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Altisource Asset Management Corporation Reports Second Quarter 2014 Results

FREDERIKSTED, U.S. Virgin Islands, July 22, 2014 (GLOBE NEWSWIRE) -- Altisource Asset Management Corporation ("AAMC" or the "Company") (NYSE MKT:AAMC) announced today financial and operating results for the second quarter of 2014. Net income attributable to stockholders for the second quarter of 2014 totaled $13.2 million, or $4.60 per diluted share,compared to a net loss attributable to stockholders of $1.5 million, or $0.64 per share,for the second quarter of 2013.

Net income attributable to stockholders for the six months ended June 30, 2014 totaled $20.1 million, or $7.00 per diluted share, compared to a net loss attributable to stockholders of $2.3 million, or $1.00 per diluted share, for the six months ended June 30, 2013.

Second quarter 2014 highlights:

  • Generated management incentive fees of $13.7 million, as a result of the $0.45 per share quarterly dividend declared and paid by Altisource Residential Corporation ("Residential") to its shareholders.
  • Facilitated Residential's agreement to acquire an aggregate of 4,374 non-performing and re-performing mortgage loans having an aggregate market value of underlying properties of $1.23 billion.
  • Managed Residential's resolution of 1,156 loans, up from 822 loans in the first quarter of 2014.
  • Facilitated an increase in Residential's rental portfolio to 142 properties, well in excess of its targeted 100 rental properties by June 30, 2014.
  • In advanced stages of launching NewSource as a second managed client for AAMC that focuses on housing related reinsurance products with limited catastrophe risk and high operational intensity, such as title insurance and home warranty.

Chief Executive Officer Ashish Pandey stated, "We are very pleased with our execution of Residential's strategic plan and the operating results we have been able to achieve for Residential."

"We are happy with the continued growth of Residential under AAMC's management, and we are excited with the progress AAMC is making toward developing NewSource as its second managed client," said Chairman William Erbey.

Webcast and conference call

The Company will host a webcast and conference call on Tuesday, July 22, 2014, at 11:30 a.m. Eastern Time to discuss its financial results for the second quarter of 2014. The conference call will be webcast live over the internet from the Company's website at www.altisourceamc.com and can be accessed by clicking on the "Shareholders" link.

About AAMC

AAMC is an asset management company that provides portfolio management and corporate governance services to investment vehicles. Additional information is available at www.altisourceamc.com.

Forward-looking statements

This press release contains forward-looking statements that involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical fact, including statements about management's beliefs and expectations. Forward-looking statements are based on management's beliefs as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future economic performance and are not statements of historical fact, actual results may differ materially from those projected. AAMC undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to: AAMC's ability to implement its business plan; AAMC's ability to leverage strategic relationships on an efficient and cost-effective basis; its ability to compete; general economic and market conditions; governmental regulations, taxes and policies; availability of adequate and timely sources of liquidity and financing; and other risks and uncertainties detailed in the "Forward-Looking Statements," "Risk Factors" and other sections of AAMC's Registration Statement on Form 10, its Annual Report on Form 10-K, its quarterly reports on Form 10-Q and its other filings with the Securities and Exchange Commission.

Altisource Asset Management Corporation
Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
Three months ended
June 30, 2014
Three months ended
June 30, 2013
Six months ended
June 30, 2014
Six months ended
June 30, 2013
Rental revenues and net gain on mortgage loans:
Rental revenues $ 181 $ — $ 250 $ —
Net unrealized gain on mortgage loans 105,042 7,165 170,172 8,293
Net realized gain on mortgage loans 10,819 1,719 20,140 2,106
Total rental revenues and net gain on mortgage loans 116,042 8,884 190,562 10,399
Expenses:
Residential property operating expenses 3,253 84 4,303 84
Real estate depreciation and amortization 103 151
Mortgage loan servicing costs 16,925 1,242 28,362 1,634
Interest expense 6,945 654 12,653 696
General and administrative 7,421 3,369 13,376 6,067
Related party general and administrative 2,675 3,598 207
Total expenses 37,322 5,349 62,443 8,688
Other income 2,101 193 2,209 193
Income before income taxes 80,821 3,728 130,328 1,904
Income tax (benefit) expense (191) 575
Net income 81,012 3,728 129,753 1,904
Net income attributable to noncontrolling interest in consolidated affiliate (67,782) (5,227) (109,695) (4,243)
Net income (loss) attributable to common stockholders $ 13,230 $ (1,499) $ 20,058 $ (2,339)
Earnings (loss) per share of common stock – basic:
Earnings (loss) per basic share $ 5.87 $ (0.64) $ 8.68 $ (1.00)
Weighted average common stock outstanding – basic 2,255,278 2,343,462 2,310,931 2,343,338
Earnings (loss) per share of common stock – diluted:
Earnings (loss) per diluted share $ 4.60 $ (0.64) $ 7.00 $ (1.00)
Weighted average common stock outstanding – diluted 2,874,906 2,343,462 2,865,185 2,343,338
Altisource Asset Management Corporation
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(Unaudited)
June 30, 2014 December 31, 2013
Assets:
Real estate held for use:
Land (from consolidated VIE) $ 3,875 $ 478
Rental residential properties (net of accumulated depreciation of $172 and $24, respectively - from consolidated VIE) 14,917 3,092
Real estate owned (from consolidated VIE) 231,013 32,332
Total real estate held for use, net 249,805 35,902
Real estate assets held for sale (from consolidated VIE) 27,572 1,186
Mortgage loans (from consolidated VIE) 2,024,028 1,207,163
Mortgage loans held for investment (from consolidated VIE) 144,009
Cash and cash equivalents (including from consolidated VIE $130,758 and $115,988, respectively) 204,642 140,000
Restricted cash 10,269 5,878
Accounts receivable (including from consolidated VIE $631 and $1,428, respectively) 955 1,428
Related party receivables (from consolidated VIE) 12,608 9,260
Deferred leasing and financing costs, net (from consolidated VIE) 3,457 2,293
Prepaid expenses and other assets (including from consolidated VIE $260 and $1,542, respectively) 1,678 1,994
Total assets $ 2,679,023 $ 1,405,104
Liabilities:
Repurchase agreements (from consolidated VIE) $ 1,271,483 $ 602,382
Accounts payable and accrued liabilities (including from consolidated VIE $7,459 and $4,952, respectively) 10,679 6,872
Related party payables (including from consolidated VIE $4,078 and $1,409, respectively) 4,911 2,883
Total liabilities 1,287,073 612,137
Commitments and contingencies
Mezzanine Equity
Preferred stock, $0.01 par value, 250,000 shares issued and outstanding as of June 30, 2014 and none issued or outstanding as of December 31, 2013; redemption value $250,000 248,824
Equity:
Common stock, $.01 par value, 5,000,000 authorized shares; 2,436,870 and 2,242,594 shares issued and outstanding, respectively as of June 30, 2014 and 2,354,774 shares issued and outstanding as of December 31, 2013 24 24
Additional paid-in capital 15,610 12,855
Retained earnings 14,657 (5,339)
Treasury stock, at cost, 194,198 shares as of June 30, 2014 and none as of December 31, 2013 (197,673)
Total stockholders' equity (167,382) 7,540
Noncontrolling interest in consolidated affiliate 1,310,508 785,427
Total equity 1,143,126 792,967
Total liabilities and equity $ 2,679,023 $ 1,405,104

The following tables set forth consolidating financial information which should be considered in addition to, and not as a substitute for, our consolidated financial statements presented in accordance with U.S. GAAP:

Altisource Asset Management Corporation
Consolidating Statement of Operations
Three months ended June 30, 2014
(In thousands, unaudited)
Residential
(GAAP)
NewSource
Stand-alone
(Non-GAAP)
AAMC Stand-
alone
(Non-GAAP)
Consolidating
Entries
AAMC
Consolidated
(GAAP)
Rental revenues and net gain on mortgage loans:
Rental revenues $ 181 $ — $ — $ — $ 181
Net unrealized gain on mortgage loans 105,042 105,042
Net realized gain on mortgage loans 10,819 10,819
Incentive management fee 13,715 (13,715)
Expense reimbursements 1,999 (1,999)
Total rental revenues and net gain on mortgage loans 116,042 15,714 (15,714) 116,042
Expenses:
Residential property operating expenses 3,253 3,253
Real estate depreciation and amortization 103 103
Mortgage loan servicing costs 16,925 16,925
Interest expense 6,945 6,945
General and administrative 5,687 65 1,669 7,421
Related party general and administrative 17,467 210 712 (15,714) 2,675
Total expenses 50,380 275 2,381 (15,714) 37,322
Other income 1,698 399 4 2,101
Income before income taxes 67,360 124 13,337 80,821
Income tax (benefit) expense (422) 231 (191)
Net income 67,782 124 13,106 81,012
Net income attributable to noncontrolling interest in consolidated affiliate (67,782) (67,782)
Net income attributable to common stockholders $ 67,782 $ 124 $ 13,106 $ (67,782) $ 13,230
Altisource Asset Management Corporation
Consolidating Statement of Operations
Six months ended June 30, 2014
(In thousands, unaudited)
Residential
(GAAP)
NewSource
Stand-alone
(Non-GAAP)
AAMC Stand-
alone
(Non-GAAP)
Consolidating
Entries
AAMC
Consolidated
(GAAP)
Rental revenues and net gain on mortgage loans:
Rental revenues $ 250 $ — $ — $ — $ 250
Net unrealized gain on mortgage loans 170,172 170,172
Net realized gain on mortgage loans 20,140 20,140
Incentive management fee 24,626 (24,626)
Expense reimbursements 3,779 (3,779)
Total rental revenues and net gain on mortgage loans 190,562 28,405 (28,405) 190,562
Expenses:
Residential property operating expenses 4,303 4,303
Real estate depreciation and amortization 151 151
Mortgage loan servicing costs 28,362 28,362
Interest expense 12,653 12,653
General and administrative 7,079 95 6,202 13,376
Related party general and administrative 30,099 521 1,383 (28,405) 3,598
Total expenses 82,647 616 7,585 (28,405) 62,443
Other income 1,806 399 4 2,209
Income (loss) before income taxes 109,721 (217) 20,824 130,328
Income tax expense 26 549 575
Net income (loss) 109,695 (217) 20,275 129,753
Net income attributable to noncontrolling interest in consolidated affiliate (109,695) (109,695)
Net income (loss) attributable to common stockholders $ 109,695 $ (217) $ 20,275 $ (109,695) $ 20,058
Altisource Asset Management Corporation
Consolidating Statement of Operations
Three months ended June 30, 2013
(In thousands, unaudited)
Residential
(GAAP)
AAMC Stand-
alone
(Non-GAAP)
Consolidating
Entries
AAMC
Consolidated
(GAAP)
Rental revenues and net gain on mortgage loans:
Net unrealized gain on mortgage loans $ 7,165 $ — $ — $ 7,165
Net realized gain on mortgage loans 1,719 1,719
Expense reimbursements 1,156 (1,156)
Total rental revenues and net gain on mortgage loans 8,884 1,156 (1,156) 8,884
Expenses:
Residential property operating expenses 84 84
Mortgage loan servicing costs 1,242 1,242
Interest expense 654 654
General and administrative 714 2,655 3,369
Related party general and administrative 1,156 (1,156)
Total expenses 3,850 2,655 (1,156) 5,349
Other income 193 193
Net income (loss) 5,227 (1,499) 3,728
Net income attributable to noncontrolling interest in consolidated affiliate (5,227) (5,227)
Net income (loss) attributable to common stockholders $ 5,227 $ (1,499) $ (5,227) $ (1,499)
Altisource Asset Management Corporation
Consolidating Statement of Operations
Six months ended June 30, 2013
(In thousands, unaudited)
Residential
(GAAP)
AAMC Stand-
alone
(Non-GAAP)
Consolidating
Entries
AAMC
Consolidated
(GAAP)
Rental revenues and net gain on mortgage loans:
Net unrealized gain on mortgage loans $ 8,293 $ — $ — $ 8,293
Net realized gain on mortgage loans 2,106 2,106
Expense reimbursements 2,057 (2,057)
Total rental revenues and net gain on mortgage loans 10,399 2,057 (2,057) 10,399
Expenses:
Residential property operating expenses 84 84
Mortgage loan servicing costs 1,634 1,634
Interest expense 696 696
General and administrative 1,701 4,366 6,067
Related party general and administrative 2,234 30 (2,057) 207
Total expenses 6,349 4,396 (2,057) 8,688
Other income 193 193
Net income (loss) 4,243 (2,339) 1,904
Net income attributable to noncontrolling interest in consolidated affiliate (4,243) (4,243)
Net income (loss) attributable to common stockholders $ 4,243 $ (2,339) $ (4,243) $ (2,339)
Altisource Asset Management Corporation
Consolidating Balance Sheet
June 30, 2014
(In thousands, unaudited)
Residential
(GAAP)
NewSource
stand-alone
(Non-GAAP)
AAMC Stand-
alone
(Non-GAAP)
Consolidating
Entries
AAMC
Consolidated
(GAAP)
Assets:
Real estate held for use:
Land $ 3,875 $ — $ — $ — $ 3,875
Rental residential properties, net 14,917 14,917
Real estate owned 231,013 231,013
Total real estate held for use, net 249,805 249,805
Real estate assets held for sale 27,572 27,572
Mortgage loans 2,024,028 2,024,028
Mortgage loans held for investment 144,009 144,009
Cash and cash equivalents 130,758 19,872 54,012 204,642
Restricted cash 10,269 10,269
Accounts receivable 631 284 40 955
Related party receivables 12,608 28,034 (28,034) 12,608
Investment in affiliate 18,000 2,000 (20,000)
Deferred leasing and financing costs, net 3,457 3,457
Prepaid expenses and other assets 260 70 1,348 1,678
Total assets $ 2,621,397 $ 20,226 $ 85,434 $ (48,034) $ 2,679,023
Liabilities:
Repurchase agreements $ 1,271,483 $ — $ — $ — $ 1,271,483
Accounts payable and accrued liabilities 7,459 3,220 10,679
Related party payables 31,947 522 476 (28,034) 4,911
Total liabilities 1,310,889 522 3,696 (28,034) 1,287,073
Commitments and contingencies
Preferred stock 248,824 248,824
Equity:
Common stock 572 24 (572) 24
Additional paid-in capital 1,226,939 20,000 15,610 (1,246,939) 15,610
Retained earnings (accumulated deficit) 82,997 (296) 14,953 (82,997) 14,657
Treasury stock (197,673) (197,673)
Total stockholders' equity 1,310,508 19,704 (167,086) (1,330,508) (167,382)
Noncontrolling interest in consolidated affiliate 1,310,508 1,310,508
Total equity 1,310,508 19,704 (167,086) (20,000) 1,143,126
Total liabilities and equity $ 2,621,397 $ 20,226 $ 85,434 $ (48,034) $ 2,679,023
Altisource Asset Management Corporation
Consolidating Balance Sheet
December 31, 2013
(In thousands, unaudited)
Residential
(GAAP)
NewSource
stand-alone
(Non-GAAP)
AAMC Stand-
alone
(Non-GAAP)
Consolidating
Entries
AAMC
Consolidated
(GAAP)
Assets:
Real estate held for use:
Land $ 478 $ — $ — $ — $ 478
Rental residential properties, net 3,092 3,092
Real estate owned 32,332 32,332
Total real estate held for use, net 35,902 35,902
Real estate assets held for sale 1,186 1,186
Mortgage loans 1,207,163 1,207,163
Cash and cash equivalents 115,988 19,923 4,089 140,000
Restricted cash 5,878 5,878
Accounts receivable 1,428 1,428
Related party receivables 9,260 4,486 (4,486) 9,260
Investment in affiliate 18,000 2,000 (20,000)
Deferred leasing and financing costs, net 2,293 2,293
Prepaid expenses and other assets 1,542 452 1,994
Total assets $ 1,398,640 $ 19,923 $ 11,027 $ (24,486) $ 1,405,104
Liabilities:
Repurchase agreement $ 602,382 $ — $ — $ — $ 602,382
Accounts payable and accrued liabilities 4,952 1,920 6,872
Related party payables 5,879 1,490 (4,486) 2,883
Total liabilities 613,213 3,410 (4,486) 612,137
Commitments and contingencies
Equity:
Common stock 423 24 (423) 24
Additional paid-in capital 758,584 20,000 12,855 (778,584) 12,855
Retained earnings (accumulated deficit) 26,420 (77) (5,262) (26,420) (5,339)
Total stockholders' equity 785,427 19,923 7,617 (805,427) 7,540
Noncontrolling interest in consolidated affiliate 785,427 785,427
Total equity 785,427 19,923 7,617 (20,000) 792,967
Total liabilities and equity $ 1,398,640 $ 19,923 $ 11,027 $ (24,486) $ 1,405,104

CONTACT: FOR FURTHER INFORMATION CONTACT: Kenneth D. Najour Chief Financial Officer T: 340-713-7722 E: Kenneth.Najour@AltisourceAMC.comSource:Altisource Asset Management Corporation