Altisource Portfolio Solutions S.a. · NASDAQ:ASPS
Altisource Portfolio Solutions — Debt Investor Presentation (June 2014)
32 slides from Altisource Portfolio Solutions's debt investor presentation, Jun 17, 2014
Slide 1: June 17, 2014 Lenders Presentation
June 17, 2014 Lenders Presentation
Slide 2: Forward Looking Statements/Non-GAAP Measures
Forward Looking Statements/Non-GAAP Measures This presentation contains forward-looking statements. These statements may be identified by words such as “anticipate,” “intend,” “expect,” “may,” “could,” “should,” “would,” “plan,” “estimate,” “seek,” “believe” and similar expressions. We caution that
Slide 3: Transaction Overview
Altisource Portfolio Solutions S.A. (“Altisource” or the “Company”) intends to raise an incremental $200 million Senior Secured Term Loan B expected to be fungible with its existing Term Loan – Use of proceeds for general corporate purposes, including potential share repurchases In addition, Altisou
Slide 4: Sources & Uses / Pro Forma Capitalization
Sources & Uses / Pro Forma Capitalization ($ in millions) Sources Uses Incremental Term Loan B $200.0 General Corporate Purposes, Including Share Repurchase $195.0 Estimated Fees, Expenses, and OID 5.0 Total Sources $200.0 Total Uses $200.0 ($ in millions) Add-On TL 3/31/2013 Current 3/31/2014A Adj.
Slide 5: Summary Term Sheet
Summary Term Sheet Borrower: Altisource Solutions S.à r.l. (“Altisource” or the “Borrower”) Facility: Incremental Senior Secured Term Loan B (“Term Loan”) Maturity: Same as existing – December 9, 2020 Guarantors: Altisource Portfolio Solutions S.A., new Midco entity and certain material direct and i
Slide 6: Corporate Structure
Corporate Structure Altisource Portfolio Solutions, Inc. has numerous U.S. subsidiaries largely for state licensing purposes Altisource Portfolio Solutions S.A. (Luxembourg) The Mortgage Partnership of America, L.L.C. (US - MO) Portfolio Management Outsourcing Solutions, LLC (US - FL) Altisource Por
Slide 7: Timeline
Timeline Week of Event June 16th Lender Call (June 17th) Post Form of Amendment (June 17th) June 23rd Commitments due from Lenders on Incremental Term Loan (June 26th) Consents due from Lenders on Amendment (June 26th) July 21st Close and Fund (July 25th) Bank Holiday Transaction Date Sun Mon Tue We
Slide 8: Management Presenters
Management Presenters William B. Shepro, Chief Executive Officer Michelle D. Esterman, Chief Financial Officer
Slide 9: Company Overview
Altisource” Company Overview ——EEeEeEe——————eF Thinking Ahead. Delivering Tod.
Slide 10: Altisource at a glance
Chairman: William C. Erbey CEO: William B. Shepro Employees: ~8,400 NASDAQ: ASPS Market Cap: (June 11, 2014) $2.5 Billion Performance since August 2009 Separation from Ocwen® CAGR Market Capitalization: (Through June 11, 2014) 63% CAGR Revenue: (Through Mar. 31, 2014) 39% CAGR Pre-tax Income(1) (Thr
Slide 11: Marketplaces Vision and Mission
Marketplaces Home Sales Home Rentals Home Maintenance Mortgage Originations Mortgage Servicing Real Estate Marketplace Mortgage Marketplace Vision To be the premier real estate and mortgage marketplace offering both content and distribution to the marketplace participants Mission To offer homeowners
Slide 12: Market Sizes
Real Estate Marketplace Mortgage Marketplace Market Sizes Home Sales(1) 5.0 million homes sold in the United States in the 12 months ended March 2014 for an aggregate sales price of ~$910 billion Home Rentals(2) 21.3 million single family rental homes Home Maintenance(2) 74.4 million owner-occupied
Slide 13: Business Overview
As of April 30, 2014. Excludes 697 employees in our corporate segment LTM as of March 31, 2014. Excludes Corporate Items and Eliminations of ($27.8mm) revenue and ($46.7mm) operating income As of March 31, 2014. Customers overlap between segments Business Overview Services to the real estate and mor
Slide 14: Mortgage Services – Summary
Mortgage Services – Summary Service revenue growth principally from continued growth of Ocwen, services expansion and growth of services provided to Lenders OneTM members Operating margins have generally expanded due to scale benefits and operating efficiencies, offset by amortization of the intangi
Slide 15: Mortgage Services – Overview
Mortgage Services – Overview A full range of solutions from valuation and back–office administrative support to real estate sales ORIGINATION Valuation Due Diligence and Quality Control Underwriting Settlement Services Title Insurance Flood Certification Lenders One TM LOSS MITIGATION Valuation Prop
Slide 16: Financial Services – Summary
Operating margin is calculated using service revenue, which we define as revenue less revenue from expense reimbursement Operating income and margin exclude $2.8mm of goodwill impairment recognized in 2010 Financial Services – Summary 55 During 2013, asset recovery management significantly expanded
Slide 17: Technology Services – Summary
Technology Services – Summary Revenue growth primarily from Ocwen’s portfolio growth and November 2013 acquisition of Equator LLC Operating margins have declined as we invest in personnel to accelerate our next generation technology development to support our anticipated growth 2009– 3/31/14 LTM CAG
Slide 18: Key Investment Highlights
Key Investment Highlights Successful Service Development Track Record Strong Recurring Cash Flows Seasoned Management Team Next Generation Technology Strong Revenue Growth Visibility 1 2 3 4 5
Slide 19: Strong Recurring Cash Flows
Strong Recurring Cash Flows Altisource is a fee-based transactional business with strong cash flows 2009 – 3/31/14 LTM CAGR: 55% 1 Free Cash Flow Conversion defined as EBITDA minus capital expenditures as a percentage of EBITDA. See appendix for reconciliation to GAAP measures Decline reflects inves
Slide 20: Strong Revenue Growth Visibility
Strong Revenue Growth Visibility 2 Long term services agreements with Ocwen $450 billion servicing portfolio Long term services agreements with Altisource Residential Corporation (“RESI”) ~$1,268 million of stockholders’ equity (1) Access to the Lenders One members through ownership of the manager o
Slide 21: Strong Revenue Growth: Growth Initiatives
Supporting Ocwen Growing our origination related services through our access to approximately 14% of the U.S. origination market through Lenders One and Ocwen Developing NextGen REALServicing® technology Supporting Ocwen Expanding Hubzu to other institutions and the non-distressed home sale market P
Slide 22: Next Generation Technology
Next generation technology supports the essence of what Altisource does: Manages a distributed network of vendors Processes the work Delivers the product to our clients Pays the vendors Collects receivables Allows Altisource to operate in a much more efficient and effective manner, increasing margin
Slide 23: Successful Service Development Track Record
Successful Service Development Track Record 4 Proven track record of incubating, launching and expanding services offered drives new growth initiatives 48.6 44.5 58.9 89.9 110.8 0.6 24.9 37.4 2.2 3.1 351.9 490.3 540.4 $300 $400 $500 $600 Mortgage Services Service Revenue ($ mm) Pre-Spin Services Ser
Slide 24: Seasoned Management Team
Seasoned Management Team 5 Strong management team with significant industry experience Name Title Industry Experience Relevant Experience William B. Shepro Chief Executive Officer and Director 18 n Previously served as President and COO of Ocwen Solutions, President of Global Servicing Solutions, LL
Slide 25: Financial Performance
Altisource” Financial Performance El Thinking Ahead. Delivering Tod.
Slide 26: Financial Metrics
$600 $700 $800 $900 Revenue ($mm) Financial Metrics Altisource has experienced significant growth due to service expansion, national roll-out of services and operating efficiencies 27.7% 29.6% 31.0% 30.9% 30% 40% 50% $150 $200 $250 EBITDA ($mm)(1) % of Service Revenue © 2014 Altisource. All rights r
Slide 27: Financial Metrics (cont’d)
Financial Metrics (cont’d) Altisource’ ‘Operating Cash Flow ($mm) % of Service Revenue ~@> $225 $200 $175 $150 $125 $100 $75 $80 $25 so 2009-2010 201120122013 3/34/a uM 50% 40% 30% 20% 10% Net Income Attributable to Altisource (Smm) ‘Sof Service Revenue ~= $150 30% $125 25% $100 20% 75 15% $80 10% $
Slide 28: Service Revenue Scenarios
Service Revenue Scenarios Creating a stable, long-term revenue stream for Altisource as delinquency rates decline. The scenarios are for illustrative purposes only, are not updated every quarter and do not represent a forecast Note: The above scenarios do not assume any reinvestment of the cash gene
Slide 29: Portfolio acquisition assumptions
Portfolio acquisition assumptions Scenario 1 Scenario 2 Annual non-GSE portfolio acquisitions by Ocwen in 2014, 2015 and 2016 (no non-GSE portfolio acquisitions in 2017 and 2018) None $100 billion Assumptions applicable to all scenarios 2013 Actual 2014 2015 2016 2017 2018 Q1 2014 Actual Default rel
Slide 30: Conclusion
Conclusion Successful Service Development Track Record Strong Recurring Cash Flows Seasoned Management Team Next Generation Technology Strong Revenue Growth Visibility 1 2 3 4 5
Slide 31: Appendix
Altisource” Appendix —S——————————— Thinking Ahead. Delivering Tod.
Slide 32: Reconciliation of EBITDA and Free Cash Flow Conversion
Historical Financial Information – Reconciliation of EBITDA and Free Cash Flow Conversion Year Ended December 31, LTM ($ mm) 2009 2010 2011 2012 2013 3/31/14 Net Income attributable to Altisource $26.0 $49.3 $71.1 $110.6 $130.0 $142.1 Income tax provision 11.6 (0.4) 7.9 8.7 8.5 9.4 Interest expense,
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