Altisource Portfolio Solutions S.a. · NASDAQ:ASPS
Altisource Portfolio Solutions — Debt Investor Presentation (April 2013)
33 slides from Altisource Portfolio Solutions's debt investor presentation, Apr 25, 2013
Slide 1: Lenders Presentation April 25, 2013
Lenders Presentation April 25, 2013
Slide 2: Forward Looking Statements/Non-GAAP Measures
Forward Looking Statements/Non-GAAP Measures This presentation and the accompanying earnings release contains forward - looking statements. These statements may be identified by words such as “anticipate,” “intend,” “expect,” “may,” “could,” “should,” “would,” “plan,” “estimate,” “seek,” “believe” a
Slide 3: Summary Term Sheet
Summary Term Sheet Borrower: Altisource Solutions S.a r.l. (the “Borrower”) Facility: $200 million Incremental Senior Secured Term Loan (fungible with existing) Maturity: November 27, 2019 (same as existing) Guarantors: Parent and each material direct and indirect restricted subsidiary of the Borrow
Slide 4: Sources and Uses and Pro Forma Capitalization
Sources and Uses and Pro Forma Capitalization (1) Represents $197.6 million of net proceeds from offering less $128.8 million paid to Ocwen for the acquisition of fee-based business of Residential Capital, LLC (“ResCap”) (2) As of April 23, 2013 (3) EBITDA defined as net income attributable to Altis
Slide 5: Timeline
Timeline Bank Holiday April 2013 Sun Mon Tue Wed Thu Fri Sat 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 Date Event April 25th Q1 '13 Earnings Release Lender call Post Loan Documents for lenders May 2nd Commitments due from lenders Comments due on loan documents
Slide 6: Management Presenters
Management Presenters William B. Shepro, Chief Executive Officer Mark F. Kearns, Chief Accounting Officer
Slide 7: Company Overview
Altisource aEe_——~—_ Company Overview A Thinking Ahead. Delivering Today:
Slide 8: Altisource at a glance
Chairman: William C. Erbey CEO: William B. Shepro Employees: 6,236 NASDAQ: ASPS Market Cap: (April 23, 2013) $1.7 Billion Performance since August 2009 Separation from Ocwen® CAGR Market Capitalization: (April 23, 2013) 72% CAGR Service revenue: Through March 31, 2013 32% Altisource Separated from O
Slide 9: Altisource Today
Altisource Today Altisource manages a distributed network of vendors primarily in the residential mortgage and real estate space Altisource provides customer care and collection services Order Services Procoess orders Deliver orders Manage payments to vendors Determine price Unstructured data Conver
Slide 10: Business Overview
Business Overview (1) Excludes 559 employees in our corporate segment (2) As of March 31, 2013. Customers overlap between segments Services that span the mortgage lifecycle and are typically outsourced by loan servicers and originators Accounts receivable management and customer relationship managem
Slide 11: Mortgage Services - Summary
Mortgage Services - Summary Revenue growth principally from continued growth of Ocwen, services expansion and growth of services provided to Lenders OneTM members Operating margins have expanded due to scale benefits and operating efficiencies Overview 2008 – 2012 CAGR: 59% Operating margin is calcu
Slide 12: Mortgage Services - Overview
Mortgage Services - Overview A full range of solutions from valuation and back-office administrative support to real estate sales and charge-off collections Valuation Due Diligence and Quality Control Underwriting Settlement Services Title Insurance Flood Certification Lenders One TM ORIGINATION Val
Slide 13: Financial Services - Summary
Operating margin is calculated using Service revenue, which we define as revenue less revenue from expense reimbursement and non-controlling interest Operating income and margin exclude $2.8mm of goodwill impairment recognized in 2010 Financial Services - Summary Customer relationship management, a
Slide 14: Technology Services - Summary
Technology Services - Summary Revenue growth primarily from Ocwen’s portfolio growth Operating margins have recently declined as we invest in personnel to accelerate our next generation technology development to support our anticipated growth 2008– 2012 CAGR: 13% Overview 45.3 47.5 52.0 56.1 74.2 77
Slide 15: Recent Acquisitions
Recent Acquisitions Homeward ResCap On March 29, 2013, we acquired certain fee-based businesses associated with the Homeward servicing platform for $87 million in cash at closing Altisource will be the exclusive provider to Ocwen and all of its subsidiaries and affiliates, of certain services relate
Slide 16: Key Investment Highlights
Key Investment Highlights Successful Service Development Track Record Strong Recurring Cash Flows Seasoned Management Team Next Generation Technology Strong Revenue Growth 1 2 3 4 5
Slide 17: Strong Recurring Cash Flows
Strong Recurring Cash Flows Altisource is a fee-based transactional business with strong cash flows 2008– 2012 CAGR: 42% 1 Free Cash Flow Conversion defined as EBITDA minus capital expenditures as a percentage of EBITDA Adjusting for $25.0 mm of receivables collected on April 1, 2013, net operating
Slide 18: Strong Revenue Growth
Service agreement with Ocwen through August 31, 2025 Continued growth at Ocwen drives growth at Altisource (1) Ally Financial: UPB of $85 bn Residential Capital LLC: UPB of $175 bn Origination Services Lenders One: 11.1% of US residential mortgage market Ocwen’s origination platform Residential rent
Slide 19: Growth Initiative – Origination Services
Note that (1) the mortgage banker does not always influence the selection of the service provider, (2) Altisource is not providing all of these origination related services today and (3) the estimated annual spend changes as the mix between refinance and purchase loans changes Considers member volum
Slide 20: Growth Initiative – Residential Asset Business
Growth Initiative – Residential Asset Business 2 Initial revenue: approximately $1,625 in revenue for each home acquired by RESI that requires renovation (estimated to be 75% of rentals) Recurring revenue: approximately $1,275 per home per year once homes are part of RESI’s rental portfolio Stabiliz
Slide 21: Growth Initiative – Hubzu Strategy Today
Growth Initiative – HubzuTM Strategy Today Online real estate transaction website – www.hubzu.com - is focused on driving a high volume of relevant traffic to each home to accelerate the sales cycle at the optimal sales price Rebranding (HubzuTM) Sell other mortgage servicers’ REO and non-distressed
Slide 22: Next Generation Technology
Next Generation Technology 3 Extensible, scalable and secure technology platform drives services delivery and innovation 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 v
Slide 23: Successful Service Development Track Record
Proven track record of incubating, launching and expanding services offered drives new growth initiatives Successful Service Development Track Record 4 Services Launched in 2009 REO Asset Management and Brokerage Property Preservation Property Inspection Default Management Foreclosure Trustee Servic
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 Previously served as President and COO of Ocwen Solutions, President of Global Servicing Solutions, LLC,
Slide 25: Financial Performance
Altisource aEe=e=_['C7~ Financial Performance (nee Thinking Ahead. Delivering Today:
Slide 26: Financial Metrics
Financial Metrics 2008– 2012 CAGR: 37% Altisource has experienced significant growth due to service expansion, national roll-out of services and operating efficiencies (1) EBITDA defined as net income attributable to Altisource plus income taxes, depreciation, amortization and interest expense 160.4
Slide 27: Financial Metrics (cont'd)
Financial Metrics (cont’d) Adjusting for $25.0 mm of receivables collected on April 1, 2013, operating cash flow for the twelve-month period ended 3/31/13 was $123.3 mm and operating cash flow as a percentage of service revenue was 25.4% (1) 9.2 26.0 49.3 71.1 110.6 112.9 5.7% 13.9% 19.9% 21.2% 23.7
Slide 28: Service Revenue Scenarios
Service Revenue Scenarios Note: The above scenarios do not assume any reinvestment of the cash generated from the businesses Creating a stable, long-term revenue stream for Altisource as delinquency rates decline. The scenarios are for illustrative purposes only and do not represent a forecast Scena
Slide 29: Service Revenue Scenarios: Assumptions
Service Revenue Scenarios: 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) None $100 billion 1 Delinquency rate is calculated as the average % of total loans that are
Slide 30: Key Investment Highlights
Key Investment Highlights Successful Product Development Track Record Strong Recurring Cash Flows Seasoned Management Team Next Generation Technology Strong Revenue Growth 1 2 3 4 5
Slide 31: Appendix
Altisource” aee[F_ Appendix ee Thinking Ahead. Delivering Today:
Slide 32: Historical Financial Information – EBITDA Reconciliation & Capital Expenditure
Historical Financial Information – EBITDA Reconciliation & Capital Expenditure Year Ended December 31, LTM ($ mm) 2008 2009 2010 2011 2012 3/31/13 Net Income attributable to Altisource $9.2 $26.0 $49.3 $71.1 $110.6 $112.9 Income tax provision 5.4 11.6 (0.4) 7.9 8.7 8.1 Interest expense 2.7 1.6 0.1 0
Slide 33: Corporate Structure
Corporate Structure (1) Market data as of April 23, 2013 (2) The Mortgage Partnership of America, LLC manages but does not own Best Partners Mortgage Cooperative, Inc (3) Altisource Portfolio Solutions, Inc. has numerous U.S. subsidiaries largely for state licensing purposes Altisource Portfolio Sol
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