Altisource Asset Management Corporation Reports Second Quarter 2019 Results
07 August 2019 - 1:30PM
Altisource Asset Management Corporation (“AAMC” or the “Company”)
(NYSE American: AAMC) today announced financial and operating
results for the second quarter of 2019.
Second Quarter 2019
Highlights
- Entered into a new asset management agreement (the “Amended
AMA”) with Front Yard Residential Corporation (“Front Yard”) on May
7, 2019, providing an improved fee structure that further aligns
interests and incentivizes performance and growth.
- Increased Front Yard's rental revenues by 26% to $51.6 million
compared to the second quarter of 2018.
- Managed Front Yard's sale of 160 non-core assets for proceeds
of $27.9 million and a $3.3 million gain over carrying value during
the second quarter of 2019.
- Advised Front Yard on the amendment of its Credit Suisse and
Nomura warehouse lines, improving fee structures and reducing
interest rate spreads from 3.00% to 2.30% on borrowings secured by
rental properties.
“The completion of the Amended AMA with Front Yard in May 2019
was a significant achievement for AAMC, as it created a base
management fee floor for AAMC with the potential for fees to
increase as Front Yard’s performance improves and provided
important termination fee protection for AAMC that had not existed
under the former asset management agreement,” stated George
Ellison, Chief Executive Officer. “We managed the internalization
of Front Yard’s property management platform ahead of schedule
without impact to its residents. Front Yard experienced certain
operational challenges in the second quarter given the large number
of properties internalized within a short timeframe; however, we
believe the underlying fundamentals of its single-family rental
business are strong. As we address Front Yard’s transition
challenges, we expect that its results will improve, which should
create value for both Front Yard’s and our shareholders.”
Second Quarter 2019 Financial Results
AAMC’s net income attributable to common stockholders for the
second quarter of 2019 was $3.2 million, or $1.81 per diluted
common share, which included a $4.8 million change in the fair
value of its shares of Front Yard common stock, compared to a net
loss of $1.1 million, or $0.69 per diluted common share, which
included a $0.6 million change in the fair value of its shares of
Front Yard common stock, for the second quarter of 2018.
AAMC's net income attributable to common stockholders for the
six months ended June 30, 2019 was $2.3 million, or $1.34 per
diluted common share, which included a $5.7 million change in the
fair value of its shares of Front Yard common stock, compared to a
net loss attributable to common stockholders of $5.5 million, or
$3.44 per diluted common share, which included a $(2.3) million
change in the fair value of its shares of Front Yard common stock,
for the six months ended June 30, 2018.
About AAMC
AAMC is an asset management company that provides portfolio
management and corporate governance services to investment
vehicles. Additional information is available at
www.altisourceamc.com.
Forward-looking Statements
This press release contains forward-looking statements that
involve a number of risks and uncertainties. Those forward-looking
statements include all statements that are not historical fact,
including statements about management’s beliefs and expectations.
Forward-looking statements are based on management’s beliefs as
well as assumptions made by and information currently available to
management. Because such statements are based on expectations as to
future economic performance and are not statements of historical
fact, actual results may differ materially from those projected.
The risks and uncertainties to which forward-looking statements are
subject include, but are not limited to: AAMC’s ability to
implement its business plan; AAMC's ability to leverage strategic
relationships on an efficient and cost-effective basis; AAMC's and
Front Yard's ability to compete; Front Yard’s ability to implement
its business plan; general economic and market conditions;
governmental regulations, taxes and policies; AAMC's ability to
generate adequate and timely sources of liquidity and financing for
itself or Front Yard; Front Yard’s ability to sell non-core assets
on favorable terms or at all; AAMC's ability to identify and
acquire assets for Front Yard’s portfolio; Front Yard’s ability to
complete potential transactions in accordance with anticipated
terms and on a timely basis or at all; AAMC’s ability to integrate
newly acquired rental assets into Front Yard’s portfolio; the
ability to effectively manage the performance of Front Yard’s
internal property manager at the level and/or the cost that it
anticipates; the failure of third party vendors to effectively
perform their obligations under their respective agreements with
AAMC or Front Yard; the effects of potential redemptions of our
Series A Preferred Stock commencing in March 2020, including our
ability to pay with funds legally available therefor; our failure
to maintain Front Yard’s qualification as a REIT; and other risks
and uncertainties detailed in the “Risk Factors” and other sections
described from time to time in the Company’s current and future
filings with the Securities and Exchange Commission. The foregoing
list of factors should not be construed as exhaustive. The
statements made in this press release are current as of the date of
this press release only. The Company undertakes no obligation to
publicly update or revise any forward-looking statements or any
other information contained herein, whether as a result of new
information, future events or otherwise.
Altisource Asset Management
CorporationCondensed Consolidated Statements of
Operations(In thousands, except share and per
share amounts)(Unaudited)
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues: |
|
|
|
|
|
|
|
Management fees from Front Yard |
$ |
3,556 |
|
|
$ |
3,644 |
|
|
$ |
7,102 |
|
|
$ |
7,371 |
|
Conversion fees from Front
Yard |
— |
|
|
53 |
|
|
29 |
|
|
116 |
|
Expense reimbursements from
Front Yard |
342 |
|
|
219 |
|
|
670 |
|
|
481 |
|
Total revenues |
3,898 |
|
|
3,916 |
|
|
7,801 |
|
|
7,968 |
|
Expenses: |
|
|
|
|
|
|
|
Salaries and employee
benefits |
4,238 |
|
|
4,524 |
|
|
8,656 |
|
|
8,738 |
|
Legal and professional
fees |
1,356 |
|
|
467 |
|
|
1,698 |
|
|
819 |
|
General and
administrative |
880 |
|
|
843 |
|
|
1,919 |
|
|
1,790 |
|
Total expenses |
6,474 |
|
|
5,834 |
|
|
12,273 |
|
|
11,347 |
|
Other income
(loss): |
|
|
|
|
|
|
|
Change in fair value of Front
Yard common stock |
4,792 |
|
|
601 |
|
|
5,669 |
|
|
(2,339 |
) |
Dividend income on Front Yard
common stock |
243 |
|
|
243 |
|
|
487 |
|
|
487 |
|
Other income |
49 |
|
|
49 |
|
|
53 |
|
|
92 |
|
Total other income (loss) |
5,084 |
|
|
893 |
|
|
6,209 |
|
|
(1,760 |
) |
Income (loss) before income
taxes |
2,508 |
|
|
(1,025 |
) |
|
1,737 |
|
|
(5,139 |
) |
Income tax (benefit)
expense |
(781 |
) |
|
42 |
|
|
(712 |
) |
|
292 |
|
Net income (loss) attributable to stockholders |
3,289 |
|
|
(1,067 |
) |
|
2,449 |
|
|
(5,431 |
) |
Amortization of preferred
stock issuance costs |
(52 |
) |
|
(52 |
) |
|
(103 |
) |
|
(103 |
) |
Net income (loss) attributable to common stockholders |
$ |
3,237 |
|
|
$ |
(1,119 |
) |
|
$ |
2,346 |
|
|
$ |
(5,534 |
) |
|
|
|
|
|
|
|
|
Earnings (loss) per
share of common stock – basic: |
|
|
|
|
|
|
|
Earnings (loss) per basic
common share |
$ |
2.04 |
|
|
$ |
(0.69 |
) |
|
$ |
1.48 |
|
|
$ |
(3.44 |
) |
Weighted average common stock
outstanding – basic |
1,589,492 |
|
|
1,612,382 |
|
|
1,585,775 |
|
|
1,608,163 |
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share of common stock – diluted: |
|
|
|
|
|
|
|
Earnings (loss) per diluted
common share |
$ |
1.81 |
|
|
$ |
(0.69 |
) |
|
$ |
1.34 |
|
|
$ |
(3.44 |
) |
Weighted average common stock
outstanding – diluted |
1,820,244 |
|
|
1,612,382 |
|
|
1,830,263 |
|
|
1,608,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Altisource Asset Management
CorporationCondensed Consolidated Balance
Sheets(In thousands, except share and per share
amounts)
|
June 30, 2019 |
|
December 31, 2018 |
|
(unaudited) |
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
20,978 |
|
|
$ |
27,171 |
|
Short-term investments |
892 |
|
|
584 |
|
Front Yard common stock, at
fair value |
19,851 |
|
|
14,182 |
|
Receivable from Front
Yard |
3,992 |
|
|
3,968 |
|
Prepaid expenses and other
assets |
3,070 |
|
|
1,552 |
|
Total current assets |
48,783 |
|
|
47,457 |
|
|
|
|
|
Non-current
assets: |
|
|
|
Right-of-use lease assets |
2,733 |
|
|
— |
|
Other non-current assets |
1,598 |
|
|
1,910 |
|
Total non-current assets |
4,331 |
|
|
1,910 |
|
Total assets |
$ |
53,114 |
|
|
$ |
49,367 |
|
|
|
|
|
Current
liabilities: |
|
|
|
Accrued salaries and employee
benefits |
$ |
3,510 |
|
|
$ |
5,583 |
|
Accounts payable and accrued
liabilities |
759 |
|
|
1,188 |
|
Short-term lease
liabilities |
171 |
|
|
— |
|
Total current liabilities |
4,440 |
|
|
6,771 |
|
Long-term lease
liabilities |
2,604 |
|
|
— |
|
Total liabilities |
7,044 |
|
|
6,771 |
|
|
|
|
|
Commitments and
contingencies |
— |
|
|
— |
|
|
|
|
|
Redeemable preferred
stock: |
|
|
|
Preferred stock, $0.01 par
value, 250,000 shares issued and outstanding as of June 30, 2019
and December 31, 2018; redemption value $250,000 |
249,855 |
|
|
249,752 |
|
|
|
|
|
Stockholders'
deficit: |
|
|
|
Common stock, $0.01 par value,
5,000,000 authorized shares; 2,886,009 and 1,590,739 shares issued
and outstanding, respectively, as of June 30, 2019 and 2,862,760
and 1,573,691 shares issued and outstanding, respectively, as of
December 31, 2018 |
29 |
|
|
29 |
|
Additional paid-in
capital |
43,531 |
|
|
42,245 |
|
Retained earnings |
28,827 |
|
|
26,558 |
|
Accumulated other
comprehensive income |
17 |
|
|
— |
|
Treasury stock, at cost,
1,295,270 shares as of June 30, 2019 and 1,289,069 shares as of
December 31, 2018 |
(276,189 |
) |
|
(275,988 |
) |
Total stockholders' deficit |
(203,785 |
) |
|
(207,156 |
) |
Total liabilities and equity |
$ |
53,114 |
|
|
$ |
49,367 |
|
|
|
|
|
|
|
|
|
FOR FURTHER
INFORMATION CONTACT: |
Robin N. Lowe |
Chief Financial Officer |
T: +1-345-815-9919 |
E:
Robin.Lowe@AltisourceAMC.com |
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