Altisource Portfolio Solutions S.A.(US:ASPS)2024-04-25 17:45Financial Data and Key Metrics Changes - The company generated $4.6 million of adjusted EBITDA, marking the best quarterly performance since Q3 2020, on $36.9 million of service revenue [6] - Adjusted EBITDA improved by more than $30 million over the last two calendar years despite low origination volume and historically low mortgage delinquency rates [6] - For 2024, the company forecasts revenue growth of 23% and adjusted EBITDA growth of $21 million compared to last year [7] - Adjusted EBITDA margins expanded to 12.6% in Q1 2024, compared to 0.7% in Q4 2023 and 4% in Q1 2023 [9] Business Line Data and Key Metrics Changes - Total company service revenue grew 15% compared to Q4 2023, with 11% growth in the Servicer and Real Estate segment and 30% in the Origination segment [8] - In the Servicer and Real Estate segment, service revenue was 11% higher than Q4 2023 but 2% lower than Q1 2023 [12] - The Origination segment outperformed the market with service revenue growth of 30% despite a 6% decline in industry-wide residential origination volume [16] Market Data and Key Metrics Changes - The company continues to see early signs of consumer financial stress, which could lead to a rise in mortgage delinquency rates [15] - The Origination segment's revenue growth was driven by customer wins from newer solutions and price increases [16] Company Strategy and Development Direction - The company is focused on winning new business and improving operational efficiency in a challenging market [20] - The strategy includes ramping sales wins and expanding services to existing customers, particularly in the Servicer and Real Estate segment [14] - The company is not waiting for the default market to recover to grow revenue and earnings, indicating a proactive approach to business development [23] Management's Comments on Operating Environment and Future Outlook - Management believes the market is recovering at a slower pace than expected, with mortgage delinquency rates remaining flat [24] - The company anticipates that as the economy normalizes, the operating environment for recent loan originations will improve [25] - Management is optimistic about the potential for significant EBITDA growth if the market returns to normal conditions [26] Other Important Information - The company ended the quarter with a total weighted average sales pipeline of $26.7 million of annual revenue on a stabilized basis [15] - The corporate adjusted EBITDA loss was $6.3 million, which was 22% better than Q4 2023 and 30% better than Q1 2023 [19] Q&A Session Summary Question: When might foreclosure sales ramp up? - Management indicated they are not waiting for the market to recover and noted that the market is recovering slower than expected, with current indicators showing flat delinquency rates [23][24] Question: How should the remaining $60 million in sales pipeline flow into revenue? - Management expects to ramp sales wins throughout the year, with an anticipated EBITDA run rate north of $30 million by Q4 [28] Question: Is the current sales pipeline satisfactory? - Management expressed a desire for a larger sales pipeline but is pleased with the progress made in a tough market [30][31] Question: How is the $88 million in annualized revenue increase split between segments? - A significant portion of the increase is tied to the growth of the renovation business and trustee wins, with some contribution from the Origination side [34] Question: Are there more cost cuts to come? - Management indicated that while there were one-time benefits in Q1, they expect modest savings in corporate costs moving forward, with some hiring anticipated in Q2 [42]