ASPS - Earnings call 3 2023 | Altisource Portfolio Solutions S.A.

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Operator

Good day, and thank you for standing by. Welcome to the Altisource Third 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 Michelle Esterman, Chief Financial Officer. Please go ahead.

Michelle Esterman

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

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

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

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

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

William Shepro

Slide on X. Thanks, Michelle, and begin I'll good morning.

We quarter are pleased performance. third our with

$XXX,XXX million second of million the quarter improvement generated XXXX we and XXXX. adjusted of quarter, $X.X the $X.X EBITDA, quarter in improvement over same a over the a For

we full to X first we for positive adjusted and million months year. our the fourth last adjusted $XX.X Based on by compared same the period quarter year. of current anticipate improved the company-wide forecast, For EBITDA EBITDA XXXX,

X. Turning to Slide

reduce balance $XX.X loan. and in the our of principal the million sale generated quarter, the to net of from equity term million of $XX proceeds used we During proceeds the

we by year can As date an save and with to revolver per expense. reduction, of to debt cash a in payment an the of Extending result X subject equivalents. customary option million We date of an described XXX,XXX XX-Q. the $XX.X loan conditions as cash estimated in the in interest XXXX term fee year is extend exercise million and the and maturity the April maturity we'll penny $X.X of quarter our extension ended to loan eliminated our and the warrants,

We continue our to in position to advantage and Altisource years with as existing over and customers the of Lenders of newer with gain traction that solutions as we what market our see opportunities members' potential strengthen segments normalize coming new to the One default take we continues significant both performance.

As on you pipeline remain and wins strong. Slide our segments X, of both can our sales see in

quarter third Our a annualized million consolidated of revenue. was representing revenue the the on $XX quarter at an estimated basis, XX% XXXX of end average of third stabilized weighted pipeline annual our

that winning stabilized won We also basis. on revenue we we are Since new annual a generate quarter, last of will million business $XX.X business. estimate

run which continue and quarter, now wins rate. XXXX to revenue million and combined, grow $XX.X from onboard annualized we a During third sales XXXX, at the are

Real Turning segment. Estate our to and Slide and X countercyclical Servicer

million quarter same than million XX% or Third in the EBITDA higher of was quarter XXXX. $X.X adjusted $XX

outsourced a in fourth Services our quarter margin was and decline EBITDA exit 'XX of reflect lower mix EBITDA XX% to margin quarter margins and year. cost third the product improvement initiatives, revenue. Adjusted employee low-margin and from growth Field lower business. by partially primarily referrals offset revenue business our of The reduction and last improved in Third adjusted XX% efficiency fewer quarter service from

products. for that We September referral higher title period also October title volume referrals were compared X recover foreclosure through market the our foreclosure in in growth XX% XX same to trustee trustee first year-over-year by pre-foreclosure pre-foreclosure continuing the and in is default evidenced believe Both as recent and to lien XXXX.

that and compared higher will last anticipate we Real XXXX, our year. For segment adjusted and Servicer EBITDA EBITDA Estate adjusted margins have to

basis. to million wins. our declined quarter, totaled The X our end primarily to of the prior compared and wins. a Moving $XX.X Real sales quarter, and quarter annual of pipeline third into because the the we the pipeline Estate pipeline revenue Slide average million an $XX.X third Servicer sales and weighted on At of stabilized converted estimated pipeline

EBITDA. management, a the was quarter provide $XX.X not in annual on million year anticipate of business September services a the agreement if asset of and field referrals mortgage our adjusted and a to reverse by and portfolio. On estimate new REO we sooner. million will portion third XXXX, of of brokerage, revenue more a master wins represents to We reach this that receiving began and REO a per that auction, stabilization One in revenue servicers of we notable $X the statement stabilized middle valuation million services work earnings in and basis, $X signing

Turning on macroeconomic X. environment to the Slide

student loan consumers from a low environment. and suspension interest pandemic, the mortgage stimulus During payments checks, benefited rate of the historically and

appreciated. delinquencies home and payments loan moratoriums and forbearance soared result, values resumed. foreclosure credit a Since month, reached XXXX, borrowing an scores savings mortgage high, student all-time ended, declined, improved early just programs consumer costs this and As

are delinquency cracks are delinquencies June also credit XXXX, by rates September are more in and auto in mortgages are quarter XX% by Comparing declined continue more to XXXX. result, XX.X% payment housing quarter behind in XX% compared to the X to withdrawals XXXX the debt a high, in at 'XX to card of from X.X% same beginning Credit As August XXXX savings delinquent the to rising. Early-stage is and of were card record payments. The consumer rise. in second mortgage X.X% market and mortgages hardship a March appear. higher X XXX(k)

in every sales rate X.X% typical unemployment up need medium would result or September by compared adjusted the to For by or has some increased the and increase housing September is of home particularly down to followed and addressable over A XX.X% a declined stages in to million. first correlated home the CNN to XXXX, though September compared couple XXX accelerate low. those and to in by they delinquency for down correction and June in which rates, originated the this interest rates foreclosures, article estimate default XX% highly XXXX, sale payment This recently to XX-day would to X% the $XXX for explained price last decline We in return XXXX. low capitulation. denial, our services is average, since an near early thereof. Naturally, delinquencies XXXX, points increase to XX%, XX-year mortgages business At home still increase a were for reached affordability recent prices would the loans combination are September years. seasonally market need basis downturn. home affordability, that by are need drop annual Home income prices, of home that for XX-year would would of that by increase

origination our environment. Turning a performed segment. in Origination to XX We in difficult Slide well

Revenue period our were the million Third over One same newer origination save quarter $X.X help reflects adjusted by wins flat solutions, market. XX% challenges to offset by revenue which a improved was Lenders partially roughly our decline businesses, XXXX customer by despite in designed origination are our the and in which from EBITDA other continued members volume. industry-wide impacted money, in

to forecasted XX the and segment anticipate adjusted and One revenue we Origination summary MBA's efficiency Origination from outperform XXXX sales in XXXX, service business XX% segment. Slide improve momentum to and of origination a compared our segment and cost market, to savings provides the sales across For in the pipeline wins. decline initiatives Lenders EBITDA

a members that on we difficult market, During solutions save our Lenders of remain help adoption very money. One our origination increasing focused

the of approximately weighted during is estimated million $XX.X sales quarter of XX third new pipeline an revenue stabilized of quarter. the business our wins, XXXX third and half a as million recognized $XX.X or of XXXX Our on million revenue won year an From annualized basis. we annual million in of first average revenue $X.X the We in basis. sales $X.X September on

segment Slide Moving to on our XX. Corporate

discipline. We continue maintain to cost

EBITDA in $X.X Corporate quarter million the XX% of same segment million than loss was better $X.X Third the or quarter in adjusted XXXX.

improve For improve to the year, to XXXX. adjusted and to reflects we This continue compared efficiency our anticipate cost-cutting July loss EBITDA EBITDA the results. we corporate conclude, our plan. To adjusted

and EBITDA million third than year-to-date adjusted was period Our quarter period the better $XX.X year. XXXX, same in is than EBITDA million adjusted the last same better $X.X

weakness pipeline the with initiatives, wins to the Our and pipeline, up wins default manage look and strength rates in aggressively EBITDA of sales savings growth adjusted positive our year questions. continue expenses. mortgage believe upside of potential quarter we normalization full delinquency if our for and the and we call for market strong, fourth Altisource XXXX consumer as open cost now attractive sales We and remain positions the and to rise. I'll

Operator

[Operator Riley. Instructions] Sharma comes first Our Raj question from from B.

Rajiv Sharma

the more more in starts could in that days Really an of sales. color the a comment little that? question industry-wide up I the Also dropped showing the space? a you considerable X,XXX And XXX. year, shoots of significantly results, improvement your you EBITDA. foreclosure improvement. on rising. part improvement an start pretty and course, some could be seemingly the of to in soon of how early in delinquencies indicative the And to had Congratulations could are good -- to of anything, days bit you And seems down on results. foreclosure on There maybe Is give relative that think? earlier early from

William Shepro

right, for Bill. All Thanks questions. Raj. is your This

related particularly if compared focused searches in increase increase report year. And So saw a title foreclosure, to in the will, on the we business in normalize rise. trustee And start and business, insured from wanted that last starting the a month, we to so earlier months the is information September and and of October I a and rates, to our days same for seeing the home, you referrals we XX% That's benefit October in ago. restart the why indications our of pretty we're early search and also XX September here, are seeing month-to-date foreclosure title got significant are bring sort time are of from months which to XX California, to a it couple foreclosure think just that. some delinquency we reason in of we in

that an and those auction this increase business stage in for earlier we're see Altisource, or appear as starting increase precursor, at does And be higher -- time system, well, work referrals. in foreclosures the a Hubzu. through the REO activities and it high-margin in our an over margin to industry-wide So both our could

Rajiv Sharma

of progress another comments cuts, Great. that? $XX.X question And Could then cuts? Or give recently sort any on cost your cost ongoing announced is any the million. you on on

William Shepro

Yes, million about think today, annualized savings. at of I Sure. we're $XX.X a year

be of other we -- think about the in of the should at $X.X the the or of the next achieved second million year. the $XXX,XXX additional million, September. month -- of $XX.X will million $XX come then roughly savings, million of half of Michelle, savings I $X in end and savings the balance year by We the

Michelle Esterman

That's right.

William Shepro

So very we're making good initiative. that progress with

Operator

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

Mike Grondahl

just Bill cash and And flow what do sort about of begin questions. a when One, 'XX, in have for a inflect? or that of then Or sort in talk think for bit you Michelle, usage potential of you base a visibility think increase just just may any two do you base Hubzu cash you case on to 'XX? case inventory? as in little an secondly, could

William Shepro

Mike, it's Bill.

home think that get time takes those are respect it the that of performing. in when lot inventory, like on XXXX talked So over percentage affordability, it return that, spend at work the And foreclosures we to and new we to end. the reasons pandemic. prior think, those quite substantially quarter that the macroeconomic certainly discussed to as conversion of we all first the is that to looked and about And time through way of foreclosures looking actually will continue how with we economy going do a also through for their the foreclosure REO. And with we converting business conversion given rate, closer initiations to rate increased clearly, what's we're that process monitoring for to what time, environment the also, and what those Hubzu system

how work of foreclosures those long then And so from in matter it's a first for just -- increase the takes its of through system. the quarter XXXX it way that to

REO. states, in And then the that to X XX months in months. I slower think it's it's it's other we've faster, it's And been typically guiding sell the foreclosure. some to about states, through people another typically, get

So about foreclosure months and the months sold. to to X those another to XX and initiations to be foreclosure increase get typically another take the sale auction in X

an So initiations. we into quarter from should start increase those next to see first of year going XXXX

What it's terms I very of providing consistent for slower period. a quarter, was year, and guidance. you flow for say would the good the In month. progress the In I cash each improving positive month making In to quarter, pleased company. will improved seasonally see we're EBITDA not is next we're typically very see -- third EBITDA earnings each Mike, fourth the

for to in of additional up quarter, sure to higher XXXX. Operator, I I'm it think last good where our be the our rate any is into setting And roughly think going revenue improve, the third was year. we a us questions. in going will line quarter fourth there's not run if with continue but than EBITDA

Operator

I further Bill Instructions] now like no showing turn am over I would final for conference questions. the remarks. [Operator to to

William Shepro

for call. sales today's Thanks and -- support, Yes. our to growing strengthening soon. We Talk we're improving the pipeline. joining progress you very we're in at Thank with you. our making pleased EBITDA company and the the your and appreciate

Operator

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

may You now disconnect.

Altisource Portfolio Solutions (ASPS) 26 Oct 232023 Q3 Earnings call transcript