Altisource Portfolio Solutions (ASPS) 7 Mar 242023 Q4 Earnings call transcript

Hello and thank you for standing by. Welcome to Altisource Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Michelle Esterman, Chief Financial Officer.

You may begin.

Thank you, operator. remind slides the website are to XX-K 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

the In addition economic of government predict with potential industry economy difficult fiscal and current uncertainty usual make the forward-looking impacts it continuing to pandemic, the on to impact operate the state and government COVID-XX the conditions and extremely which of Altisource. in the servicer as associated of statements, future responses to policies as well the we

to in the slides XX-K describing our release a statements forward-looking no different lead statements, a the and in projections some and to factors review that herein in as company's provided the future quarterly as financial may change result earnings or circumstances, contained scenarios XXXX update as Please results. or information well events. Form sections factors provided undertake previously of risk obligation We new

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

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

ramped. and Slides business, as Thanks, new financial We're Michelle, not and we our and strengthen X with has X. to position our which good on begin in fully continue I'll pleased performance XXXX morning. win

decline Estate market compared by by XXXX, was the decline both to to company revenue improved outperformed business We XX% XXXX. the and Servicer million total Origination with overall XX% only $XX.X headwinds X% to In industry-wide the and and service segments, $XX.X adjusted a million EBITDA for of origination than in face revenue of service the segment in lower market in residential compared segment Real serious volume. compared a XXXX

mix, largely EBITDA lower corporate Company-wide, We're XX.X% for adjusted is good operating Our X X adjusted to XX.X% businesses a XXXX $XX.X in EBITDA XXX product XXXX, by loss total margins improved company segment's margins generated our in in off the $XXX,XXX segments EBITDA months and EBITDA positive to December. declined generating improvement points the we XXXX, to from million. in Corporate XXXX of basis including higher start EBITDA January. of of costs. adjusted adjusted $XXX,XXX in The the last business by adjusted and

sales sales During new XXXX, steps in strengthen discuss won our I'll improve business, balance pipeline wins our we to a in and few minutes. detail pipeline our greater and took sheet.

the $XX.X meeting X.X% to April the XXXX our extended another of by maturity respect or extend to balance conditions. term date our certain both the balance the sheet, million loan with principal option of year, we With by and term reduced subject loan and revolver to to

revenue and adjusted for $XX.X benefit wins, corporate service EBITDA represents margins strong to only industry-wide EBITDA post million Based COVID in current which in operate, position forecast. and Turning adjusted We X expectations our XXXX. assumes for service origination This our increase $XX.X XXXX XX% a improvement to EBITDA. in in enhanced us in and our and closure million $XXX and are an and million revenue which to starts, million the believe growth. in XX% modest growth $XX.X revenue $XXX over XX% growth upon to lower we forecasting to costs million adjusted market sales $XX.X volume, million we for Slide

increases service be of XXXX our wins ramping XXXX sales and by the that price growth driven sales forecasting wins, certain continued will are We revenue the services. for

improvement initiatives, EBITDA year be increases and XXXX initiatives. adjusted business efficiency that revenue will full of year savings and operating the unit benefit from by: anticipate full cost two, efficiency the savings one, of price lower cost benefit margins, XXXX and driven from the XXXX higher scale; primarily growth; We three, costs corporate and

year, it While still off a of we're EBITDA with in is January to start $XXX,XXX. early in the adjusted good

XXXX, As and we sales look normalized of also that volumes. benefit will continued beyond default ramp we our anticipate the origination market recovery wins, of businesses from the

Slide of strategic initiatives. our X XXXX summary a provides

you can As to established we growth. initiatives support see, X long-term

on business we continue that we in our adjusted profitability. corporate those efforts a these and operational high margins and where generate look to on a the We as and is development performer, offerings; their business efforts drive costs focus generate businesses delinquencies second, in implement in Altisource accelerate improve and impact efficiency greatest margins. and evaluate plan and plan demand departments to rise to strong strong believe our believe costs we to servicers businesses strong profit and We to generates operations higher processes we on Several believe market of solutions to manage are development high for and First, streamline reduce deliver forecast margins, will where tailwinds. profitability EBITDA prepare originators gross performance. and

Third, strengthen solutions wallet gain customer to share. relationships customers and existing other cross-sell to

members new that and members improve that grow Fourth, Lenders our One other believe hundreds strong improve intended performance to is revenue with solutions. One offerings and significant revenue-generating members their our help to that new One have grow customer leverage launch launching buying We Lenders there is of through to existing customers. Lenders by profitability believe profitability. the collective earnings a there business opportunity base cross-selling and solutions We opportunity a We significant power.

Real Slide our X segment. and and Estate countercyclical Servicer to Moving

improved margin reflects $XX.X offset and the business We adjusted business. adjusted service our service Servicer lower that certain growth Estate field service in quarter XXXX reduction and earlier the EBITDA X%, than improvement Real fourth XX.X%. higher-margin XX.X% offset efficiency declined product stage process, the was mix and from lower million For the of $X.X growth XXXX, employee from and XXXX, or revenue of of and from low-margin default margin fewer revenue improved businesses reflect XXXX modestly support a in exit revenue. outsourced which to by lower services initiatives modestly higher referrals margins adjusted adjusted EBITDA by and segment's cost Adjusted EBITDA and partially margins. million EBITDA benefits EBITDA XX.X% by

Slide our summary and Servicer wins of X Real provides a Estate sales and pipeline.

million generate quarter. the basis We the of For estimate the stabilized had that won $XX.X new a years. year, couple annual on we revenue we couple fourth wins business next of over in a will sales significant in

larger we will start provide progresses. for We receive assets. that of owners toward signing was first services as the quarter renovation year end anticipate REO agreements first The to and of the renovation to the ramp referrals of first one the the

win the worth year larger volumes January $XX.X in an of an steadily There which pipeline revenue with wallet basis, the and was most The will our referral the referrals share stabilized expansion average opportunities a a are through of impact an a We pipeline customer million of with anticipate We in few increase weighted existing sales in higher-margin on trustee in noting. XXXX late-stage total annual and beyond. second to of to receive started summer. business. grow ended

are and loan estate currently real services for negotiating servicer to their REO a agents. We provide an auction agreement

And market services servicers. of to are exciting for have provide discussing our with also report finally, to loan opportunities negotiating on we these expansion We nonbank trustee our management to one earnings quarter are We couple a customers. call. share agreements asset more of with hope REO first

conversion improve initiatives. and segment will revenue compared considerably for services XXXX, we from savings Real and sales of efficiency XXXX revenue, adjusted and certain EBITDA ramp sales XXXX Estate full to For year of wins, anticipate price service and Servicer the the wins continued that benefit XXXX our to cost increases of

and forecast the assumes in benefit modest REO foreclosure later-stage Hubzu starts. offerings Our a only increase post-COVID from

stress, a Turning of to affordability are for mortgage payments. of rising auto on savings stress. mortgage growing rates home rise auto could mortgages debt rates to precursors According have are York, are at environment grown of signs by the increased grow Early-stage Credit mortgages rising, rates. 'XX a credit credit day and are consecutive XX-year record rise. home macroeconomic card card to to to Federal Bank financial to in payment continue high, debt lines There delinquency XX. declined, early-stage behind loans New financial that continue more XX-plus which pre-pandemic be low. into above equity December early XX% and and two are levels, delinquency becoming is are X XXX(k) 'XX, XXXX are on Consumer withdrawals hardship also Slide have and at the one XX% card comparing delinquent signaling credit more December by delinquencies Reserve rising near delinquency quarters. balances early-stage and is consumer delinquent

our XX. to on segment Moving Slide origination

decline wins growth volumes. declines greater our origination segment environment. newer solutions, One customer business lower Our improvement XX% improved in a cost origination the reflects the industry-wide by Adjusted in a by and Lenders only residential XXXX EBITDA initiatives. of degree an from from Originations impacted that in despite difficult EBITDA in segment from volumes well businesses offset and our XX% XXXX, million. revenue revenue performed $X.X origination compared origination revenue the partially in a adjusted other origination were to savings the This decline efficiency with of market outperformed to

adjusted gross segment's all adjusted EBITDA For and relative improved profit, XXXX. Origination margins, XXXX, the profit gross to margins, EBITDA

of summary origination our wins a segment provides sales pipeline. XX Slide and

difficult new a compete During an members Lenders annualized money for interest focus on in our we On and business stabilized our save the our an basis, drove better market, $XX.X year. million won substantial origination very estimated solutions. helping One in

pipeline million, Our sales million of with weighted the the was million of contracting end average stage. $XX in $X $XX at XXXX the

forecasted launch to Lenders service benefit cost increases certain initiatives sales EBITDA industry-wide For considerably business, year services our momentum of to in This in January 'XX Lenders outperform One efficiency of improve profitability. improve and revenue full One help XXXX. adjusted Origination for XX% the savings our to solutions our price we anticipate the compared the XXXX, increase members of and origination that is volume, segment and from their new XXXX

planning front, are insurance of states first homeowners over we partner will soft we this an a the technology members, insurance and One to XX across solution Lenders program, XX launch with carriers Through new new for work growth One insurance with provide the borrowers members the in quarter. solutions priced Lenders One Origination On revenue believe competitively existing members, our and value Lenders adoption and access We of launch segment. combined earnings to greater support insurance. to strengthen our solutions, regular further will of in One Lenders our homeowners with proposition

Corporate XX. Slide our Turning segment on to

$X.X costs. reflects loss EBITDA better our XX% continue to was We down initiatives. XXXX bring of savings loss lower than cost our adjusted $XX.X efficiency adjusted The EBITDA or million operating million XXXX. and

year full the anticipate EBITDA of savings we adjusted benefit compared improve XXXX, to from to initiatives. For efficiency XXXX loss cost XXXX and

to More is in perfect Slide not the interest dramatic The few The expense. our XX. over created last XXXX default market years was recently, and still shut in corporate fully environment increasing recovered. reducing and Moving volumes a Altisource. for storm origination has increase there significantly mortgage been a rates, interest down virtually

While last Origination segment decline outperformed both earlier-stage these X service support Servicer million by impacted segments $XX Even adjusted improved and events primarily grew volume. than the Real over foreclosure the in that more XX% the segments, origination our the business negatively activities in businesses still, revenue years. we EBITDA Estate and

should meaningful sales to pipeline and a business support that continue growth we've strong in won have new to in and XXXX ramp XXXX beyond. Additionally,

and to we are growth we should between market XX% and EBITDA When interest rates believe decline, positioned and to expense. in and interest we normal result, service benefit $XX.X XXXX. XX% million revenue adjusted million adjusted from of returns growth achieve default the to a $XX.X EBITDA revenue and corporate lower stronger As

open up I'll now Operator? for questions. the call

first question comes with Instructions] Riley. line the Raj of [Operator Our B. Sharma from

of time could give and great of One the in that that's of the in reporting? side, that more the year? in for you first talk of Lenders the kind some on Can Bill, were And on providing about beginning the Yes. year first especially launched color you the on origination doing the half new years. -- products guidance how credit several the

interesting. It's

if the roughly credit did track since went a live with and in credit between our business, last month, label And On the XXXX. we've and credit by customers. reporting XXXX April the And we reporting that think $X white grown I agency a business think first related March, rate. $XXX,XXX we over be became we're services. revenue I million business of -- to customer on reporting in in then, March the and of month And probably not run XX to January

that's me, to million generate very it revenue in excuse out members annual good it, month our can a million $X or a think launch I a new we example of take a and So -- revenue. of roll how year product, $XX

One is better are, to And make what their And and understand business then we so our work Lenders leverage help to programs are. money compete. origination members to in power the whole our strategy what around to their more with pain of continue to needs their new launch them buying points

And my prepared about I talked remarks, in homeowners so which an example, is insurance.

with insure officers we're friction, launching and with a help and a less members and their So insurance. efficiently get company working homeowners for program this quotes tech and to their loan quarter borrowers our

the And policy, that to It's revenue those we is, about the program. that in years. we are But still early. ongoing extent every a that's then what on originated. So subsequent business an excited earn we commission an renew we're creates pretty about that annuity like -- borrowers we policy commission

which Another it flood program. of again, working us that policy. our And launching of product power here, it adoption, flood the insurance a whole profitability and members, costs cost-effective a again, And helps buying that stronger our We're increases One is with we're launch and the to increases ultimately flood insurance strategy pricing to gives Lenders offer provide a a members process the our in a profitability. reduce adoption the and members we're insurance. gain the is stronger calling partner our

launch that each and excited to couple contribute these the these earnings growth. So we revenue new future of we're of and can we're programs around new pretty year a -- launch optimistic programs,

accurate? or Default Great. slower process, Services the with have focusing been the part the -- And pre-foreclosure to you the moving the segment on then business into indications are REOs, that on you foreclosure earlier the of more part conversion is that the of started

Yes.

we up early they're on the delinquencies, at not foreclosure back prior to have So Raj, the look initiations pandemic, as early foreclosures to quite seen is make call, levels what at all the yet pick the haven't our out we're is stage the to picked pointed What it way seeing clearly, from pandemic. I although end. time of were And starting they the like that up. those substantially XXXX the

what those existing in referral are now so focusing good And early-stage activities, we're customers, we're where we new what working on a with is seeing doing on and and lift pretty our customers, volumes.

business you in give of search quarter fourth of volumes the So is fourth in our business just the in XX% and about trend to trustee foreclosure year. we compared this title quarter, quarter the to an referral And our a example, first that saw the prior year. increase continuing in

the lift -- guidance sales very is lift stage on doing end. doesn't an some we're earlier-stage earlier we're assuming going lot of in a is what increase only we gave at a from those volumes. there activities, those modest focusing a So a get activities, And the where assumes but referral to we're perspective in

get as upside, think, approaching there forecasting. we're and that what we're to inflows we're we're to we increase your be conservative stabilize, yet, back at increase is trying how because the conversion -- seeing end that or of more So normal what terms the some market in and continues guidance. our we're outflows rate not to But to

me. then question for And just it. Got last

of to is largely On there guidance in about loaded? to activity. the half talk rise Is the foreclosure perhaps you slight cadence guidance, guide fiscal the 'XX can a back

Yes.

wrong, from us. is So a a was March, But revenue tough comp of see our last -- the correct and X%, revenue was Michelle, January service is going than -- perspective, higher time X% and in the -- last that our me same February. it for I and I revenue variety if March, a for roughly think I'm every in I first month year than than reasons, February, better you're think January to look, year a revenue, think other quarter, both

revenue continue our of perspective. good about a to February in from month we're strong. EBITDA start to think talked the be is January. being We I to off think a $XXX,XXX So I going

we you're going support revenue we the for revenue customers, -- throughout how they won and that ramp ramp Raj, the to the the for and we've timing answer largely the as our think see to news year, good customers is it's all about how I question, your onboard So the ramp those growth year.

verbal a have we So why numbers, we commitment those there's EBITDA the revenue are gotten grow. and signed and or in our we've feel that -- our And forecast it's we year, all would that's we expect numbers. that to largely ramp in a contract because already to it's range in -- revenue that are that grow wins throughout either those as about a

better think correct be me a revenue if pretty tough look first be these to I because I the from to will will a our first ramp I'm but last in I -- as we year year, -- comp revenue gotten and be would So and think, commitment. March and of side, last customers EBITDA to wrong, quarter EBITDA revenue we've service as a won and quarter, where verbal already expect progresses Michelle, we'll year. would close grow revenue we've than the that we

the from [Operator with next Northland. Mike of question Instructions] Our line Grondahl comes

your over inventory the 'XX? for How Hubzu outlook course of you would describe

you Michelle, well. jump can as And in

we're So trying I to think, Mike, inventory. being we're on be Hubzu -- very conservative

Hubzu And on progress. starts, the think wins really, foreclosure because EBITDA lot I going to we more think being stage to and back to modest growth. Mike, pretty sort until that's revenue don't around what can in can drive So to on of inventory we of I significant sales recollection. the a lot these Michelle, think a projections. a all we good and front me in control. more inventory, conversion rate making I And a actually we control modest levels, the in we're what we're focusing we of cautious earlier the really as from the it's my see But very be of getting our pre-pandemic want way start end, foreclosure have growth projection. that We're

just 'XX out conversion? growth Slide lag, How a lays catches revenue dollar we think X to wins kind up it's it. sales of about bunch that Got in for from that And years 'XX while, been wins the of is revenue as those really a in wins. a But the amount. strong do those and

So the you takes win when from bottom line, it just you ramp. when to time

can course, customers could out go they of market happen could business, market decrease and Of things increase share. share,

with a it $XX.X yet. happen leave could But that's won, launched potential haven't couple business static. new and So lot us, of and it renovation these of as massive a sort million, a Mike, a wins, -- in this we got there's wins larger we there's for we REO the

or planned, And that an around as But It year we we So new potential get two in last those takes would that's get are to revenue we progressed press launch, from we're of referrals. think, to nowhere program business. next customer market that as -- takes it first the got more very hopefully going that's -- as we construction out we become it's to year we're I stabilize to as and referrals first ramping think well. help mean from a a significant launched release in near the been quite from me time sale got perspective. and to expecting referrals getting ultimately year, to nicely. Michelle, REO win for I our attractive a we REO very, week lending that the issued number an share going perspective. ramping revenue our win. progresses that's -- generate Granite our referral, but we're a September, our get in the to revenue. here We

it from So we to They're strong associated they're are to the time very going -- and And bottom the generating in it Mike, earnings. with names. wins very in believe is we're they're these But household revenue. year line, ramp revenue that margins next. this to continue actually and that takes just -- those wins attractive and --

lastly, need reach then or not Got it. like any year 'XX this any Got remind milestones And you for anything, related the Or the any to to to during debt? us debt about? amounts do but milestones that it. just

we've remarks, think a interest default I I talked the the to look, you No, the higher improvement origination improved market even over strong year. and impact the we've the the both as market over in bit EBITDA million, during forecasting had very, years about really by of $XX time. pandemic this of perfect storm. a progress $XX million, environment, $XX And rates very impacting last made Yes. tough we're couple and a in this million difficult prepared our

line. as in going refinance we're back in the growth, of right And our margins, the progress in the continue to getting think direction are our terms to are strong strong debt. I make So plans we EBITDA to ultimately costs in

time. fee debt another 'XX, So and in right with extension conditions April The matures now, warrants some automatic right got reps around an we've an but year. to and subject have we complying

about good continue company position put interest we adjusted our refi and and feel to our EBITDA position. to to grow our We reduce hopefully debt a expense. the so the got in And

further call Bill would [Operator for questions remarks. closing to to Instructions] like turn no showing the back in the over now queue. I'm I

pleased We're for year. operator. us up sales for performance XXXX our this in financial wins and really joining. sets you, Thank believe Thanks Great. with this well and

and this today's Thank you call. your for conference Ladies gentlemen, participation. concludes

disconnect. may You now