive. that We've cash in of XXXX relationship the the and, flow. goes same company agreement tremendous strong businesses And out we're Ocwen with very a CBA with think and the and bring So undervalued. amount with is long-term got are

Lee Cooperman

We're to later. talk going

no you. [indiscernible] I'll So more questions. Thank

Bill Shepro

you. Thank

Operator

Thank comes Securities. with Instructions] Our Northland you. from Grondahl Mike next [Operator question

line now is Your open.

Mike Grondahl

Yes. Michelle. Good morning, and Bill

new kind just of getting delay caused delay an you all servicing the the there? system? do Is on this Ocwen that's believe update in With just that what referrals,

Bill Shepro

Sure.

So, good morning, Mike.

-- inventory percentage beginning the said, did roll beginning balance just what quarter So converted at through had the sold the the and if beginning the inventory the forward same of and percentage, inventory at we was that the we had we same quarter we in the servicing as if impact $X.X about of we to conversion same the We season, in million the have system in continued been the the quarter. prior in the of historically the have migration started would in it absent third third feeling quarter. years, the tune higher rates, June, our of

pretax. And have just migration. have all at cost-based servicing historically. have we million convert didn't system to pace we And inventory, basis, to as And Ocwen percentage have place related cost in that the would so believe we beginning fallen the X.X same that's the the largely we of we the because inventory

Mike Grondahl

Got it.

So, It's anything. you you're you're out getting on losing all still the like getting. anticipated not inventory

Bill Shepro

servicer, on referral you a and they letter when and there letter from is you foreclosure have changed the do systems understanding some and were the onboarding holds an a this the and servicers foreclosure basis, put actions a my servicing believe name didn't are we to obligated So to of we anticipate switch de-boarding hold.

impact and referrals. an continues on impact an have had to that So,

foreclosure So, we're are be we that at seeing, certain We're not of we're indication homes seeing an being think sure the what but sale, a some that. may sold the also not into less greater impact the an from We're being sure from early we're of holds. REO the referral sold the know at potentially more foreclosure homes what volumes was that. impact on from We was from is impact foreclosure. the percentage there

Mike Grondahl

they just of announced foreclosure that little to sales. I on auction.com ago -- do think with expand working quarter so a bit, a And kind to or were NRZ,

at foreclosure, we do think to they're you then through you REO of to sales? that So say able What seeing if it loan, and are there? get less need sell kind the might

Bill Shepro

and that our the We're of we comes foreclosures what put sold could We've REO that's inflow attention how estimate typically our Yes. scenarios. paying at the to together model and expected sale based And that. into historical percentage on REO.

sold If the it close foreclosure have loans to of could a sale inflow. greater reduce percentage the pay we that are turns out our So, attention. at

NRZ for We that. work performing this have doing that not at about conversations we're with had them, point but

Mike Grondahl

it. Got

Okay. watch if people to wasn't could are Clearly what the for that wasn't little that's kind comment happening then, I just down, of surprised? closely. enough? owners.com bit or a know just you of you something that happening shutting arguing growth And but with fast maybe don't

Bill Shepro

were make much here's results Michael, contractors that other decision we with was but very And can at Yes. in result, Hubzu were business. XXXX a owner's we we're made the the as going eliminate but business our to employees. agents way able reduce to in that a benefits burn the that model capital. to going investment with be independent technology the of bring positive the the bring the or a to using estate had consultation seen real it. transitioning the require where associated to better real And some equity there, we off longer that, from look ultimately cash at were We leveraging testing we in estate strategic a before we board business from and us or

to we're we're But in some working from that owners burn the inside business. same going associated cash eliminate of with the and Hubzu. leverage a so at to And technology the time, of

Mike Grondahl

Sure.

continue that ASPS? kind non-core businesses Okay. you left as Pointillist of could And then, What's streamlining any monetized? be other besides

Bill Shepro

objectives fronts. is And there's right. think is talked the one we We're a And strategically progress on All And two put and smaller the objectives, infrastructure aligning the our base organization two we additional seller, not deck. with we are in growing to good very three many there's having else it. the businesses add and we businesses at that more But we there's on very very we've businesses few evaluate. we're we're in of prepared But non-Ocwen slide remarks, -- that, the the can focused believe if in shareholder could on not on about to making Mike. this second three There both Yes. businesses, streamlining and small strategic organization, non-NRZ point, revenue the other a core customers. -- outside focused now would through or consider exist a really much those sell. of said one value we look, our that the operating

estimate services, leading then, But, Also is we're off of to mothball Mike the with right some now, And business. moving save run thing that the we're million of technology hope very and out while getting REALservicing, the are our the focused that we'll to transition of third of in complete, our about buyer period on quarter that activities on allow complete, and once will a system. year, other next -- us $XX essentially for point those growth start cloud the along NCI center of Ocwen data we moving the to the a rate three move of us savings year. we're by to with $X a the businesses. And a million time. we providing including I'd two that's will Once going

important initiative an well. that's for as So, us

Mike Grondahl

catalyst? piece the is kind project still of that and And million, or more up last in on sort the from, that to out with million implement is you of to the $X savings just left have ring there XX process it. Got following catalyst of project

Bill Shepro

Yes.

in the organization to at businesses to of I the align have we of to closing do still some the place. think when Mike, we look work and sales businesses, have the you these

there'll And anticipate the savings do company. streamlining of a we data some will come be course from more that large cloud. the of center very to So migration

Mike Grondahl

That's a that's it. then, more. a big just Got chunk left. And couple

So, of but focused it, you're up I spoken midpoint year-over-year, a had clarified even the sort kind the you migration but happening your guidance on think robust Ocwen Q of with still low-end. of for to saying the

little I right? of but kind a catch bit down So, still did year-over-year, that

Bill Shepro

rate absent anticipating way, right. right. to question. our and every just news we that largely not that transition we of by something whether is impact, ourselves timing the when. And in REO, is, impact I would money, on probably a try takes going make that grasp, right you'll get And earnings. of to we impact because didn't decades place But we couple in look, understand that fully the conversion beat That's been about have good or the guess it's transition the up we scenarios when was line. of It's it's the have We're don't the the think servicing always

Mike Grondahl

investments last year read million At like XX on in 'XX this Okay. year initial back be What's to pace on year. and be XX point million. it one to it million, then, spend going XX was And it roughly this was any XXXX? was

Bill Shepro

Yes.

the stage we're equity being it future. the account an So well we from raise balance to Mike, and but now winding it's perspective sheets aren't to on closing owners.com Pointillist still, down it's the funding further any and in completely, that and at going look that's going a we as on the accounting for it and planning earlier

the spend to down come to zero. is So, investment almost going

Mike Grondahl

XXXX. In

was that Okay. the like it direction I fine. was going. felt That's

Okay.

Bill Shepro

the normal in P&Ls. up And be I course the the businesses we will making clear, mean, just level to business investments are in that show in

Mike Grondahl

of bit Okay. same margin as if Hubzu the non-NRZ a non-Ocwen, these the guys will, the then, profile little worse customers, for you sales. is lastly adding Hubzu are non-NRZ kind And non-Ocwen, you or better

Bill Shepro

Page on in probably were inventory our close think So, XXX% you'll year XX, And what it to the was that? look up on year-to-date non-Ocwen REO sort first non-Ocwen. Michelle, non-NRZ look compared of at you number If XXXX. the if double is slides, grow for year of also you I page to what this in and continued and see to sales last

of in the paid more money for So were we've like paid, services for fees Mike, same or terms other customers. the

growing So of portfolio. success with the I than price? is think same the average the sales generate then the the the sales Ocwen price margin very is high the what's the in -- terms business the question pretty the size on And But we NRZ sales better. lower of fees in pleased now what's we're business. and really And or and fees average it's what a very, that right are our average price becomes on

Mike Grondahl

Great.

Okay. thanks lot. Hey, a

Operator

Instructions] [Operator

Bill Shepro

to one So operator, just thing I want clarify.

I anticipate think Lee's I response I we anticipate to the we non-NRZ and in said question, to NRZ, intended Ocwen growing business. and grow say non-Ocwen

to clarify that. for there's to just with you questions, we attending thank you. If and no call look the forward other Sorry, speaking

Operator

Ladies call. conference and for participating. concludes today's this gentlemen, you Thank

disconnect. may now You

Altisource Portfolio Solutions (ASPS) 26 Oct 192019 Q3 Earnings call transcript