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Altisource Announces Fourth Quarter and Full Year Results

LUXEMBOURG, March 2, 2015 (GLOBE NEWSWIRE) -- Altisource Portfolio Solutions S.A. ("Altisource") (Nasdaq:ASPS) today reported financial results for the fourth quarter and full year 2014.

Full Year 2014 Results Compared to 2013:

  • Service revenue of $938.7 million, a 42% increase
  • Net income attributable to Altisource of $134.5 million, a 3% increase
  • Diluted earnings per share of $5.69, a 10% increase
  • Adjusted diluted earnings per share of $7.17, a 15% increase
  • Cash from operations of $197.5 million, a 6% increase

Fourth Quarter 2014 Results Compared to Fourth Quarter 2013:

  • Service revenue of $217.8 million, a 13% increase
  • Net loss attributable to Altisource of $1.5 million compared to net income attributable to Altisource of $35.5 million in the fourth quarter 2013
  • Diluted loss per share of $0.08 compared to diluted earnings per share of $1.42 in the fourth quarter 2013
  • Adjusted diluted earnings per share of $0.30, an 83% decrease
  • Cash from operations of $71.8 million, a 41% increase

Outside of the discontinuation of the lender placed insurance brokerage line of business, the fourth quarter 2014 net loss was from higher costs than in the fourth quarter of 2013, partially as a result of expenses to support anticipated business growth. To quickly address the change in expectations for Ocwen's growth, the Company has begun to execute on a plan that includes eliminating non-revenue generating businesses, reducing vendor fees and eliminating staff to reduce costs.

"Our 2014 performance was driven by strong revenue growth. During 2014, our earnings grew at a lower rate than our revenue as we incurred expenses for people and infrastructure to support a larger Ocwen and certain longer-term initiatives that had no revenue associated with them. We developed and are implementing a plan to reduce costs and eliminate certain of these initiatives to be a leaner, more focused organization," said Chief Executive Officer William B. Shepro.

Full year and fourth quarter 2014 highlights include:

  • The average number of loans serviced by Ocwen on REALServicing® totaled 2.2 million, a 91% increase compared to the year ended December 31, 2013 and 2.4 million for the fourth quarter 2014, a 59% increase compared to the fourth quarter 2013
  • On November 21, 2014, we acquired certain assets and assumed certain liabilities of Owners Advantage, LLC ("Owners.com"), a leading self-directed online real estate marketplace, for an initial purchase price of $19.8 million plus contingent earn out consideration of up to an additional $7.0 million over two years, subject to Owners.com achieving annual performance targets
  • On September 12, 2014, we completed the acquisition of certain assets and assumed certain liabilities of Mortgage Builder Software, Inc. ("Mortgage Builder"), a provider of mortgage loan origination and servicing software systems, for an initial purchase price of $15.7 million plus contingent earn out consideration of up to an additional $7.0 million over three years, subject to Mortgage Builder achieving annual performance targets
  • On August 1, 2014, we amended our senior secured term loan agreement and increased our borrowings by $200.0 million.

William Shepro commented further, "We have begun 2015 very focused on our customer and product diversification initiatives while continuing to support Ocwen, a very important and strategic customer to us."

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. Altisource 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: Altisource's ability to retain existing customers and attract new customers; general economic and market conditions; governmental regulations, taxes and policies; availability of adequate and timely sources of liquidity; and other risks and uncertainties detailed in the "Forward-Looking Statements," "Risk Factors" and other sections of the Company's Form 10-K and other filings with the Securities and Exchange Commission.

Webcast

Altisource will host a webcast on Wednesday, March 4, 2015 at 11:00 a.m. EST to discuss our fourth quarter and full year results. A link to the live audio webcast will be available on Altisource's website through the Investor Relations home page. Those who want to listen to the call should go to the website fifteen minutes prior to the call to register, download and install any necessary audio software. A replay of the conference call will be available via the website approximately two hours after the conclusion of the call and will remain available for approximately 30 days.

About Altisource

Altisource Portfolio Solutions S.A. is a premier marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries offering both distribution and content. Altisource leverages proprietary business process, vendor and electronic payment management software and behavioral science based analytics to improve outcomes for marketplace participants. Altisource has been named to Fortune's fastest growing global companies two years in a row. Additional information is available at www.Altisource.com.

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended Years ended
December 31, December 31,
2014 2013 2014 2013
Service revenue
Mortgage Services $ 145,037 $ 139,752 $ 650,026 $ 490,333
Financial Services 21,816 26,220 98,312 92,479
Technology Services 63,154 33,702 230,367 103,891
Eliminations (12,163) (7,233) (40,026) (24,644)
217,844 192,441 938,679 662,059
Reimbursable expenses 37,414 29,417 137,634 102,478
Non-controlling interests 629 727 2,603 3,820
Total revenue 255,887 222,585 1,078,916 768,357
Cost of revenue 149,238 114,868 569,546 390,002
Reimbursable expenses 37,414 29,417 137,634 102,478
Gross profit 69,235 78,300 371,736 275,877
Selling, general and administrative expenses 61,979 33,783 201,282 113,810
Income from operations 7,256 44,517 170,454 162,067
Other income (expense), net:
Interest expense (7,323) (5,989) (23,363) (20,291)
Other income (expense), net 39 28 174 557
Total other income (expense), net (7,284) (5,961) (23,189) (19,734)
Income (loss) before income taxes and non-controlling interests (28) 38,556 147,265 142,333
Income tax provision (878) (2,313) (10,178) (8,540)
Net income (loss) (906) 36,243 137,087 133,793
Net income attributable to non-controlling interests (629) (727) (2,603) (3,820)
Net income (loss) attributable to Altisource $ (1,535) $ 35,516 $ 134,484 $ 129,973
Earnings (loss) per share:
Basic $ (0.08) $ 1.56 $ 6.22 $ 5.63
Diluted $ (0.08) $ 1.42 $ 5.69 $ 5.19
Weighted average shares outstanding:
Basic 20,306 22,734 21,625 23,072
Diluted 20,306 25,005 23,634 25,053
Transactions with related parties:
Revenue $ 164,064 $ 147,198 $ 666,800 $ 502,087
Cost of revenue 10,706 6,024 38,610 19,983
Selling, general and administrative expenses 196 240 (268) 569
Other income -- -- -- 773
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
December 31,
2014 2013
ASSETS
Current assets:
Cash and cash equivalents $ 161,361 $ 130,324
Accounts receivable, net 112,183 104,787
Prepaid expenses and other current assets 23,567 10,996
Deferred tax assets, net 4,987 2,837
Total current assets 302,098 248,944
Premises and equipment, net 127,759 87,252
Deferred tax assets, net -- 622
Goodwill 90,851 99,414
Intangible assets, net 245,246 276,162
Other assets 22,267 17,658
Total assets $ 788,221 $ 730,052
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 111,766 $ 84,706
Current portion of long-term debt 5,945 3,975
Deferred revenue 9,829 36,742
Other current liabilities 13,227 10,131
Total current liabilities 140,767 135,554
Long-term debt, less current portion 582,669 391,281
Deferred tax liabilities, net 2,694 --
Other non-current liabilities 20,648 45,476
Equity:
Common stock ($1.00 par value; 25,413 shares authorized and issued,
and 20,279 outstanding, as of December 31, 2014; 100,000 shares authorized,
25,413 issued and 22,629 outstanding as of December 31, 2013)
25,413 25,413
Additional paid-in capital 91,509 89,273
Retained earnings 367,967 239,561
Treasury stock, at cost (5,134 shares as of December 31, 2014
and 2,784 shares as of December 31, 2013)
(444,495) (197,548)
Altisource equity 40,394 156,699
Non-controlling interests 1,049 1,042
Total equity 41,443 157,741
Total liabilities and equity $ 788,221 $ 730,052
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years ended December 31,
2014 2013
Cash flows from operating activities:
Net income $ 137,087 $ 133,793
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 29,046 19,056
Amortization of intangible assets 37,680 28,176
Change in the fair value of Equator Earn Out (37,924) --
Goodwill impairment 37,473 --
Share-based compensation expense 2,236 2,400
Equity in losses of investment in affiliate -- 176
Bad debt expense 16,257 2,549
Amortization of debt discount 317 223
Amortization of debt issuance costs 1,151 958
Deferred income taxes 1,166 2,015
Loss on disposal of fixed assets 184 1,309
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (22,492) (5,602)
Prepaid expenses and other current assets (12,501) (2,817)
Other assets (1,750) (1,586)
Accounts payable and accrued expenses 24,285 7,381
Other current and non-current liabilities (14,722) (2,557)
Net cash provided by operating activities 197,493 185,474
Cash flows from investing activities:
Additions to premises and equipment (64,846) (34,134)
Acquisition of businesses, net of cash acquired (34,720) (267,946)
Proceeds from loan to Ocwen -- 75,000
Proceeds from sale of equity affiliate -- 12,648
Other investing activities (300) (50)
Change in restricted cash (1,402) (1,462)
Net cash used in investing activities (101,268) (215,944)
Cash flows from financing activities:
Repayment of long-term debt and payments on capital lease obligations (4,959) (3,729)
Proceeds from issuance of long-term debt 198,000 200,502
Debt issuance costs (2,608) (3,200)
Proceeds from stock option exercises 2,688 6,885
Purchases of treasury stock (255,713) (141,018)
Contributions from non-controlling interests -- 28
Distributions to non-controlling interests (2,596) (4,176)
Net cash (used in) provided by financing activities (65,188) 55,292
Net increase in cash and cash equivalents 31,037 24,822
Cash and cash equivalents at the beginning of the period 130,324 105,502
Cash and cash equivalents at the end of the period $ 161,361 $ 130,324
Supplemental cash flow information:
Interest paid $ 21,829 $ 19,325
Income taxes paid, net 13,340 3,671
Non-cash investing and financing activities:
(Decrease) increase in payables for purchases of premises and equipment $ (2,328) $ 4,552
Decrease in acquisition of businesses from subsequent working capital true-ups (3,711) (2,039)

CONTACT: Michelle D. Esterman Chief Financial Officer T: +352 2469 7950 E: Michelle.Esterman@altisource.luSource:Altisource Portfolio Solutions S.A.