Altisource Portfolio Solutions (ASPS) saw its net income plummet by 91% in the first quarter of 2015, according to the company’s first-quarter results, which were released Thursday morning.
According to Altisource, its net income attributable to the company fell to $3.698 million in the first quarter, down from $39.63 million in the first quarter of 2014.
Overall, the company’s first-quarter net income fell from $40.15 million in 2014 to $4.41 million in 2015.
According to Altisource’s CEO, William Shepro, the drop in income was due in part to $13.6 million in expenses “related to terminated employees and contractors and other out-of-the-ordinary items.”
Shepro noted that without these expenses, the company’s adjusted net income attributable to shareholders would have been $24.3 million.
In a January call with investors, Shepro and Michelle Esterman, the company’s chief financial officer, told investors that the company may be in for some bumpy quarters due to its relationship with Ocwen Financial (OCN), but was taking steps to address those issues.
“Recognizing that Ocwen is not likely to grow that much in the near term, we right-sized our organization and are realigning our expenses for this new reality,” Esterman said in January.
To “right-size” the organization, Esterman said in January that the company recently eliminated more than 800 individual employee positions and hundreds of contractors throughout the company’s “geographical footprint,” in an attempt to cut the company’s operating costs.
And now the company is reporting $13.6 million in expenses due to terminated employees and contractors and other out-of-the-ordinary items.
According to a Thursday filing with the Securities and Exchange Commission, Ocwen remains Altisource’s largest customer, representing 59% of the company’s revenue in the first quarter.
That share is down slightly from the first quarter of 2014, when Ocwen represented 61% of Altisource’s revenue.
In Altisource’s mortgage services segment, Ocwen represented 63% of its revenue, down from 69% in 2014.
For Altisource’s financial services segment, Ocwen represented 25% of its revenue, down from 26% in 2014.
In Altisource’s technology services segment, Ocwen represented 47% revenue, up from 35% in 2014.
Overall, Altisource reported service revenue of $207.8 million, which was down just 1% from 2014.
In January, Esterman and Shepro told investors that Altisource expects to generate $551 million in revenue in 2015 from providing mortgage and technology services to Ocwen’s existing portfolio of non-agency loans, but expected those figures to drop over the next several years.
Despite the slight drop in service revenue, Altisource’s diluted earnings per share was $0.18, down 89% form 2014. The company’s adjusted diluted earnings per share was $0.56, a 72% decrease from 2014.
"I am pleased with our first-quarter accomplishments. Not only are we executing on our growth initiatives, we are also making good progress on the cost reduction plan we implemented during the first quarter,” Shepro said Thursday.
“Further, we expect to achieve higher cost savings in the second quarter from the benefit of the elimination of the data access fees, lower unit costs for outside fees and services on seasonally higher revenue and the termination of a lease on a larger facility,” Shepro continued. “As a result, we believe we are on-track to achieve the objectives we established for the year as a leaner, operational and sales focused organization.”
Additionally, the company noted that the average number of loans serviced by Ocwen on REALServicing was 2.4 million for the first quarter of 2015, an increase of 27% compared to the first quarter 2014.
On Altisource’s Hubzu platform, the company reported 8,305 houses sold in the first quarter of 2015, an increase of 24% compared to the first quarter in 2014.