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Altisource Announces Third Quarter Financial Results

October 25, 2018 8:03 AM

LUXEMBOURG, Oct. 25, 2018 (GLOBE NEWSWIRE) -- Altisource Portfolio Solutions S.A. (“Altisource” or the “Company”) (NASDAQ: ASPS) today reported financial results for the third quarter 2018, reporting service revenue of $196.9 million, operating income of $20.9 million, adjusted operating income(1) of $25.7 million, net income attributable to Altisource of $8.7 million, adjusted net income attributable to Altisource(1) of $12.2 million, diluted earnings per share of $0.49 and adjusted diluted earnings per share(1) of $0.69. During the third quarter of 2018, Altisource launched Project Catalyst, a program to better align the Company’s cost structure with anticipated revenue, and improve operating margins and performance.

Third quarter service revenue of $196.9 million decreased by 6% compared to the second quarter of 2018 primarily from fewer homes sold in the Company’s Buy-Renovate-Lease-Sell business. Third quarter service revenue decreased by 12% compared to the third quarter of 2017 primarily from the reduction in size of the Ocwen Financial Corporation (“Ocwen”) servicing portfolio and the Front Yard Residential Corporation (“RESI”) portfolio of non-performing loans and REO. These declines were partially offset by growth in the Owners.com® and Financial Services businesses.

Third quarter operating income of $20.9 million was 68% higher than the second quarter of 2018 and 55% higher than the third quarter of 2017 primarily from the $13.7 million gain on sale of the Rental Property Management business in the third quarter of 2018 and margin expansion from the initial benefits of Project Catalyst, partially offset by a $5.9 million third quarter 2018 reserve for sales tax and a $3.4 million third quarter 2018 restructuring expense related to Project Catalyst. Third quarter adjusted operating income(1) of $25.7 million was 17% higher than the second quarter of 2018 and 10% higher than the third quarter of 2017 from margin expansion from the initial benefits of Project Catalyst. Third quarter adjusted operating income(1) as a percentage of service revenue was 13.0% compared to 10.5% in both the second quarter of 2018 and the third quarter of 2017.

Third quarter 2018 diluted earnings per share was $0.49 and adjusted diluted earnings per share(1) was $0.69, compared to second quarter 2018 diluted earnings per share of $0.09 and adjusted diluted earnings per share(1) of $0.60. Third quarter adjusted diluted earnings per share was higher than the second quarter of 2018 from adjusted operating income growth. Third quarter 2018 adjusted diluted earnings per share was $0.09, or 12%, lower than the third quarter of 2017 primarily from a $1.5 million pretax gain on debt repurchase reflected in the third quarter of 2017 ($0.06 per diluted share) and $1.1 million of higher pretax interest expense from the April 2018 debt refinancing transaction ($0.04 per diluted share).

“The early benefits of Project Catalyst fueled earnings growth in the third quarter of 2018. Based upon a detailed analysis completed during the quarter, we established targeted annual run-rate cost savings between $65 million and $90 million with estimated one-time restructuring costs of between $25 million and $35 million. We are targeting to achieve more than half of the savings in 2019 with the full run-rate savings achieved in 2020. While there is a tremendous amount of work to achieve our targeted savings, Project Catalyst gives us greater confidence in our ability to grow Altisource’s adjusted pre-tax earnings in 2019 and improve our adjusted operating margins compared to this year,” said Chief Executive Officer William B. Shepro.

Mr. Shepro further commented, “We continued to win and onboard business from some of the largest and most well respected financial institutions in our industry, building a sizeable pipeline of future revenue. During the third quarter, we made excellent progress onboarding one of the largest institutional real estate and mortgage investors in the U.S. and two large servicers. We began receiving REO and foreclosure auction referrals from the institutional investor and expect to begin receiving referrals from the two large servicer customers in the first quarter. When you combine our customer wins with Project Catalyst, we believe we are positioning Altisource for sustainable growth, margin expansion and greater operating flexibility - further advancing our competitive positioning.”

Third Quarter 2018 Highlights(2)

Corporate

Servicer Solutions

Origination Solutions

Real Estate Investor Solutions

Consumer Real Estate Solutions

Third Quarter 2018 Results Compared to Second Quarter 2018 and Third Quarter 2017:

(in thousands, except per share data)Third
Quarter
2018		 Second
Quarter
2018		 Change Third
Quarter
2017		 Change
Service revenue$196,906 $208,861 (6)% $224,308 (12)%
Income from operations20,918 12,426 68% 13,459 55%
Adjusted operating income(1)25,693 21,880 17% 23,442 10%
Income before income taxes and non-controlling interests16,129 3,071 425% 10,357 56%
Pretax income attributable to Altisource(1)15,275 2,384 541% 9,552 60%
Adjusted pretax income attributable to Altisource(1)18,268 14,739 24% 19,535 (6)%
Net income attributable to Altisource8,667 1,568 453% 6,961 25%
Adjusted net income attributable to Altisource(1)12,193 10,557 15% 14,447 (16)%
Diluted earnings per share0.49 0.09 444% 0.38 29%
Adjusted diluted earnings per share(1)0.69 0.60 15% 0.78 (12)%
Cash flows from operating activities20,397 31,822 (36)% 34,612 (41)%
Adjusted cash flows from operating activities(1)36,796 27,791 32% 44,142 (17)%
Adjusted cash flows from operating activities less additions for premises and equipment(1)35,345 26,293 34% 42,315 (16)%

________________________

(1)This is a non-GAAP measure that is defined and reconciled to the corresponding GAAP measure herein.
(2)Applies to the third quarter 2018 unless otherwise indicated.
(3)Effective January 1, 2018, mark-to-market adjustments of our investment in RESI are reflected in our results of operations in connection with the adoption of a new accounting principle (previously reflected in comprehensive income).

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 management’s 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 management’s 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, our ability to retain existing customers and attract new customers and the potential for changes in our customer relationships, including the possibility of early termination of our Cooperative Brokerage Agreement with New Residential Investment Corp. or the possibility that we may not be successful in negotiating a satisfactory services agreement with New Residential Investment Corp.; 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 Altisource’s 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 Altisource’s Form 10-K, the Form 10-Q for the quarterly period ended June 30, 2018 and other filings with the Securities and Exchange Commission.

Webcast

Altisource will host a webcast at 11:00 a.m. EDT today to discuss our third quarter. A link to the live audio webcast will be available on Altisource’s 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.

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

Three months ended
September 30,		 Nine months ended
September 30,
2018 2017 2018 2017
Service revenue
Mortgage Market $168,489 $189,615 $497,101 $583,002
Real Estate Market 12,825 21,113 51,292 64,649
Other Businesses, Corporate and Eliminations 15,592 13,580 46,140 44,603
Total service revenue 196,906 224,308 594,533 692,254
Reimbursable expenses 6,815 9,866 23,970 31,786
Non-controlling interests 854 805 2,066 2,107
Total revenue 204,575 234,979 620,569 726,147
Cost of revenue 140,765 165,032 434,010 506,458
Reimbursable expenses 6,815 9,866 23,970 31,786
Gross profit 56,995 60,081 162,589 187,903
Operating expenses (income):
Selling, general and administrative expenses 46,329 46,622 132,377 146,793
Gain on sale of business (13,688) — (13,688) —
Restructuring charges 3,436 — 3,436 —
Income from operations 20,918 13,459 40,464 41,110
Other income (expense), net:
Interest expense (6,725) (5,599) (19,615) (16,862)
Unrealized gain (loss) on investment in equity securities 1,782 — (4,186) —
Other income (expense), net 154 2,497 (2,435) 8,015
Total other income (expense), net (4,789) (3,102) (26,236) (8,847)
Income before income taxes and non-controlling interests 16,129 10,357 14,228 32,263
Income tax provision (6,608) (2,591) (6,059) (7,615)
Net income 9,521 7,766 8,169 24,648
Net income attributable to non-controlling interests (854) (805) (2,066) (2,107)
Net income attributable to Altisource $8,667 $6,961 $6,103 $22,541
Earnings per share:
Basic $0.51 $0.39 $0.36 $1.23
Diluted $0.49 $0.38 $0.35 $1.20
Weighted average shares outstanding:
Basic 17,033 18,023 17,184 18,337
Diluted 17,575 18,429 17,669 18,854
Comprehensive income:
Net income $9,521 $7,766 $8,169 $24,648
Other comprehensive income (loss), net of tax:
Reclassification of unrealized gain on investment in equity securities, net of income tax provision of $200, to retained earnings from the cumulative effect of an accounting change — — (733) —
Unrealized (loss) gain on investment in equity securities, net of income tax benefit (provision) of $0, $2,054, $0, $(78) — (5,530) — 212
Comprehensive income, net of tax 9,521 2,236 7,436 24,860
Comprehensive income attributable to non-controlling interests (854) (805) (2,066) (2,107)
Comprehensive income attributable to Altisource $8,667 $1,431 $5,370 $22,753

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
SEGMENT FINANCIAL INFORMATION
(in thousands)
(unaudited)

Three months ended September 30, 2018
Mortgage Market Real Estate Market Other Businesses,
Corporate and
Eliminations		 Consolidated Altisource
Revenue
Service revenue $168,489 $12,825 $15,592 $196,906
Reimbursable expenses 6,617 185 13 6,815
Non-controlling interests 854 — — 854
175,960 13,010 15,605 204,575
Cost of revenue 113,636 15,883 18,061 147,580
Gross profit (loss) 62,324 (2,873) (2,456) 56,995
Operating expenses (income):
Selling, general and administrative expenses 21,155 5,188 19,986 46,329
Gain on sale of business — (13,688) — (13,688)
Restructuring charges 901 74 2,461 3,436
Income (loss) from operations 40,268 5,553 (24,903) 20,918
Total other income (expense), net 74 22 (4,885) (4,789)
Income (loss) before income taxes and non-controlling interests $40,342 $5,575 $(29,788) $16,129


Three months ended September 30, 2017
Mortgage Market Real Estate Market Other
Businesses, Corporate and
Eliminations		 Consolidated Altisource
Revenue
Service revenue $189,615 $21,113 $13,580 $224,308
Reimbursable expenses 8,842 1,008 16 9,866
Non-controlling interests 805 — — 805
199,262 22,121 13,596 234,979
Cost of revenue 137,466 23,497 13,935 174,898
Gross profit (loss) 61,796 (1,376) (339) 60,081
Selling, general and administrative expenses 28,006 4,208 14,408 46,622
Income (loss) from operations 33,790 (5,584) (14,747) 13,459
Total other income (expense), net 26 — (3,128) (3,102)
Income (loss) before income taxes and non-controlling interests $33,816 $(5,584) $(17,875) $10,357

ALTISOURCE PORTFOLIO SOLUTIONS S.A.
SEGMENT FINANCIAL INFORMATION
(in thousands)
(unaudited)

Nine months ended September 30, 2018
Mortgage Market Real Estate Market Other
Businesses,
Corporate and
Eliminations		 Consolidated Altisource
Revenue
Service revenue $497,101 $51,292 $46,140 $594,533
Reimbursable expenses 22,793 1,143 34 23,970
Non-controlling interests 2,066 — — 2,066
521,960 52,435 46,174 620,569
Cost of revenue 340,038 62,628 55,314 457,980
Gross profit (loss) 181,922 (10,193) (9,140) 162,589
Operating expenses (income):
Selling, general and administrative expenses 65,133 14,486 52,758 132,377
Gain on sale of business — (13,688) — (13,688)
Restructuring charges 901 74 2,461 3,436
Income (loss) from operations 115,888 (11,065) (64,359) 40,464
Total other income (expense), net 86 36 (26,358) (26,236)
Income (loss) before income taxes and non-controlling interests $115,974 $(11,029) $(90,717) $14,228


Nine months ended September 30, 2017
Mortgage Market Real Estate Market Other
Businesses,
Corporate and
Eliminations		 Consolidated Altisource
Revenue
Service revenue $583,002 $64,649 $44,603 $692,254
Reimbursable expenses 29,071 2,665 50 31,786
Non-controlling interests 2,107 — — 2,107
614,180 67,314 44,653 726,147
Cost of revenue 421,942 72,484 43,818 538,244
Gross profit (loss) 192,238 (5,170) 835 187,903
Selling, general and administrative expenses 86,493 14,084 46,216 146,793
Income (loss) from operations 105,745 (19,254) (45,381) 41,110
Total other income (expense), net 138 — (8,985) (8,847)
Income (loss) before income taxes and non-controlling interests $105,883 $(19,254) $(54,366) $32,263

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

September 30,
2018		 December 31,
2017
ASSETS
Current assets:
Cash and cash equivalents$102,860 $105,006
Investment in equity securities44,967 49,153
Accounts receivable, net46,929 52,740
Prepaid expenses and other current assets81,622 64,742
Total current assets276,378 271,641
Premises and equipment, net52,026 73,273
Goodwill84,027 86,283
Intangible assets, net98,754 120,065
Deferred tax assets, net304,383 303,707
Other assets13,697 10,195
Total assets$829,265 $865,164
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses$96,407 $84,400
Current portion of long-term debt34,440 5,945
Deferred revenue12,955 9,802
Other current liabilities7,912 9,414
Total current liabilities151,714 109,561
Long-term debt, less current portion346,544 403,336
Other non-current liabilities7,866 12,282
Commitments, contingencies and regulatory matters
Equity:
Common stock ($1.00 par value; 100,000 shares authorized, 25,413 issued and 17,048 outstanding as of September 30, 2018; 100,000 shares authorized, 25,413 shares issued and 17,418 outstanding as of December 31, 2017)25,413 25,413
Additional paid-in capital118,625 112,475
Retained earnings603,343 626,600
Accumulated other comprehensive income— 733
Treasury stock, at cost (8,365 shares as of September 30, 2018 and 7,995 shares as of December 31, 2017)(425,767) (426,609)
Altisource equity321,614 338,612
Non-controlling interests1,527 1,373
Total equity323,141 339,985
Total liabilities and equity$829,265 $865,164

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

Nine months ended
September 30,
2018 2017
Cash flows from operating activities:
Net income$8,169 $24,648
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization24,743 27,411
Amortization of intangible assets21,311 27,143
Change in the fair value of acquisition related contingent consideration— 24
Unrealized loss on investment in equity securities4,186 —
Share-based compensation expense6,150 3,237
Bad debt expense2,408 3,101
Gain on early extinguishment of debt— (5,419)
Amortization of debt discount513 225
Amortization of debt issuance costs739 625
Deferred income taxes(676) —
Loss on disposal of fixed assets723 2,776
Gain on sale of business(13,688) —
Loss on debt refinancing4,434 —
Changes in operating assets and liabilities:
Accounts receivable4,515 21,543
Prepaid expenses and other current assets(16,880) (17,272)
Other assets554 760
Accounts payable and accrued expenses10,774 165
Other current and non-current liabilities(14,325) (41,838)
Net cash provided by operating activities43,650 47,129
Cash flows from investing activities:
Additions to premises and equipment(4,207) (7,485)
Proceeds from the sale of business15,000 —
Net cash provided by (used in) investing activities10,793 (7,485)
Cash flows from financing activities:
Proceeds from issuance of long-term debt407,880 —
Repayments and repurchases of long-term debt(436,821) (48,600)
Debt issuance costs(5,042) —
Proceeds from stock option exercises3,576 2,084
Purchase of treasury shares(21,771) (24,995)
Distributions to non-controlling interests(1,912) (2,143)
Payment of tax withholding on issuance of restricted shares and stock option exercises(608) (1,088)
Net cash used in financing activities(54,698) (74,742)
Net decrease in cash, cash equivalents and restricted cash(255) (35,098)
Cash, cash equivalents and restricted cash at the beginning of the period108,843 153,421
Cash, cash equivalents and restricted cash at the end of the period$108,588 $118,323
Supplemental cash flow information:
Interest paid$17,889 $16,203
Income taxes paid, net4,162 15,445
Non-cash investing and financing activities:
Increase in payables for purchases of premises and equipment$12 $52

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

Adjusted operating income, pretax income attributable to Altisource, adjusted pretax income attributable to Altisource, adjusted net income attributable to Altisource, adjusted diluted earnings per share, adjusted cash flows from operating activities, adjusted cash flows from operating activities less additions to premises and equipment and net debt less marketable 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 Altisource’s performance and do not purport to be alternatives to income from operations, income before income taxes and non-controlling interests, net income attributable to Altisource, diluted earnings per share, cash flows from operating activities and long-term debt, including current portion, as measures of Altisource’s 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-recurring items from earnings, cash flows from operating activities and long-term debt net of cash on-hand and marketable 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 management’s evaluation of business performance. Furthermore, we believe the exclusion of more significant non-recurring items enables comparability to prior period performance and trend analysis.

It is management’s intent to provide non-GAAP financial information to enhance the understanding of Altisource’s 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, gain on sale of business, sales tax accrual, litigation settlement loss and restructuring charges from income from operations. Pretax income attributable to Altisource is calculated by removing non-controlling interests from income before income taxes and non-controlling interests. Adjusted pretax income attributable to Altisource is calculated by removing intangible asset amortization expense, share-based compensation expense, unrealized gain (loss) on investment in equity securities, gain on sale of business, sales tax accrual, litigation settlement loss, restructuring charges, loss on debt refinancing and non-controlling interests from income before income taxes and non-controlling interests. Adjusted net income attributable to Altisource is calculated by removing intangible asset amortization expense (net of tax), share-based compensation (net of tax), unrealized gain (loss) on investment in equity securities (net of tax), gain on sale of business (net of tax), sales tax accrual (net of tax), litigation settlement loss (net of tax), restructuring charges (net of tax), loss on debt refinancing (net of tax) and foreign income tax reserves from net income attributable to Altisource. Adjusted diluted earnings per share is calculated by dividing net income attributable to Altisource after removing intangible asset amortization expense (net of tax), share-based compensation (net of tax), unrealized gain (loss) on investment in equity securities (net of tax), gain on sale of business (net of tax), sales tax accrual (net of tax), litigation settlement loss (net of tax), restructuring charges (net of tax), loss on debt refinancing (net of tax) and foreign income tax reserves by the weighted average number of diluted shares. Adjusted cash flows from operating activities is calculated by removing the cash payment related to the net litigation settlement loss and the increase (decrease) in short-term investments in real estate from cash flows from operating activities. Adjusted cash flows from operating activities less additions to premises and equipment is calculated by removing the cash payment related to the net litigation settlement loss, the increase (decrease) in short-term investments in real estate and additions to premises and equipment from cash flows from operating activities. Net debt less marketable securities is calculated as long-term debt, including current portion, minus cash and cash equivalents and marketable securities.

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

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

Three months ended
September 30,		 Three months
ended
June 30,		 Nine months ended
September 30,
2018 2017 2018 2018 2017
Income from operations$20,918 $13,459 $12,426 $40,464 $41,110
Intangible asset amortization expense6,620 8,604 7,544 21,311 27,143
Share-based compensation expense2,039 1,379 1,910 6,150 3,237
Gain on sale of business(13,688) — — (13,688) —
Sales tax accrual5,868 — — 5,868 —
Litigation settlement loss500 — — 500 —
Restructuring charges3,436 — — 3,436 —
Adjusted operating income$25,693 $23,442 $21,880 $64,041 $71,490
Income before income taxes and non-controlling interests$16,129 $10,357 $3,071 $14,228 $32,263
Non-controlling interests(854) (805) (687) (2,066) (2,107)
Pretax income attributable to Altisource15,275 9,552 2,384 12,162 30,156
Intangible asset amortization expense6,620 8,604 7,544 21,311 27,143
Share-based compensation expense2,039 1,379 1,910 6,150 3,237
Unrealized (gain) loss on investment in equity securities(1,782) — (1,533) 4,186 —
Gain on sale of business(13,688) — — (13,688) —
Sales tax accrual5,868 — — 5,868 —
Litigation settlement loss500 — — 500 —
Restructuring charges3,436 — — 3,436 —
Loss on debt refinancing— — 4,434 4,434 —
Adjusted pretax income attributable to Altisource$18,268 $19,535 $14,739 $44,359 $60,536
Net income attributable to Altisource$8,667 $6,961 $1,568 $6,103 $22,541
Intangible asset amortization expense, net of tax4,517 6,452 5,499 15,097 20,736
Share-based compensation expense, net of tax1,391 1,034 1,392 4,357 2,473
Unrealized (gain) loss on investment in equity securities, net of tax(1,319) — (1,134) 3,097 —
Gain on sale of business, net of tax(9,341) — — (9,341) —
Sales tax accrual, net of tax4,004 — — 4,004 —
Litigation settlement loss, net of tax341 — — 341 —
Restructuring charges, net of tax2,345 — — 2,345 —
Loss on debt refinancing, net of tax— — 3,232 3,232 —
Foreign income tax reserves1,588 — — 1,588 —
Adjusted net income attributable to Altisource$12,193 $14,447 $10,557 $30,823 $45,750
Diluted earnings per share$0.49 $0.38 $0.09 $0.35 $1.20
Intangible asset amortization expense, net of tax, per diluted share0.26 0.35 0.31 0.85 1.10
Share-based compensation expense, net of tax, per diluted share0.08 0.06 0.08 0.25 0.13
Unrealized (gain) loss on investment in equity securities, net of tax, per diluted share(0.08) — (0.06) 0.18 —
Gain on sale of business, net of tax, per diluted share(0.53) — — (0.53) —
Sales tax accrual, net of tax, per diluted share0.23 — — 0.23 —
Litigation settlement loss, net of tax, per diluted share0.02 — — 0.02 —
Restructuring charges, net of tax, per diluted share0.13 — — 0.13 —
Loss on debt refinancing, net of tax, per diluted share— — 0.18 0.18 —
Foreign income tax reserves, per diluted share0.09 — — 0.09 —
Adjusted diluted earnings per share$0.69 $0.78 $0.60 $1.74 $2.43
Calculation of the impact of intangible asset amortization expense, net of tax
Intangible asset amortization expense$6,620 $8,604 $7,544 $21,311 $27,143
Tax benefit from intangible asset amortization(2,103) (2,152) (2,045) (6,214) (6,407)
Intangible asset amortization expense, net
of tax		4,517 6,452 5,499 15,097 20,736
Diluted share count17,575 18,429 17,553 17,669 18,854
Intangible asset amortization expense, net of tax, per diluted share$0.26 $0.35 $0.31 $0.85 $1.10
Calculation of the impact of share-based compensation expense, net of tax
Share-based compensation expense$2,039 $1,379 $1,910 $6,150 $3,237
Tax benefit from share-based compensation expense(648) (345) (518) (1,793) (764)
Share-based compensation expense, net
of tax		1,391 1,034 1,392 4,357 2,473
Diluted share count17,575 18,429 17,553 17,669 18,854
Share-based compensation expense, net of tax, per diluted share$0.08 $0.06 $0.08 $0.25 $0.13
Calculation of the impact of the unrealized (gain) loss on investment in equity securities, net of tax
Unrealized (gain) loss on investment in equity securities$(1,782) $— $(1,533) $4,186 $—
Tax provision (benefit) from the unrealized (gain) loss on investment in equity securities463 — 399 (1,089) —
Unrealized (gain) loss on investment in equity securities, net of tax(1,319) — (1,134) 3,097 —
Diluted share count17,575 18,429 17,553 17,669 18,854
Unrealized (gain) loss on investment in equity securities, net of tax, per diluted share$(0.08) $— $(0.06) $0.18 $—
Calculation of the impact of gain on sale of business, net of tax
Gain on sale of business$(13,688) $— $— $(13,688) $—
Tax expense from gain on sale of business4,347 — — 4,347 —
Gain on sale of business, net of tax(9,341) — — (9,341) —
Diluted share count17,575 18,429 17,553 17,669 18,854
Gain on sale of business, net of tax, per diluted share$(0.53) $— $— $(0.53) $—
Calculation of the impact of sales tax accrual, net of tax
Sales tax accrual$5,868 $— $— $5,868 $—
Tax benefit from sales tax accrual(1,864) — — (1,864) —
Sales tax accrual, net of tax4,004 — — 4,004 —
Diluted share count17,575 18,429 17,553 17,669 18,854
Sales tax accrual, net of tax, per diluted share$0.23 $— $— $0.23 $—
Calculation of the impact of litigation settlement loss, net of tax
Litigation settlement loss$500 $— $— $500 $—
Tax benefit from litigation settlement loss(159) — — (159) —
Litigation settlement loss, net of tax341 — — 341 —
Diluted share count17,575 18,429 17,553 17,669 18,854
Litigation settlement loss, net of tax, per diluted share$0.02 $— $— $0.02 $—
Calculation of the impact of restructuring charges, net of tax
Restructuring charges$3,436 $— $— $3,436 $—
Tax benefit from restructuring charges(1,091) — — (1,091) —
Restructuring charges, net of tax2,345 — — 2,345 —
Diluted share count17,575 18,429 17,553 17,669 18,854
Restructuring charges, net of tax, per diluted share$0.13 $— $— $0.13 $—
Calculation of the impact of the loss on debt refinancing, net of tax
Loss on debt refinancing$— $— $4,434 $4,434 $—
Tax benefit from the loss on debt refinancing— — (1,202) (1,202) —
Loss on debt refinancing, net of tax— — 3,232 3,232 —
Diluted share count17,575 18,429 17,553 17,669 18,854
Loss on debt refinancing, net of tax, per diluted share$— $— $0.18 $0.18 $—
Calculation of the impact of foreign income tax reserves
Foreign income tax reserves$1,588 $— $— $1,588 $—
Diluted share count17,575 18,429 17,553 17,669 18,854
Foreign income tax reserves, per diluted share$0.09 $— $— $0.09 $—
Cash flows from operating activities$20,397 $34,612 $31,822 $43,650 $47,129
Net litigation settlement loss payment— — — — 28,000
Increase (decrease) in short-term investments in real estate16,399 9,530 (4,031) 22,283 11,619
Adjusted cash flows from operating activities36,796 44,142 27,791 65,933 86,748
Less: Additions to premises and equipment(1,451) (1,827) (1,498) (4,207) (7,485)
Adjusted cash flows from operating activities less additions to premises and equipment$35,345 $42,315 $26,293 $61,726 $79,263
September 30, 2018
Senior secured term loans$388,760
Less: Cash and cash equivalents(102,860)
Less: Marketable securities(44,967)
Net debt less marketable securities$240,933

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

FOR FURTHER INFORMATION CONTACT:

Michelle D. Esterman
Chief Financial Officer
T: +352 2469 7950
E: [email protected]

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