Altisource Announces Third Quarter 2020 Financial Results
Altisource Portfolio Solutions S.A. reported third quarter 2020 service revenue of $85.4 million, a 36% decrease year-over-year, primarily due to COVID-19 impacts. The company faced a net loss of $(13.2) million compared to a net income of $7.2 million in Q3 2019. However, adjusted EBITDA improved to $6.4 million, up $8.5 million from Q2 2020. Looking ahead, Altisource anticipates 2021 service revenue between $250 million and $270 million and adjusted EBITDA of $35 million to $43 million.
- Adjusted EBITDA increased by $8.5 million compared to Q2 2020.
- Targeting 2021 service revenue of $250 million to $270 million.
- Service revenue declined by 36% year-over-year.
- Net loss of $(13.2) million, contrasting with $7.2 million net income in Q3 2019.
Third Quarter 2020
- Service revenue of
$85.4 million - Loss before income taxes and non-controlling interests of
$(11.1) million - Adjusted pretax loss attributable to Altisource(1) of
$(1.4) million - Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”)(1) of
$6.4 million
LUXEMBOURG, Oct. 29, 2020 (GLOBE NEWSWIRE) -- Altisource Portfolio Solutions S.A. (“Altisource” or the “Company”) (NASDAQ: ASPS), a leading provider and marketplace for the real estate and mortgage industries, today reported financial results for the third quarter 2020.
“We are pleased with the progress we are making in a very difficult operating environment. We increased adjusted EBITDA(1) by
Mr. Shepro further commented, “We also continue to develop and grow our customer base increasing the backlog of potential default related business which we anticipate will be available to us in late 2021 and into 2022 when we forecast that the market returns to a more normal operating environment.”
Third Quarter 2020 Highlights(2)
Financial and Corporate:
- Ended the third quarter 2020 with
$67.0 million of cash and cash equivalents and$30.2 million of investment in equity securities - Ended the third quarter 2020 with
$196.6 million of net debt less investment in equity securities(1) - On October 19, 2020, Front Yard Residential Corporation (“RESI”) announced it entered into a definitive agreement to sell the company for
$13.50 per share in cash; adjusting Altisource’s investment in RESI to$13.50 per share results in a$16.4 million increase in investment in equity securities to$46.6 million compared to the amount reflected on the balance sheet as of September 30, 2020 - Subsequent to the end of the third quarter 2020, Altisource sold 1.6 million shares of RESI for net proceeds of
$21.1 million and will use the net proceeds to repay a portion of its Senior Secured Term Loan - To address lower than previously anticipated revenue from (1) the extension of foreclosure and eviction moratoriums and (2) an MSR investor’s instructions to Ocwen Financial Corporation (“Ocwen”) to move certain services to another service provider, the Company has developed an operating plan targeting 2021 adjusted EBITDA(1) margins of
14% to16% on$250 million to$270 million of forecasted revenue
Business Highlights:
- The Company’s third quarter 2020 performance in its default related services businesses, including revenue from customers other than Ocwen, New Residential Investment Corp. (“NRZ”) and RESI, continues to be negatively impacted by COVID-19 related governmental and, in some instances, servicer measures to provide support to borrowers (i.e., foreclosure and eviction moratoriums, forbearance plans and higher unemployment benefits) as well as the transition of certain of Ocwen’s Field Services referrals on the NRZ MSRs to another service provider which began in July 2020
- Service revenue from customers other than Ocwen, NRZ and RESI was relatively flat in the third quarter of 2020 compared to the third quarter of 2019 primarily due to COVID-19 foreclosure moratoriums and forbearance programs offset by strong originations demand (year-to-date 2020 service revenue from these customers is
11% higher than the same period in 2019)
Field Services
- Field Services service revenue from customers other than Ocwen, NRZ and RESI was
34% lower in the third quarter of 2020 compared to the third quarter of 2019 primarily due to COVID-19 foreclosure moratoriums and forbearance programs (year-to-date 2020 service revenue from these customers is17% higher than the same period in 2019) - Finalized the work to begin receiving Field Services referrals, anticipated to begin in the first quarter of 2021, on a recently won government contract
- Notified by a top 25 non-bank servicer that it is expanding its use of Altisource’s Field Services on its FHA portfolio to an additional 29 states over the next couple of quarters
Marketplace
- Hubzu inventory from customers other than Ocwen, NRZ and RESI declined by
22% since September 30, 2019 primarily due to the COVID-19 foreclosure moratoriums and forbearance programs, with such inventory representing45% of total Hubzu inventory as of September 30, 2020 (an increase from31% of total inventory as of September 30, 2019) - Hubzu service revenue from customers other than Ocwen, NRZ and RESI was
7% lower in the third quarter of 2020 compared to the third quarter of 2019 primarily due to the COVID-19 foreclosure moratoriums and forbearance programs (year-to-date 2020 service revenue from these customers is8% higher than the same period in 2019) - Executed a Statement of Work to expand our auction services for a top 25 servicer to include foreclosure auctions and expect to begin receiving referrals in the first quarter of 2021
Mortgage and Real Estate Solutions
- Grew Mortgage and Real Estate Solutions service revenue from customers other than Ocwen, NRZ and RESI by
17% in the third quarter of 2020 compared to the third quarter of 2019 primarily due to a growing customer base and higher origination volumes from a lower interest rate environment (year-to-date 2020 service revenue from these customers is25% higher than the same period in 2019) - Began providing loss mitigation services for a Top 10 servicer
Third Quarter 2020 Financial Results
Third quarter 2020 service revenue of
Third quarter 2020 loss from operations of
Third quarter 2020 adjusted operating income(1) of
Third quarter 2020 loss before income taxes and non-controlling interests of
Third quarter 2020 adjusted pretax loss attributable to Altisource(1) of
Third quarter 2020 adjusted EBITDA(1) of
Third quarter 2020 net loss attributable to Altisource of
Third quarter 2020 adjusted net loss attributable to Altisource(1) of
Third quarter 2020 diluted loss per share of
Third quarter 2020 adjusted diluted loss per share(1) of
Third Quarter and Year-to-Date September 30, 2020 Results Compared to the Third Quarter and Year-to-Date September 30, 2019:
| (in thousands, except per share data) | Third quarter 2020 | Third quarter 2019 | % Change | Year-to-Date Sept. 30, 2020 | Year-to-Date Sept. 30, 2019 | % Change | ||||||||||||||||
| Service revenue | $ | 85,386 | $ | 133,781 | (36 | ) | $ | 289,570 | $ | 489,300 | (41 | ) | ||||||||||
| (Loss) income from operations | (6,814 | ) | 19,735 | (135 | ) | (28,725 | ) | 24,515 | (217 | ) | ||||||||||||
| Adjusted operating income(1) | 3,658 | 9,325 | (61 | ) | 7,390 | 42,095 | (82 | ) | ||||||||||||||
| (Loss) income before income taxes and non-controlling interests | (11,140 | ) | 12,955 | (186 | ) | (54,011 | ) | 20,898 | (358 | ) | ||||||||||||
| Pretax (loss) income attributable to Altisource(1) | (11,480 | ) | 12,544 | (192 | ) | (54,653 | ) | 18,807 | (391 | ) | ||||||||||||
| Adjusted pretax (loss) income attributable to Altisource(1) | (1,406 | ) | 4,428 | (132 | ) | (7,004 | ) | 24,656 | (128 | ) | ||||||||||||
| Adjusted EBITDA(1) | 6,426 | 12,925 | (50 | ) | 17,521 | 55,172 | (68 | ) | ||||||||||||||
| Net (loss) income attributable to Altisource | (13,237 | ) | 7,165 | (285 | ) | (59,948 | ) | (1,863 | ) | N/M | ||||||||||||
| Adjusted net (loss) income attributable to Altisource(1) | (3,764 | ) | 3,957 | (195 | ) | (11,833 | ) | 18,855 | (163 | ) | ||||||||||||
| Diluted (loss) earnings per share | (0.85 | ) | 0.44 | (293 | ) | (3.85 | ) | (0.12 | ) | N/M | ||||||||||||
| Adjusted diluted (loss) earnings per share(1) | (0.24 | ) | 0.25 | (196 | ) | (0.76 | ) | 1.15 | (166 | ) | ||||||||||||
| Cash flows (used in) provided by operating activities | (2,861 | ) | (10,962 | ) | 74 | (14,077 | ) | 22,194 | (163 | ) | ||||||||||||
| Adjusted cash flows used in operating activities less additions to premises and equipment(1) | (3,897 | ) | (11,646 | ) | 67 | (16,579 | ) | (12,025 | ) | (38 | ) | |||||||||||
N/M - not meaningful.
- Third quarter 2020 and 2019 (loss) income from operations include
$2.2 million and$2.8 million , respectively ($10.9 million and$9.1 million for year-to-date September 30, 2020 and 2019, respectively) of restructuring charges related to Project Catalyst. Third quarter 2020 and 2019 (loss) income from operations also include$(0.6) million and$(1.7) million , respectively ($(0.6) million and$0.3 million for year-to-date September 30, 2020 and 2019, respectively) of sales tax net accruals (reimbursements). Third quarter and year-to-date September 30, 2020 loss from operations include Pointillist losses of$2.1 million and$7.2 million , respectively (no comparable amounts in 2019) and third quarter 2020 cost savings initiatives of$0.7 million (no comparable amounts in 2019). Year-to-date September 30, 2019 income from operations includes a loss on the BRS portfolio sale of$1.8 million (no comparable amounts in 2020). Third quarter and year-to-date September 30, 2019 (loss) income from operations include a$17.6 million gain on the sale of the Financial Services business (no comparable amounts in 2020). Year-to-date September 30, 2019 income from operations includes an other asset write-off from a business exit of$0.2 million (no comparable amounts in 2020). - Third quarter 2020 and 2019 pretax (loss) income attributable to Altisource(1) include unrealized mark-to-market gains (losses) on our equity investment in RESI of
$0.1 million and$(2.3) million , respectively ($(12.4) million and$11.7 million for year-to-date September 30, 2020 and 2019, respectively). - Third quarter 2019 net (loss) income attributable to Altisource includes
$(0.9) million of certain income tax items (no comparable amount for the third quarter 2020) ($2.4 million and$12.3 million for year-to-date September 30, 2020 and 2019, respectively) related to adjustments to foreign income tax reserves and the impact of a decrease in the India and Luxembourg income tax rates on deferred tax assets.
________________________
| (1) | This is a non-GAAP measure that is defined and reconciled to the corresponding GAAP measure herein. |
| (2) | Applies to the third quarter 2020 unless otherwise indicated. |
Forward-Looking Statements
This press release 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 management’s beliefs and expectations. These statements may be identified by words such as “anticipate,” “intend,” “expect,” “may,” “could,” “should,” “would,” “plan,” “estimate,” “seek,” “believe,” “potential” and similar expressions. 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 the future and are not statements of historical fact, actual results may differ materially from what is contemplated by the forward-looking statements. Altisource does not undertake, and expressly disclaims, any 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, the risks and uncertainties related to pandemics, epidemics or other force majeure events, including the COVID-19 pandemic, and associated impacts to the economy, supply chain, transportation, movement of people, availability of vendors, demand for our products or services, increased costs, recommendations or restrictions imposed by governmental entities, changes in relevant business practices undertaken or imposed by our clients, vendors or regulators, impacts on contracts and client relationships and potential litigation exposure; our ability to retain existing customers and attract new customers and the potential for changes in our customer relationships; various risks relating to our ability to effectively manage our regulatory and contractual obligations; the adequacy of our financial resources, including our sources of liquidity and ability to repay borrowings and comply with our Credit Agreement, including the financial and other covenants contained therein; as well as Altisource’s ability to retain key executives or employees, general economic and market conditions, behavior of customers, suppliers and/or competitors, technological developments, governmental regulations, taxes and policies, and other risks and uncertainties detailed in the “Forward-Looking Statements,” “Risk Factors” and other sections of Altisource’s Form 10-K, March 31, 2020 Form 10-Q and other filings with the Securities and Exchange Commission.
Webcast
Altisource will host a webcast at 8:30 a.m. EDT today to discuss our third quarter. A link to the live audio webcast will be available on Altisource’s website in the Investor Relations section. Those who want to listen to the call should go to the website at least 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 the website approximately two hours after the conclusion of the call and will remain available for approximately 30 days.
About Altisource
Altisource Portfolio Solutions S.A. is an integrated service provider and marketplace for the real estate and mortgage industries. Combining operational excellence with a suite of innovative services and technologies, Altisource helps solve the demands of the ever-changing markets we serve. Additional information is available at www.Altisource.com.
FOR FURTHER INFORMATION CONTACT:
Michelle D. Esterman
Chief Financial Officer
T: (770) 612-7007
E: Michelle.Esterman@altisource.com
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share data)
(unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Service revenue | $ | 85,386 | $ | 133,781 | $ | 289,570 | $ | 489,300 | ||||||||
| Reimbursable expenses | 2,810 | 7,213 | 14,495 | 16,484 | ||||||||||||
| Non-controlling interests | 599 | 499 | 1,516 | 2,179 | ||||||||||||
| Total revenue | 88,795 | 141,493 | 305,581 | 507,963 | ||||||||||||
| Cost of revenue | 69,760 | 103,509 | 235,284 | 371,167 | ||||||||||||
| Reimbursable expenses | 2,810 | 7,213 | 14,495 | 16,484 | ||||||||||||
| Gross profit | 16,225 | 30,771 | 55,802 | 120,312 | ||||||||||||
| Operating expenses (income): | ||||||||||||||||
| Selling, general and administrative expenses | 20,812 | 25,833 | 73,606 | 104,275 | ||||||||||||
| Gain on sale of business | — | (17,558 | ) | — | (17,558 | ) | ||||||||||
| Restructuring charges | 2,227 | 2,761 | 10,921 | 9,080 | ||||||||||||
| (Loss) income from operations | (6,814 | ) | 19,735 | (28,725 | ) | 24,515 | ||||||||||
| Other income (expense), net | ||||||||||||||||
| Interest expense | (4,103 | ) | (4,892 | ) | (13,265 | ) | (16,656 | ) | ||||||||
| Unrealized gain (loss) on investment in equity securities | 138 | (2,294 | ) | (12,433 | ) | 11,731 | ||||||||||
| Other (expense) income, net | (361 | ) | 406 | 412 | 1,308 | |||||||||||
| Total other income (expense), net | (4,326 | ) | (6,780 | ) | (25,286 | ) | (3,617 | ) | ||||||||
| (Loss) income before income taxes and non-controlling interests | (11,140 | ) | 12,955 | (54,011 | ) | 20,898 | ||||||||||
| Income tax provision | (1,757 | ) | (5,379 | ) | (5,295 | ) | (20,670 | ) | ||||||||
| Net (loss) income | (12,897 | ) | 7,576 | (59,306 | ) | 228 | ||||||||||
| Net income attributable to non-controlling interests | (340 | ) | (411 | ) | (642 | ) | (2,091 | ) | ||||||||
| Net (loss) income attributable to Altisource | $ | (13,237 | ) | $ | 7,165 | $ | (59,948 | ) | $ | (1,863 | ) | |||||
| (Loss) earnings per share: | ||||||||||||||||
| Basic | $ | (0.85 | ) | $ | 0.45 | $ | (3.85 | ) | $ | (0.12 | ) | |||||
| Diluted | $ | (0.85 | ) | $ | 0.44 | $ | (3.85 | ) | $ | (0.12 | ) | |||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 15,637 | 15,897 | 15,578 | 16,133 | ||||||||||||
| Diluted | 15,637 | 16,151 | 15,578 | 16,133 | ||||||||||||
| Comprehensive (loss) income: | ||||||||||||||||
| Comprehensive (loss) income, net of tax | $ | (12,897 | ) | $ | 7,576 | $ | (59,306 | ) | $ | 228 | ||||||
| Comprehensive income attributable to non-controlling interests | (340 | ) | (411 | ) | (642 | ) | (2,091 | ) | ||||||||
| Comprehensive (loss) income attributable to Altisource | $ | (13,237 | ) | $ | 7,165 | $ | (59,948 | ) | $ | (1,863 | ) | |||||
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED BALANCE SHEETS
(in thousands, except for per share data)
(unaudited)
| September 30, 2020 | December 31, 2019 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 67,023 | $ | 82,741 | |||
| Investment in equity securities | 30,185 | 42,618 | |||||
| Accounts receivable, net | 28,056 | 43,615 | |||||
| Prepaid expenses and other current assets | 14,718 | 15,214 | |||||
| Total current assets | 139,982 | 184,188 | |||||
| Premises and equipment, net | 14,983 | 24,526 | |||||
| Right-of-use assets under operating leases, net | 20,303 | 29,074 | |||||
| Goodwill | 73,849 | 73,849 | |||||
| Intangible assets, net | 49,702 | 61,046 | |||||
| Other assets | 11,284 | 12,436 | |||||
| Total assets | $ | 310,103 | $ | 385,119 | |||
| LIABILITIES AND EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable and accrued expenses | $ | 56,362 | $ | 67,671 | |||
| Deferred revenue | 4,349 | 5,183 | |||||
| Other current liabilities | 10,749 | 14,724 | |||||
| Total current liabilities | 71,460 | 87,578 | |||||
| Long-term debt | 288,930 | 287,882 | |||||
| Other non-current liabilities | 26,291 | 31,016 | |||||
| Commitments, contingencies and regulatory matters | |||||||
| Equity (deficit): | |||||||
| Common stock ( | 25,413 | 25,413 | |||||
| Additional paid-in capital | 140,225 | 133,669 | |||||
| Retained earnings | 198,756 | 272,026 | |||||
| Treasury stock, at cost (9,767 shares as of September 30, 2020 and 9,959 shares as of December 31, 2019) | (442,107 | ) | (453,934 | ) | |||
| Altisource deficit | (77,713 | ) | (22,826 | ) | |||
| Non-controlling interests | 1,135 | 1,469 | |||||
| Total deficit | (76,578 | ) | (21,357 | ) | |||
| Total liabilities and deficit | $ | 310,103 | $ | 385,119 | |||
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Nine months ended September 30, | |||||||
| 2020 | 2019 | ||||||
| Cash flows from operating activities: | |||||||
| Net (loss) income | $ | (59,306 | ) | $ | 228 | ||
| Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | |||||||
| Depreciation and amortization | 11,521 | 14,196 | |||||
| Amortization of right-of-use assets under operating leases | 8,107 | 9,145 | |||||
| Amortization of intangible assets | 11,344 | 15,489 | |||||
| Unrealized loss (gain) on investment in equity securities | 12,433 | (11,731 | ) | ||||
| Share-based compensation expense | 6,556 | 8,284 | |||||
| Bad debt expense | 1,423 | 114 | |||||
| Amortization of debt discount | 500 | 499 | |||||
| Amortization of debt issuance costs | 548 | 552 | |||||
| Deferred income taxes | 274 | 15,568 | |||||
| Loss on disposal of fixed assets | 459 | 330 | |||||
| Gain on sale of business | — | (17,558 | ) | ||||
| Changes in operating assets and liabilities (excludes effect of sale of business): | |||||||
| Accounts receivable | 10,136 | (31,580 | ) | ||||
| Short-term investments in real estate | — | 39,873 | |||||
| Prepaid expenses and other current assets | 621 | 12,588 | |||||
| Other assets | 853 | (55 | ) | ||||
| Accounts payable and accrued expenses | (10,676 | ) | (17,058 | ) | |||
| Current and non-current operating lease liabilities | (8,518 | ) | (9,713 | ) | |||
| Other current and non-current liabilities | (352 | ) | (6,977 | ) | |||
| Net cash (used in) provided by operating activities | (14,077 | ) | 22,194 | ||||
| Cash flows from investing activities: | |||||||
| Additions to premises and equipment | (2,502 | ) | (1,204 | ) | |||
| Proceeds received from sale of equity securities | — | 7,819 | |||||
| Proceeds from the sale of business | 3,307 | 38,027 | |||||
| Other | — | 1,087 | |||||
| Net cash provided by investing activities | 805 | 45,729 | |||||
| Cash flows from financing activities: | |||||||
| Repayments and repurchases of long-term debt | — | (44,820 | ) | ||||
| Proceeds from stock option exercises | — | 392 | |||||
| Purchase of treasury shares | — | (13,397 | ) | ||||
| Distributions to non-controlling interests | (976 | ) | (2,003 | ) | |||
| Payments of tax withholding on issuance of restricted share units and restricted shares | (1,495 | ) | (1,516 | ) | |||
| Net cash used in financing activities | (2,471 | ) | (61,344 | ) | |||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (15,743 | ) | 6,579 | ||||
| Cash, cash equivalents and restricted cash at the beginning of the period | 86,583 | 64,046 | |||||
| Cash, cash equivalents and restricted cash at the end of the period | $ | 70,840 | $ | 70,625 | |||
| Supplemental cash flow information: | |||||||
| Interest paid | $ | 12,218 | $ | 16,271 | |||
| Income taxes paid, net | 742 | 2,397 | |||||
| Acquisition of right-of-use assets with operating lease liabilities | 1,051 | 5,888 | |||||
| Reduction of right-of-use assets from operating lease modifications or reassessments | (1,715 | ) | (3,458 | ) | |||
| Non-cash investing and financing activities: | |||||||
| Net increase in payables for purchases of premises and equipment | $ | 60 | $ | 203 | |||
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
NON-GAAP MEASURES
(in thousands, except per share data)
(unaudited)
Adjusted operating income, pretax (loss) income attributable to Altisource, adjusted pretax (loss) income attributable to Altisource, adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted net (loss) income attributable to Altisource, adjusted diluted (loss) earnings per share, adjusted cash flows used in operating activities less additions to premises and equipment and net debt less investment in equity securities, which are presented elsewhere in this earnings release, are non-GAAP measures used by management, existing shareholders, potential shareholders and other users of our financial information to measure Altisource’s performance and do not purport to be alternatives to (loss) income from operations, (loss) income before income taxes and non-controlling interests, net (loss) income attributable to Altisource, diluted (loss) earnings per share, cash flows used in operating activities and long-term debt, including current portion, as measures of Altisource’s performance. We believe these measures are useful to management, existing shareholders, potential shareholders and other users of our financial information in evaluating operating profitability and cash flow generation more on the basis of continuing cost and cash flows as they exclude amortization expense related to acquisitions that occurred in prior periods and non-cash share-based compensation, as well as the effect of more significant non-operational items from earnings, cash flows from operating activities and long-term debt net of cash on-hand and investment in equity securities. We believe these measures are also useful in evaluating the effectiveness of our operations and underlying business trends in a manner that is consistent with management’s evaluation of business performance. Furthermore, we believe the exclusion of more significant non-operational items enables comparability to prior period performance and trend analysis.
It is management’s intent to provide non-GAAP financial information to enhance the understanding of Altisource’s GAAP financial information, and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure. The non-GAAP financial information presented may be determined or calculated differently by other companies. The non-GAAP financial information should not be unduly relied upon.
Adjusted operating income is calculated by removing intangible asset amortization expense, share-based compensation expense, restructuring charges, Pointillist losses, third quarter 2020 cost savings initiatives, loss on BRS portfolio sale, gain on sale of business, sales tax net accrual (reimbursement) and other asset write-off from business exit from (loss) income from operations. Pretax (loss) income attributable to Altisource is calculated by removing non-controlling interests from (loss) income before income taxes and non-controlling interests. Adjusted pretax (loss) income attributable to Altisource is calculated by removing non-controlling interests, intangible asset amortization expense, share-based compensation expense, restructuring charges, Pointillist losses, third quarter 2020 cost savings initiatives, unrealized gain (loss) on investment in equity securities, loss on BRS portfolio sale, gain on sale of business, sales tax net accrual (reimbursement) and other asset write-off from business exit from (loss) income before income taxes and non-controlling interests. Adjusted EBITDA is calculated by removing the income tax provision, interest expense (net of interest income), depreciation and amortization, intangible asset amortization, share-based compensation expense, restructuring charges, Pointillist losses, third quarter 2020 cost savings initiatives, unrealized gain (loss) on investment in equity securities, loss on BRS portfolio sale, gain on sale of business, sales tax net accrual (reimbursement) and other asset write-off from business exit from net (loss) income attributable to Altisource. Adjusted net (loss) income attributable to Altisource is calculated by removing intangible asset amortization expense (net of tax), share-based compensation expense (net of tax), restructuring charges (net of tax), Pointillist losses (net of tax), third quarter 2020 cost savings initiatives (net of tax), unrealized gain (loss) on investment in equity securities (net of tax), loss on BRS portfolio sale (net of tax), gain on sale of business (net of tax), sales tax net accrual (reimbursement) (net of tax), other asset write-off from business exit (net of tax) and certain income tax items related to adjustments to foreign income tax reserves, the impact of a decrease in the India and Luxembourg income tax rates on deferred tax assets and an India restructuring from net (loss) income attributable to Altisource. Adjusted diluted (loss) earnings per share is calculated by dividing net (loss) income attributable to Altisource after removing intangible asset amortization expense (net of tax), share-based compensation expense (net of tax), restructuring charges (net of tax), Pointillist losses (net of tax), third quarter 2020 cost savings initiatives (net of tax), unrealized gain (loss) on investment in equity securities (net of tax), loss on BRS portfolio sale (net of tax), gain on sale of business (net of tax), sales tax net accrual (reimbursement) (net of tax), other asset write-off from business exit (net of tax) and certain income tax related items by the weighted average number of diluted shares. Adjusted cash flows used in operating activities less additions to premises and equipment is calculated by removing the decrease in short-term investments in real estate, payment of sales tax accrual and additions to premises and equipment from cash flows (used in) provided by operating activities. Net debt less investment in equity securities is calculated as long-term debt, including current portion, minus cash and cash equivalents and investment in equity securities.
Reconciliations of the non-GAAP measures to the corresponding GAAP measures are as follows:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| (Loss) income from operations | $ | (6,814 | ) | $ | 19,735 | $ | (28,725 | ) | $ | 24,515 | |||||
| Intangible asset amortization expense | 4,295 | 3,298 | 11,344 | 15,489 | |||||||||||
| Share-based compensation expense | 1,732 | 2,831 | 6,556 | 8,284 | |||||||||||
| Restructuring charges | 2,227 | 2,761 | 10,921 | 9,080 | |||||||||||
| Pointillist losses | 2,139 | — | 7,215 | — | |||||||||||
| Third quarter 2020 cost savings initiatives | 697 | — | 697 | — | |||||||||||
| Loss on BRS portfolio sale | — | — | — | 1,770 | |||||||||||
| Gain on sale of business | — | (17,558 | ) | — | (17,558 | ) | |||||||||
| Sales tax net accrual (reimbursement) | (618 | ) | (1,742 | ) | (618 | ) | 311 | ||||||||
| Other asset write-off from business exit | — | — | — | 204 | |||||||||||
| Adjusted operating income | $ | 3,658 | $ | 9,325 | $ | 7,390 | $ | 42,095 | |||||||
| (Loss) income before income taxes and non-controlling interests | $ | (11,140 | ) | $ | 12,955 | $ | (54,011 | ) | $ | 20,898 | |||||
| Non-controlling interests | (340 | ) | (411 | ) | (642 | ) | (2,091 | ) | |||||||
| Pretax (loss) income attributable to Altisource | (11,480 | ) | 12,544 | (54,653 | ) | 18,807 | |||||||||
| Intangible asset amortization expense | 4,295 | 3,298 | 11,344 | 15,489 | |||||||||||
| Share-based compensation expense | 1,732 | 2,831 | 6,556 | 8,284 | |||||||||||
| Restructuring charges | 2,227 | 2,761 | 10,921 | 9,080 | |||||||||||
| Pointillist losses | 1,879 | — | 6,316 | — | |||||||||||
| Third quarter 2020 cost savings initiatives | 697 | — | 697 | — | |||||||||||
| Unrealized (gain) loss on investment in equity securities | (138 | ) | 2,294 | 12,433 | (11,731 | ) | |||||||||
| Loss on BRS portfolio sale | — | — | — | 1,770 | |||||||||||
| Gain on sale of business | — | (17,558 | ) | — | (17,558 | ) | |||||||||
| Sales tax net accrual (reimbursement) | (618 | ) | (1,742 | ) | (618 | ) | 311 | ||||||||
| Other asset write-off from business exit | — | — | — | 204 | |||||||||||
| Adjusted pretax (loss) income attributable to Altisource | $ | (1,406 | ) | $ | 4,428 | $ | (7,004 | ) | $ | 24,656 | |||||
| Net income (loss) attributable to Altisource | $ | (13,237 | ) | $ | 7,165 | $ | (59,948 | ) | $ | (1,863 | ) | ||||
| Income tax provision | 1,757 | 5,379 | 5,295 | 20,670 | |||||||||||
| Interest expense (net of interest income) | 4,078 | 4,823 | 13,160 | 16,320 | |||||||||||
| Depreciation and amortization | 8,115 | 6,972 | 22,865 | 29,685 | |||||||||||
| Share-based compensation | 1,732 | 2,831 | 6,556 | 8,284 | |||||||||||
| Restructuring charges | 2,227 | 2,761 | 10,921 | 9,080 | |||||||||||
| Pointillist losses | 1,813 | — | 6,160 | — | |||||||||||
| Third quarter 2020 cost savings initiatives | 697 | — | 697 | — | |||||||||||
| Unrealized (gain) loss on investment in equity securities | (138 | ) | 2,294 | 12,433 | (11,731 | ) | |||||||||
| Loss on BRS portfolio sale | — | — | — | 1,770 | |||||||||||
| Gain on sale of business | — | (17,558 | ) | — | (17,558 | ) | |||||||||
| Sales tax net accrual (reimbursement) | (618 | ) | (1,742 | ) | (618 | ) | 311 | ||||||||
| Other asset write-off from business exit | — | — | — | 204 | |||||||||||
| Adjusted EBITDA | $ | 6,426 | $ | 12,925 | $ | 17,521 | $ | 55,172 | |||||||
| Net (loss) income attributable to Altisource | $ | (13,237 | ) | $ | 7,165 | $ | (59,948 | ) | $ | (1,863 | ) | ||||
| Intangible asset amortization expense, net of tax | 4,284 | 2,475 | 11,283 | 11,626 | |||||||||||
| Share-based compensation expense, net of tax | 1,558 | 2,125 | 5,943 | 6,218 | |||||||||||
| Restructuring charges, net of tax | 1,943 | 2,114 | 9,801 | 6,994 | |||||||||||
| Pointillist losses, net of tax | 1,879 | — | 6,316 | — | |||||||||||
| Third quarter 2020 cost savings initiatives, net of tax | 565 | — | 565 | — | |||||||||||
| Unrealized (gain) loss on investment in equity securities, net of tax | (138 | ) | 1,722 | 12,433 | (8,805 | ) | |||||||||
| Loss on BRS portfolio sale, net of tax | — | — | — | 1,405 | |||||||||||
| Gain on sale of business, net of tax | — | (9,427 | ) | — | (9,427 | ) | |||||||||
| Sales tax net accrual (reimbursement), net of tax | (618 | ) | (1,308 | ) | (618 | ) | 233 | ||||||||
| Other asset write-off from business exit, net of tax | — | — | — | 151 | |||||||||||
| Certain income tax related items | — | (909 | ) | 2,392 | 12,323 | ||||||||||
| Adjusted net (loss) income attributable to Altisource | $ | (3,764 | ) | $ | 3,957 | $ | (11,833 | ) | $ | 18,855 | |||||
| Diluted (loss) earnings per share | $ | (0.85 | ) | $ | 0.44 | $ | (3.85 | ) | $ | (0.12 | ) | ||||
| Impact of using diluted share count instead of basic share count for a loss per share | — | — | — | 0.01 | |||||||||||
| Intangible asset amortization expense, net of tax, per diluted share | 0.27 | 0.15 | 0.72 | 0.71 | |||||||||||
| Share-based compensation expense, net of tax, per diluted share | 0.10 | 0.13 | 0.38 | 0.38 | |||||||||||
| Restructuring charges, net of tax, per diluted share | 0.12 | 0.13 | 0.63 | 0.43 | |||||||||||
| Pointillist losses, net of tax, per diluted share | 0.12 | — | 0.41 | — | |||||||||||
| Third quarter 2020 cost savings initiatives, net of tax, per diluted share | 0.04 | — | 0.04 | — | |||||||||||
| Unrealized (gain) loss on investment in equity securities, net of tax, per diluted share | (0.01 | ) | 0.11 | 0.80 | (0.54 | ) | |||||||||
| Loss on BRS portfolio sale, net of tax, per diluted share | — | — | — | 0.09 | |||||||||||
| Gain on sale of business, net of tax, per diluted share | — | (0.58 | ) | — | (0.57 | ) | |||||||||
| Sales tax net accrual (reimbursement), net of tax, per diluted share | (0.04 | ) | (0.08 | ) | (0.04 | ) | 0.01 | ||||||||
| Other asset write-off from business exit, net of tax, per diluted share | — | — | — | 0.01 | |||||||||||
| Certain income tax related items per diluted share | — | (0.06 | ) | 0.15 | 0.75 | ||||||||||
| Adjusted diluted (loss) earnings per share | $ | (0.24 | ) | $ | 0.25 | $ | (0.76 | ) | $ | 1.15 | |||||
| Calculation of the impact of intangible asset amortization expense, net of tax | |||||||||||||||
| Intangible asset amortization expense | $ | 4,295 | $ | 3,298 | $ | 11,344 | $ | 15,489 | |||||||
| Tax benefit from intangible asset amortization | (11 | ) | (823 | ) | (61 | ) | (3,863 | ) | |||||||
| Intangible asset amortization expense, net of tax | 4,284 | 2,475 | 11,283 | 11,626 | |||||||||||
| Diluted share count | 15,637 | 16,151 | 15,578 | 16,420 | |||||||||||
| Intangible asset amortization expense, net of tax, per diluted share | $ | 0.27 | $ | 0.15 | $ | 0.72 | $ | 0.71 | |||||||
| Calculation of the impact of share-based compensation expense, net of tax | |||||||||||||||
| Share-based compensation expense | $ | 1,732 | $ | 2,831 | $ | 6,556 | $ | 8,284 | |||||||
| Tax benefit from share-based compensation expense | (174 | ) | (706 | ) | (613 | ) | (2,066 | ) | |||||||
| Share-based compensation expense, net of tax | 1,558 | 2,125 | 5,943 | 6,218 | |||||||||||
| Diluted share count | 15,637 | 16,151 | 15,578 | 16,420 | |||||||||||
| Share-based compensation expense, net of tax, per diluted share | $ | 0.10 | $ | 0.13 | $ | 0.38 | $ | 0.38 | |||||||
| Calculation of the impact of restructuring charges, net of tax | |||||||||||||||
| Restructuring charges | $ | 2,227 | $ | 2,761 | $ | 10,921 | $ | 9,080 | |||||||
| Tax benefit from restructuring charges | (284 | ) | (647 | ) | (1,120 | ) | (2,086 | ) | |||||||
| Restructuring charges, net of tax | 1,943 | 2,114 | 9,801 | 6,994 | |||||||||||
| Diluted share count | 15,637 | 16,151 | 15,578 | 16,420 | |||||||||||
| Restructuring charges, net of tax, per diluted share | $ | 0.12 | $ | 0.13 | $ | 0.63 | $ | 0.43 | |||||||
| Calculation of the impact of Pointillist losses, net of tax | |||||||||||||||
| Pointillist losses | $ | 1,879 | $ | — | $ | 6,316 | $ | — | |||||||
| Tax benefit from Pointillist losses | — | — | — | — | |||||||||||
| Pointillist losses, net of tax | 1,879 | — | 6,316 | — | |||||||||||
| Diluted share count | 15,637 | 16,151 | 15,578 | 16,420 | |||||||||||
| Pointillist losses, net of tax, per diluted share | $ | 0.12 | $ | — | $ | 0.41 | $ | — | |||||||
| Calculation of the impact of third quarter 2020 cost savings initiatives, net of tax | |||||||||||||||
| Third quarter 2020 cost savings initiatives | $ | 697 | $ | — | $ | 697 | $ | — | |||||||
| Tax benefit from third quarter 2020 cost savings initiatives | (132 | ) | — | (132 | ) | — | |||||||||
| Third quarter 2020 cost savings initiatives, net of tax | 565 | — | 565 | — | |||||||||||
| Diluted share count | 15,637 | 16,151 | 15,578 | 16,420 | |||||||||||
| Third quarter 2020 cost savings initiatives, net of tax, per diluted share | $ | 0.04 | $ | — | $ | 0.04 | $ | — | |||||||
| Calculation of the impact of the unrealized (gain) loss on investment in equity securities, net of tax | |||||||||||||||
| Unrealized (gain) loss on investment in equity securities | $ | (138 | ) | $ | 2,294 | $ | 12,433 | $ | (11,731 | ) | |||||
| Tax (benefit) provision from the unrealized (gain) loss on investment in equity securities | — | (572 | ) | — | 2,926 | ||||||||||
| Unrealized (gain) loss on investment in equity securities, net of tax | (138 | ) | 1,722 | 12,433 | (8,805 | ) | |||||||||
| Diluted share count | 15,637 | 16,151 | 15,578 | 16,420 | |||||||||||
| Unrealized (gain) loss on investment in equity securities, net of tax, per diluted share | $ | (0.01 | ) | $ | 0.11 | $ | 0.80 | $ | (0.54 | ) | |||||
| Calculation of the impact of loss on BRS portfolio sale, net of tax | |||||||||||||||
| Loss on BRS portfolio sale | $ | — | $ | — | $ | — | $ | 1,770 | |||||||
| Tax benefit from loss on BRS portfolio sale | — | — | — | (365 | ) | ||||||||||
| Loss on BRS portfolio sale, net of tax | — | — | — | 1,405 | |||||||||||
| Diluted share count | 15,637 | 16,151 | 15,578 | 16,420 | |||||||||||
| Loss on BRS portfolio sale, net of tax, per diluted share | $ | — | $ | — | $ | — | $ | 0.09 | |||||||
| Calculation of the impact of gain on sale of business, net of tax | |||||||||||||||
| Gain on sale of business | $ | — | $ | (17,558 | ) | $ | — | $ | (17,558 | ) | |||||
| Tax provision from gain on sale of business | — | 8,131 | — | 8,131 | |||||||||||
| Gain on sale of business, net of tax | — | (9,427 | ) | — | (9,427 | ) | |||||||||
| Diluted share count | 15,637 | 16,151 | 15,578 | 16,420 | |||||||||||
| Gain on sale of business, net of tax, per diluted share | $ | — | $ | (0.58 | ) | $ | — | $ | (0.57 | ) | |||||
| Calculation of the impact of sales tax net accrual (reimbursement), net of tax | |||||||||||||||
| Sales tax net accrual (reimbursement) | $ | (618 | ) | $ | (1,742 | ) | $ | (618 | ) | $ | 311 | ||||
| Tax provision (benefit) from sales tax net accrual (reimbursement) | — | 434 | — | (78 | ) | ||||||||||
| Sales tax net accrual (reimbursement), net of tax | (618 | ) | (1,308 | ) | (618 | ) | 233 | ||||||||
| Diluted share count | 15,637 | 16,151 | 15,578 | 16,420 | |||||||||||
| Sales tax net accrual (reimbursement), net of tax, per diluted share | $ | (0.04 | ) | $ | (0.08 | ) | $ | (0.04 | ) | $ | 0.01 | ||||
| Calculation of the impact of other asset write-off from business exit, net of tax | |||||||||||||||
| Other asset write-off from business exit | $ | — | $ | — | $ | — | $ | 204 | |||||||
| Tax benefit from other asset write-off from business exit | — | — | — | (53 | ) | ||||||||||
| Other asset write-off from business exit, net of tax | — | — | — | 151 | |||||||||||
| Diluted share count | 15,637 | 16,151 | 15,578 | 16,420 | |||||||||||
| Other asset write-off from business exit, net of tax, per diluted share | $ | — | $ | — | $ | — | $ | 0.01 | |||||||
| Certain income tax related items resulting from: | |||||||||||||||
| Foreign income tax reserves/other | $ | — | $ | (909 | ) | $ | 1,008 | $ | — | ||||||
| India income tax rate changes | — | — | 1,384 | — | |||||||||||
| Deferred tax adjustment (Luxembourg tax rate change) | — | — | — | 12,323 | |||||||||||
| Certain income tax related items | — | (909 | ) | 2,392 | 12,323 | ||||||||||
| Diluted share count | 15,637 | 16,151 | 15,578 | 16,420 | |||||||||||
| Certain income tax related items per diluted share | $ | — | $ | (0.06 | ) | $ | 0.15 | $ | 0.75 | ||||||
| Cash flows (used in) provided by operating activities | $ | (2,861 | ) | $ | (10,962 | ) | $ | (14,077 | ) | $ | 22,194 | ||||
| Decrease in short-term investments in real estate | — | (414 | ) | — | (39,873 | ) | |||||||||
| Payment of sales tax accrual | — | — | — | 6,858 | |||||||||||
| Adjusted cash flows used in operating activities | (2,861 | ) | (11,376 | ) | (14,077 | ) | (10,821 | ) | |||||||
| Less: additions to premises and equipment | (1,036 | ) | (270 | ) | (2,502 | ) | (1,204 | ) | |||||||
| Adjusted cash flows used in operating activities less additions to premises and equipment | $ | (3,897 | ) | $ | (11,646 | ) | $ | (16,579 | ) | $ | (12,025 | ) | |||
| September 30, 2020 | September 30, 2019 | ||||||
| Senior secured term loan | $ | 293,826 | $ | 294,002 | |||
| Less: Cash and cash equivalents | (67,023 | ) | (66,901 | ) | |||
| Less: Investment in equity securities | (30,185 | ) | (40,093 | ) | |||
| Net debt less investment in equity securities | $ | 196,618 | $ | 187,008 | |||
__________________________
Note: Amounts may not add to the total due to rounding.
FAQ
What was Altisource's service revenue for Q3 2020?
How much did Altisource lose in Q3 2020?
What is Altisource's adjusted EBITDA for Q3 2020?
What revenue does Altisource expect for 2021?
What was the year-over-year change in service revenue for Altisource?
