ALTISOURCE ANNOUNCES THIRD QUARTER FINANCIAL RESULTS
Luxembourg, October 25, 2018 - Altisource Portfolio Solutions S.A. (“Altisource” or the “Company”) (NASDAQ: ASPS) today reported financial results for the third quarter 2018, reporting service revenue of $196.9 million, operating income of $20.9 million, adjusted operating income(1) of $25.7 million, net income attributable to Altisource of $8.7 million, adjusted net income attributable to Altisource(1) of $12.2 million, diluted earnings per share of $0.49 and adjusted diluted earnings per share(1) of $0.69. During the third quarter of 2018, Altisource launched Project Catalyst, a program to better align the Company’s cost structure with anticipated revenue, and improve operating margins and performance.
Third quarter service revenue of $196.9 million decreased by 6% compared to the second quarter of 2018 primarily from fewer homes sold in the Company’s Buy-Renovate-Lease-Sell business. Third quarter service revenue decreased by 12% compared to the third quarter of 2017 primarily from the reduction in size of the Ocwen Financial Corporation (“Ocwen”) servicing portfolio and the Front Yard Residential Corporation (“RESI”) portfolio of non-performing loans and REO. These declines were partially offset by growth in the Owners.com® and Financial Services businesses.
Third quarter operating income of $20.9 million was 68% higher than the second quarter of 2018 and 55% higher than the third quarter of 2017 primarily from the $13.7 million gain on sale of the Rental Property Management business in the third quarter of 2018 and margin expansion from the initial benefits of Project Catalyst, partially offset by a $5.9 million third quarter 2018 reserve for sales tax and a $3.4 million third quarter 2018 restructuring expense related to Project Catalyst. Third quarter adjusted operating income(1) of $25.7 million was 17% higher than the second quarter of 2018 and 10% higher than the third quarter of 2017 from margin expansion from the initial benefits of Project Catalyst. Third quarter adjusted operating income(1) as a percentage of service revenue was 13.0% compared to 10.5% in both the second quarter of 2018 and the third quarter of 2017.
Third quarter 2018 diluted earnings per share was $0.49 and adjusted diluted earnings per share(1) was $0.69, compared to second quarter 2018 diluted earnings per share of $0.09 and adjusted diluted earnings per share(1) of $0.60. Third quarter adjusted diluted earnings per share was higher than the second quarter of 2018 from adjusted operating income growth. Third quarter 2018 adjusted diluted earnings per share was $0.09, or 12%, lower than the third quarter of 2017 primarily from a $1.5 million pretax gain on debt repurchase reflected in the third quarter of 2017 ($0.06 per diluted share) and $1.1 million of higher pretax interest expense from the April 2018 debt refinancing transaction ($0.04 per diluted share).
“The early benefits of Project Catalyst fueled earnings growth in the third quarter of 2018. Based upon a detailed analysis completed during the quarter, we established targeted annual run-rate cost savings between $65 million and $90 million with estimated one-time restructuring costs of between $25 million and $35 million. We are targeting to achieve more than half of the savings in 2019 with the full run-rate savings achieved in 2020. While there is a tremendous amount of work to achieve our targeted savings, Project Catalyst gives us greater confidence in our ability to grow Altisource’s adjusted pre-tax earnings in 2019 and improve our adjusted operating margins compared to this year,” said Chief Executive Officer William B. Shepro.
Mr. Shepro further commented, “We continued to win and onboard business from some of the largest and most well respected financial institutions in our industry, building a sizeable pipeline of future revenue. During the third quarter, we made excellent progress onboarding one of the largest institutional real estate and mortgage investors in the U.S. and two large servicers. We began receiving REO and foreclosure auction referrals from the institutional investor and expect to begin receiving referrals
The following information was filed by Altisource Portfolio Solutions S.A. (ASPS) on Thursday, October 25, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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Ticker: ASPS CIK: 1462418 Form Type:10-Q Quarterly Report Accession Number: 0001462418-18-000055 Submitted to the SEC: Thu Oct 25 2018 8:04:27 AM EST Accepted by the SEC: Thu Oct 25 2018 Period: Sunday, September 30, 2018 Industry: Miscellaneous Business Services