ASPS - Earnings call transcript Q3 2021 | Altisource Portfolio Solutions S.A.

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Operator

Good day, and thank you for standing by. Welcome to the Altisource Third Quarter 2021 Earnings Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Michelle Esterman, Chief Financial Officer. Please go ahead.

Michelle Esterman

operator. you, Thank to XX-Q 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

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

statements, review statements, on economy difficult factors as forward-looking describe addition scenarios the to provided and previously provided the XXXX factors forward-looking risk associated results. information future and Form herein to which Altisource. and pandemic lead or result of events. the future as COVID-XX state release uncertainty may new usual current XXXX these In the its well predict to circumstances, different impact XX-Q, obligation our change financial in potential makes Please that the of or no in in We projections earnings XX-K section with the it contained the undertake a statements as extremely company's and update slides to quarterly

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

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

William Shepro

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

discuss we the Slide beyond. reasons Altisource will to well morning, XXXX X I positioned and Turning X. This is believe for

normal environment. are First, a as significant return revenue operating we for and poised more growth offerings we default our earnings to believe that post-pandemic

originations growth. will be executing on a our significant our business believe and this for are also Second, driver strategic plan we in

Slide estimated cash of balance on significantly Beginning will significantly half at cash reduced an Fourth, structure. anticipate $XXX generate interest by closing. the growth we in sale as cost default in our sheet flow we with strengthens second Third, the a our return million to equity revenue of X. our Pointillist we in that adding XXXX business anticipated of positive

severely been forbearance the has significantly Altisource. years over business by and to reduced moratoriums as referrals impacted pandemic plans the X.X Our last foreclosure

those the are environment. scheduled foreclosure normal prior government's loss essentially expired CFPB's or initiations delinquent The than January January were However, the of temporary federal days pandemic. XXX other is on July, XXXX. X, as foreclosure a including X, operating prohibit at to loans post-pandemic believe end end more CFPB's we in rules more until The a the few rules to moratorium that the return mitigation we to exceptions, end sight and measures requiring

Hurricane lower expectations. fourth of increases third XX% consecutive quarter third We XX% higher the holds to are than and indicators in to growth. but XXXX by inventory ending support quarter beginning homes still same These Hubzu of second than Hubzu to Further, quarter, quarter Knight remain our quarter see by offset our that more close foreclosure growth were XXXX. of initiations referrals According XXX% on leading second some of Ida. were the homes, quarter the pre-pandemic Black marks higher X,XXX were foreclosure the impacted temporary inventory partially than than

in loss On a XXXX trends depends delinquency positive holds. scheduled on basis, foreclosure our and levels. in of these continue business related and mitigation Ida after temporary the accelerate default Hurricane the to expiration expect the CFPB stabilized We revenue rules

can the delinquency the higher high To XXXX At and X, the of $XXX countercyclical default we the refresh to our default of between existing rates investor estimate for and because million. $XXX X. could sales with market year As is that the million basis continue million shown we business REO on sold we we Slide at Slide assume delinquency that the illustrated attractive a many revenue The historically us X end, compared estimated more to prior to single-family end, balance our of rental are to nature delinquency immediately business, solutions REO than as market XXX,XXX leverage low assume rates quarter At single-family on became solutions our third pandemic. we to market low market stabilized a Xx return XXXX. homes investment on the grow the to larger an is the foreclosures suite per our than levels. in

our investors and needs lion's website that equator.com the buyer the to our updated midsized share seller market. real we small up quarter, of develop this make estate signature and signature continued the meet During to of programs and

by we While programs. encouraged still early, these are the of progress

to X our on perform improve profitability. The independent origination credit banks, execute well as our mortgage business in business. mission we bankers to their origination and Turning Slide help unions to continues

network in our business and the During these the with MBA's purchase model other included The gain the members during rate ordered XXXX. volume repositories to One growth is forecast agency, XX a planned of opposed are reporting business. the Slide growth process. of Slides X origination solutions, their on Lenders of increased market as interest XX% solutions members with in in these business -- a We number Lenders tri-merge in believe typically to we model existing are X provides credit through to act share XX% the more are to quarter, oriented. the summary along branch rate plan by by describes environment of members. our origination approved for XX% a despite rising the we a We've fraud positioned the revenue as launch and the in verification, X that residential members, loan in national of to the whose well reseller We and refi typical offering the fourth support office the U.S. and growth a Lenders opportunity illustrates Slide credit decline One, along other of One X reseller all improving services effect solutions Slide as agreements a should the of offerings originate we unit with providers approximately description collectively quarter. economics. the to deliver origination manner which adoption compounding and driven launch One manufacturing XX Lenders of X XX% credit executed mortgages.

As the investment the as you There shareholder well evaluating ways with to that respect potential last exploration are business. and we divestiture, I be assurance no result can quarter, to enhance shared with this transaction may investing third-party disclosure origination strategic value in determine half a actions we include options return other intend joint in These business. upon venture, as year other in retaining or cash our don't appropriate us. will will any provide and that reduced updates required. Based second anticipated is structure. revenue or growth Altisource a forecast We on further transaction the in flow to cost unless to our or positive of significantly until by we generate in XXXX,

expenses, excluding third our $XX.X XXXX. September XXXX. cash services outside services, vary than the lower fees outside reduced for quarter, and we period the second During which quarter XX% the by Cash to revenue, of excluding in million were XX, same with X fees ended and or costs, compared the X% months

in our We and our by automation. costs footprint reducing continue to take to investing lower steps facilities

sell month, that to Finally, announced platform. XX% turning on at will journey management estimate Pointillist into million $XXX shareholders fully to adjustment. we $XXX working Last diluted of our SaaS Altisource's approximately that Based XX closing, Slide for we Pointillist, customer interest, agreement ownership in a entered Pointillist subject million. in cash capital we to definitive a receive

to demonstrates end no of wish of potential a closing million before collection use evolution. Altisource capital team and transaction the fully cash congratulate believe the We $X.X assuming We the that of the $XXX any markets. goodwill. by will businesses the will phase purposes. general X-year Pointillist's and and a reduction of of like anniversary not million them that sale Altisource pre- of proceeds close valuable the following next best corporate the at million that and post-tax Pointillist for also estimated cash appreciated gain $XXX year the thank to receive indemnification Pointillist the of has closing in an We may estimate anticipate I'd of it additional claims. before generate will in be intends this

opportunities well We revenue cash the businesses flow XXXX year our to with in about cost positioned significantly positive open grow generate of the a second origination higher up default are base. us. We in are the of questions. now front Operator? we on excited and lower call the believe and in half for I'll

Operator

[Operator Instructions].

from line Northland comes Mike question Securities. first Our Grondahl of with the

Michael Grondahl

maybe. questions Michelle, and two Bill

that Roughly saying one, cash at what throw back the X And What level, do to behind you're that? a should the of year. half revenues driver to XX% big are or grow first X you're then you talking need cash? originations next things maybe in the generating XX% high secondly, level revenue. off origination of The about year

William Shepro

Mike, to so question your first get growth. let me origination to related the

of a there's drivers. couple So

think we'll quarter. a hold I this million, in roughly We're year. launching little exact little $XX in a maybe bit origination tri-merge -- number, that to product it, more the it's roughly business not do don't revenue credit this an

a pick this very We that anticipate help anticipate year out a this origination get buyer. correspondent product. Two some to correspondent plans -- buyers where volume. access We will to we growth We we're is preferred there's to in Lenders a significant more have a for going volume of verification shrinking that have be important where that coming we more employment January beginning the roll market program One in solutions will members wholesomely of that up service investor suite our an employment year.

forecast X It because not next but pandemic the question revenue origination difficult I are never in is mean next progresses. Mike, meaningful meaningful cash, those year into as we're of sort going a to out somewhat we for the where a very year respect So anticipating the we're guidance business. before, of specific very and of on that to areas anticipate Then, accelerating growth come year. we've growth your with

this REO if we first quarter compares the fourth to we this year, second the And anticipate quarter, files. to accelerate revenue to give our as expect quarter. last a would the back losses quarter not referrals similar, down, typically somewhat our looking I then just XXXX. pre-pandemic. go at quarter to you our XXX into be the to EBITDA which third EBITDA to third were XXXX, year In if fourth our down improve, go referrals. full begin would to the of and progresses. year, X,XXX will So slightly in the that seasonally XXX that to quarter as sort And And is referrals and slow, the an come quarter REO of that's of That received of you example. we you referrals. was And

XXXX, foreclosure you getting most don't start see anticipate seeing going indicators we most if to REO So the starting in to the improve, levels, of our can already those Hubzu we moratoriums we're and receive as pre-pandemic and is back those delinquent the middle business, in loans. we're for stabilizing revenue ended to profitable leading it that to

the think us get of lot up that's a support to cash there's that's I flow we're positive the indicator. room for to in half grow, continue So great It's third those second the talking going to year. significantly about and but quarter, numbers that to a help leading -- of in referrals and

Michael Grondahl

nice see Sure. the in to was inventory, a Yes, it turn too. Hubzu

you of to that the the piece sort off of of at part origination are you? is you maybe where And process business. it are off origination or kind a selling of of XX%, not? Just the that -- back you sell XX% what of beginning even putting and the revenue dispose at are maybe of the going to -- growth, if Or the Just or of process? kind under business microscope middle the

William Shepro

Sure.

the we is and Mike, shareholder decisions evaluation think I create made point have say going on going all through around origination how any to not we're still at best this we're to the process time. in value,

to my for options, beyond And much me described we would said Altisource do our I've you, add. our look business. options, there's looked the of business, of in so were to list to remarks, what where considering would -- prepared believe without the go. origination revenue We what with at sort that If and obviously, not those sell just origination we're still like I we've

any sold it be also if at have potential in costs the transition we of frankly, putting we believe made as we're Again, create any decisions. business, positive We the sale. origination we to shareholder what's would year related flow half second long-term best value. aside And the still not to opportunity the the the cash looking

Operator

[Operator Instructions].

Riley. B. the Sharma with Our next question from of comes Raj line

Rajiv Sharma

slide was X revenues would to delinquency range the business all? service quarters million is in services you're the million. go scenario on about rates, rates. quarters I million. where this revenues basing you Bill to -- anything so $XXX were about you at had I ago, Slide did and That potentially of basing Has back outlook delinquency potential higher X. changed know reduction QX And December from environment the in service $XXX your little that for $XXX on outlook reduction stated on the a that XXXX the that you're Michelle, any million you're stabilized just 'XX wanted to changed on $XXX ago, talking December now default Has business? X rates. talking the Slide X to -- delinquency

William Shepro

things. thing where quarters, of because rates as you to we're some One, column, delinquency right-hand opportunity think the No, using ago, column column. where only come respect they've to we're if delinquency Ocwen's down the opposed you with change that using came over it's And And delinquency today. rates couple that the that to the we're Raj, last little looking some, middle middle came as pre-pandemic at that's couple down Ocwen/NRZ bit those rates, the in opportunity in in down rates count that then current the the degree. X are the opposed today's loan of quarters out, that a and business, -- down as brings pointed -- a use loan in delinquency were to as driving I numbers,

and as middle could column are a Ocwen fluctuate where of that delinquency bit on rates up. opens course, what looks depending quite then market like, our So the back

Rajiv Sharma

true that, come changed that in have in since worse? gotten you onboarded Right. better that foreclosures Would possible the still X beginning to of or arising X last the servicers year have new that set any opportunity I you in also way, the have has Is quarters. mean gotten gains servicers, -- next on, that from the years, or

William Shepro

No, we in new not but Correct I assume existing designed is tell the numbers you on think wrong, me if sales. fact based I'm would that's does -- this. Raj, only I what way these in This is customers. Michelle, any

Michelle Esterman

You're right. Correct.

William Shepro

I look, only And so down, X.X think for the for have us, as volumes -- the as industry-wide. down last been we sales close significantly, not years slowed default the has but

clients, be anticipate open able do market the only not As that's clients, add new to these we reflected starts but up again, to grow that we and existing in our will not numbers.

Rajiv Sharma

a half, the trying from flow Got side, saying it. cost to should sort you out. cash How costs? I And looking the second know of rate? then level to cost at I'm down on look this model costs we on Are free you're should go revenue further get side. positive be the to breakeven and that maybe services quarterly

William Shepro

our model. I So do operating a leverage think of in there's lot

a by those you next the end by costs million say to million or million down at $X the some cost bring So particularly we're addition is grow as run And opportunities, probably another, to rate same facilities rate there end Michelle, that, or the year, which close the nearly we be on should we would our yes. of -- to $X of increasing year to revenue. raising believe in side, $X.X we million? revenue, on by basis the not $X at growing

Michelle Esterman

fair, That's yes.

William Shepro

down know have I to opportunity, we see you if add... But continuing Yes, of operation. sure million through by costs. to very as don't spend budgeting on of efficient we're and $X.X a we're the going our efficiency improvements lot that's some And run a continuing to bringing make time running -- million. rate we're $X basis to process, Michelle, anything we're facilities a where

Rajiv Sharma

Right. And then lastly...

William Shepro

that I you to Michelle, know anything Raj. year. if add Sorry, had don't to next for

Michelle Esterman

Yes.

and I think We're things big on efforts those that. points. new focused are also the like continuing automation

Rajiv Sharma

then Is And fourth when the right? expected close? Is lastly, to sale of is Pointillist Right. the it that end quarter?

William Shepro

Yes.

So we filed...

Rajiv Sharma

fourth... of end the By

William Shepro

HSR the filed we Yes, applications.

any far, had not any the and of still We we're on the feedback to close year. have end by track believe -- we so received

Operator

back turn I'm conference at go Bill this the showing now ahead. no Shepro. to like time. [Operator Instructions]. would to I further questions Please

William Shepro

support. operator, Thanks, thanks for We your call. you. appreciate Thank attending the and

Operator

you today's This Thank concludes for call. conference participating.

You may now disconnect.

Altisource Portfolio Solutions (ASPS) 6 Nov 212021 Q3 Earnings call transcript