Altisource Portfolio Solutions S.a. · NASDAQ:ASPS

Altisource Portfolio Solutions — Debt Investor Presentation (March 2018)

50 slides from Altisource Portfolio Solutions's debt investor presentation, Mar 14, 2018

1. Slide 1: Lender Presentation March 14, 2018

   © 2018 Altisource. All rights reserved. Lender Presentation March 14, 2018 Any copying, distribution or use of any of the information contained herein that is not expressly permitted by Altisource in writing is STRICTLY PROHIBITED. Altisource, the Altisource logo, the “REAL” family of trademarks and

2. Slide 2: Forward-Looking Statements and Estimates

   1 © 2018 Altisource. All rights reserved. Forward-Looking Statements and Estimates This presentation contains forward-looking statements that involve a number of risks and uncertainties. These forward-looking statements include all statements that are not historical fact, including statements about

3. Slide 3: Non-GAAP Measures

   2 © 2018 Altisource. All rights reserved. Non-GAAP Measures Adjusted Operating Income, Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted EBITDA, Adjusted Cash Flows From Operating Activities, Cash Flows From Operating Activities Less Capital Expenditures, Adjusted C

4. Slide 4: Today's Presenters

   3 © 2018 Altisource. All rights reserved. Today’s Presenters Indroneel Chatterjee Chief Financial Officer • Joined Altisource as CFO in October 2017 • Previously served as Head of Credit Solutions for Nomura Securities William B. Shepro Chief Executive Officer and Director • Appointed CEO and to the

5. Slide 5: Table of Contents

   4 © 2018 Altisource. All rights reserved. Transaction Overview ….………………………………………...... Altisource Overview ……………..……………………………........ Key Investment Highlights ….……………………………….......... Core Businesses in Focus …...….…………….……………......... Financial Overview ………….…….…………….……………....... Syndication Overv

6. Slide 6: Transaction Overview

   5 © 2018 Altisource. All rights reserved. Transaction Overview

7. Slide 7: Transaction Overview

   6 © 2018 Altisource. All rights reserved. Transaction Overview • Altisource Portfolio Solutions S.A. (“Altisource,” “ASPS” or the “Company”) is an integrated service provider and marketplace for the real estate and mortgage industries • Altisource plans to issue a new $414 million Term Loan B due Ma

8. Slide 8: Pro Forma Capitalization

   7 © 2018 Altisource. All rights reserved. Pro Forma Capitalization 1 Total debt represents outstanding balance at the end of the period 2 This is a non-GAAP measure defined and reconciled in the Appendix Sources & Uses ($MM) Sources Uses New Term Loan B 414 Refinance Existing Term Loan B 414 Cash 8

9. Slide 9: Altisource Overview

   8 © 2018 Altisource. All rights reserved. Altisource Overview

10. Slide 10: Vision: To be the premier real estate and mortgage marketplace

    9 © 2018 Altisource. All rights reserved. Vision: To be the premier real estate and mortgage marketplace connecting market participants and providing related services

11. Slide 11: About Altisource

    10 © 2018 Altisource. All rights reserved. About Altisource Altisource is a leading provider of services and technologies for the mortgage and real estate industries, focusing on the needs of servicers, real estate investors, originators and consumers 1 Excludes $59 million Service Revenue from cust

12. Slide 12: Our Services and Technologies

    11 © 2018 Altisource. All rights reserved. Our Services and Technologies1 Altisource has scalable, nationwide businesses that can drive growth across our strategic businesses Real Estate Brokerage Online Auction Title and Escrow Valuation Property Preservation and Inspection Insurance Property Manag

13. Slide 13: Servicer Solutions

    12 © 2018 Altisource. All rights reserved. Servicer Solutions Real Estate Brokerage Loan Origination Servicing Delinquency Pre- Foreclosure Foreclosure Asset Management Home Management Our Solutions We provide services and technologies for loan servicers to manage delinquencies, preserve, maintain,

14. Slide 14: Servicer Solutions - Competitive Advantages

    13 © 2018 Altisource. All rights reserved. Servicer Solutions - Competitive Advantages One of the few players to offer a nationwide comprehensive suite of solutions at scale Ongoing investment in and commitment to a strong quality and control environment positions Altisource as a formidable competit

15. Slide 15: Real Estate Investor Solutions

    14 © 2018 Altisource. All rights reserved. Real Estate Investor Solutions Real Estate Brokerage Loan Origination Servicing Delinquency Pre- Foreclosure Foreclosure Asset Management Home Management Our Solutions We provide services and technologies for residential real estate investors to buy, manage

16. Slide 16: Real Estate Investor Solutions – Competitive Advantages

    15 © 2018 Altisource. All rights reserved. Real Estate Investor Solutions – Competitive Advantages Own one of the largest, most comprehensive rental data warehouses to improve the accuracy of the underwriting and leasing of real estate Vertically integrated operations reduce home acquisition and sal

17. Slide 17: Origination Solutions

    16 © 2018 Altisource. All rights reserved. Origination Solutions Real Estate Brokerage Loan Origination Servicing Delinquency Pre- Foreclosure Foreclosure Asset Management Home Management 1 Sources: Altisource estimates, U.S. loan originations for 2017 based on the Mortgage Bankers Association estim

18. Slide 18: Origination Solutions - Competitive Advantages

    17 © 2018 Altisource. All rights reserved. Origination Solutions - Competitive Advantages Ability to reduce Lenders One members’ cost to originate loans and improve loan sale execution by leveraging the cooperative’s buying power and providing services directly to the members Provides preferred corr

19. Slide 19: Consumer Real Estate Solutions

    18 © 2018 Altisource. All rights reserved. Consumer Real Estate Solutions Real Estate Brokerage Loan Origination Servicing Delinquency Pre- Foreclosure Foreclosure Asset Management Home Management Our Solutions We provide consumers with a technology enabled real estate brokerage and the suite of ser

20. Slide 20: Consumer Real Estate Solutions – Competitive Advantages

    19 © 2018 Altisource. All rights reserved. Consumer Real Estate Solutions – Competitive Advantages Full suite of home purchase and sale related services provides superior consumer experience and larger monetization opportunity Extensive licensing and regulatory landscape requirements create signific

21. Slide 21: Key Investment Highlights

    20 © 2018 Altisource. All rights reserved. Key Investment Highlights

22. Slide 22: Key Investment Highlights

    21 © 2018 Altisource. All rights reserved. Key Investment Highlights Counter-cyclical businesses positioned to benefit from loosening credit standards and growing FHA issuance Attractive Industry Dynamics Our clients represent some of the largest winners in the servicing and origination industry con

23. Slide 23: Attractive Industry Dynamics

    22 © 2018 Altisource. All rights reserved. 0 2 4 6 8 10 12 14 0 3 :Q 1 0 3 :Q 3 0 4 :Q 1 0 4 :Q 3 0 5 :Q 1 0 5 :Q 3 0 6 :Q 1 0 6 :Q 3 0 7 :Q 1 0 7 :Q 3 0 8 :Q 1 0 8 :Q 3 0 9 :Q 1 0 9 :Q 3 1 0 :Q 1 1 0 :Q 3 1 1 :Q 1 1 1 :Q 3 1 2 :Q 1 1 2 :Q 3 1 3 :Q 1 1 3 :Q 3 1 4 :Q 1 1 4 :Q 3 1 5 :Q 1 1 5 :Q 3 1 6

24. Slide 24: Attractive Industry Dynamics: Outstanding Residential Debt

    23 © 2018 Altisource. All rights reserved. 1,001 1,219 1,434 1,723 1,761 1,821 1,988 2,275 2,436 2,646 2,492 2,456 2,486 2,544 2,541 2,548 2,607 2,672 810 963 1,099 1,143 1,194 1,304 1,456 1,670 1,736 1,781 1,637 1,543 1,469 1,483 1,513 1,578 1,644 1,708 579 569 517 444 406 365 367 396 578 823 990 1

25. Slide 25: FHA market share and industry consolidation

    24 © 2018 Altisource. All rights reserved. • FHA issuance grew to 35% of combined Freddie, Fannie and Ginnie issuance volumes in 2017, up from 26% in 20091 • FHA mortgages exhibit higher delinquency rates than conventional agency mortgages2 FHA is growing its market share of total originations • Ori

26. Slide 26: Successful Track Record of launching services

    25 © 2018 Altisource. All rights reserved. 1 Excludes the following: (i) service revenue from post-charge-off consumer debt collection services, customer relationship management services, IT infrastructure management services (ii) Equator acquisition related deferred revenue (iii) service revenue fr

27. Slide 27: Momentum of Client Wins

    26 © 2018 Altisource. All rights reserved. Momentum of Client Wins Actual 2017 Revenue Strong Momentum of Recent Key Client Wins1 in Servicer Solutions and Origination Solutions Stabilized Annual Revenue 1 The table represents the period in which we received verbal notification from new or existing

28. Slide 28: Attractive Financial Profile

    27 © 2018 Altisource. All rights reserved. Attractive Financial Profile Altisource has used some of its cash flow to reduce Debt and Net Debt while maintaining strong liquidity – Since December 31, 2014, Altisource reduced its total debt by $178.0 million, including voluntary purchases of $160.1 mil

29. Slide 29: Attractive Financial Profile: Free Cash Flow and Coverage

    28 © 2018 Altisource. All rights reserved. 151.3 132.6 159.2 116.6 99.9 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% $0. 00 $50 .00 $10 0.00 $15 0.00 $20 0.00 $25 0.00 $30 0.00 $35 0.00 $40 0.00 $45 0.00 $50 0.00 2013 2014 2015 2016 2017 266.2 430.2 357.3 284.6 259.4 1 This is a non-GAAP measure defined

30. Slide 30: Strong Cash Flow Coverage

    29 © 2018 Altisource. All rights reserved. We anticipate that the existing Ocwen and NRZ portfolios, with an UPB of $179 billion as of December 31 2017, will provide an estimated $2.1 billion of revenue and approximately $770 million of EBITDA through 2025 Strong Cash Flow Coverage 535 413 311 246 1

31. Slide 31: Strong Cash Flow Coverage

    30 © 2018 Altisource. All rights reserved. Strong Cash Flow Coverage Cash flows from the Ocwen and NRZ portfolio provide significant coverage 6 1 Discount rate used:5.5% 2 Ocwen and NRZ cash flow was discounted to its present value by using EBITDA from the prior slide and allocating the (i) pro-rata

32. Slide 32: Strong Cash Flow Coverage: Ocwen PHH acquisition

    31 © 2018 Altisource. All rights reserved. Strong Cash Flow Coverage • Ocwen entered into a definitive agreement to acquire PHH Corporation on February 27, 2018. PHH serviced approximately $148 Billion UPB as of December 31, 2017 • Altisource has long-term agreements with Ocwen to provide the outsou

33. Slide 33: Experienced Management Team

    32 © 2018 Altisource. All rights reserved. Experienced Management Team 7 Mr. Shepro was appointed CEO and to the Board of Altisource in August 2009. Mr. Shepro previously served as the President and COO of Ocwen Solutions at Ocwen Financial Corp. William B. Shepro Chief Executive Officer & Director

34. Slide 34: Core Businesses in Focus

    33 © 2018 Altisource. All rights reserved. Core Businesses in Focus

35. Slide 35: Core Businesses Growing

    34 © 2018 Altisource. All rights reserved. Altisource has rapidly grown its field services and Hubzu businesses 1 EBITDA calculations for Altisource Field Services and Hubzu include pro rata Servicer Solutions segment expense allocations but exclude certain corporate allocations 2 Source: S&P Global

36. Slide 36: Financial Overview

    35 © 2018 Altisource. All rights reserved. Financial Overview

37. Slide 37: Financial Performance

    36 © 2018 Altisource. All rights reserved. 25.7 41.2 95.2 81.0 151.3 132.6 159.2 103.5 55.6 116.6 99.9 $0. 00 $20 .00 $40 .00 $60 .00 $80 .00 $10 0.00 $12 0.00 $14 0.00 $16 0.00 $18 0.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 Cash Flows From Operating Activities Less Capital Expenditures ($ mi

38. Slide 38: Strong Free Cash Flow Generation, Interest and Debt Coverage

    37 © 2018 Altisource. All rights reserved. 1 This is a non-GAAP measure defined and reconciled in the Appendix 2 2018 Scenarios are provided in slide 38. The Scenarios do not reflect the proposed SSTL refinancing Strong Free Cash Flow Coverage 8.9 7.7 7.0 6.8 5.5 4.5 2013 2014 2015 2016 2017 2018 Ad

39. Slide 39: 2018 Scenarios

    38 © 2018 Altisource. All rights reserved. 1 This is a non-GAAP measure defined and reconciled in the Appendix 2 Beginning in the first quarter of 2018, the Company plans to exclude stock-based compensation from Adjusted EBITDA 3 2018 Scenarios do not reflect the proposed SSTL refinancing $ millions

40. Slide 40: Syndication Overview

    39 © 2018 Altisource. All rights reserved. Syndication Overview

41. Slide 41: Summary Indicative Terms

    40 © 2018 Altisource. All rights reserved. Summary Indicative Terms x Borrower: Altisource S.à r.l. Corp Ratings: TBD Facility: Revolver Term Loan B Security: Substantially all assets of the borrower and guarantor, subject to customary exceptions Guarantors: Each material wholly-owned restricted sub

42. Slide 42: Transaction Timeline

    41 © 2018 Altisource. All rights reserved. Transaction Timeline S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 March 2018 March 14th Launch Term Loan Syndication with Lender Meeting March 28th Lender Commitments Due March 28th Price and Allocate Wee

43. Slide 43: Appendix

    42 © 2018 Altisource. All rights reserved. Appendix

44. Slide 44: Non-GAAP Measures

    43 © 2018 Altisource. All rights reserved. • Adjusted Operating Income, EBITDA, Adjusted EBITDA, Adjusted Cash Flows From Operating Activities, Cash Flows From Operating Activities Less Capital Expenditures, Adjusted Cash Flows From Operating Activities Less Capital Expenditures, Net Debt, Net Debt

45. Slide 45: Non-GAAP Measures

    44 © 2018 Altisource. All rights reserved. • Net Debt is calculated as long-term debt, including current portion, minus cash and cash equivalents • Net Debt Less Marketable Securities is calculated as long-term debt, including current portion, minus cash and cash equivalents and marketable securitie

46. Slide 46: Reconciliation ($ in millions)

    45 © 2018 Altisource. All rights reserved. Reconciliation ($ in millions) 2009 2010 2011 2012 2013 2014 2015 2016 2017 Cash Flows From Operating Activities 33.3 52.8 111.6 116.5 185.5 197.5 195.4 126.8 66.1 Add: Litigation settlement loss1 - - - - - - - - 28.0 Add: Increase in short-term real estate

47. Slide 47: Non-GAAP Measures Reconciliation

    46 © 2018 Altisource. All rights reserved. 1 Net of insurance recovery 2 Midpoint of Scenarios Note: Numbers may not sum due to rounding Non-GAAP Measures Reconciliation ($ in millions) 2009 2010 2011 2012 2013 2014 2015 2016 2017 Operating Income (Loss) 36.5 55.0 85.7 127.4 162.1 170.5 79.1 65.1 49

48. Slide 48: Non-GAAP Measures Reconciliation

    47 © 2018 Altisource. All rights reserved. Non-GAAP Measures Reconciliation ($ in millions ) A B Midpoint Net Income Attributable to Altisource s 13 16 14 Add: Income tax provision 6 10 8 Add: Interest expense, net of interest income 22 22 22 Add: Depreciation and amortization 56 57 56 Add: Share-ba

49. Slide 49: Corporate Structure

    48 © 2018 Altisource. All rights reserved. Corporate Structure Guarantors Borrower Altisource Portfolio Solutions S.A. (Luxembourg) Altisource S.à r.l. f/k/a Altisource Holdings S.à r.l. (Luxembourg) Public Company ASPS Market Cap: $519 million (as of 3/12/2018) $414 million Senior Secured Term Loan

50. Slide 50: © 2018 Altisource. All rights reserved.

    © 2018 Altisource. All rights reserved.

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