Altisource Portfolio Solutions (ASPS) 30 Jul 222022 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Altisource Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation there'll be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to your host, Michelle Esterman, Chief Financial Officer, you may begin.

Thank you, operator. remind slides the website are to XX-Q release at want quarterly and available first you earnings that Form www.altisource.com. We on our additional provide information may useful. These investors find

number cause actual to include which forward-looking Our results and remarks could involve differ. today a that uncertainties of statements, risks

well Please In addition the predict to Altisource. and with may our companies information, XXXX section lead impact projections provided the herein previously as state these of uncertainty usual result no Form that results. and contained different statements forward-looking COVID-XX its update factors continuing on undertake provided difficult the to quarterly it a new We the or describe the circumstances, risk a current and extremely change the economy in to of obligation or as potential factors release pandemic earnings economic scenarios, slides, XX-K, of associated forward-looking statements, review events. financial environment in makes future future as the to which and statements,

call, to in will the non-GAAP quarterly measures. and slides. GAAP our both find In is we measures of present and to release financial you reconciliation GAAP disclosures A non-GAAP regarding earnings measures. will additional the the appendix non-GAAP included slides, this quarterly During

Bill. me Joining to Chief turn for Executive Chairman call Shepro, our the is Bill Officer. over today's and call now I will

growth. both second thank quarter morning sequential with benefiting and Good real slide and of the is for the with and you performance. EBITDA results our revenue year-over-year and default from joining I'm Beginning our segment Michelle. adjusted estate Thanks, servicer call. and four, today's pleased business restart with

designed the to Lenders to increasingly a average are largely reduce business was solutions, million, Our our the buying in volume. their a focused costs. originations pipeline increase grew our which with One revenue we origination decline, quarter members $XX last line as on segments market-wide origination our market in year-over-year decline XX% help since weighted them sales in decline Despite are

over We partially sales quarter the also XXXX of corporate path cost in XX% positive from cash. offset the cash EBITDA second quarter We in us cost ended generate business, down by the performance the and the puts by flow marketing maintain This segments. continue business of pointless initiatives to with a discipline sale of with $XX assignment costs to in and and on to XXXX. employees the million savings

first between ending further of the expected, burn As significantly on up burn, $XX quarter. down with reduced based factors. the cash as we other compared estimate and the working capital the and believe year decline $XX million our or anticipate fluctuating and progresses, will our with cash million to We year cash

$X.X Our funds point in includes approximately the cash in $X.X U.S. the of from estimate million of escrow receipt million anticipated and sale. of taxes refund

and and Turning and our estate servicer to five segment. slides real six

As to of margins. our second first the you service the revenue grew adjusted improved see can on quarter quarter both adjusted this XXXX slide we of five, and EBITA and year, EBITDA compared and

and you of restart XXst should EBITDA of margin the of growth on improvements and delinquencies, our market items borrower following December product foreclosures continuing two the reflects the September XXXX Adjusted reflect Our revenue measures. most There scale, default pandemic-related pre-pandemic recovery relief savings mind. expiration the keep greater and the remaining initiatives. are mix, of cost in

foreclosure default the still below recover, second quarter market same are beginning the initiations though even pre-COVID XXXX period. XX% is First, to

middle margin that market based until our REO complete higher Second, of foreclosure foreclosure REO, will typical benefit fully a default the sell to XXXX. we of timelines recovery on not auction anticipate business the the and from and the

default restart the making our growing sales on are from tailwinds market, from benefiting we progress. pipeline and focused to addition of good In the are

an with in are and new a business, won of revenue stabilized we basis. annualized quarter second million the stages onboarding estimated During $X.X various on of

is In stabilized average $XX on an sales annualized basis. million and pipeline currently addition, weighted our

believe our rise driving and rates rates at inflationary could a With increase that business segment. may million. servicer longer business our XX-day X% historical more rates, real environment. term, rising to Looking countercyclical addressable benefit in near estate at delinquency increases default by every and market $XXX Today, for we for lows. our estimate We delinquency risks, services delinquency the default mortgage interest from deteriorating rates are economic

Turning to slides origination eight and our segment. seven in

market couple faces for XX%. last forecast with origination challenges Following latest reflecting decline of years, strong XXXX, origination growth MBA by the now over to the the volume

business in some of outperformed with our market market Lenders decline. performance second the decline traction money. offset One year-over-year was are with help not a gained Diving in our impact designed save our quarter second that immune revenue little line segment quarter results, largely as to declines than origination with solutions members deeper our was Our origination greater the the we to market the origination overall into by This market businesses. other

in-house greater retain work employees, and percentage transitioned customers the transactions, declined silver from was of to which than these faster There refinanced lining. market. a of some in a cash As revenue derived their businesses is

unprecedented do to couple One years solutions difficult With a it's origination are on origination in volume volume and originators have that costs Over been focus of to reducing increasingly to margins, for so. our cost them attention solutions very their originators purchase saving get given decline looking and turned that help last us the to and their profitability. Lenders

business these wins stabilized and will generate begin strong result, stages revenue won onboarding on a various to in from a quarter million from a We a and we had perspective. an a we in estimated basis that $X.X quarter. the third As sales of are anticipate in very year new

XX% Based will and in origination progress we forecasted $XX increased weighted believe weighted pipeline that increasing on stabilized to launches average adoption, sales the our annualized we also sales by product We our basis. XX% new product outperform million a volume. on decline

contributor new are market our from exciting our we with cost pleased we should sales and to accelerate second conclude, developing timelines. believe a these and the benefit launches We wins our execute to our focus believe an pipeline for long-term from is significant We greater insight prospects to positioned strong that will business, well for revenue newer revenue Altisource our tailwinds wins, savings. and we benefit the business, increased and origination are into results. pipeline. strategic gain sales quarter on earnings. translate business our as estate servicer we and To In our continue help programs we to and continue anticipate are growth our business solutions to on how sales and and real building be into plan origination and product innovative sales In

stakeholders. on we we now more the to company to plan return win execute value questions, our As a substantial growth and for call business, operator? up for will our continue anticipate create open I'll and we

[Operator Instructions] Our question first Grondahl from Mike Northland Capital. with

Your line is open.

for first foreclosure is on of the Mike you Mike ramp. on versus Grondahl. sort This difference Pochucha Maybe seeing Are here? timing geographical cycle much just Thanks. period

No, we're Hey, Mike. geographical I'm think a not I morning. from perspective that least seeing anything Good aware at not don't of.

where the most foreclosure benefit very XX% the markets I our in attractive middle we're recovers next though the won't as market think in so of I new year. businesses think seeing until mentioned, early the what of of innings. I some stabilizes is terms only but still not year. that recovering, down And toward also from I mean, was last it it's still we're initiations is while

lower XX% 'XX. than in

Thank right. Michelle. you, That's

there? Got back on it. is originations, to with to competitors a with And share there's environment it that softer opportunity then just take an going say fair that based some there maybe

Yes.

so seeing -- we're on their what the them cooperative Lenders think I basically the is and manage help reduce we One we loan and money, make better more that Cooperative can members sales get joined this costs. execution

volume. didn't of today's members on cost they getting the though had. had so focused now need our several origination very weren't over so execution, had they years, on last the couple better environment they much the where volume. were help could business They And that volume in focused on tremendous barely much Over they just years, because handle profitable those last they closing savings, -- as

building the really alone. about money. products December members the care cost several we launched we've our on helped to good how that up is making saving earlier to lot save that business money in pipeline very very that long seeing far. into convert and pipeline. we're which members And We're manufacture what in job about it year, revenue, And still is progress last so we're learning a encouraging takes a done Now new the but significant

you. thank pause, I'll Thanks.

Great. Thanks, Mike.

One next question. for moment our

Credit Suisse. next from Ramin Our Kamali comes from question

open. is line Your

do at I cash, Hi, tax from the guess federal I trajectory. you of you you're good expect calls. Pointillist refund. $XX a said right now year million have your also and end some cash Thanks, about sense at that coming better taking But million. $XX wanted to my money morning. flow Bill, of in to sitting get from

million cash burn. have So if it that, of for $XX been not close would probably to

of help be trajectory So expect standpoint? you kind when breakeven now cash me to from cash do for QX a and understand QX. the flow flow And

Yes.

get to we we'll that million a So of what last brought Ramin, $XX cash. just we includes down earlier year release we and IRS refund is that of tax now do tax one of the that the paid returns. Pointillist from little $XX and million the with And We assumes think our end about quarter, know we that processing or the that were bit talking -- the escrow.

next get a or portion we're that that month hopefully, notice got the two. we've to of So in going money,

we're better feeling So about that.

we're we being to time flow terms EBITDA the right of generate now, And now, improves, market But Right of itself, A cash business the default conservative. how accelerate the believe terms in how this depends a that timing the could recovers. fairly in In we're going market XXXX. extent being and positive lines. conservative on of to that operates. we're lot the that

breakeven cash I standpoint? Can little basis particular think you a more on quarterly ’XX? in a a quarter you'll any mean from color be you give that us flow

do burn the come reach breaking the we point, year, and continue this Ramin, down we year to will and anticipate to next the next year. positive that numbers continue So at -- for not improve progresses but we're will cash not the out earnings as are

more then on relative And were starts those business. you share just it. Can picking comment kind on your foreclosure of what seeing you core up. initiations one certainly to the kind of pre-COVID? I guess, are Got question of

share to in Yes. I they're hard They and to listened It's at, Xome. think their yesterday, to close going XX%. about market Mr. I be they tell. think, call talked Cooper's to

inventory sitting one-third at is theirs. Our today of

could share how extrapolate, you market if So give that. of perhaps of where sense sure you that our is. not calculating I'm a sort they're

a think environmentally, recovering, origination have lot wouldn't more you business are expected the with actually fit the and is we've gaining where market products market these what's and in origination really in that our default really so are product interest products. Ramin, and found I right traction, interesting, is, declining. great volumes There's a

so in of at tremendous the foreclosure to learning onboard how we're takes long we're we're half, them, And default where the then initiations side, XX% were but on it And only making quarter second of XXXX. progress. clearly,

that off that and Michelle applying hold foreclosed. the remind government. in activity making and sort was to the sort there one the of The around scrubbing government moratorium, their was if these related months me, that for I for mortgages was of servicer, none resulted put that, We borrower mini of may April, of will, they where two portfolios Some of, foreclosure. a be it programs, GSE suspect lenders federal had before the on if you to government think sure

as foreclosure impacted well. quarter starts could second So have in that the

We a auction pickup our to are June. compared referrals foreclosure REO July seeing in of and

even opportunities But that to improve think in economic like benefit business. even I And being, where recovered has it segment, for default were. quarter even where to in it still deteriorating we the a in hasn't environment the were experiencing, having that recovered the we're We're not though point see. in we same the we'll appears it tremendous So to XXXX. continue

All Thanks, right. Bill.

Ramin. Thanks,

[Operator moment for One Instructions] next question. our

with comes your Our Raj Sharma open. is Riley, next line question from B.

the service REO to at just Thank of you I you. on Hubzu Thank change you wanted pickup what think of FC a starts. revenues few quarters you're flow? of want the had, flow, of a you had all marketplace, business wouldn't a in next REO I the that to seeing cadence ago, guided that until see I -- in to mid commented mid just questions kind kind understand the of year. of a Is in sense next amount for I of taking the get You by year. a certain

good question, a Rajiv. That's

have numbers, pre-pandemic foreclosure it, then a those the if that all that starts quarter. new the middle or of So of ’XX. even delinquency get back you those year, the been think pre-pandemic foreclosures it up, numbers the middle increase in the because would at to takes would volumes in we the number. expect pre-pandemic it due to close or that But the But about XXXX. these time will is bit to this out out of initiated pre-pandemic those are stabilize levels certainly higher XX% roughly the it back rates stabilization the it XXXX getting go stabilize would course, If to market an going of to to If beyond little stabilize. same push push

The point correct quarter we how second me wrong, other the generate much I'm XXXX, in out the Hubzu? Michelle, in thing revenue I'd is in if and of did

million. $XX

$XX million.

that as sense quarter for what the this and stabilize. to million as year, that of could recovers market and opportunity compare you So the as $X we or the in is business did a second you see the roughly to get we

helpful. you Origination and You comment Got little on which how side, Or should metrics it. that? your origination launches? in you those the bit is the can to That's that could are about earlier in you relative the on anything lower be new in market, launches new overall massive Has the faring? had product indicated And doing a product decline. better the be changed and going business then talk to

Yes, happy to.

and and learning amount the long pipeline several new in space of tremendous verification products to we significant the lines We're it a save customer we growth proposal, portion our What to where being in long are tri-merge from services. reporting space. our So and is money. give is time fully a credit yes And products customers. to very the speed onboarded coming on new we're go gaining reporting credit a from the all And get signed, analysis ordering launched contract traction. onboard to large of the and our customers -- products those a every from focused pricing customer's it those how a integrated up a takes in takes pipeline of we're the to customer, then and when business weeks of branches those newer Origination able of our couple to how and a

bit. so on Also, And volumes to the up that's pushed continue market down little origination timing deteriorate volume. the forecast The the a more. come origination

start quarter believe, see Both in the impact. those to said, improvement, that and points the still we really in you'll modest our business as forecasting. I quarter to quarter, well as So think improvement we're currently being had in some third year-over-year. see we and That's prior a relative Origination sequentially an believe, you'll the fourth both what

it up, little quarter to I we really in third in the start numbers quarter. fourth believe, a show show think but up the will So the bit start to in

thank Great, you. get back. Got it. I'll

Thank you.

you. Thank

I'm for to And [Operator questions like Bill at Instructions] showing not further to this remarks. time. back the any any I'd call closing turn

in great day. the interest We support and Great. joining call. Have your company. Thanks, the operator, thanks for and appreciate a

this Ladies today's presentation. gentlemen, does conclude and

day. a now may wonderful disconnect, and You have