Altisource Portfolio Solutions S.a. · NASDAQ:ASPS
Altisource Portfolio Solutions — Q3 2023 Earnings Presentation
33 slides from Altisource Portfolio Solutions's earnings presentation, Oct 26, 2023
Slide 1: Altisource Third Quarter 2023 Supplementary Information
ALTISOURCE THIRD QUARTER 2023 SUPPLEMENTARY INFORMATION OCTOBER 26, 2023 1
Slide 2: Disclaimer
DIS CLAIMER This presentation contains forward-looking statements that involve a number of risks pandemic, customer concentration, the timing of the anticipated increase in default and uncertainties. These forward-looking statements include all statements that are related referrals following the exp
Slide 3: Non-GAAP Measures
NON-G AAP MEA SURES Adjusted operating loss, pretax loss attributable to Altisource, adjusted pretax loss significant non-operational items enables comparability to prior period performance attributable to Altisource, earnings before interest, taxes, depreciation and and trend analysis. amortization
Slide 4: Third Quarter 2023 Overview
THIRD QUARTER 20 23 OV ERV IEW • Generated $874,000 of Adjusted EBITDA1 in Q3 2023, representing a: • $4.4 million improvement compared to Q2 2023 • $7.3 million improvement compared to Q3 2022 • Improved Adjusted EBITDA by $16.1 million for the first nine months of 2023 compared to 2022 • Anticipat
Slide 5: Third Quarter Equity and Debt Activity
THIRD QUARTER EQUITY AND DEBT AC TIV ITY In September 2023, the Company closed an underwritten public offering to sell common stock and used a portion of the net proceeds to pay down debt Transaction Highlights • Sold 5.6 million shares of common stock, generating net proceeds of $18.4 million after
Slide 6: Consolidated Sales Pipeline and Wins
CONSOLIDATE D SA LES P IP ELINE A ND WINS ($ millions) $65.3 $68.9 $62.4 $63.2 $56.2 $59.0 Attractive Sales $45.9 Pipeline1 Weighted Average Pipeline Estimated Revenue – End of Quarter 2 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 FY 2022 FY 2023 Strong Sales $14.4 Wins $17.8 $16.9 YTD Wins $31.0 $40.
Slide 7: Servicer and Real Estate (SRE) Segment
SE RVICER AND REAL ESTATE (S RE ) S EGME NT Segment Service Revenue $29.0 ($ millions) $29.8 Financial Performance $26.5 $24.9 $26.9 • Service Revenue • Q3 2023 Service revenue of $26.9 million was $2.1 million, or 7%, lower than Q3 2022 primarily from the Q4 2022 exit of a low margin employee outso
Slide 8: SRE Sales Pipeline and Wins
SRE SALES PIPELINE AND WINS ($ millions) $46.3 $41.7 Attractive Sales $35.4 $33.4 $35.6 $38.6 $25.6 Pipeline1 Weighted Average Pipeline Estimated Revenue – End of Quarter 2 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 FY 2022 FY 2023 Strong Sales Wins $14.4 $15.3 YTD Wins $9.4 $32.6 Wins3 $4.2 $1.2 $1.
Slide 9: Macroeconomic Environment
MACROECONOMIC EN VIRONMENT Consumer loan delinquency rates are increasing • Government relief measures, including stimulus checks, • Rising early-stage mortgage delinquencies; 30-day delinquencies unemployment benefits, suspension of mortgage and student increased 9.4% and 60-day delinquencies incre
Slide 10: Origination Segment
ORIGINATION SEG MENT Segment Historical Financials ($ millions) 8.3 Financial Performance 7.3 7.3 7.2 6.3 • Service Revenue • 3Q 2023 Service revenue was roughly flat compared to Q3 (1.8) (0.7) (0.7) (1.3) (0.5) 2022 despite a 10% decline in industrywide origination -24% -12% -10% -16% -7% volume1 Q
Slide 11: Origination Sales Pipeline and Wins
ORIGINATION SALES P IPE LINE AND W INS ($ millions) $31.9 Attractive Sales $20.8 $23.4 $22.6 $20.8 $24.6 $20.4 Pipeline1 Weighted Average Pipeline Estimated Revenue – End of Quarter 2 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 FY 2022 FY 2023 Strong Sales $7.9 $10.2 Wins YTD Wins $21.6 $7.9 Wins3 $3.
Slide 12: Corporate and Others Segment
CORP ORATE A ND OTHERS SEG MENT Financial Performance • Corporate and Others includes costs related to corporate Corporate Adjusted EBITDA Loss functions including executive, infrastructure and certain 14.0 ($ millions) 1200.0% technology groups, finance, law, compliance, human resources, 12.0 11.0
Slide 13: Conclusion
CONCLUS ION The Company is positioned for attractive growth as we look to 2024 Attractive potential revenue growth levers Adjusted EBITDA performance is improving • Strong YTD’23 sales wins and pipeline • Q3’23 Adjusted EBITDA was $7.3 million better • Return to a normal residential mortgage than Q3
Slide 14: Appendix
APPENDIX THIRD THIRD QUARTER 2023 SEGMENT QUARTER COST INVESTOR FINANCIAL O P E R AT I N G FINANCIAL REDUCTION NON GAAP R E L AT I O N S R E S U LT S METRICS I N F O R M AT I O N PLAN MEASURES I N F O R M AT I O N 15 17 20 21 22 32 © 2023 Altisource All Rights Reserved. 14
Slide 15: Third Quarter Financial Results
THIRD QUARTER 20 23 FINANCIAL RESULTS Q3 Q3 Vs. YTD YTD Vs. $ millions (except EPS) 2023 2022 Q3 2022 2023 2022 YTD 2022 Revenue $36.2 $38.4 -6% $110.9 $118.3 -6% Service revenue 34.1 36.3 -6% 104.4 111.7 -7% Gross profit 7.2 4.0 80% 21.2 13.7 55% Loss from operations (3.5) (10.6) 66% (13.9) (29.3)
Slide 16: Progress with Select Customer Wins
PROGRESS W ITH SELECT 1 CUSTOMER WINS Agreements Began Est. Stabilized Notified of Agreements in Anticipated receiving revenue win Customer description Service executed negotiation "Go Live" Date referrals in opportunity1 Q4'21 Originator Lenders One √ Q3'22 Medium Q2'22 Originator Granite √ Q1'23 M
Slide 17: Operating Metrics
OPERATING ME TRICS Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Ocwen1 Serviced Portfolio2: Default Related Services: Service revenue3 per delinquent loan4 per quarter Non-GSE $ 366 $ 235 $ 157 $ 158 $ 156 $ 158 $ 210 $ 244 $ 260 $ 243 $ 295 $ 257 $ 291 GSE and FHA $
Slide 18: Operating Metrics: Hubzu
OPERATING ME TRICS Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 1 Hubzu : 2 Service revenue (in millions) $ 21.4 $ 12.2 $ 7.4 $ 8.6 $ 6.1 $ 5.8 $ 8.0 $ 8.1 $ 6.7 $ 5.9 $ 7.7 $ 7.1 $ 7.1 Number of homes sold on Hubzu: 3 Ocwen serviced portfolios 1,709 860 570 620 514
Slide 19: Hubzu Inventory
HUBZU IN VENTORY Ending Inventory (in 000’s) 6.9 6.2 6.3 6.2 6.3 5.9 5.9 6.0 6.0 6.0 5.8 5.0 4.5 4.4 3.2 3.4 3.6 3.6 4.1 3.5 3.5 3.9 4.2 3.4 2.6 2.4 2.7 2.4 2.4 2.5 2.6 2.7 2.7 2.4 2.4 2.1 2.0 2.0 2.2 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 All Other Customers O
Slide 20: Segment Financial Information
SEG MENT F INA NCIAL INFORMATION Service revenue ($ millions) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Servicer and Real Estate1 $ 27.2 $ 29.4 $ 29.0 $ 26.5 $ 29.8 $ 24.9 $ 26.9 Origination1 10.6 8.2 7.3 6.3 7.3 8.3 7.2 Corporate and Others1 - - - - - - - Total $ 37.8 $ 37.6 $ 36.3 $ 32.8 $ 37.1 $
Slide 21: Third Quarter Cost Reduction Plan
THIRD QUARTER COST REDUCT ION PL AN In July 2023, the Company began to implement a company-wide cost reduction plan which is estimated to reduce annual cash operating expenses by $13.5 million once complete; the plan is anticipated to be complete in the second half of 2024 The Company believes it is
Slide 22: Non-GAAP Measures
NON-GAAP MEA SURES Adjusted operating loss, pretax loss attributable to Altisource, adjusted pretax loss attributable to Altisource, EBITDA, Adjusted EBITDA, adjusted net loss attributable to Altisource, adjusted diluted loss per share, and net debt are non-GAAP measures used by management, existing
Slide 23: Non-GAAP Measures
NON-GAAP MEA SURES • Adjusted EBITDA is calculated by removing the income tax (benefit) provision, interest expense (net of interest income), depreciation and amortization, intangible asset amortization expense, share-based compensation expense, cost of cost savings initiatives and other, debt amend
Slide 24: Non-GAAP Measures: Reconciliation
NON-GAAP MEA SURES Reconciliation Q3'22 Q2'23 Q3'23 YTD'22 YTD'23 ($ in millions except per share data) Loss from operations $ (10.6) $ (6.8) $ (3.5) $ (29.3) $ (13.9) Intangible asset amortization expense 1.3 1.3 1.4 3.8 3.9 Share-based compensation expense 1.3 1.2 1.2 3.9 3.9 Cost of cost savings
Slide 25: Non-GAAP Measures: Reconciliation
NON-GAAP MEA SURES Reconciliation Q3'22 Q2'23 Q3'23 YTD'22 YTD'23 ($ in millions except per share data) Net loss attributable to Altisource $ (14.4) $ (18.9) $ (11.3) $ (42.1) $ (43.1) Income tax (benefit) provision (0.2) 0.6 0.4 2.2 2.6 Interest expense, net of interest income 4.1 9.6 9.6 11.1 25.5
Slide 26: Non-GAAP Measures: Reconciliation
NON-GAAP MEA SURES Reconciliation Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 ($ in millions except per share data) Servicer and Real Estate: Income before income taxes and non-controlling interests $ 5.7 $ 6.3 $ 5.9 $ 8.6 $ 9.9 $ 6.2 $ 8.4 Depreciation and amortization, including intangible asset amo
Slide 27: Non-GAAP Measures: Reconciliation
NON-GAAP MEA SURES Reconciliation Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 ($ in millions except per share data) Corporate and Others: Loss before income taxes and non-controlling interests $ (16.4) $ (17.1) $ (17.8) $ (15.3) $ (19.6) $ (22.4) $ (17.8) Interest expense, net of interest income 3.5 3
Slide 28: Non-GAAP Measures: Reconciliation
NON-GAAP MEA SURES Reconciliation Q3'22 Q2'23 Q3'23 YTD'22 YTD'23 ($ in millions except per share data) Net loss attributable to Altisource $ (14.4) $ (18.9) $ (11.3) $ (42.1) $ (43.1) Intangible asset amortization expense, net of tax 1.3 1.3 1.3 3.8 3.9 Share-based compensation expense, net of tax
Slide 29: Non-GAAP Measures: Reconciliation
NON-GAAP MEA SURES Reconciliation Q3'22 Q2'23 Q3'23 YTD'22 YTD'23 ($ in millions except per share data) Calculation of the impact of intangible asset amortization expense, net of tax: Intangible asset amortization expense $ 1.3 $ 1.3 $ 1.4 $ 3.8 $ 3.9 Tax benefit from intangible asset amortization (
Slide 30: Non-GAAP Measures: Reconciliation
NON-GAAP MEA SURES Reconciliation Q3'22 Q2'23 Q3'23 YTD'22 YTD'23 ($ in millions except per share data) Calculation of the impact of cost of cost savings initiatives and other, net of tax: Cost of cost savings initiatives and other $ 0.5 $ 0.1 $ 1.2 $ 1.1 $ 1.8 Tax benefit from cost of cost savings
Slide 31: Non-GAAP Measures: Reconciliation and Net Debt
NON-GAAP MEA SURES Reconciliation Q3'22 Q2'23 Q3'23 YTD'22 YTD'23 ($ in millions except per share data) Certain income tax related items resulting from: Certain income tax related items $ 0.2 $ 0.4 $ 0.4 $ 2.0 $ 1.1 Diluted share count (in 000s) 16,087 20,840 22,181 16,051 20,538 Certain income tax
Slide 32: Investor Relations Information
INVESTOR RELATION S INFORMATION Altisource Portfolio Solutions S.A. is an integrated service provider and marketplace for the real estate and mortgage industries. Combining operational excellence with a suite of ABOUT ALTISOURCE innovative services and technologies, Altisource helps solve the demand
Slide 33: Altisource
a x Altisource YOUR ONE SOURCE™
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