Altisource Portfolio Solutions SA :ASPS-US: Earnings Analysis: Q2, 2016 By the Numbers : August 10, 2016

Altisource Portfolio Solutions SA reports financial results for the quarter ended June 30, 2016.

We analyze the earnings along side the following peers of Altisource Portfolio Solutions SA – Walker & Dunlop, Inc., Ladder Capital Corp. Class A and PennyMac Financial Services, Inc. Class A (WD-US, LADR-US and PFSI-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 255.81 million, Net Earnings of USD 19.99 million.
  • Gross margins narrowed from 33.11% to 25.93% compared to the same period last year, operating (EBITDA) margins now 15.55% from 22.37%.
  • Year-on-year change in operating cash flow of -42.93% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2015-06-30 2015-09-30 2015-12-31 2016-03-31 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 268.35 272.82 270.61 250.14 255.81
Revenue Growth (%YOY) -9.35 -5.18 5.74 4 -4.68
Earnings (mil) 45.95 37.05 -45.1 18.49 19.99
Earnings Growth (%YOY) -15.07 -12.39 -2837.85 400.11 -56.49
Net Margin (%) 17.12 13.58 -16.66 7.39 7.82
EPS 2.22 1.82 -2.35 0.92 1.02
Return on Equity (%) 404.92 202.44 -240.89 129.52 122.68
Return on Assets (%) 24.56 19.46 -23.81 10.25 11.5

Access our Ratings and Scores for Altisource Portfolio Solutions SA

Market Share Versus Profits

Revenues History
Earnings History

ASPS-US‘s change in revenue this period compared to the same period last year of -4.68% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that ASPS-US is holding onto its market share. Also, for comparison purposes, revenues changed by 2.26% and earnings by 8.11% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 33.11% to 25.93%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 22.37% to 15.55% in this time frame. For comparison, gross margins were 26.57% and EBITDA margins were 16.99% in the previous period.

Gross Margin Versus EBITDA Margin

Cash Versus Earnings – Sustainable Performance?

Operating Cash Flow Growth Versus Earnings Growth

ASPS-US‘s change in operating cash flow of -42.93% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 15.44% to 6.99% and (2) one-time items that contributed to a decrease in pretax margins from 19.10% to 9.37%

EBIT Margin Versus PreTax Margin
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Altisource Portfolio Solutions SA

Company Profile

Altisource Portfolio Solutions SA engages in the provision of real estate services. It operates through the following segments: Mortgage Services, Financial Services, and Technology Services. The Mortgage Services segment includes asset management, insurance, residential property valuation, default management, and origination management services. The Financial Services segment deals with asset recovery and customer relationship management. The Infrastructure Services segment supplies software applications and information technology infrastructure under the following trademarks: REALServicing, REALTrans, REALRemit, REALDoc, and Equator’s Solutions. The company was founded on November 4, 1999 and is headquartered in Luxembourg.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of ASPS-US.