ASPS - Earnings call transcript Q4 2021 | Altisource Portfolio Solutions S.A.

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Altisource Fourth Quarter 2021 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker, Michelle Esterman, Chief Financial Officer. Please go ahead.

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

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

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

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

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

William Shepro

from year during over related the reflects quarter significantly and quarter. A relief today's sale XX% debt, XXXX million termination the begin We and in revenue solutions, on We I'll programs we XXXX. The increase that strengthen for of cash in by of slide in a the the call. same growth our our anticipated growth poised net grow programs Thanks, demonstrate our Good business adoption sheet impacted pandemic with customer XX% joining of quarterly in wins and thank revenue a forecasted third in ended balance earnings. borrower in Pointillist. return Altisource a cash product and in and fourth $XXX.X relief temporary Michelle. with of XXXX resiliency representing you $XX.X morning and the challenges year-over-year with business. compared believe million launch borrower adjusted X. pandemic defined Origination to We new our ’XX the recent are beginning debt XXXX. Default to greater to a and in reduction tailwinds net to revenue period related from

half adjusted the in benefit reduction businesses prior the for growth second fourth expected This Origination core morning, quarter we I'll discuss briefly EBITDA and our of of cost generate we'll Default initiatives, and revenue and XXXX. positive With anticipate detail. our results greater our

borrower largely Turning quarter pandemic We gain. X; was Fourth the in sheet gain tax cash, X, from the $XX on mitigation temporary to approximately an on equity our proceeds we the balance our in our sale of outstanding our with received income sale to net impacted line fourth million $XXX million loss the performance in generating million quarter related use $XX interest seasonality. Pointillist. revenue by Pointillist significantly balance revolver. repay and completed with expectations slide On $XX.X December and measures of our financial benefited of million and of strengthening post

in Assuming Altisource, win the December. with an attractive developed we adjustments big believe of collection to that we've for sale in receive majority no businesses. expect XXXX, a we an million valuable $X.X and was additional to demonstrates This received be

for our XXXX. and strategic priorities X to Turning slide

areas We have two of primary focus.

the our the adoption. And history X on to Default support solutions Origination XXX competitive mortgage resonates cooperative, independent second build bankers provider provides our and small our business. customer improve from Slide expiration ordered of business how that our vein certain continue verification, quarter this during develop mitigation believe credit membership members the grow loan compete. we Origination intend report One to grew in tri-merge they're XX is unions and offering business Lenders and to continuing we members, are that particularly leading process. greater the this looking prospects, for better this out members and foreclosure members additional manufacturing our loan in fourth fraud Origination the other moratoriums mission profitability mission a Lenders help solutions, that for launched to our and are our of loss midsize One servicers the information We One The to strongly typically Origination In to market. challenging leveraging tailwinds grow their and measures. and and as with credit temporary by wins and of Lenders a business and First edge, through new and growing product solutions banks,

The as digit the Origination begin in volume. that members to opposed in to following our with revenue their quarter. and planned growth office third the Origination mind growth We manufacturing along and the purchase the plan market quarterly launch. refinance forecast year a successful And interest originations. and Keep of our members the processes a are growth the of for Lenders for also growth efficiency. over beta offerings to order LOLA despite platform of Lenders One for Origination MBAs X% well year. should in which solutions, for operational a launch XX% branch easier last mortgage to purchase is these existing it grow double the their improve support members a One positioned with number by --and to anticipate forecasted One LOLA to of through business Automation to increased in full and rising as gain business adoption launched receive refer market typical loan Lenders the automates favors makes model solutions environment, share Lenders as One single we and Loan a year-over-year a growth rate technology, We decline

Default that this despite entering higher Default severely a expired delinquency loss our and extend by federal XXXX in significantly moratoriums, pandemic been is the however, impacted Altisource temporary early referrals measures and moratorium measures recovery. at pandemic the X business temporary mitigation slide of rates. since as Recently, The loss reduced the of the we at believe foreclosure has foreclosure CFPB’s expired related business, to market of year. mitigation July, the innings end early the last end government's Turning

servicers to have and foreclosures. As begun a initiate result, new restart

were see some growth. quarter businesses. the our increase Hubzu XXXX. quarter same We are higher in the than homes indicators that Default growth support several of consecutive expectations over quarter ending are the in inventory And of our an leading to of beginning referrals inventory referrals in experiencing and our of Hubzu marks in X,XXX XXX% fourth third

first XXX%, by Hubzu by businesses months with a the year, two referrals XX%, will two For increase and growing we foreclosure future referrals, in of auction same also title the result have XX% was last significant these experienced in Trustee, higher growth referrals the respectively, this Hubzu referrals, which largely and driven revenue. months pre-foreclosure portion over in The year. of

the the progresses. continue how going servicers home predict the price may default expect While year to impact to market, of as trends expiration it's to difficult positive governmental and we these temporary the respond are measures, how appreciation to

by earlier auction title with auction and foreclosure the will Homes We Slides REO longer. be historical which or we at of you Default recover our foreclosure that should that referrals. first recovery sell services of also to the to returns norms. will which become grow X into valuation we foreclosure this illustration have We take X what revenue anticipate foreclosure return in the begin on the to be as don't believe and will our provide be an process the expect prior initiations, insight and the solution followed should way resolve we usually believe to will work auction referrals. market

typically levels during the anticipate the levels. operating a we XX% post the to home On at depleted of brokerage were the business was pre-pandemic REO estimate A pandemic, X%, revenue, insurance, of driving the inventory and and Because generate services sale Default factor in it level. return fees. to and that REO that normal to sale delinquency field we'll time REO Plus XX a step the by XXXX. our take the REO inventory increase December currently pandemic our XXXX, default we is delinquency estate the normal process, of operating in We a middle last rates environment revenue generate compared first will real title be auction for is rate. in day referrals, delinquency

low delinquency low revenue pandemic. shown that to million constant. estimate immediately At slide $XXX At to rates to delinquency growth on in XXXX our a prior grow end, XXX reduced generate at a XXXX adjusted high and significantly we are on could assume XX, As levels. million holding assumptions the Default historically basis structure. we the forecast the higher anticipated Based stabilized to end, we return all to businesses, other between$ for our a business the half the rates upon positive return begin December revenue assume business Origination Default will of we second EBITDA and Altisource both on our cost

year and was revenue million of lower were XXXX full are XXXX. generated services, typically costs excluding fees outside cash if incurred For than only the $XX.X which

we to concluded determined with the best our our provide in the I you update evaluate this the to shareholders is of I'd Before shareholder with business and process, Origination enhance for that XX, and company like respect to in recently business, the after announced that We we on our interest XXXX. of range July it a value further alternatives the and an Origination on to business. process invest conclude, exploring retain board's to options

prospects I an unique and our exciting pleased our return couple adjusted strengthened create to and and significant have years value distribution shareholders. balance sheet revenue have The growth. last am the that believe a will we not engine been business’ forecasting easy, strategic for have be and strong plan but of to Origination EBITDA catalyst growth We

now addition our in and who for substantial and to building thank In Default tailwinds like believe Altisource’s market exciting Origination to shareholders employees supported customers. for and create questions. that are the we recognize call we Operator? customers. board, will we business, I'd business pandemic, the our leadership innovative I’ll through quality and while continuing company an up the to value open as navigated to high services our team provide

Operator

Our Instructions] Grondahl first will from Mike [Operator Northland Securities. with come question

Mike Grondahl

Yes, good morning, guys.

bill, you should of mentioned First line recovery? in What February Maybe describe that takeaway our from a sort in you as your expected of kind and of strength with be? referral little question January maybe and is behind? the January some bit February would ahead,

William Shepro

restarted, and than we or are better new months. are think with better slightly for the with get budgeted. Again, auction businesses, would planned those But that these first initiated, first So or foreclosure numbers valuation, I were we referrals, in it in two roughly And budget foreclosures trustee line three the in expecting in to you this line our the that's was year. foreclosures what we And for receive. for expect were first services our those expectation. the than

Mike Grondahl

the size and you a waiting years, Part the just couple kind to cost do Got structure two. And Is of you've have ask part be that over that? much say it. the anything you past And place in right me of on kind let me, the for the way out cost the of pretty structure. call now is cost recovery to Would volume structure? you're there business? then in just then the where need you to

you a related to are in from about that Kind of ‘XX? or what structure cash usage question? So cost thinking a cash generation

William Shepro

Yes.

on $XX you of we when come sort if services our will, and the you think remarks, outside semi-fixed fixed that down, I naturally about would goods as million. down said lower orders. prepared in the structure, And cost excludes that took So have by I costs and

year for second see semi-fixed first is cash of a for think attacking all will fourth couple is later be to got a perspective, and but you'll gross year, Altisource quarter where job the significant. bigger and wouldn't From generating on about not margins. in be So year. and generate contracts improvement quarter. some you're consumer the modest cash Mike, in base. the our EBITDA It's a is There's you’ve typically it corner those expect many cost adjusted cases, the really our first quarter, the the in in EBITDA good to getting And as of going the which what flow as profit improving a first numbers I say really growing this prepaying in in think quarter. bonuses I the in positive reasons year. in the the we've half we'll did plan the cash happen the line, quarter very some we your fixed positive And point the we strong to And turn top the first we're it's at

So definitely sequentially beginning second end the grow, forecasting quarter sequentially the also year. grow EBITDA the the to quarter rest of we're second the should the through year. of in revenue for And from

The -- the still anticipate the EBITDA, year. we better first first will modestly the hope still, is closed quarter but our and quarter, than will too with only tell, books of month it to fourth revenue early be we we're be for

Mike Grondahl

Got to you the think it? bit about of year, use cash, overall the that way it, for little and a is

William Shepro

and three cash Mike, the Yes, we see anticipating use so will we're going think going to to generate quarters, we're two, consume you'll still fourth that for quarter. in cash, cash first then the we're

the still out -- we're to million-ish and if And $XX roughly growing again, how expecting for of to cash the to as million we're still at at or wrong. I and down. waiting be comes cash Michelle, we're end think because But the forecasting, tricky of me to the be the of around, how would year I this is everything end currently come think year correct see we, well. Michelle, I'm the XX so year, forecast But it's we, pandemic.

Mike Grondahl

you those was press lastly, earlier it? Got is losses earlier represent it, fourth that generating directionally. that mention that's then helps you there losses? $X.X business in our million. Pointillist businesses Or maybe small stage before do sold in And the just Did another the quarter stage from release,

William Shepro

Pointillist. was That

Operator

We with Raj Sharma from do have a question B. Riley.

Raj Sharma

Yes. you. Thank

the a Hubzu know business how into and revenues services million So on of comment Origination given bit on could you how, quantify you little $XXX second you out of year? break this you the give before service Hubzu I range $XXX XX sort that? some million. pickup slide and here and field to you Could on to that how proportion half sort a cadence in same Do going really, expect is is? of and you color more of Would

William Shepro

Sure.

are Because strong. inflow Just quarter, first strong quarter. fourth in with the and inflows a the inventory, we in were is Hubzu, pickup the respect the to the the seeing and inventory

as gotten Raj, of number So in very Hubzu first year we quarter. pickup lot we progresses, the of to And compared on auction. will the a are seeing we've fourth the quarter that a continue referrals, foreclosure significant think foreclosure

those will some sale takes a foreclosure negotiate or re-perform the those, make resolution of But borrower it the Now generate the will servicer and off. the ultimately, just revenue paid will significant number will that to of time.

will progress don't I the year terms businesses revenue me. of in between look have a the that out year by. front you as of as of Michelle, goes that so. So or in mix

there. have could add you color If any you

Michelle Esterman

And Yes, Those I think the so Default Default. included, Hubzu. the you it then here, is of what's business field businesses. services included mentioned Origination is not and part just are

William Shepro

think the auction get until referrals degree foreclosure REO revenue if lot we you the to we're is, have were early the as initiation, are of process won't I a because sale. stage, but in a know, related of you're right, you of foreclosure work, you expecting picking they foreclosure restarted. recall, what to valuation, title terms generate Raj, in getting in up that foreclosures getting referrals see services But some to to

that becoming or that growing but that REO. the first come growth are the taking foreclosures not process in hearing ultimately of will sort from initiations don't of those Even to than because over And new of become, place are are really two anecdotally tremendously, foreclosure others. servicers think of faster REO. ultimately probably where the starting up we're become XXXX. So now, It's going stabilizes until that we quarter what some are growing middle is some will this year which

being and seen action. a So referrals. machinery for increase taking of understand in they're getting is the we servicers But have that foreclosure time, the we servicers are January, before starting meaningful going a in thoughtful some very also

think And to continue that pipeline year as the so we progresses. build will

Raj Sharma

were are that double -- the Hubzu, They're at in million marketplace So, midpoint. more -- if services looking to is in at which they and I correctly, they its $XXX understand than field the XXXX.

William Shepro

Stabilization. Yes.

Raj Sharma

year At -- is this year, and this

William Shepro

of No, reach of the XXXX, stabilization. midpoint is we the that's the XXXX when middle

Raj Sharma

do how you to where grow? origination’s do much you your expect And that business, expect

William Shepro

you pipeline in signed first any committed some the customers with prepared gotten And we're were our gotten well pipeline give anticipate just that said, to got a think our outright that excluding those I signing we've we went we right I down $XX.X So And as really that's over in first customers priority we live some our annual as just an our it's said, million. credit to a saying sense, on Raj, product, now. remarks, be growth basis we not have were I'm that double customer haven't XX%. launched digit and thought, include quarter, no, that in to terms, a top customer tri-merge both last the year you market, is if contracts, that negotiating an we've going

those. have another you that are these $XX.X the customers that's been excluding then moved evaluation, include sales funnel stage, if million. so down And to the those are I'm So that evaluation and now qualified have in

sign close been committed, $XX revenue of getting committed in million annual that's at to they're or point where we're a So either the contract evaluating.

what white new But progress is live. with but grow market that the in we're only that's taking excited completed with to of we're a the get a pretty customer all very progress, longer, us our help us little not and to label paperwork done, a there's product, in very, be declining. products. onboard to that customers, And lot has making our order it's integrations bit pleased will the we're about And of so credit signed and

Raj Sharma

it. when you to still color do, then of how market the into do talk was your results see terms Got numbers, can times your business relative Is give market January in the December. foreclosure market share do that? How we translate we up the mortgage we when stable? Could at market look we the And that in about on starts, seven lag? you some overall, your look from at the share? And

William Shepro

And a It's that I you the best in think go business rate way get Default the Yes, to included slides I page revenue all delinquency on to XX. the before growth think we've Raj. presentation. mean about are those that's pre-pandemic the if to that matter our I in to of $XXX we way timing the about million best just stabilized it, of rates, think think it's

Raj Sharma

Right.

the And starts starts, your series pandemic those delinquency other starts? when representative March foreclosure and so XXXX the is, foreclosure are are onwards. Is too apparently, business look to that half from the the of at you of from prior half on ratio

William Shepro

what have I you think I in restarts What Raj, don't, anecdotally the, probably you that fingertips. because can I say can restarted exhausted tell a my they've information could I would began restarting. the super even I sorts tell at only all of making the don't have delinquent I sure though careful, and pre even quarter, before they pandemic were lot in that for customers servicers third of options were is

quoted why think first with saw of and we coming initiations. the fourth that most REO that saw the So from is statistics and new in foreclosure and in I then saw increase the Hubzu referrals we quarter we both quarter amount of referrals, some of I and a decent foreclosure those restarts the that's

Operator

call questions to turn now showing back remarks. And in for I Shepro time. this any speakers, no queue Bill the at Mr. the like would to closing further I'm

William Shepro

in for today's appreciate you, really operator Thank your Great. listening interest call. Altisource. We thank you and

Operator

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

may You disconnect. now

Altisource Portfolio Solutions (ASPS) 3 Mar 222021 Q4 Earnings call transcript