Altisource Portfolio Solutions S.A.(ASPS) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For 2024, the company generated $150 million in service revenue, a 10$17.4 million, representing an $18.3 million improvement over 2023 [8][10] - The company reduced its debt by over$60 million, from $233 million to$172.5 million, significantly strengthening its balance sheet [12][14] Business Line Data and Key Metrics Changes - The Servicer and Real Estate segment reported service revenue of $120 million, an 11$42.1 million, up $5 million or 14$30.4 million, a 6% increase from 2023, with adjusted EBITDA improving by $5.4 million to$2.5 million [20][21] - The Corporate segment's adjusted EBITDA loss decreased by $7.9 million or 22$27.2 million, reflecting efficiency initiatives [22] Market Data and Key Metrics Changes - Foreclosure starts in 2024 were 35% lower than 2019 levels, and foreclosure sales were 53% lower than 2019 levels, indicating a challenging market environment [23] - The origination market faced difficulties, with 2024 mortgage origination volume 35% lower than 2019 levels, primarily due to higher interest rates [24] Company Strategy and Development Direction - The company aims to diversify its revenue base and ramp up business won while maintaining cost discipline and significantly reducing corporate interest expense [28] - Focus areas for growth include the renovation business, Lenders One solutions, and expanding the Hubzu platform to include commercial auctions [38][40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, forecasting service revenue between $165 million and$185 million, representing 16% annual growth, and adjusted EBITDA of $18 million to$23 million [26][27] - The company anticipates positive operating cash flow for the first time since 2019, driven by sales wins and improved margins [26][27] Other Important Information - The company completed a significant transaction with lenders in February 2025, which is expected to be accretive to pre-transaction shareholders in the medium to long term [16][28] - The interest rate on the new term loan and super senior credit facility is SOFR plus 650 basis points, resulting in a substantial reduction in annual cash interest costs [12][13] Q&A Session Summary Question: Can you comment on the nature of some of the wins you've had across originations and servicing? - Management highlighted successful initiatives in the construction renovation and Lenders One businesses, with both achieving over $1 million a month in revenue [34][35] Question: How are things trending thus far in 2025? - Management reported a strong start to 2025, with January revenue and EBITDA results aligning with plans, and February revenue also on target [42][43] Question: When do you think the increase in foreclosure starts will be reflected in results? - Management noted that while they are being conservative in forecasting, anecdotal evidence suggests clients expect an increase in foreclosure starts [48][50] Question: Are there other agencies implementing unfriendly creditor policies that might impact the business? - Management mentioned the FHA's new programs and indicated that borrowers are continuing to default on modified loans, which could lead to increased business in the future [54][56] Question: Will there be a sizable gain in Q1 that could reduce the negative equity position on the balance sheet? - Management confirmed that interest expense will decrease significantly, and they expect strong revenue and EBITDA results in Q1 [60][62]