GlobeNewswire Inc | Oct 29, 2020 06:53AM EDT

October 29, 2020

Third Quarter 2020

-- Service revenue of $85.4 million -- Loss before income taxes and non-controlling interests of $(11.1) million -- Adjusted pretax loss attributable to Altisource(1) of $(1.4) million -- Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)(1) of $6.4 million

LUXEMBOURG, Oct. 29, 2020 (GLOBE NEWSWIRE) -- Altisource Portfolio Solutions S.A. (Altisource or the Company) (NASDAQ: ASPS), a leading provider and marketplace for the real estate and mortgage industries, today reported financial results for the third quarter 2020.

We are pleased with the progress we are making in a very difficult operating environment. We increased adjusted EBITDA(1) by $8.5 million in the third quarter of 2020 compared to the second quarter of 2020, and we are implementing our 2021 operating plan that targets $250 million to $270 million of service revenue and $35 million to $43 million of adjusted EBITDA(1). Our operating plan assumes continued COVID-19 related headwinds in our default businesses throughout most of the year, said Chairman and Chief Executive Officer William B. Shepro.

Mr. Shepro further commented, We also continue to develop and grow our customer base increasing the backlog of potential default related business which we anticipate will be available to us in late 2021 and into 2022 when we forecast that the market returns to a more normal operating environment.

Third Quarter 2020 Highlights(2)

Financial and Corporate

-- Ended the third quarter 2020 with $67.0 million of cash and cash equivalents and $30.2 million of investment in equity securities -- Ended the third quarter 2020 with $196.6 million of net debt less investment in equity securities(1) -- On October 19, 2020, Front Yard Residential Corporation (RESI) announced it entered into a definitive agreement to sell the company for $13.50 per share in cash; adjusting Altisources investment in RESI to $13.50 per share results in a $16.4 million increase in investment in equity securities to $46.6 million compared to the amount reflected on the balance sheet as of September 30, 2020 -- Subsequent to the end of the third quarter 2020, Altisource sold1.6million shares of RESI for net proceeds of $21.1 million and will use the net proceeds to repay a portion of its Senior Secured Term Loan -- To address lower than previously anticipated revenue from (1) the extension of foreclosure and eviction moratoriums and (2) an MSR investors instructions to Ocwen Financial Corporation (Ocwen) to move certain services to another service provider, the Company has developed an operating plan targeting 2021 adjusted EBITDA(1) margins of 14% to 16% on $250 million to $270 million of forecasted revenue

Business Highlights

-- The Companys third quarter 2020 performance in its default related services businesses, including revenue from customers other than Ocwen, New Residential Investment Corp. (NRZ) and RESI, continues to be negatively impacted by COVID-19 related governmental and, in some instances, servicer measures to provide support to borrowers (i.e., foreclosure and eviction moratoriums, forbearance plans and higher unemployment benefits) as well as the transition of certain of Ocwens Field Services referrals on the NRZ MSRs to another service provider which began in July 2020 -- Service revenue from customers other than Ocwen, NRZ and RESI was relatively flat in the third quarter of 2020 compared to the third quarter of 2019 primarily due to COVID-19 foreclosure moratoriums and forbearance programs offset by strong originations demand (year-to-date 2020 service revenue from these customers is 11% higher than the same period in 2019)

Field Services

-- Field Services service revenue from customers other than Ocwen, NRZ and RESI was 34% lower in the third quarter of 2020 compared to the third quarter of 2019 primarily due to COVID-19 foreclosure moratoriums and forbearance programs (year-to-date 2020 service revenue from these customers is 17% higher than the same period in 2019) -- Finalized the work to begin receiving Field Services referrals, anticipated to begin in the first quarter of 2021, on a recently won government contract -- Notified by a top 25 non-bank servicer that it is expanding its use of Altisources Field Services on its FHA portfolio to an additional 29 states over the next couple of quarters

Marketplace

-- Hubzu inventory from customers other than Ocwen, NRZ and RESI declined by 22% since September 30, 2019 primarily due to the COVID-19 foreclosure moratoriums and forbearance programs, with such inventory representing 45% of total Hubzu inventory as of September 30, 2020 (an increase from 31% of total inventory as of September30, 2019) -- Hubzu service revenue from customers other than Ocwen, NRZ and RESI was 7% lower in the third quarter of 2020 compared to the third quarter of 2019 primarily due to the COVID-19 foreclosure moratoriums and forbearance programs (year-to-date 2020 service revenue from these customers is 8% higher than the same period in 2019) -- Executed a Statement of Work to expand our auction services for a top 25 servicer to include foreclosure auctions and expect to begin receiving referrals in the first quarter of 2021

Mortgage and Real Estate Solutions

-- Grew Mortgage and Real Estate Solutions service revenue from customers other than Ocwen, NRZ and RESI by 17% in the third quarter of 2020 compared to the third quarter of 2019 primarily due to a growing customer base and higher origination volumes from a lower interest rate environment (year-to-date 2020 service revenue from these customers is 25% higher than the same period in 2019) -- Began providing loss mitigation services for a Top 10 servicer

Third Quarter 2020 Financial Results

Third quarter 2020 service revenue of $85.4 million was 36% lower than the third quarter 2019 primarily from COVID-19 pandemic related governmental restrictions, Ocwens transition of Field Services referrals associated with certain MSRs to another service provider (which began in July 2020), the reduction in the size of Ocwens portfolio, and NRZs higher percentage of home sales at the foreclosure auction (resulting in a lower percentage of foreclosures converting to real estate owned properties (REO), which in turn reduces our REO auction, brokerage, field services and title service revenue). Service revenue also declined from the discontinuation and exit from certain businesses resulting in a 4% decline in service revenue. These decreases were partially offset by a 30% increase in service revenue from the origination businesses in Mortgage and Real Estate Solutions from sales wins and higher origination volumes from a lower interest rate environment.

Third quarter 2020 loss from operations of $(6.8) million was lower than third quarter 2019 income from operations of $19.7 million primarily from lower revenue (as discussed above) and a $17.6 million gain on sale on the sale of business during the third quarter of 2019, partially offset by lower outside fees and services from lower referral volumes and lower selling, general and administrative expenses, which include the benefits of our COVID-19 cash cost savings measures and Project Catalyst cost reduction initiatives.

Third quarter 2020 adjusted operating income(1) of $3.7 million was lower than third quarter 2019 adjusted operating income(1) of $9.3 million primarily from the impact of revenue declines discussed above, partially offset by lower outside fees and services from lower referral volumes and lower selling, general and administrative expenses, which include the benefits of our COVID-19 cash cost savings measures and Project Catalyst cost reduction initiatives.

Third quarter 2020 loss before income taxes and non-controlling interests of $(11.1) million was lower than third quarter 2019 income before income taxes and non-controlling interests of $13.0 million primarily from lower operating income discussed above, partially offset by an unrealized gain on our investment in RESI of $0.1 million in the third quarter 2020 compared to an unrealized loss on our investment in RESI of $(2.3) million in the third quarter 2019 and lower interest expense.

Third quarter 2020 adjusted pretax loss attributable to Altisource(1) of $(1.4) million was lower than third quarter 2019 adjusted pretax income attributable to Altisource(1) of $4.4 million primarily from lower adjusted operating income(1) discussed above, partially offset by lower interest expense.

Third quarter 2020 adjusted EBITDA(1) of $6.4 million was lower than third quarter 2019 adjusted EBITDA(1) of $12.9 million primarily from lower adjusted operating income(1) discussed above.

Third quarter 2020 net loss attributable to Altisource of $(13.2) million was lower than third quarter 2019 net income of $7.2 million primarily from lower income before income taxes and non-controlling interests discussed above, partially offset by lower income tax expense.

Third quarter 2020 adjusted net loss attributable to Altisource(1) of $(3.8) million was lower than third quarter 2019 adjusted net income attributable to Altisource(1) of $4.0 million primarily from lower adjusted pretax income attributable to Altisource(1) discussed above, partially offset by lower income tax expense.

Third quarter 2020 diluted loss per share of $(0.85) was lower than third quarter 2019 diluted earnings per share of $0.44 diluted primarily due to lower net income attributable to Altisource discussed above, partially offset by fewer diluted shares outstanding from share repurchases during 2019.

Third quarter 2020 adjusted diluted loss per share(1) of $(0.24) was lower than third quarter 2019 diluted earnings per share of $0.25 primarily due to lower adjusted net income attributable to Altisource(1) discussed above, partially offset by fewer diluted shares outstanding from share repurchases during 2019.

Third Quarter and Year-to-Date September 30, 2020 Results Compared to the Third Quarter and Year-to-Date September 30, 2019:

(in thousands, Third quarter Third quarter Year-to-Date Year-to-Date %except per 2020 2019 % Change Sept. 30, 2020 Sept. 30, 2019 Changeshare data)Service revenue $ 85,386 $ 133,781 (36 ) $ 289,570 $ 489,300 (41 )(Loss) income (6,814 ) 19,735 (135 ) (28,725 ) 24,515 (217 )from operationsAdjustedoperating 3,658 9,325 (61 ) 7,390 42,095 (82 )income^(1)(Loss) incomebefore incometaxes and (11,140 ) 12,955 (186 ) (54,011 ) 20,898 (358 )non-controllinginterestsPretax (loss)income (11,480 ) 12,544 (192 ) (54,653 ) 18,807 (391 )attributable toAltisource^(1)Adjusted pretax(loss) income (1,406 ) 4,428 (132 ) (7,004 ) 24,656 (128 )attributable toAltisource^(1)Adjusted EBITDA 6,426 12,925 (50 ) 17,521 55,172 (68 )^(1)Net (loss)income (13,237 ) 7,165 (285 ) (59,948 ) (1,863 ) N/M attributable toAltisourceAdjusted net(loss) income (3,764 ) 3,957 (195 ) (11,833 ) 18,855 (163 )attributable toAltisource^(1)Diluted (loss)earnings per (0.85 ) 0.44 (293 ) (3.85 ) (0.12 ) N/M shareAdjusteddiluted (loss) (0.24 ) 0.25 (196 ) (0.76 ) 1.15 (166 )earnings pershare^(1)Cash flows(used in)provided by (2,861 ) (10,962 ) 74 (14,077 ) 22,194 (163 )operatingactivitiesAdjusted cashflows used inoperatingactivities less (3,897 ) (11,646 ) 67 (16,579 ) (12,025 ) (38 )additions topremises andequipment^(1)

N/M - not meaningful.

-- Third quarter 2020 and 2019 (loss) income from operations include $2.2 million and $2.8 million, respectively ($10.9 million and $9.1 million for year-to-date September 30, 2020 and 2019, respectively) of restructuring charges related to Project Catalyst. Third quarter 2020 and 2019 (loss) income from operations also include $(0.6) million and $(1.7) million, respectively ($(0.6) million and $0.3 million for year-to-date September 30, 2020 and 2019, respectively) of sales tax net accruals (reimbursements). Third quarter and year-to-date September 30, 2020 loss from operations include Pointillist losses of $2.1 million and $7.2 million, respectively (no comparable amounts in 2019) and third quarter 2020 cost savings initiatives of $0.7 million (no comparable amounts in 2019). Year-to-date September 30, 2019 income from operations includes a loss on the BRS portfolio sale of $1.8 million (no comparable amounts in 2020). Third quarter and year-to-date September 30, 2019 (loss) income from operations include a $17.6 million gain on the sale of the Financial Services business (no comparable amounts in 2020). Year-to-date September 30, 2019 income from operations includes an other asset write-off from a business exit of $0.2 million (no comparable amounts in 2020). -- Third quarter 2020 and 2019 pretax (loss) income attributable to Altisource(1) include unrealized mark-to-market gains (losses) on our equity investment in RESI of $0.1 million and $(2.3) million, respectively ($(12.4) million and $11.7 million for year-to-date September 30, 2020 and 2019, respectively). -- Third quarter 2019 net (loss) income attributable to Altisource includes $(0.9) million of certain income tax items (no comparable amount for the third quarter 2020) ($2.4 million and $12.3 million for year-to-date September 30, 2020 and 2019, respectively) related to adjustments to foreign income tax reserves and the impact of a decrease in the India and Luxembourg income tax rates on deferred tax assets.

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(1) This is a non-GAAP measure that is defined and reconciled to the corresponding GAAP measure herein.(2) Applies to the third quarter 2020 unless otherwise indicated.

Forward-Looking Statements

This press release contains forward-looking statements that involve a number of risks and uncertainties. These forward-looking statements include all statements that are not historical fact, including statements about managements beliefs and expectations. These statements may be identified by words such as anticipate, intend, expect, may, could, should, would, plan, estimate, seek, believe, potential and similar expressions. Forward-looking statements are based on managements beliefs as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to the future and are not statements of historical fact, actual results may differ materially from what is contemplated by the forward-looking statements. Altisource does not undertake, and expressly disclaims, any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to, the risks and uncertainties related to pandemics, epidemics or other force majeure events, including the COVID-19 pandemic, and associated impacts to the economy, supply chain, transportation, movement of people, availability of vendors, demand for our products or services, increased costs, recommendations or restrictions imposed by governmental entities, changes in relevant business practices undertaken or imposed by our clients, vendors or regulators, impacts on contracts and client relationships and potential litigation exposure; our ability to retain existing customers and attract new customers and the potential for changes in our customer relationships; various risks relating to our ability to effectively manage our regulatory and contractual obligations; the adequacy of our financial resources, including our sources of liquidity and ability to repay borrowings and comply with our Credit Agreement, including the financial and other covenants contained therein; as well as Altisources ability to retain key executives or employees, general economic and market conditions, behavior of customers, suppliers and/or competitors, technological developments, governmental regulations, taxes and policies, and other risks and uncertainties detailed in the Forward-Looking Statements, Risk Factors and other sections of Altisources Form 10-K, March 31, 2020 Form 10-Q and other filings with the Securities and Exchange Commission.

Webcast

Altisource will host a webcast at 8:30 a.m. EDT today to discuss our third quarter. A link to the live audio webcast will be available on Altisources website in the Investor Relations section. Those who want to listen to the call should go to the website at least fifteen minutes prior to the call to register, download and install any necessary audio software. A replay of the conference call will be available via the website approximately two hours after the conclusion of the call and will remain available for approximately 30 days.

About Altisource

Altisource Portfolio Solutions S.A. is an integrated service provider and marketplace for the real estate and mortgage industries. Combining operational excellence with a suite of innovative services and technologies, Altisource helps solve the demands of the ever-changing markets we serve. Additional information is available at www.Altisource.com.

FOR FURTHER INFORMATION CONTACT:

Michelle D. EstermanChief Financial OfficerT: (770) 612-7007E: Michelle.Esterman@altisource.com

ALTISOURCE PORTFOLIO SOLUTIONS S.A.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)(in thousands, except per share data)(unaudited)

Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 Service revenue $ 85,386 $ 133,781 $ 289,570 $ 489,300 Reimbursable 2,810 7,213 14,495 16,484 expensesNon-controlling 599 499 1,516 2,179 interestsTotal revenue 88,795 141,493 305,581 507,963 Cost of revenue 69,760 103,509 235,284 371,167 Reimbursable 2,810 7,213 14,495 16,484 expensesGross profit 16,225 30,771 55,802 120,312 Operating expenses (income):Selling, general andadministrative 20,812 25,833 73,606 104,275 expensesGain on sale of ? (17,558 ) ? (17,558 )businessRestructuring 2,227 2,761 10,921 9,080 charges (Loss) income from (6,814 ) 19,735 (28,725 ) 24,515 operationsOther income (expense), netInterest expense (4,103 ) (4,892 ) (13,265 ) (16,656 )Unrealized gain(loss) on investment 138 (2,294 ) (12,433 ) 11,731 in equity securitiesOther (expense) (361 ) 406 412 1,308 income, netTotal other income (4,326 ) (6,780 ) (25,286 ) (3,617 )(expense), net (Loss) income beforeincome taxes and (11,140 ) 12,955 (54,011 ) 20,898 non-controllinginterestsIncome tax provision (1,757 ) (5,379 ) (5,295 ) (20,670 ) Net (loss) income (12,897 ) 7,576 (59,306 ) 228 Net incomeattributable to (340 ) (411 ) (642 ) (2,091 )non-controllinginterests Net (loss) incomeattributable to $ (13,237 ) $ 7,165 $ (59,948 ) $ (1,863 )Altisource (Loss) earnings per share:Basic $ (0.85 ) $ 0.45 $ (3.85 ) $ (0.12 )Diluted $ (0.85 ) $ 0.44 $ (3.85 ) $ (0.12 ) Weighted average shares outstanding:Basic 15,637 15,897 15,578 16,133 Diluted 15,637 16,151 15,578 16,133 Comprehensive (loss) income: Comprehensive (loss) $ (12,897 ) $ 7,576 $ (59,306 ) $ 228 income, net of taxComprehensive incomeattributable to (340 ) (411 ) (642 ) (2,091 )non-controllinginterests Comprehensive (loss)income attributable $ (13,237 ) $ 7,165 $ (59,948 ) $ (1,863 )to Altisource



ALTISOURCE PORTFOLIO SOLUTIONS S.A.CONSOLIDATED BALANCE SHEETS(in thousands, except for per share data)(unaudited)

September 30, December 31, 2020 2019 ASSETSCurrent assets: Cash and cash equivalents $ 67,023 $ 82,741 Investment in equity securities 30,185 42,618 Accounts receivable, net 28,056 43,615 Prepaid expenses and other current assets 14,718 15,214 Total current assets 139,982 184,188 Premises and equipment, net 14,983 24,526 Right-of-use assets under operating leases, 20,303 29,074 netGoodwill 73,849 73,849 Intangible assets, net 49,702 61,046 Other assets 11,284 12,436 Total assets $ 310,103 $ 385,119 LIABILITIES AND EQUITYCurrent liabilities: Accounts payable and accrued expenses $ 56,362 $ 67,671 Deferred revenue 4,349 5,183 Other current liabilities 10,749 14,724 Total current liabilities 71,460 87,578 Long-term debt 288,930 287,882 Other non-current liabilities 26,291 31,016 Commitments, contingencies and regulatory matters Equity (deficit): Common stock ($1.00 par value; 100,000 sharesauthorized, 25,413 issued and 15,646 25,413 25,413 outstanding as of September 30, 2020; 15,454outstanding as of December31, 2019)Additional paid-in capital 140,225 133,669 Retained earnings 198,756 272,026 Treasury stock, at cost (9,767 shares as ofSeptember 30, 2020 and 9,959 shares as of (442,107 ) (453,934 )December 31, 2019)Altisource deficit (77,713 ) (22,826 ) Non-controlling interests 1,135 1,469 Total deficit (76,578 ) (21,357 ) Total liabilities and deficit $ 310,103 $ 385,119

ALTISOURCE PORTFOLIO SOLUTIONS S.A.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited)

Nine months ended September 30, 2020 2019 Cash flows from operating activities: Net (loss) income $ (59,306 ) $ 228 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:Depreciation and amortization 11,521 14,196 Amortization of right-of-use assets under operating 8,107 9,145 leasesAmortization of intangible assets 11,344 15,489 Unrealized loss (gain) on investment in equity 12,433 (11,731 )securitiesShare-based compensation expense 6,556 8,284 Bad debt expense 1,423 114 Amortization of debt discount 500 499 Amortization of debt issuance costs 548 552 Deferred income taxes 274 15,568 Loss on disposal of fixed assets 459 330 Gain on sale of business ? (17,558 )Changes in operating assets and liabilities (excludes effect of sale of business):Accounts receivable 10,136 (31,580 )Short-term investments in real estate ? 39,873 Prepaid expenses and other current assets 621 12,588 Other assets 853 (55 )Accounts payable and accrued expenses (10,676 ) (17,058 )Current and non-current operating lease liabilities (8,518 ) (9,713 )Other current and non-current liabilities (352 ) (6,977 )Net cash (used in) provided by operating activities (14,077 ) 22,194 Cash flows from investing activities: Additions to premises and equipment (2,502 ) (1,204 )Proceeds received from sale of equity securities ? 7,819 Proceeds from the sale of business 3,307 38,027 Other ? 1,087 Net cash provided by investing activities 805 45,729 Cash flows from financing activities: Repayments and repurchases of long-term debt ? (44,820 )Proceeds from stock option exercises ? 392 Purchase of treasury shares ? (13,397 )Distributions to non-controlling interests (976 ) (2,003 )Payments of tax withholding on issuance of restricted (1,495 ) (1,516 )share units and restricted sharesNet cash used in financing activities (2,471 ) (61,344 )Net (decrease) increase in cash, cash equivalents and (15,743 ) 6,579 restricted cashCash, cash equivalents and restricted cash at the 86,583 64,046 beginning of the periodCash, cash equivalents and restricted cash at the end $ 70,840 $ 70,625 of the periodSupplemental cash flow information: Interest paid $ 12,218 $ 16,271 Income taxes paid, net 742 2,397 Acquisition of right-of-use assets with operating 1,051 5,888 lease liabilitiesReduction of right-of-use assets from operating lease (1,715 ) (3,458 )modifications or reassessmentsNon-cash investing and financing activities: Net increase in payables for purchases of premises $ 60 $ 203 and equipment

ALTISOURCE PORTFOLIO SOLUTIONS S.A.NON-GAAP MEASURES(in thousands, except per share data)(unaudited)

Adjusted operating income, pretax (loss) income attributable to Altisource, adjusted pretax (loss) income attributable to Altisource, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted net (loss) income attributable to Altisource, adjusted diluted (loss) earnings per share, adjusted cash flows used in operating activities less additions to premises and equipment and net debt less investment in equity securities, which are presented elsewhere in this earnings release, are non-GAAP measures used by management, existing shareholders, potential shareholders and other users of our financial information to measure Altisources performance and do not purport to be alternatives to (loss) income from operations, (loss) income before income taxes and non-controlling interests, net (loss) income attributable to Altisource, diluted (loss) earnings per share, cash flows used in operating activities and long-term debt, including current portion, as measures of Altisources performance. We believe these measures are useful to management, existing shareholders, potential shareholders and other users of our financial information in evaluating operating profitability and cash flow generation more on the basis of continuing cost and cash flows as they exclude amortization expense related to acquisitions that occurred in prior periods and non-cash share-based compensation, as well as the effect of more significant non-operational items from earnings, cash flows from operating activities and long-term debt net of cash on-hand and investment in equity securities. We believe these measures are also useful in evaluating the effectiveness of our operations and underlying business trends in a manner that is consistent with managements evaluation of business performance. Furthermore, we believe the exclusion of more significant non-operational items enables comparability to prior period performance and trend analysis.

It is managements intent to provide non-GAAP financial information to enhance the understanding of Altisources GAAP financial information, and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure. The non-GAAP financial information presented may be determined or calculated differently by other companies. The non-GAAP financial information should not be unduly relied upon.

Adjusted operating income is calculated by removing intangible asset amortization expense, share-based compensation expense, restructuring charges, Pointillist losses, third quarter 2020 cost savings initiatives, loss on BRS portfolio sale, gain on sale of business, sales tax net accrual (reimbursement) and other asset write-off from business exit from (loss) income from operations. Pretax (loss) income attributable to Altisource is calculated by removing non-controlling interests from (loss) income before income taxes and non-controlling interests. Adjusted pretax (loss) income attributable to Altisource is calculated by removing non-controlling interests, intangible asset amortization expense, share-based compensation expense, restructuring charges, Pointillist losses, third quarter 2020 cost savings initiatives, unrealized gain (loss) on investment in equity securities, loss on BRS portfolio sale, gain on sale of business, sales tax net accrual (reimbursement) and other asset write-off from business exit from (loss) income before income taxes and non-controlling interests. Adjusted EBITDA is calculated by removing the income tax provision, interest expense (net of interest income), depreciation and amortization, intangible asset amortization, share-based compensation expense, restructuring charges, Pointillist losses, third quarter 2020 cost savings initiatives, unrealized gain (loss) on investment in equity securities, loss on BRS portfolio sale, gain on sale of business, sales tax net accrual (reimbursement) and other asset write-off from business exit from net (loss) income attributable to Altisource. Adjusted net (loss) income attributable to Altisource is calculated by removing intangible asset amortization expense (net of tax), share-based compensation expense (net of tax), restructuring charges (net of tax), Pointillist losses (net of tax), third quarter 2020 cost savings initiatives (net of tax), unrealized gain (loss) on investment in equity securities (net of tax), loss on BRS portfolio sale (net of tax), gain on sale of business (net of tax), sales tax net accrual (reimbursement) (net of tax), other asset write-off from business exit (net of tax) and certain income tax items related to adjustments to foreign income tax reserves, the impact of a decrease in the India and Luxembourg income tax rates on deferred tax assets and an India restructuring from net (loss) income attributable to Altisource. Adjusted diluted (loss) earnings per share is calculated by dividing net (loss) income attributable to Altisource after removing intangible asset amortization expense (net of tax), share-based compensation expense (net of tax), restructuring charges (net of tax), Pointillist losses (net of tax), third quarter 2020 cost savings initiatives (net of tax), unrealized gain (loss) on investment in equity securities (net of tax), loss on BRS portfolio sale (net of tax), gain on sale of business (net of tax), sales tax net accrual (reimbursement) (net of tax), other asset write-off from business exit (net of tax) and certain income tax related items by the weighted average number of diluted shares. Adjusted cash flows used in operating activities less additions to premises and equipment is calculated by removing the decrease in short-term investments in real estate, payment of sales tax accrual and additions to premises and equipment from cash flows (used in) provided by operating activities. Net debt less investment in equity securities is calculated as long-term debt, including current portion, minus cash and cash equivalents and investment in equity securities.

Reconciliations of the non-GAAP measures to the corresponding GAAP measures are as follows:

Three months ended Nine months ended September 30, September 30, 2020 2019 2020 2019 (Loss) income from $ (6,814 ) $ 19,735 $ (28,725 ) $ 24,515 operations Intangible asset 4,295 3,298 11,344 15,489 amortization expenseShare-based compensation 1,732 2,831 6,556 8,284 expenseRestructuring charges 2,227 2,761 10,921 9,080 Pointillist losses 2,139 ? 7,215 ? Third quarter 2020 cost 697 ? 697 ? savings initiativesLoss on BRS portfolio ? ? ? 1,770 saleGain on sale of business ? (17,558 ) ? (17,558 )Sales tax net accrual (618 ) (1,742 ) (618 ) 311 (reimbursement)Other asset write-off ? ? ? 204 from business exit Adjusted operating income $ 3,658 $ 9,325 $ 7,390 $ 42,095 (Loss) income beforeincome taxes and $ (11,140 ) $ 12,955 $ (54,011 ) $ 20,898 non-controlling interests Non-controlling interests (340 ) (411 ) (642 ) (2,091 )Pretax (loss) incomeattributable to (11,480 ) 12,544 (54,653 ) 18,807 AltisourceIntangible asset 4,295 3,298 11,344 15,489 amortization expenseShare-based compensation 1,732 2,831 6,556 8,284 expenseRestructuring charges 2,227 2,761 10,921 9,080 Pointillist losses 1,879 ? 6,316 ? Third quarter 2020 cost 697 ? 697 ? savings initiativesUnrealized (gain) loss oninvestment in equity (138 ) 2,294 12,433 (11,731 )securitiesLoss on BRS portfolio ? ? ? 1,770 saleGain on sale of business ? (17,558 ) ? (17,558 )Sales tax net accrual (618 ) (1,742 ) (618 ) 311 (reimbursement)Other asset write-off ? ? ? 204 from business exit Adjusted pretax (loss)income attributable to $ (1,406 ) $ 4,428 $ (7,004 ) $ 24,656 Altisource Net income (loss)attributable to $ (13,237 ) $ 7,165 $ (59,948 ) $ (1,863 )Altisource Income tax provision 1,757 5,379 5,295 20,670 Interest expense (net of 4,078 4,823 13,160 16,320 interest income)Depreciation and 8,115 6,972 22,865 29,685 amortizationShare-based compensation 1,732 2,831 6,556 8,284 Restructuring charges 2,227 2,761 10,921 9,080 Pointillist losses 1,813 ? 6,160 ? Third quarter 2020 cost 697 ? 697 ? savings initiativesUnrealized (gain) loss oninvestment in equity (138 ) 2,294 12,433 (11,731 )securitiesLoss on BRS portfolio ? ? ? 1,770 saleGain on sale of business ? (17,558 ) ? (17,558 )Sales tax net accrual (618 ) (1,742 ) (618 ) 311 (reimbursement)Other asset write-off ? ? ? 204 from business exit Adjusted EBITDA $ 6,426 $ 12,925 $ 17,521 $ 55,172 Net (loss) incomeattributable to $ (13,237 ) $ 7,165 $ (59,948 ) $ (1,863 )Altisource Intangible assetamortization expense, net 4,284 2,475 11,283 11,626 of taxShare-based compensation 1,558 2,125 5,943 6,218 expense, net of taxRestructuring charges, 1,943 2,114 9,801 6,994 net of taxPointillist losses, net 1,879 ? 6,316 ? of taxThird quarter 2020 costsavings initiatives, net 565 ? 565 ? of taxUnrealized (gain) loss oninvestment in equity (138 ) 1,722 12,433 (8,805 )securities, net of taxLoss on BRS portfolio ? ? ? 1,405 sale, net of taxGain on sale of business, ? (9,427 ) ? (9,427 )net of taxSales tax net accrual(reimbursement), net of (618 ) (1,308 ) (618 ) 233 taxOther asset write-offfrom business exit, net ? ? ? 151 of taxCertain income tax ? (909 ) 2,392 12,323 related items Adjusted net (loss)income attributable to $ (3,764 ) $ 3,957 $ (11,833 ) $ 18,855 Altisource Diluted (loss) earnings $ (0.85 ) $ 0.44 $ (3.85 ) $ (0.12 )per share Impact of using dilutedshare count instead of ? ? ? 0.01 basic share count for aloss per shareIntangible assetamortization expense, net 0.27 0.15 0.72 0.71 of tax, per diluted shareShare-based compensationexpense, net of tax, per 0.10 0.13 0.38 0.38 diluted shareRestructuring charges,net of tax, per diluted 0.12 0.13 0.63 0.43 sharePointillist losses, net 0.12 ? 0.41 ? of tax, per diluted shareThird quarter 2020 costsavings initiatives, net 0.04 ? 0.04 ? of tax, per diluted shareUnrealized (gain) loss oninvestment in equity (0.01 ) 0.11 0.80 (0.54 )securities, net of tax,per diluted shareLoss on BRS portfoliosale, net of tax, per ? ? ? 0.09 diluted shareGain on sale of business,net of tax, per diluted ? (0.58 ) ? (0.57 )shareSales tax net accrual(reimbursement), net of (0.04 ) (0.08 ) (0.04 ) 0.01 tax, per diluted shareOther asset write-offfrom business exit, net ? ? ? 0.01 of tax, per diluted shareCertain income taxrelated items per diluted ? (0.06 ) 0.15 0.75 share Adjusted diluted (loss) $ (0.24 ) $ 0.25 $ (0.76 ) $ 1.15 earnings per share Calculation of the impactof intangible asset amortization expense, netof taxIntangible asset $ 4,295 $ 3,298 $ 11,344 $ 15,489 amortization expenseTax benefit fromintangible asset (11 ) (823 ) (61 ) (3,863 )amortizationIntangible assetamortization expense, net 4,284 2,475 11,283 11,626 of taxDiluted share count 15,637 16,151 15,578 16,420 Intangible assetamortization expense, net $ 0.27 $ 0.15 $ 0.72 $ 0.71 of tax, per diluted share Calculation of the impactof share-based compensation expense, netof taxShare-based compensation $ 1,732 $ 2,831 $ 6,556 $ 8,284 expenseTax benefit fromshare-based compensation (174 ) (706 ) (613 ) (2,066 )expenseShare-based compensation 1,558 2,125 5,943 6,218 expense, net of taxDiluted share count 15,637 16,151 15,578 16,420 Share-based compensationexpense, net of tax, per $ 0.10 $ 0.13 $ 0.38 $ 0.38 diluted share Calculation of the impactof restructuring charges, net of taxRestructuring charges $ 2,227 $ 2,761 $ 10,921 $ 9,080 Tax benefit from (284 ) (647 ) (1,120 ) (2,086 )restructuring chargesRestructuring charges, 1,943 2,114 9,801 6,994 net of taxDiluted share count 15,637 16,151 15,578 16,420 Restructuring charges,net of tax, per diluted $ 0.12 $ 0.13 $ 0.63 $ 0.43 share Calculation of the impactof Pointillist losses, net of taxPointillist losses $ 1,879 $ ? $ 6,316 $ ? Tax benefit from ? ? ? ? Pointillist lossesPointillist losses, net 1,879 ? 6,316 ? of taxDiluted share count 15,637 16,151 15,578 16,420 Pointillist losses, net $ 0.12 $ ? $ 0.41 $ ? of tax, per diluted share Calculation of the impactof third quarter 2020 cost savings initiatives,net of taxThird quarter 2020 cost $ 697 $ ? $ 697 $ ? savings initiativesTax benefit from thirdquarter 2020 cost savings (132 ) ? (132 ) ? initiativesThird quarter 2020 costsavings initiatives, net 565 ? 565 ? of taxDiluted share count 15,637 16,151 15,578 16,420 Third quarter 2020 costsavings initiatives, net $ 0.04 $ ? $ 0.04 $ ? of tax, per diluted share Calculation of the impactof the unrealized (gain)loss on investment in equity securities, net oftaxUnrealized (gain) loss oninvestment in equity $ (138 ) $ 2,294 $ 12,433 $ (11,731 )securitiesTax (benefit) provisionfrom the unrealized ? (572 ) ? 2,926 (gain) loss on investmentin equity securitiesUnrealized (gain) loss oninvestment in equity (138 ) 1,722 12,433 (8,805 )securities, net of taxDiluted share count 15,637 16,151 15,578 16,420 Unrealized (gain) loss oninvestment in equity $ (0.01 ) $ 0.11 $ 0.80 $ (0.54 )securities, net of tax,per diluted share Calculation of the impactof loss on BRS portfolio sale, net of taxLoss on BRS portfolio $ ? $ ? $ ? $ 1,770 saleTax benefit from loss on ? ? ? (365 )BRS portfolio saleLoss on BRS portfolio ? ? ? 1,405 sale, net of taxDiluted share count 15,637 16,151 15,578 16,420 Loss on BRS portfoliosale, net of tax, per $ ? $ ? $ ? $ 0.09 diluted share Calculation of the impactof gain on sale of business, net of taxGain on sale of business $ ? $ (17,558 ) $ ? $ (17,558 )Tax provision from gain ? 8,131 ? 8,131 on sale of businessGain on sale of business, ? (9,427 ) ? (9,427 )net of taxDiluted share count 15,637 16,151 15,578 16,420 Gain on sale of business,net of tax, per diluted $ ? $ (0.58 ) $ ? $ (0.57 )share Calculation of the impactof sales tax net accrual (reimbursement), net oftaxSales tax net accrual $ (618 ) $ (1,742 ) $ (618 ) $ 311 (reimbursement)Tax provision (benefit)from sales tax net ? 434 ? (78 )accrual (reimbursement)Sales tax net accrual(reimbursement), net of (618 ) (1,308 ) (618 ) 233 taxDiluted share count 15,637 16,151 15,578 16,420 Sales tax net accrual(reimbursement), net of $ (0.04 ) $ (0.08 ) $ (0.04 ) $ 0.01 tax, per diluted share Calculation of the impactof other asset write-off from business exit, netof taxOther asset write-off $ ? $ ? $ ? $ 204 from business exitTax benefit from otherasset write-off from ? ? ? (53 )business exitOther asset write-offfrom business exit, net ? ? ? 151 of taxDiluted share count 15,637 16,151 15,578 16,420 Other asset write-offfrom business exit, net $ ? $ ? $ ? $ 0.01 of tax, per diluted share Certain income taxrelated items resulting from:Foreign income tax $ ? $ (909 ) $ 1,008 $ ? reserves/otherIndia income tax rate ? ? 1,384 ? changesDeferred tax adjustment(Luxembourg tax rate ? ? ? 12,323 change)Certain income tax ? (909 ) 2,392 12,323 related itemsDiluted share count 15,637 16,151 15,578 16,420 Certain income taxrelated items per diluted $ ? $ (0.06 ) $ 0.15 $ 0.75 share Cash flows (used in)provided by operating $ (2,861 ) $ (10,962 ) $ (14,077 ) $ 22,194 activitiesDecrease in short-terminvestments in real ? (414 ) ? (39,873 )estatePayment of sales tax ? ? ? 6,858 accrualAdjusted cash flows used (2,861 ) (11,376 ) (14,077 ) (10,821 )in operating activitiesLess: additions to (1,036 ) (270 ) (2,502 ) (1,204 )premises and equipment Adjusted cash flows usedin operating activities $ (3,897 ) $ (11,646 ) $ (16,579 ) $ (12,025 )less additions topremises and equipment

September 30, September 30, 2020 2019 Senior secured term loan $ 293,826 $ 294,002 Less: Cash and cash equivalents (67,023 ) (66,901 )Less: Investment in equity securities (30,185 ) (40,093 ) Net debt less investment in equity $ 196,618 $ 187,008 securities

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Note: Amounts may not add to the total due to rounding.