Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the Altisource First Quarter 2023 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 today, Michelle Esterman, Chief Financial Officer. Michelle, the floor is yours.

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

predict statements, extremely current responses operate future addition COVID to in the forward-looking associated pandemic, to difficult economic of economy impact together industries Altisource. the uncertainty usual continuing In the environment, as potential the it make government to the with the the of with the and as state on well servicer impact and we which

to in the slides XX-K which our release a Please statements no different lead statements, a the and in projections describe and to factors forward-looking that herein in as company's provided the future quarterly as financial may change result earnings or circumstances, contained scenarios XXXX update as review results. or information well events. Form section factors provided undertake previously of risk obligation We new

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

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

William Shepro

good Thanks, Michelle, and morning.

impact a off COVID-XX start plan the we We're We XXXX X. recover on to strong to of will with the begin Slide pandemic. our executed in from as

of gross over gross basis and margins in adjusted was point $X.X adjusted XXX performance better EBITDA and of the of financial improvement million planned profit a than $X.X quarter in XXXX. quarter margins first million improvement with first profit Our XX%, an representing EBITDA

segment took India refund. XXXX cost by default XXXX in and measures growth we and $X.X recovery the and our in Servicer other driven pre-foreclosure in income Real saving were the tax market, an results our company-wide to solutions million from in primarily Estate ongoing These revenue of early related

and revenue and growth countercyclical both onboarded our restart we a from segment and savings default Estate segments, mix product both initiatives. generated EBITDA benefit business. continue adjusted the In robust and to pipeline year-over-year Our of market, as cost Servicer of we and significant Real sequential sales maintained new the and won

and strengthened we equity, February In term of our our extending sheet principal the balance million $XX the of also cash. with We date raising loan. revolver XXXX, the quarter reducing by balance term in loan maturity the and ended

In EBITDA first the $XX.X and X Turning our Servicer XX% grew $XX.X million year. quarter the to to last of Slide Estate by we and Real service million compared and to adjusted by segment. first revenue quarter, XX% to

same over to our We the also margins XX% from adjusted improved XX% EBITDA period.

default of services Our mix field our margin reflect benefits reflects revenue cost the revenue initially the higher in scale by growth pre-foreclosure EBITDA and recovery lower our market, which reduction improvements ongoing partially solutions. business. growth margin offset measures, revenue with and Adjusted

wins. and X and and Servicer Moving Real pipeline sales to Slide our Estate

not As be to from I the see about we you wins, and market progress. excited default weighted pipeline strong our recover and continue drive are waiting can our growth, to sales average to for

that business basis. stabilized we in During a we generate the quarter, won annualized million on new revenue will $XX.X estimate

construction February biggest win anticipate are U.S. from revenue We in services win in year is We quarter mitigation largest lenders stage for this one the early as our began risk from revenue and the and of to providing monthly the in which referrals the generating the grow of launching progresses.

bank relationship customer customer a Management our base. referrals from midsized auction foreclosure with expanded receiving Technologies began Equator also we quarter, grew the and During an Asset

margins grow This and compared to For default continuing and with higher reflects the Real scale. wins, Servicer sales revenue adjusted market countercyclical to we anticipate segment XXXX. Estate our recovery EBITDA XXXX, a and of

that several delinquency becoming to American rates. increasingly has in reached X. a XXXX, are Inflation, Slide purchasing which be financially consumers' consumers mortgage are There stressed, a on XX-year macroeconomic the precursors environment to high in Turning eroded rise June indicators which the power. could

January personal To inflation, rapidly affordability and reduced rate, the lows. raised Fed which on values. the deteriorating the rate October auto down XXXX. economy. March in a fight funds bellwether this is have of savings Fed At XXXX. of a Fitch historical are mortgages home Auto to declined pandemic were to This XXXX, drive double that from in were XXXX, in Against delinquencies has high day time, lows near delinquencies to often driving to record X.X% February almost same beginning XX% the reports home interest XX-plus the of average X.XX% backdrop, rates, in ratings X.XX% to considered

high rates student student federal resume borrowers On in to climb robust a X delinquency and the card XXXX credit January. hit loan payments pace to debt in XXXX, and credit rose card card card slated sharply compared front, credit loan February rising record January. few at reported to months. in are December a delinquency a continues Outstanding rates throughout large recently lenders Credit in

economic While it's mortgage delinquency to a the the predict environment of Altisource results economy, in should state benefit rates. difficult future deteriorating if higher

quarter. products. we Origination of X difficult revenue Slide our compared performed reflects well with X origination and in our growth in progress the wins our segment. revenue represents making XX% segment onboarding in sequential our fourth the in to a first quarters growth to environment, This Lenders are from In Originations customer Turning we One quarter newer

accrual fourth the fourth benefit XXXX the quarter Adjusted bonus quarter EBITDA was reversal. by first the from to revenue offset quarter, reflecting growth, flat

the Our same in revenue period. market-wide for decline volume Origination the decline origination better year-over-year segment's was than

One As you can designed traction better-than-market with help money. as to solutions save our bottom see this we on performance that slide, left of business this our significantly Lenders the from the members reflects gain are

in largely businesses were line Our our which with performance market. other by the offset was partially origination

approximately We our and and basis. we sales estimated or in XXXX Slide $X.X sales in From on in million in revenue million recognized first X closed quarter. summary of a million the during annualized of million provides additional Origination $X.X an $X.X $XX.X quarter these wins. an revenue wins pipeline segment the wins, first

we growth sequential in second momentum, revenue our Given anticipate the quarter.

the sales despite XXXX year, MBA's and early the to EBITDA For volume XXXX. growth early we decline generate progress reductions. segment XXXX year-over-year for origination XXXX XX% forecast full based revenue Origination anticipate to XXXX late This to converting the and adjusted compared and XXXX our revenue product is of the launches, and wins cost to upon by

Corporate our to segment. Turning

discipline to to continue respect maintain with We cost costs. corporate

costs, expense to compared debt corporate largely amendment costs, flat and onetime to interest be For the year, we expect XXXX. excluding

we pipeline are are that growth our In our positioned sales revenue. operating a and progress are leverage scale. to demonstrate Estate conclude, as EBITDA countercyclical return Servicer revenue first growth making and Origination converting To market we anticipate and business, by and encouraged adjusted segment, sales pipeline strong grow year-over-year believe we and quarter we wins revenue from Real wins we adjusted revenue. We in maintaining XXXX well good sales tailwinds, In our to to and results generate EBITDA. our positive

is improved return Our growth segment a sales adjusted what very forecasted help revenue origination Origination year to progress should in our efficiency EBITDA be difficult and market. and for the initiatives to

a The and value sheet, balance corporate to company to took performance the strengthen should steps cost our us we our and our stakeholders. stronger of in return create segments, help for with growth discipline combined substantial

I'll the call up for now Operator? open questions.

Operator

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

Michael Grondahl

Ocwen we default interesting deck, of and inventory, which do my things Bill, your track. My maybe and business? are per that a one first there's loans indicator always is revenue question, the leading at is non-GSE Hubzu you delinquent you think service in couple best question to the for loan, non-GSE

William Shepro

Mike. Yes.

we those two delinquent that revenue look mean of reference think the and deck, of think on Michelle, go you I clearly, per Hubzu if which I is in have back, hand-in-hand, back loan. maybe the the page can number. I you slide, So inventory

quarter like and back of million $XX really to the which Hubzu only first a going look and I'm little compared year. quarter maybe of million around pre-pandemic. generated, was of in over XXXX, the I revenue really memory was you If first the here pre-pandemic something think, from this to last quarter February -- January $X

comes the year where back, started as and all these market last are new foreclosures that continuing. so And

through process of Hubzu period and a work get before see sell for revenue time going increasing. Hubzu inventory end REO and the those manage to also that's As sales the you when the loan per it, up and start those you to then from delinquent should we

Michael Grondahl

it. Got it. Got

So...

Michelle Esterman

But -- sorry.

Michael Grondahl

kind of the you Hubzu, higher. I was up leading indicator better that to But a Is seems ultimately, I number service tick need just revenue that inventory you Hubzu be do Service maybe to at more pre-foreclosure to work. should know, than don't slightly inventory as revenue. lot say push going fair?

William Shepro

if right is Hubzu just think higher-margin a revenue big quarter, a having $XX a we'd product. different product million it's comes And mean of extra high-margin it, be now. -- the as in back, million a you I an if had $XX first Yes. in very we or about that very conversation

to become gets back rates prepared described the the in economic as I excited then remarks, foreclosures were we're process, So normal. my pre-pandemic. potentially, sold. where ultimately, through conditions new they work be for And ultimately and may the benefit above to delinquency the getting something themselves those rise market we to given And REO

Michelle Esterman

see, can if delinquent think you I Mike, And you XXXX, look loan what at was for per Slide on it around $XXX. revenue XX,

of and going that to look first showed be you quarter ago at And you you'd the $X,XXX. gave think it, we annualize these or If I $X,XXX. it a X quarter scenarios just shy

progress there's come. see So that through, can you way work but these as to their we're initiations more making

William Shepro

remarks, I uptick because on on services on in seen the that today, REO. yet as the prepared we're mentioned focused, primarily Yes. call, pre-foreclosure I we haven't mean

seeing the that trustee field in our our and earlier the business, the our process. business uptick We provided all title are we services and business in services

Michael Grondahl

Good. Right. Good.

some on is to ourselves ahead in little fair? QX, XQ, revenue know growth sequential said you -- see get But I to want of to you bit don't don't growth. I And that sort but think of of I a XQ, Okay. expect similar

William Shepro

Yes.

change we similar. revenue good -- to could will revenue currently The impact somewhat -- services the which but be we're bit, QX. margins may be that a think QX of to that's little a degree, similar mix perspective expect anticipating do I some a the from to

Michael Grondahl

deck, good then think the from if from it. share all what's count just a in shares everything the that XX.X don't going I Got shares. lastly, million to that Maybe recent got like use the diluted But includes offering. forward the And offering? fully know includes it's I now

Michelle Esterman

Yes.

we XX. you April I on says at think of that the had outstanding it XX.X look it, at shares Q our face if million

Michael Grondahl

XX.X.

Great. Okay.

Operator

question next of from Raj Our Company. Sharma Instructions] & [Operator comes Riley B.

Rajiv Sharma

refinancing XX-year the to the comment any being process lenders. guys on these -- that's delay like of an Mae, Fannie expected impact? you Freddie extension, efforts the expected they or are Did that offered have impact to Mac Is kind

mean, the happened and that's also, that Do means why if And a recently was have you -- that delinquency that mortgage I on down. nationwide rate delinquencies there dip anything thoughts follow-on. could coming a blip? in with just any and or serious that that have if indicative a is

William Shepro

delinquency the I'll second you part question On delinquency rates with that is the what rates, normally, in take see your some. down Yes. of tick quarter, tax particularly refunds, first, first the Raj.

all the and it's suspect continues significant potentially blip, I be to on conditions pressure the we more a and environment described, pressure there think consumers. given and economic American I

that part first extended was place. of that government With your the question, modification the respect an COVID programs think loan FHA of the I essentially program in were to some -- where your

pay I to ability and think look, happens a unemployment what lot bills. on with your depends,

so of a do the down today's much market. rate what would higher, rates difficult it's you -- do an basically, up, doing FHA because very streamlined can't not the government streamlined go refinance to loan So with is a refinance borrowers in interest

to so government steady, borrowers' for keep to looking the the tools to is but have And the they have payments make the ability payment.

over of and on that because of And time, a it's payment. unable longer much out to have it's so won't a continues an environment if slightly make that Maybe economic payment period to consumers, they're put lower stress the it impact. extended

loan a payments. think I to is on the ultimately happens overall what economy, with lot what with student going depend happens

few while student I on payments been loan in million XX XX think collecting adults on month a to payments, that moratorium something saving is over scheduled restart That a or million there's $XXX student loans. like there's those in a are months.

the So overall depends Raj, lot potential will to all on with have ultimately happens pressure FHA consumers. But clearly, the a but put economy. things could what on on that the help these borrowers continue to program new margin, incrementally

Rajiv Sharma

Got Any it. that is is Great. continue the of the current think cost just we terms the to continue year? overhead the cutting corporate That and cost Are cost makes the more sense. last question in base on then costs to And through forthcoming? other that base.

William Shepro

Yes.

the talked beginning in some our to whole, and in flat, made in compared Corporate So remarks, so that be little we about the maybe a benefit quarter. expecting a quarter, interest Origination we'll I we In the in think year, debt. prepared last of bit corporate onetime amending the as our full get changes with first expense associated to the costs segment, quarter costs largely second excluding down

Operator

I closing it remarks. for would Bill turn Shepro now back to like to over

William Shepro

your support. good listening and Have operator, a thank you, Thank you for the day. We call. to appreciate

Operator

the program. you your in for today's Thank conclude This does participation conference.

disconnect. You may now

Altisource Portfolio Solutions (ASPS) 27 Apr 232023 Q1 Earnings call transcript