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Press release from GlobeNewswire (a Nasdaq OMX company)

Altisource Announces Third Quarter Results

Thursday, October 27, 2011

Altisource Announces Third Quarter Results06:00 EDT Thursday, October 27, 2011LUXEMBOURG, Luxembourg, Oct. 27, 2011 (GLOBE NEWSWIRE) -- Altisource™ (Nasdaq:ASPS) today reported Net Income Attributable to Altisource of $17.2 million or $0.67 per diluted share for the quarter ended September 30, 2011. This compares with Net Income Attributable to Altisource of $9.8 million or $0.37 per share for the quarter ended September 30, 2010. Service Revenue for the third quarter was $86.2 million, up 39% compared to the third quarter of 2010. Third quarter highlights include: Average loans serviced by the Company's largest customer Ocwen® on the REALServicing® platform of 516,214 for the quarter.   Generated cash flow from operations for the third quarter of $30.6 million representing $0.35 for every dollar of Service Revenue in the quarter.   Acquired 644,462 shares of stock under the stock repurchase program at an average price of $35.08 in the quarter.   Completed the investment of $15.0 million in Correspondent One S.A. Gross margin remained flat when compared to the quarter ended June 30, 2011 as the increase in gross margin attributable to Technology Services was offset by a decline in gross margin attributable to Mortgage Services. This was due to Mortgage Services segment's mix of services and the build out of infrastructure to support Ocwen's September 1, 2011 boarding of the Litton portfolio. As a result of the boarding of the Litton portfolio, Altisource delivered in the quarter a proportionately higher percentage of services to homes in pre-foreclosure. For these services, the margins are generally lower. The delivery of pre-foreclosure services, however, is a strong leading indicator of future referrals of higher margin foreclosure and asset management services.  From an operating margin perspective, margins for the total Company improved in the quarter when compared to the quarter ended June 30, 2011 by 300 basis points to 25% of Service Revenue. This reflects faster growth in the higher margin Mortgage Services segment as well as leveraging of the Corporate infrastructure. For the fourth quarter, Service Revenue should continue to improve when compared to the third quarter based principally upon the expected growth in foreclosure and asset management related referrals. Financial Results, Unaudited   Three Months Ended  Nine Months Ended    September 30, September 30,(in thousands) 2011 2010 2011 2010           Service Revenue $ 86,169 $ 62,159 $ 230,403 $ 172,725 Reimbursable Expenses 21,833 13,369 56,933 33,040 Cooperative Non-controlling Interest 1,791 2,052 4,395 4,136 Total Revenue 109,793 77,580 291,731 209,901           Cost of Revenue 51,506 35,544 134,452 99,602 Reimbursable Expenses 21,833 13,369 56,933 33,040  Gross Profit 36,454 28,667 100,346 77,259           Selling, General and Administrative Expenses 15,329 14,730 45,487 39,275            Income from Operations 21,125 13,937 54,859 37,984           Other Income (Expense), net (320) 698 294 666           Income Before Income Taxes and Non-controlling Interests  20,805  14,635  55,153  38,650 Income Tax Provision (1,843) (2,751) (5,377) (2,029)            Net Income 18,962 11,884 49,776 36,621           Net Income Attributable to Non-controlling Interests  (1,791)  (2,052)  (4,395)  (4,136)  Net Income Attributable to Altisource $ 17,171 $ 9,832 $ 45,381 $ 32,485           Earnings Per Share:         Basic $ 0.71 $ 0.39 $ 1.84 $ 1.30 Diluted $ 0.67 $ 0.37 $ 1.76 $ 1.24           Weighted Average Shares Outstanding:         Basic 24,341 25,318 24,602 25,080 Diluted 25,489 26,544 25,720 26,168           Transactions with Related Parties:         Revenue $ 63,827 $ 39,459 $ 166,311 $ 104,494 Selling, General and Administrative Expenses $ 506 $ 223 $ 1,352 $ 811Revenue The following table presents Total Revenue by segment:   Three Months Ended Nine Months Ended   September 30, September 30,(in thousands) 2011 2010 2011 2010           Mortgage Services         Service Revenue $58,915 $34,909 $147,768 $89,623 Reimbursable Expenses 21,464 12,562 55,221 30,811 Cooperative Non-controlling Interest 1,791 2,052 4,395 4,136 Mortgage Services – Total Revenue 82,170 49,523 207,384 124,570           Financial Services         Service Revenue 16,934 18,132 53,067 56,646 Reimbursable Expenses 369 807 1,712 2,229 Financial Services – Total Revenue 17,303 18,939 54,779 58,875           Technology Services 14,827 12,963 41,115 37,422           Eliminations (4,507) (3,845) (11,547) (10,966)           Total Revenue $109,793 $77,580 $291,731 $209,901Income Before Income Tax and Pretax Income The following table presents income attributable to Altisource before income tax (Pretax Income) including amounts by segment:    Three Months Ended  Nine Months Ended    September 30, September 30,(dollars in thousands) 2011 2010 2011 2010          Mortgage Services:         Income Before Income Taxes $22,554 $14,928 $60,391 $35,805 Non-controlling Interests (1,791) (2,052) (4,395) (4,136) Pretax Income $20,763 $12,876 $55,996 $31,669 As Percent of Service Revenue 35% 37% 38% 35%          Financial Services:         Income Before Income Taxes $350 $368 $2,784 $3,411 As Percent of Service Revenue 2% 2% 5% 6%          Technology Services:         Income Before Income Taxes $4,359 $4,090 $11,108 $12,782 As Percent of Revenue 29% 32% 27% 34%          Corporate:         Loss Before Income Taxes  $ (6,458)  $ (4,751)  $ (19,130)  $ (13,348)          Consolidated:         Income Before Income Taxes $20,805 $14,635 $55,153 $38,650 Non-controlling Interests (1,791) (2,052) (4,395) (4,136) Pretax Income $19,014 $12,583 $50,758 $34,514           As Percent of Service Revenue 22% 20% 22% 20%Stock Repurchase Update For the nine months ended September 30, 2011 the Company repurchased 1.0 million shares (0.6 million shares during the third quarter) of common stock on the open market at an average price of $33.53. Since inception of the stock repurchase program, 1.7 million shares of common stock have been repurchased on the open market at an average price of $31.02.Forward-Looking Statements This press release contains forward-looking statements that involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical fact, including statements about our management's beliefs and expectations. Forward-looking statements are based on management's beliefs as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future economic performance and are not statements of historical fact, actual results may differ materially from those projected. The Company undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to: Altisource's ability to retain existing customers and attract new customers; general economic and market conditions; governmental regulations, taxes and policies; availability of adequate and timely sources of liquidity and other risks and uncertainties detailed in the "Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of the Company's Form 10-K and other filings with the Securities and Exchange Commission.Webcast Altisource will host a webcast at 11:00 a.m. Eastern today to discuss third quarter results. A link to the live audio web cast as well as an accompanying slide deck will be available on our website through the Investor Relations home page. Those who want to listen to the call should go to the website fifteen minutes prior to the call to register, download and install any necessary audio software. A replay of the conference call will be available via our website approximately two hours after the conclusion of the call.About Altisource Altisource Portfolio Solutions S.A. (Nasdaq:ASPS) is a provider of services focused on high-value, technology-enabled knowledge-based solutions principally related to real estate and mortgage portfolio management, asset recovery and customer relationship management. Additional information is available at www.altisource.com.ALTISOURCE PORTFOLIO SOLUTIONS S.A.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited, Dollars in thousands, Except Per Share Data)         September 30, December 31,   2011 2010 ASSETS           Current Assets:     Cash and Cash Equivalents $21,250 $22,134 Accounts Receivable, net 50,239 53,495 Prepaid Expenses and Other Current Assets 6,793 13,076 Deferred Tax Assets, net 2,328 551 Total Current Assets 80,610 89,256       Restricted Cash 1,222 1,045 Premises and Equipment, net 22,626 17,493 Deferred Tax Assets, net — 1,206 Intangible Assets, net 67,066 72,428 Goodwill  14,915 11,836 Investment in Equity Affiliate 14,645 — Other Non-current Assets  8,645 4,536   $209,729 $197,800 Total Assets           LIABILITIES AND EQUITY           Current Liabilities:     Accounts Payable and Accrued Expenses $33,697 $35,384 Capital Lease Obligations – Current  643 680 Other Current Liabilities  8,151 5,616 Total Current Liabilities 42,491 41,680       Capital Lease Obligations – Non-current  345 852 Deferred Tax Liability, net 539 — Other Non-current Liabilities 2,679 3,370       Commitments and Contingencies            Equity:     Common Stock ($1.00 par value; 100,000 shares authorized; 25,413 shares issued and 23,979 outstanding in 2011; 25,413 shares issued and 24,881outstanding in 2010) 25,413 25,413 Retained Earnings 100,984 58,546 Additional Paid-in-Capital 81,406 79,297 Treasury Stock, at cost ($1.00 par value; 1,434 and 532 shares in 2011 and 2010, respectively) (46,171) (14,418) Altisource Equity 161,632 148,838       Non-controlling Interests 2,043 3,060 Total Equity 163,675 151,898 Total Liabilities and Equity $209,729 $197,800CONTACT: Robert D. Stiles Chief Financial Officer T: +352 2469 7903 E: robert.stiles@altisource.lu