ASPS - Earnings call transcript Q3 2020 | Altisource Portfolio Solutions S.A.

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Operator

Good morning, ladies and gentlemen, and welcome to the Altisource Third Quarter 2020 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to your host, Miss. Michelle Esterman, Chief Financial Officer.

Michelle Esterman

Thank you, operator. We first want to remind you that the earnings release, Form 10-Q and quarterly slides are available on our website at www.altisource.com. investors useful. information additional provide may find These

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

than timing the uncertainty providers In the the future the and result impact and extent review no uncertainty on forward-looking Form new referrals first impact statements future and which describe quarter the economy our may events risk in slides extremely associated on current well the predict COVID-XX Altisource. Altisource these of of as as impacted its a services in with Please difficult the addition of Form future or to undertake to as XX-Q, other statements pandemic earnings usual by events. Auckland is of We section forward-looking NRZ that and different to state results. Altisource. XX-Q factors it obligation or makes factors inherent quarterly XX-K the the lead update statements, Form of also potential release, to of contained company's The XXXX information directing to

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

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

William Shepro

EBITDA strategy compared financial update we the making adjusted Beginning to the environment. operating our $X.X progress our margins the an today's brief our flow a are of we slide I'll with and second. million a pleased overview to improve and morning Good We third in summary an adjusted very increased call. are for and on quarter quarter with by operating This third cash Michelle. thank morning, to in EBITDA and the joining Thanks, environment. you difficult three current sales address of progress our provide performance,

implementing of plan revenue are adjusted to to XXXX operating $XXX $XX targets million of service that our million $XXX We EBITDA. and $XX million million

Our of COVID-XX continued in throughout year. the assumes operating our related most businesses default plan headwinds

develop business to tremendous we default forecast we be base, available anticipate continue customer when us the increasing a XXXX XXXX operating also the grow environment. returns backlog and and our market more normal which We to to in late of into that will

four slide performance. quarter and to Turning our financial third

EBITDA. and million adjusted quarter, field pre-tax to we of million pre-tax services second and service a referrals the transition growth NRZ adjusted in second primarily revenue, adjusted on-going the field compared $X.X lower quarters decline pandemic to services adjusted pressure improved in service EBITDA in another revenue improvement on business and the our $X.X by adjusted a For with Despite and million of generated Ocwen's in measures on MSRs marketplace adjusted pre-tax the $X.X margin taken by the margin driven business. $XX.X was revenue improved EBITDA the the and and loss the The mix higher $X.X quarter. changes revenue cost by business in million million in provider, and third reduction from

market revenue homebuyers XX%. and XX% marketplace to sale approximately by as returned prices Our by the average grew increased our home

five. slide to Turning

cash and September cash XX, equivalents. $XX million we of As had unrestricted of

net quarter consolidate, business, securities increased but We end cash the we unrestricted which of the $XXX.X debt from still approximately the Altisource's by with separated of ended Pointillist million. marketable less from Excluding changes flow June. cash $XXX,XXX

of investment recently less securities Front Based end net million, a in $XXX.X for Since of shares the XX sold X.X of million. of upon been Front approximately September as would consideration debt million, As for had marketable we of $XX.X of Yard of securities Yard's Residential. September Front million. net the share, $XX.XX marketable $XX.X have XX, sale our quarter, announced decrease we per million Yard representing $XX.X

We debt. will net to proceeds reduce use our these

detailed to today's press of performance prior our more financial XX-Q. refer third to please compared For quarter periods, Form description release a and

As reducing operating our adjusted with services fees, achieve efficiency and an million on these of adjusted facilities that service results, workforce as plan $XXX footprint, $XX costs the XX% that you estimate EBITDA at $XXX To slide technology initiatives. to will and our expenses of and six, we we discussed and million XXXX last margins. with developed contemplates implementing to quarter, operating we professional revenue and size between other be XX% million EBITDA shown million $XX

sense from We on depressed our achieve the growth had data recent shows in related of deliver mortgages noncurrent in of of XXXX under impact we on plan that we're for that mind XXXX number business, in the XX% to pressure to period initiations of August assumes the same the a to savings work report compared our August plan. has on remaining throughout pandemic believe that XXXX Knight despite our to that track through are foreclosure XXXX. default on you XXXX have referrals August lower give begun were a of compared Black businesses April XX% in continued year. of the our To our with the Keep and most

the seven. forbearance current market for rates, normal delinquency in approximately delinquencies default for more every federal million. Based the in increase by XXXX. market, services that the market the the return will for upon In since market of for addressable has are by to into and a related upon beginning late that timing we of $X.X we addressable slide year, estimate the services billion plans, Turning the operating conditions estimate expiration that X% moratoriums in to over Based to $XXX normal eviction forecasting XXXX government's increase our billion. $X.X increases the our the default grown we and

we our customer base, to Altisource more XXXX moratoriums foreclosure XXXX programs, provide anticipate large of should eviction and market when the attractive normal of a operating business. very growing and that a with beginning significant there's because the late in return likely default and forbearance and is to this revenue environment. tailwinds However, With into backlog

to also with believe a and In growth cost base, achieve that companies we significant offers margin default related a the can with services. we our are anticipated Altisource improvements of one to structural revenue few origination scale we making that addition of full suite expansion. is

a that industry. largest the strong we several have last in the many developed the base servicers includes Over of customer years,

anticipating been, plans as of opportunities pipeline an one servicers Our higher with the to volumes of the end. strongest and it's forbearance referral is come also moratoriums

progress XX% other customers NRZ very XXXX from select difficult provides Ocwen, on an customer of and the REZI. nine slide months the we the we wins. XXXX. period customers are update by Slide nine to default environment, and Turning compared with to these first during revenue making eight in grew than a In same

the services services its During that loss quarters. the our government on use providing to contract, quarter, executed work a notified and of began auction foreclosure a XX Altisource's services FHA an servicer work of over on for by we portfolio servicer next begin states of nonbank XX receiving statement XX top top include XX were a its to a additional field for they couple a were expanding auctions, field mitigation the bank, top referrals to finalized services expand to

businesses, are low also from and growth our We interest developing growing focused are rate on which benefiting customer origination-related and environment. the

member’s of the are role while growing in cooperative leveraging to to should our the originations-related our demand helping profitability provide revenue market of XXXX. sales structural by to liquidity, sum and higher of services One our our XXXX performing collectively protecting Cooperative our improve growth Altisource, manager that We customers, for the Lenders XXXX, drive also our and when operations, to and we doing changes late help positioned employees. business growth continue well well health make growth greater to our drive Lenders for represent default originations into up strategy combined pipeline, members so profitability. loan XXXX. XX% welfare firm. strong a the with business in of related returns as One we margins the the approximately the sure additional focus for opportunity a for supporting margins going our This and capturing our demand, making residential and growing improving tremendous We're on are our into share and is To The and

begin model normal to and call demonstrating move are now current business loans the We that tremendously open we an and that efficient the scalable the through can to cycle. delinquent questions. once up for Operator? should I'll life default benefit have adjust environment

Operator

Instructions] Mike Security. Northland first from question of [Operator comes Grondahl Our

Mike Grondahl

out wins in call kind you're first progress first origination how going XXXX? Hey, anything party -- any is talk the good to Two there's anything Could secondly, the And the Yes. you of side, third maybe morning. up ramping part making on and then maybe if things. about of that or there?

William Shepro

Yes. On market it's Good origination strong morning, an this Mike. year. incredibly originations,

up are making relatively are of business off but good -- forecasting is today, $X working of is trillion be That volume they'll Some origination year. this we to small progress.

second we me the businesses quarter. I the about originations grew wrong, correct from third I'm think to if the by Michelle, XX%.

Michelle Esterman

right. That's

William Shepro

progress. making are we so And

and that We have done we years, incredible those to services job originations about to provide U.S. represent members, Lenders as also improve collectively not margins. And our a have of members those we to good should cooperative their help members the continue this products XX% in have asset those the leveraging where market. and One, as to over

large focused will into And to that contribute there's So believe we year. continue a will to very our that are on we and growth that. to going believe -- next contribute opportunity, very

progress. pleased we’re the So with

out plan We’re we And add at coming XXXX, then One. significant continuing in those of origination-related least growth and some our from services, the those to activities. operating Lenders additional members expect to for rolling

highlighted On the I few, sales of sales pipeline, wins. a our Mike

The be and seeing prospective pipeline should there's that on clients, we we the auction on inventory. this to a of going two On is The the REO last couple attractive has pretty believe course both in to pretty Hubzu, protest meaningful. a side. protest referrals. the there, have continue under no foreclosure for contract That or challenge side potential that the we quarters. is government to came sales We month conclusion on of have was start of a and finally board

in last starts and this foreclosure And from completed you year, in quarter foreclosure of like in the of year about the this when about there down XX,XXX REO X,XXX only that's third something think you to or sort of If XX,XXX foreclosure only last foreclosures, third quarter think the then year. third of starts quarter were year. starts, XX,XXX

I we will be environment quite normal to think to you So if the believe inventory up And a over just getting available foreclosures, is rates, look exclude tremendously -- plus the if XXX%. down they're you significantly, inventory at that XX helpful delinquency back but us.

when provide and normalize it tremendous higher than current market are base where does particularly that that are customer pipeline. our us presumably, sales rates a the benefit and should with to So normalize, will the our today, delinquency they

Mike Grondahl

lot. it, Got Hey, okay. a thanks

William Shepro

Thanks, Mike.

Operator

Raj Your [Ph]. next question from Sharma comes

Unidentified Analyst

could the bit talk up end so to -- to the little Hello, are the moratoriums, a projecting wanted about at you is And such about that lifting business that's good end the the chat of the then on end you or timeline XXXX? of this the the morning. little how just a business you of at estimate, quarter. I year get just you timing of first pick of

William Shepro

Yes, sure.

this end even then the believe, apply forecasting non-government moratoriums, largely least were we end those those now, year. of similar be of -- now, those loans, forbearance can through to the a really they And it extend necessarily -- both government's if we March following which Then forbearance government year. and also of but The about a at have so and applies year. of are again, into approach. entered think the we're year. loans, even this of moratoriums, And So up eviction plans to at loans. federal between right you not may servicers majority are right July believe end of extend the non-government plans, to servicers the to following you late as or though foreclosure non-government-related following government this applicable similar moratoriums And

that take vast And months, so at to off. follow when And loss around point, that’s begin of roll and then the will those the the that you've assuming for mitigation those XX got to that’s activities rules full the CFPB majority waterfall. when

the very anticipate seeing forecast won’t next XXXX into second meaningful meaningful And so a be probably until end some our of we in increase -- but We’ll meaningful late XXXX. going amount year, and in won’t a see half until increase it year. the of the

Unidentified Analyst

Right.

your in $XXX only guidance to of million late that XXXX? So corporates up $XXX million pick

William Shepro

correct. That’s

Unidentified Analyst

your in nationwide the overall Is the more held being serious total rate? of delinquencies so is in in serious into that have of rate tied Right. rise is I to now, about follow-on leads increase delinquency addressable about more or the questions. and overall I a your X% delinquency more couple statement XX% delinquency to you And expect know calculated I that And market. that -- that rate down the because with kind line rate... right come the

William Shepro

if you look at... Yes,

Unidentified Analyst

...As few moratoriums end?

William Shepro

So the is rate I delinquency over XX think, Raj, plus day XXX%. up

up it's XXX%. I about think

exclude. you If

Unidentified Analyst

Right.

William Shepro

Loans including absolute I or loans it’s on I foreclosure. hold almost in me by, think, to an basis, up in XXX% basis so, then foreclosure, up don’t it’s think, XXX%, points. And XXX also this,

continue roll at lower if get programs, the to we of delinquencies even will end off than be of we borrowers to think rates When higher they plans. this, think significantly than so the were where And normalize delinquency government pre-pandemic. we forbearance their something

those programs, If rates last year, higher. rates if these the you roll this We at think much ago. that large pandemic back just to governmental will lows, be they should were we off, delinquency significantly normal, programs presents a to think delinquency and we significantly were will be year But be historic opportunity as time believe, they rates ends a where as because Even the at us. delinquency back think lows. it historic got than higher greater for opportunity,

Unidentified Analyst

now. are seriously What mortgages of go there foreclosures? X.X into loss you million X.X delinquent -- million, do these right estimate to you percentage mitigation or expect would And about

William Shepro

in we form about XX% end when probably think and were quarters, forbearance million. assessment was loss of from I were talking over mitigation. the XX% last what The I up about to of estimating couple Yes, may to servicers a it's talking loans programs, time, really Today, that's the four reasonable at some the there think those and that million today. three servicers over borrowers anywhere of is And here. in still we're

Unidentified Analyst

this Okay, Thank take offline. much. you great. I'll take my so I'll --

William Shepro

Thanks, Raj.

Operator

I'm showing Mr. back the conference like I Bill time. Shepro. no to further questions this to now would turn at

William Shepro

operator. Thanks to today’s look and forward you we talking to again joining Thank for call, you, quarter. next

Unidentified Speaker

have I take queue a in if to Excuse would me. question you it. like

Operator

day. Ladies a Thank this conference. today’s and gentlemen, for you Have concludes your participation. wonderful

disconnect. all may You

Altisource Portfolio Solutions (ASPS) 30 Oct 202020 Q3 Earnings call transcript