Q1 2024 Altisource Portfolio Solutions SA Earnings Call

April 25, 2024

Okay, let's start.

Speaker Change: Good day, and thank you for standing by welcome to the Ultra source portfolio solutions first quarter 'twenty 'twenty four earnings call.

Speaker Change: At this time, all participants are in listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press star one one on your telephone.

Speaker Change: You will then hear an automated message advising that your hand is raised.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I'd now like to hand, the conference over to your first speaker today, Michelle instrument Chief Financial Officer.

Michelle: Thank you operator, we first want to remind you that the earnings release Form 10-Q, and quarterly slides are available on our website at www dot out to source Dot com.

Michelle: These provide additional information investors may find useful our remarks today include forward looking statements, which involve a number of risks and uncertainties that could cause actual results to differ.

Michelle: Financial projections and scenarios are expressly qualified as forward looking statements and as with other forward looking statements should not be unduly relied upon.

Michelle: In addition to the usual uncertainty associated with forward looking statements. The continuing impacts of government and service are responsive to the COVID-19 pandemic governmental fiscal policies and current economic conditions make it extremely difficult to predict the future state of the economy and the industries in which we operate.

Michelle: As well as the potential impact unhealthy source.

Michelle: Please review the forward looking statements sections in the company's earnings release, and quarterly slides as well as the risk factors contained in our 2023 Form 10-K, describing some factors that may lead to different results.

Michelle: We undertake no obligation to update statements financial scenarios and projections previously provided or provided herein as a result of a change in circumstances.

Michelle: Information or future events.

Michelle: During this call we will present, both GAAP and non-GAAP financial measures in our earnings release and quarterly slides you will find additional disclosures regarding the non-GAAP measures a reconciliation.

Michelle: Filiation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides.

Michelle: Joining me for today's call is Bill Chaperone, our chairman and Chief Executive Officer, I will now turn the call over to Bill.

William B. Shepro: Thanks, Michelle and good morning, I'll begin on slide four.

William B. Shepro: We're pleased with our first quarter performance, we generated $4 6 million of adjusted EBITDA, marking our best quarterly performance since the third quarter of 2020 on $36 $9 million of service revenue.

William B. Shepro: We believe our financial results and sales wins demonstrate that we are not waiting for a default market to return to normal.

William B. Shepro: Duane currency rates to rise to achieve growth.

William B. Shepro: Proved adjusted EBITDA by more than $30 million over the last two calendar years.

William B. Shepro: Incredibly difficult environment of lower origination volume, coupled with close to historically low mortgage delinquency rates.

William B. Shepro: For 2024, and what continues to be a difficult environment, we forecast that we will grow revenue by 23% and adjusted EBITDA by $21 million compared to last year at the midpoint of our guidance. If achieved this represents an adjusted EBITDA improvement of approximately $52 million over the three year.

William B. Shepro: Period.

William B. Shepro: So the balance of this year, we anticipate quarter over quarter service revenue and adjusted EBITDA growth compared to the same quarters in 2023, as we continue to ramp sales wins and win new business on a lower cost base.

William B. Shepro: The default market returns to normal and origination volumes increased outsource should benefit even more.

William B. Shepro: In our servicer in real estate segment, we are winning market share.

William B. Shepro: Of the three exciting servicer, our real estate pipeline opportunities I discussed with you last month, we entered into agreements with two one in March and one next month we.

William B. Shepro: We anticipate on a third agreement this quarter and.

William B. Shepro: In our originations segment, we are increasing adoption of our solutions that help originators save money during the quarter. We signed another 13 agreements for our Tri merge credit product and related retailer services.

William B. Shepro: We are already seeing the benefit of our growth initiatives and believe this will be reflected in our financial results as the year progresses.

William B. Shepro: I will discuss our sales progress and pipeline in more detail in a few minutes.

William B. Shepro: Slide five provides additional information on our financial performance and trends.

William B. Shepro: Total company service revenue grew 15% compared to the fourth quarter of 2023 with 11% growth in the service of our real estate segment and 30% in the origination segment.

William B. Shepro: Compared to the first quarter of 2023 total company service revenue was almost flat driven by growth in the origination segment offset by a decline in the servicer in real estate segment from an estimated $1 billion of one time revenue in March 2023.

Operator: Let's start. Good day, and thank you for standing by. Welcome to the Altisource Portfolio Solutions first quarter 2024 earnings call. At this time, all participants are in listen-only mode.

William B. Shepro: Companywide adjusted EBITDA of $4 $6 million was $4 $4 million higher than the fourth quarter of $3 $2 million higher than the first quarter of 2023 and represents 23% at the midpoint of our 2020 for guidance.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

William B. Shepro: Provided on our fourth quarter call.

Operator: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Michelle Esterman, Chief Financial Officer. Thank you, operator.

William B. Shepro: Adjusted EBITDA margins expanded to 12, 6% in the first quarter of 2024 compared to <unk>, 7% in the fourth quarter of 23, 4% in the first quarter of 'twenty three.

William B. Shepro: First quarter 2024 total company adjusted EBITDA included an estimated $600000 in nonrecurring net benefits in first quarter last year included an estimated $2 1 million.

Michelle D. Esterman: We first want to remind you that the earnings release, Form 10-Q, and quarterly slides are available on our website at www.altisource.com. These provide additional information investors may find useful. Our remarks today include forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ. Financial projections and scenarios are expressly qualified as forward-looking statements and, as with other forward-looking statements, should not be unduly relied upon. In addition to the usual uncertainty associated with forward-looking statements, the continuing impacts of government and servicer responses to the COVID-19 pandemic, governmental fiscal policies, and current economic conditions make it extremely difficult to predict the future state of the economy and the industries in which we operate, as well as the potential impact on LTE.

William B. Shepro: Non recurring benefits.

William B. Shepro: Total company improvement was driven by margin expansion in both of our segments and lower corporate costs.

William B. Shepro: Over the last couple of years, we have provided you with a run rate scenario to demonstrate what <unk> has run rate revenue and adjusted EBITDA could look like in a normal pre pandemic default operating environment, while holding the origination segment comp state.

William B. Shepro: While we believe that our 2024 guidance takes a conservative approach to the recovery of the default market. We also believe the market will return to a more normal environment any time.

Michelle D. Esterman: Please review the forward-looking statements sections in the company's earnings release and quarterly slides, as well as the risk factors contained in our 2023 Form 10-K describing some factors that may lead to different results. We undertake no obligation to update statements, financial scenarios, and projections previously provided or provided herein as a result of a change in circumstances, new information, or future events.

William B. Shepro: In addition, FHA loans are typically originated with only 3% down providing a much lower equity cushion even with home price appreciation over the last several years.

William B. Shepro: To help you understand the magnitude of the revenue and earnings opportunity from our sales wins in both segments, we are providing our financial scenario on slide six.

Michelle D. Esterman: During this call, we will present both GAAP and non-GAAP financial measures. In our earnings release and quarterly slides, you will find additional disclosures regarding the non-GAAP measures. A reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides. I will now turn the call over to Bill Shepro, our Chairman and Chief Executive Officer. Thank you, Michelle, and good morning.

Michelle D. Esterman: During this call, we will present both GAAP and non-GAAP financial measures. In our earnings release and quarterly slides, you will find additional disclosures regarding non-GAAP measures. A reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides.

William B. Shepro: The scenario annualize and adjust our first quarter performance to exclude nonrecurring items and adds estimated fully ramp service revenue and adjusted EBITDA.

Michelle D. Esterman: Joining me for today's call is Bill Shepro, our Chairman and Chief Executive Officer. I will now turn the call over to Bill. Thanks, Michelle, and good morning.

William B. Shepro: Weighted to business, we've already won net of an assumed level of churn.

William B. Shepro: As you can see on the slide ramping estimated revenue from existing sales wins at estimated EBITDA margins could increase first quarter 2024 annualized service revenue.

William B. Shepro: I'll begin on slide 4. I'm very pleased with our 1st quarter performance. We generated 4.6M dollars of adjusted EBITDA, marking our best quarterly performance since the 3rd quarter of 2020 on 36.9M dollars of service revenue. We believe our financial results and sales wins demonstrate that we are not waiting for the default market to return to normal or for delinquency rates to rise to achieve growth. We improved adjusted EBITDA by more than $30 million over the last two calendar years in an incredibly difficult environment of low origination volume coupled with close to historically low mortgage delinquency rates.

William B. Shepro: $147 million to $219 million and adjusted EBITDA from 16 million to $35 million.

William B. Shepro: This doesn't assume any further wins from our current sales pipeline.

William B. Shepro: <unk> default operating environment revenue from the launch of new lenders one solutions, an increase in delinquency rates, nor a return to a higher level of origination volume.

William B. Shepro: We have made tremendous progress, winning new business and improving our operational efficiency and a tough market.

William B. Shepro: For 2024, in what continues to be a difficult environment, we forecast that we will grow revenue by 23% and adjusted EBITDA by $21 million compared to last year at the midpoint of our guidance. If achieved, this represents an adjusted EBITDA improvement of approximately $52 million over the three-year period. For the balance of this year, we anticipate quarter-over-quarter service revenue and adjusted EBIT of growth compared to the same quarters in 2023 as we continue to ramp sales wins and win new business on a lower cost basis. And as the default market returns to normal and origination volumes increase, Altisource should benefit even more.

William B. Shepro: We believe this scenario illustrates the bright future ahead for Alto source as we ramp our sales wins with additional growth potential.

William B. Shepro: Slide seven provides additional information on our surface our real estate segment.

William B. Shepro: First quarter 2020 for service revenue in this segment was 11% higher than the fourth quarter of 2023, and 2% lower than the first quarter of 2023.

William B. Shepro: If you exclude the estimated $1 million of nonrecurring revenue from the first quarter of last year revenue for the first quarter of this year would have been modestly higher than the first quarter of last year.

William B. Shepro: We continue to experience growth in certain higher margin businesses that support the earlier stage of the default process.

William B. Shepro: In our Service Earned Real Estate segment, we are winning market share. Of the three exciting servicer and real estate pipeline opportunities I discussed with you last month, we entered into agreements with two, one in March and one in May. We anticipate signing a third agreement this quarter. In our origination segment, we are increasing the adoption of our solutions that help originators save money. During the quarter, we signed another 13 agreements for our tri-merge credit product and related retailer services.

William B. Shepro: Adjusted EBITDA of $10 4 million was 21% higher than the fourth quarter of 2023, and 6% lower than the first quarter of last year.

William B. Shepro: Adjusted EBITDA margins were 35, 8% in the first quarter of 2024 compared to 32, 9% in the fourth quarter of 2023.

William B. Shepro: 37, 4% in the same period last year.

William B. Shepro: The improving compared to last quarter reflects our efficiency initiatives, partially offset by an estimated $600000 in net nonrecurring expenses in the first quarter of this year.

William B. Shepro: We are already seeing the benefit of our growth initiatives and believe this will be reflected in our financial results as the year progresses. I'll discuss our sales progress and pipeline in more detail in a few minutes. Slide 5 provides additional information on our financial performance and training. Total company service revenue grew 15% compared to the fourth quarter of 2023, with 11% growth in the service and real estate segment and 30% in the origination segment.

William B. Shepro: First quarter 2023 margins were modestly higher.

William B. Shepro: From an estimated $1 million of prior year nonrecurring revenue.

William B. Shepro: Majority of which increased adjusted EBITDA and the estimated $600000 of current year net nonrecurring expenses I just discussed.

William B. Shepro: Slide eight provides a summary of our servicer and real estate sales wins and pipeline.

William B. Shepro: For the quarter, we won new business that we estimate will generate $6 $3 million in annual revenue on a stabilized basis over the next couple of years.

William B. Shepro: Last quarter I highlighted three larger late stage opportunities in the pipeline.

William B. Shepro: Company-wide adjusted EBITDA of $4.6 million was $4.4 million higher than the fourth quarter and $3.2 million higher than the first quarter of 2023 and represents 23% of the midpoint of our 2024 guidance, which will be provided on our fourth quarter call. Adjusted EBITDA margins expanded to 12.6% in the first quarter of 2024 compared to 0.7% in the fourth quarter of 2023 and 4% in the first quarter of 2023. First quarter 2024 total company-adjusted EBITDA included an estimated $600,000 in non-recurring net benefits, and first quarter last year included an estimated $2.1 million in non-recurring net benefits.

William B. Shepro: Toby toward the end of the first quarter, we signed the agreement to provide REO auction services for a loan servicer.

William B. Shepro: In April we signed an agreement to provide foreclosure trustees services for a loan servicer and anticipate signing the second trustee agreement this quarter.

William B. Shepro: We have completed the onboarding process for both wins and began receiving referrals this month.

William B. Shepro: These wins represent an expansion of services that we provide to existing customers.

William B. Shepro: We also made progress ramping sales wins from 2023 in the fourth quarter of 2023, we signed agreements to provide REO renovation services for one of our larger owners of our REO assets.

William B. Shepro: We received our first renovation referrals last week.

William B. Shepro: We anticipate referral volume from this customer will ramp as the year progresses.

William B. Shepro: Total company improvement was driven by margin expansion in both of our segments and lower corporate costs. Over the last couple of years, we have provided you with a run rate scenario to demonstrate what Altisource's run rate revenue and adjusted EBITDA could look like in a normal, pre-pandemic, default operating environment while holding the origination segment company. While we believe that our 2024 guidance takes a conservative approach to the recovery of the default market, we also believe the market will return to a more normal environment in time.

William B. Shepro: Another fourth quarter win was an expansion of wallet share with an existing customer and our higher margin trust fee business.

William B. Shepro: We started to receive an increase in referrals in January which continued to grow through the quarter.

William B. Shepro: We anticipate these referral volumes to ramp through the summer and stabilize thereafter.

William B. Shepro: We ended the quarter with a total weighted average sales pipeline of $26 $7 million.

William B. Shepro: Of annual revenue on a stabilized basis, most of which we forecast will impact 2025 and beyond.

William B. Shepro: Loans originated over the last couple of years after a massive increase in home values generally don't have the same level of home equity compared to loans originated before then. In addition, FHA loans are typically originated with only 3% down, providing a much lower equity cushion, even with home price appreciation over the last several years.

William B. Shepro: The decline in the sales pipeline compared to last quarter, primarily reflects our sales wins.

William B. Shepro: Turning to the macroeconomic environment on slide nine.

William B. Shepro: As we discussed on our call in March we continue to believe that there are early signs of consumer financial stress.

William B. Shepro: These could be precursors to arise in mortgage delinquency rates.

William B. Shepro: Of course, we are not waiting for the market to recover to seek to grow our business. We have a strong suite of solutions that we believe support both the servicer and origination markets and are winning new business, to help you understand the magnitude of the revenue and earnings opportunity from our sales wins in both segments. We are providing a financial scenario on slide six. The scenario annualizes and adjusts our first-quarter performance to exclude non-recurring items and adds estimated fully ramped service revenue and adjusted EBITDA related to business we have already won, net of an assumed level of churn.

William B. Shepro: Moving to our origination segment on slide 10.

William B. Shepro: Our origination segment performed very well.

William B. Shepro: Despite the 6% decline in industry wide residential origination volume in the first quarter compared to the fourth quarter of 2023.

William B. Shepro: The originations segment outperformed the market with service revenue growth of 30% and an adjusted EBITDA improvement of $900000 to $500000.

William B. Shepro: We also grew service revenue by 7% and adjusted EBITDA by $1 $2 million compared to last year.

William B. Shepro: As you can see on the slide, ramping estimated revenue from existing sales wins at estimated EBITDA margins could increase first quarter 2024 annualized service revenue from $147 million to $219 million and adjusted EBITDA from $16 million to $35 million. This doesn't assume any further wins from our current sales pipeline, a normal default operating environment, revenue from the launch of new LendersOne solutions, an increase in delinquency rates, nor a return to a higher level of origination volume.

William B. Shepro: Revenue growth was driven by customer wins from our newer solutions and price increases and the lenders one business.

William B. Shepro: Adjusted EBIT improved from revenue growth and cost savings and efficiency initiatives.

William B. Shepro: As you can see on the slide the origination segments gross profit gross profit margins adjusted EBITDA and adjusted EBITDA margins, all improved relative to prior quarters.

William B. Shepro: Slide 11 provides a summary of our origination segment sales wins and pipeline.

William B. Shepro: We continue to focus on helping our lenders one members save money and better compete.

William B. Shepro: We have made tremendous progress winning new business and improving our operational efficiency in a tough market. We believe this scenario illustrates the bright future ahead for Altisource as we ramp up our sales wins with additional growth potential. Slide 7 provides additional information on our surface-earned real estate segment. First quarter 2024 service revenue in this segment was 11% higher than the fourth quarter of 2023 and 2% lower than the first quarter of 2023.

William B. Shepro: This is driving substantial interest in our solutions.

William B. Shepro: On an annualized stabilized basis, we want an estimated $4 $2 million in new business in the first quarter.

William B. Shepro: Our weighted average sales pipeline at the end of the quarter was $13 9 million.

William B. Shepro: We are excited about our progress in the origination segment.

William B. Shepro: During difficult times lenders are more diligently examining their costs and we are winning a lot of new business as a result.

William B. Shepro: With sustained low origination volumes, we have been provided an attractive window of opportunity we expect.

William B. Shepro: If you exclude the estimated $1 million of non-recurring revenue from the first quarter of last year, revenue for the first quarter of this year would have been modestly higher than the first quarter of last year. We continue to experience growth in certain higher-margin businesses that support the earlier stage of the default process. Adjusted EBITDA of $10.4 million was 21% higher than the fourth quarter of 2023 and 6% lower than the first quarter of last year. Adjusted EBITDA margins were 35.8 percent in the first quarter of 2024 compared to 32.9 percent in the fourth quarter of 2023 and 37.4 percent in the same period last year.

William B. Shepro: The benefit from this growth both today and even more when origination volumes return to more normal levels.

William B. Shepro: Additionally, we continue to focus on rolling out new solutions to help our lenders one members to make more money.

William B. Shepro: We believe the regular launch of new solutions to lenders one members combined with greater adoption of our existing solutions will strengthen our value proposition for lenders one members and support further revenue and earnings growth in our origination segment.

William B. Shepro: Turning to our corporate segment on slide 12.

William B. Shepro: We continue to bring down our operating costs.

William B. Shepro: First quarter 2020 for corporate adjusted EBITDA loss of $6 3 million was $1 8 million or.

William B. Shepro: The improvement compared to last quarter reflects our efficiency initiatives, partially offset by an estimated $600,000 in net non-recurring expenses in the first quarter of this year. First quarter 2023 margins were modestly higher, from an estimated $1 million of prior year non-recurring revenue, the majority of which increased adjusted EBITDA, and the estimated $600,000 of current year net non-recurring expenses I just discussed. Slide 8 provides a summary of our servicer and real estate sales wins and pipeline.

William B. Shepro: 22% better than the fourth quarter of 2023, and $2 7 million or 30% better than the first quarter of 2023.

William B. Shepro: The first quarter 2024 results included an estimated $1 2 million of net nonrecurring benefits in the first quarter of 2023 included an estimated $1 3 million.

William B. Shepro: Of nonrecurring benefits.

William B. Shepro: Absent these benefits first quarter 2024, adjusted EBITDA loss at corporate was 4% better than the fourth quarter, 2023, and 25% better than the first quarter of 2023.

William B. Shepro: For the quarter, we won new business that we estimate will generate $6.3 million in annual revenue on a stabilized basis over the next couple of years. Last quarter, I highlighted three larger late-stage opportunities in the pipeline. Toward the end of the first quarter, we signed an agreement to provide REO auction services for loan services. In April, we signed an agreement to provide foreclosure trustee services for a loan servicer, and we anticipate signing the second trustee agreement this quarter.

William B. Shepro: The lower adjusted EBITDA loss also reflects our cost savings and efficiency initiatives.

William B. Shepro: Moving to slide 13.

William B. Shepro: In summary, I'm pleased with our first quarter performance, we continue to win meaningful new business and are making good progress ramping 2023 sales wins in the <unk>.

William B. Shepro: Historically difficult market.

William B. Shepro: As a result, we anticipate that we'll generate quarterly year over year service revenue and adjusted EBITDA growth compared to the same quarters in 2023 for the balance of the year.

William B. Shepro: We have completed the onboarding process for both WINS and began receiving referrals this month. These wins represent an expansion of services that we provide to existing customers. We also made progress ramping sales wins from 2023. In the fourth quarter of 2023, we signed agreements to provide REO renovation services for one of the larger owners of REO assets. We received our first renovation referral last week.

William B. Shepro: We believe we are also on track to achieve 13% to 32% service revenue growth over 2023, and adjusted EBITDA of between $17, five and $22 $5 million in 2024.

William B. Shepro: If achieved this represents an adjusted EBITDA improvement of approximately $52 million over a three year period.

Speaker Change: I will now open up the call for questions operator.

William B. Shepro: We anticipate referral volume from this customer will ramp as the year progresses. Another fourth-quarter win was an expansion of WalletShare with an existing customer in our higher-margin trustee business. We started to receive an increase in referrals in January, which continued to grow through the quarter. We anticipate these referral volumes to ramp through the summer and stabilize thereafter. We ended the quarter with a total weighted average sales pipeline of $26.7 million in annual revenue on a stabilized basis, most of which we forecast will impact 2025 and beyond.

Speaker Change: Thank you and at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.

William B. Shepro: To withdraw your question. Please press Star one again and then please standby now as we compile our Q&A.

William B. Shepro: Yes.

William B. Shepro: First question comes from Mike Grondahl with Northland. Mike Go ahead. Your line is open.

Michael John Grondahl: Okay. Thank you.

William B. Shepro: The decline in the sales pipeline compared to last quarter primarily reflects our sales win. Turning to the macroeconomic environment in slide 9, as we discussed on our call in March, we continue to believe that there are early signs of consumer financial stress and that these could be precursors to a rise in mortgage delinquency rates. Moving to our origination segment in slide 10, our origination segment performed very well.

Michael John Grondahl: <unk>.

Michael John Grondahl: Just trying to think through.

Michael John Grondahl: Bill kind of your latest thoughts on when foreclosure sales might ramp.

Michael John Grondahl: And is there any other leading indicator.

William B. Shepro: We should look to.

Michael John Grondahl:

Michael John Grondahl: Delinquent GSE loans.

Michael John Grondahl: Macro things on job loss, but where's your head kind of today.

Michael John Grondahl: For that ramp and I don't know what are you looking to to help you kind of bench market.

William B. Shepro: Despite the 6% decline in industry-wide residential origination volume in the first quarter compared to the fourth quarter of 2023, the origination segment outperformed the market with service revenue growth of 30% and an adjusted EBITDA improvement of $900,000 to $500,000. We also grew service revenue by 7% and adjusted EBITDA by $1.2 million compared to last year. Revenue growth was driven by customer wins from our newer solutions and price increases in the LendersOne business. Adjusted EBITDA improved due to revenue growth and cost savings and efficiency initiatives.

Speaker Change: Yeah, Hey, Mike. Thanks for the question. So I guess, the first point I want to make as well.

Speaker Change: We're not waiting for the market to recover the default market to get back to normal or for delinquency rates to rise to improve our revenue and earnings I think that's a really important message.

Speaker Change: But then specifically to your question Mike look I think the market is recovering less then we at a slower pace than we expected I thought given those precursors and horizon.

Speaker Change: Auto delinquencies credit card student loan delinquencies. We all thought these were good solid indicators of what ultimately was going to happen or what ultimately should happen with mortgage delinquency rates, but today. They are sitting in a roughly flat to where they were a year ago.

William B. Shepro: As you can see on the slide, the origination segments gross profit, gross profit margins, adjusted EBITDA, and adjusted EBITDA margins all improved relative to the prior quarter. Slide 11 provides a summary of Origination Segment Sales Wins and Pipelines. We continue to focus on helping our Lenders1 members save money and better compete, and this is driving substantial interest in our solution. On an annualized, stabilized basis, we won an estimated $4.2 million in new business in the first quarter. Our weighted average sales pipeline at the end of the quarter was $13.9 million.

Michael John Grondahl: So we're paying close attention and we do anticipate that over time the market will get back to normal if you look and I talked a little bit about this in my prepared remarks, if you look at.

Michael John Grondahl: Loans originated and there are several million loans originated over the last couple of years that followed the run up in home prices and if you look at FHA loans that are 97% loan to value.

Michael John Grondahl: Even with the run up of home prices over the last couple of years, there's not a lot of equity in those homes and so I think as the <unk>.

Michael John Grondahl: Is it things.

Michael John Grondahl: Things get back to normal you would expect those.

William B. Shepro: We are excited about our progress in the origination segment. During difficult times, lenders are more diligently examining their costs, and we are winning a lot of new business as a result. With sustained low origination volumes, we have been provided with an attractive window of opportunity.

Michael John Grondahl: The operating environment for those more recent cohorts of loan originations.

Michael John Grondahl: A return to a more normal operating environment.

Michael John Grondahl: And by the way I think Mike if the market, we did run the math and say what happens if the market were to get back to normal to this scenario, we presented today and I think you would see.

William B. Shepro: We expect to benefit from this growth both today and even more when origination volumes return to more normal levels. Additionally, we continue to focus on rolling out new solutions to help our Lenders1 members make more money. We believe the regular launch of new solutions to Lenders1 members, combined with greater adoption of our existing solutions, will strengthen our value proposition for Lenders1 members and support further revenue and earnings growth in our origination segment.

Michael John Grondahl: When we when we look back to the run rate scenario, we provided I think in the third or fourth quarter of last year.

Michael John Grondahl: And we.

Michael John Grondahl: We account for some potential run off of our anchor client portfolios and in some other churn from customers I mean, we could in a normal environment add another $30 million roughly of adjusted EBITDA to the scenario we presented today so.

Michael John Grondahl: So on top of the I think it was.

William B. Shepro: Turning to our corporate segment on slide 12, we continue to bring down our operating costs. First quarter 2024 corporate adjusted EBITDA loss of $6.3 million was $1.8 million, or 22% better than the fourth quarter of 2023, and $2.7 million, or 30% better than the first quarter of 2023. The first quarter of 2024 results included an estimated $1.2 million of net nonrecurring benefits, and the first quarter of 2023 included an estimated $1.3 million of nonrecurring benefits.

Michael John Grondahl: 35 million of adjusted EBITDA in our scenario you could add as much as another $30 million of EBITDA now there may be a little bit of additional fixed costs, we would add but the number.

Michael John Grondahl: EIT becomes quite interesting as that market recovers. So it's hard for us to tell when it's going to recover we think some of the early signs.

Michael John Grondahl: <unk> exist.

Michael John Grondahl: That there could be some stress in the market, but we're not waiting for that to happen to grow our revenue and earnings.

Speaker Change: Got it and then.

Michael John Grondahl: Two questions kind of related to slide 17.

Michael John Grondahl: Okay.

Speaker Change: First one.

William B. Shepro: Absent these benefits, the first quarter 2024 adjusted EBITDA loss in corporate was 4% better than the fourth quarter 2023 and 25% better than the first quarter 2020. The lower adjusted EBITDA loss also reflects our cost savings and efficiency this year. Moving to slide 13.

Michael John Grondahl: The consolidated sales pipeline and when you guys had a bunch of wins.

Michael John Grondahl: <unk> 23 right like.

Michael John Grondahl: $68 million worth.

Michael John Grondahl: And you have cumulatively got about $8 million of that into revenue.

Michael John Grondahl: If we look at the same time period, those five quarters presented.

Operator: In summary, I'm pleased with our first quarter performance. We continue to win meaningful new business and are making good progress ramping 2023 sales wins in a historically difficult market. As a result, we anticipate that we will generate quarterly year-over-year service revenue and adjusted EBITDA growth compared to the same quarters in 2023 for the balance of the year. We believe we are also on track to achieve 13 to 32% service revenue growth in 2023 and adjusted EBIT of between $17.5 and $22.5 million in 2024.

Michael John Grondahl: How should we think about the next.

Speaker Change: I'll call it the remaining $60 million flowing into revenue.

Michael John Grondahl: Yes.

Speaker Change: Very good question, Mike So I think what youre going to see is we're now ramping and you'll see that on the bottom row of that slide 17, where we did I think $3 5 billion. So we are starting to ramp it youre going to see that we're going to continue to ramp.

Speaker Change: The sales wins as the year progresses.

Speaker Change: When we look.

Speaker Change: When we get to the fourth quarter, we're not going to be quite at that.

Speaker Change: Run rate, but I think from an EBIT perspective, we're expecting to be north of a $30 million EBIT run rate. If you annualize our fourth quarter performance youre going to start to see the benefit and again were being very conservative on the default market recovering. This is primarily from our ramping sales wins from on a more efficient.

Operator: If achieved, this represents an adjusted EBITDA improvement of approximately $52 million over a three-year period. I'll now open up the call for questions. Operator. Thank you, and at this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

Speaker Change: Cost base or lower cost base.

Speaker Change: Got it and then.

Speaker Change: That's helpful.

Speaker Change: Exit run rate.

Speaker Change: And then.

Speaker Change: My last question on the topline attractive sales pipeline.

Speaker Change: I sort of get.

Speaker Change: Three Q23, <unk> 23, those numbers were kind of flattish.

Speaker Change: A chunk of the pipeline went down into wins.

Speaker Change: But then if I go for <unk> 23 to <unk> 24.

Michael John Grondahl: Bill, kind of your latest thoughts on when foreclosure sales are going to happen... And is there any other leading indicator? We should, um, you know delinquent GSE loan macro things on job loss, but where's your head kind of today? for that ramp, and I don't know, what are you looking for? to help you kind of bend.

Speaker Change: You had 10 million fallout to wins, but the number dropped by about $8 million or are you happy where your pipeline is.

Speaker Change: You kind of need to rebuild some of that now or I don't know like just help us think about that pipeline the size of it what does it need to be to kind of.

Speaker Change: Continue to support these these wins.

Speaker Change: I think youre right, Mike the reason for the drop reflects primarily reflects the sales wins.

William B. Shepro: Yeah. Hey, Mike. Thanks for the question. So I guess the first point I want to make is we're not waiting for the market to recover, you know, the default market to get back to normal, or for delinquency rates to rise to improve our revenue and earnings. I think that's really important.

Speaker Change: And we have some pretty meaningful sales when youre going to see.

Speaker Change: I think if there is a footnote about it but in April we had a pretty good sales win that I talked about in my prepared remarks related to our trustee business. We think we're going to sign a second agreement hopefully this quarter, which will go into the win column as well look we're never happy with the sales pipeline, we have tended to be bigger Mike and we've.

William B. Shepro: But then, specifically to your question, Mike, look, I think the market is recovering less than we expected at a slower pace than we expected. You know, I thought, given those precursors, you know, the rise in auto delinquencies, credit cards, student loan delinquencies, you know, we all thought these were good, solid indicators of what ultimately was going to happen or what ultimately should happen with mortgage delinquency rates. But today, they're sitting, you know, roughly flat to where they were a year ago.

Speaker Change: Our strong sales team that's done a very nice job of building the pipeline.

Speaker Change: Winning market share in a really tough market today, particularly on the default side and so I'm pleased with the progress, we're making but I've never I always want that pipeline to be bigger and we talk about it internally not just this quarter, but each quarter, we set pretty aggressive goals around how we want to grow the pipeline.

William B. Shepro: And so, we're paying close attention, and we do anticipate that over time, the market will get back to normal. If you look, and I talked a little bit about this in my prepared remarks, if you look at loans originated, you know, and there were several million loans originated over the last couple of years that followed the run-up in home prices. And if you look at FHA loans that have 97% loan-to-value, you know, even with the run-up of home prices over the last couple of years, there's not a lot of equity in those homes.

Speaker Change: But we feel good this is a weighted average pipeline and keep in mind. The actual pipeline is much higher than that.

Speaker Change: Got it got it.

Speaker Change: That color is helpful.

Speaker Change: Thanks, and good luck.

Speaker Change: Mike.

Speaker Change: One moment for our next question.

Speaker Change: Your next question comes from.

Speaker Change: Raj Sharma with B Riley Raj go ahead your line is open.

William B. Shepro: And so, I think as the economy, you know, as things get back to normal, you would expect the operating environment for those more recent cohorts of loan originations to return to a more normal operating environment. And by the way, I think, Mike, if the market, we did run the math and said, what happens if the market were to get back to normal to this scenario we presented today? And I think you would see, you know, when we look back to the run rate scenario we provided in the 3rd or 4th quarter of last year. You know, and we account for some potential runoff from our anchor client portfolios and some other churn from customers. I mean, we could, in a normal environment, add another 30 million dollars, roughly.

Rajiv Sharma: Yes, hi.

Rajiv Sharma: Congratulations on the increase in profitability.

Rajiv Sharma: I wanted to.

Rajiv Sharma: Wanted to ask you some questions on this slide.

Rajiv Sharma: Early stage the business wins that are contributing to $88 million.

Rajiv Sharma: <unk> dollars in annualized revenue increase.

Speaker Change: Is that right.

Speaker Change: That's slide how does that link between.

Speaker Change: The default services.

Speaker Change: And the market I mean, I'm, assuming that has nothing to do with the <unk>.

Speaker Change: <unk> side of the marketplace.

Speaker Change: And also how does that split with <unk>.

Speaker Change: Originations.

Speaker Change: Sure, So hey, Raj, let me turn to next slide.

William B. Shepro: Of adjusted EBITDA to the scenario we presented today. So, on top of that, I think it was 35Million adjusted EBITDA in our scenario. You could add as much as another 30 million dollars of EBITDA. Now, there may be a little bit of additional fixed costs we would add, but the number, you know, EBITDA becomes quite interesting as that market recovers. So, it's hard for us to tell when the market is going to recover. We think some of the early signs exist that there could be some stress in the market, but we're not waiting for that to happen to grow our revenue. Got it!

Speaker Change: Okay.

Speaker Change: The servicing revenue scenario.

Speaker Change: On slide six.

Speaker Change: So about $88 million I would say a meaningful portion of that is tied to the growth of our renovation business.

Speaker Change: Then some of it is tied to the growth of these trustee wins and I think this is a sales wins through April April 20, or so it may be April 24th.

Speaker Change: So this includes.

Speaker Change: The trustee business the renovation business would probably be the two the renovation being the largest in the two trustee wins and then the next largest would be.

Michael John Grondahl: And then... Two questions kind of related to slide 17. The first one is, you know, the consolidated sales pipeline. You guys had a bunch of wimps in 23, right?

Speaker Change: Probably I don't have that right in front of me, but I think some of the REO auction work that we're doing for a loan servicer.

Speaker Change: Market share gains and then there are some in the origination side, but it's pretty small relatively speaking compared to whats the growth in the servicer in real estate segment. So I think just to repeat largely its the renovation business.

Michael John Grondahl: $68 million worth, and you've cumulatively got about 8 million of that into revenue. If we look at the same time period, those five quarters, how should we think about the next, I don't know, I'll call it the remaining 60 million. Flowing into, Yeah, that's a very good question, Mike.

William B. Shepro: $68 million worth, and you've cumulatively got about 8 million of that into revenue. If we look at the same time period, those five quarters, how should we think about the next, I don't know, I'll call it the remaining 60 million. Flowing into, Yeah, that's a very good question, Mike.

Speaker Change: II trustee wins, and then the fourth REO auction business.

Speaker Change: There's a little bit of title wins in there as well.

Speaker Change: Right. So all of this is.

William B. Shepro: So I think, look, what you're going to see is we're now ramping, and you see that on the bottom row of that slide 17, where we did, I think, three and a half million. So we are starting to ramp it, and you'll see that we're going to continue to ramp up the sales wins as the year progresses. And look, when we get to the fourth quarter, we're not going to be quite at that run rate.

Speaker Change: If I'm correct in understanding all that all this all these wins are in the earliest stage of the foreclosure process basically.

Speaker Change: If the foreclosures market is that moving up.

Speaker Change: Considerably.

Speaker Change: There's more loss mitigation.

Speaker Change: And there's more loan modifications.

Speaker Change: And other early so this is the earliest stage could you talk about the trustee is the customer deferral expansion business.

Michael John Grondahl: But I think from an EBITDA perspective, we're expecting to be north of a $30 million EBITDA run rate if you annualize our fourth quarter performance. So you're going to start to see the benefit. And again, we're being very conservative on the default market recovering. This is primarily from ramping sales wins on a more efficient cost base or a lower cost base. Got it, and then you know that's helpful for that exit run rate and then, my last question, on the top line, an attractive sales pipeline.

Speaker Change: You are taking share there.

Speaker Change: And that's largely all of the gains, but how do you.

Speaker Change: Do you do you make much money if there is.

Speaker Change: The last model, there's loss mitigation loan modifications.

Speaker Change: Yeah. So we're a foreclosure trustee and I think it's 11% or 12 states and Theres milestone billing Raj, so and we're not assuming that each foreclosure file we've received makes it all the way through the end of the process, but in the milestone billing process I think youre, probably billing 60 or 70% of the total fees.

Michael John Grondahl: I sort of get... 3Q23, 4Q23, you know, those numbers were kind of flattish, and I think a chunk of the pipeline went down into the wind. But then if I go 4Q23 to 1Q24, yes, you had 10 million fallout to win.

Speaker Change: In the first.

Speaker Change: A couple of months of receiving the referral so it's not dependent on making it all the way through the end.

Speaker Change: And our analysis, our forecast of of what the revenue could look like on a stabilized basis is in today's market.

Michael John Grondahl: But the number dropped by about 8 million. Are you happy where your pipeline is? Do you kind of need to rebuild some of that now?

Speaker Change: In a rising delinquency rate environment or a more normal delinquency environment.

Speaker Change: And yes.

Speaker Change: It's a very profitable.

Michael John Grondahl: Or, I don't know, just help us think about that pipeline, the size of it, what it needs to be to kind of..., continue to support. Yeah, I think you're right, Mike, the reason for the drop primarily reflects sales wins. And we have some pretty meaningful sales when you see, I think there's a footnote to it, but in April, we had a pretty good sales win that I talked about in my prepared remarks related to our trustee business. We think we're going to sign a second agreement, hopefully this quarter, which will go into the win column as well. Look, we're never happy with the sales pipeline.

William B. Shepro: Or, I don't know, just help us think about that pipeline, the size of it, what it needs to be to kind of..., continue to support. Yeah, I think you're right, Mike, the reason for the drop primarily reflects sales wins. And we have some pretty meaningful sales when you see, I think there's a footnote to it, but in April, we had a pretty good sales win that I talked about in my prepared remarks related to our trustee business. We think we're going to sign a second agreement, hopefully this quarter, which will go into the win column as well. Look, we're never happy with the sales pipeline.

Speaker Change: Business for us.

Speaker Change: Got it and then on the on the cost base. So clearly there were you had some cost cuts and that's also that's contributed and the increase in revenues contributed to the increase in profitability.

Speaker Change: None.

Speaker Change: With the cost cuts.

Speaker Change: Or your cost base currently is that to stay.

Speaker Change: Or are there more cost cuts to come more.

Speaker Change: Some of them.

Speaker Change: Yes, so let's talk just first about on the corporate side there were some onetime benefits we got in the first quarter, but even if you normalize for those one time benefits, we still brought the cost down compared to the fourth quarter.

William B. Shepro: We want it to be bigger, Mike, and we'd be a strong sales team that's done a very nice job of building the pipeline, winning market share in a really tough market today, particularly on the default side. And so I'm pleased with the progress we're making, but I'm never, you know, I always want that pipeline to be bigger. And we talk about it internally, not just this quarter, but each quarter. We set pretty aggressive goals around how we want to grow the pipeline, but we feel good.

Speaker Change: So we won't we're not anticipating those one time benefits to continue in future quarters. I think there is some modest and Michelle jump in savings in corporate in the second half of the year.

Speaker Change: Hi, Michelle right that's right.

Michelle: Great Tech within the technology and communications line.

Michelle: Yes, so I think youll see a little bit of savings there, maybe just a little bit in occupancy as well a modest amount, but for the most part I think.

Michael John Grondahl: This is a weighted average pipeline. Keep in mind that the actual pipeline is much higher. Got it, got it. Okay, well that, hey, that color's helpful.

Michelle: We don't have any new set of initiatives beyond what's already been planned for the rest of the year.

Michael John Grondahl: Thanks and good luck. Thanks Mike. One moment for our next question. Your next question comes from Raj Sharma with B. Reilly.

Operator: Thanks and good luck. Thanks Mike. One moment for our next question. Your next question comes from Raj Sharma with B. Reilly.

Michelle: And then when you look at the business units Raj there will be a little bit of ramping up some costs in the second quarter in anticipation of what we think is going to be very meaningful growth going into the third and fourth quarter, but that would just be sort of a normal you would expect there's going to be some hiring in advance of that revenue coming in.

Operator: Raj, go ahead. Your line is open. Yeah, hi. So congratulations on the increase in profitability. I wanted to ask you some questions on this slide. You know, at the earlier stage, the business wins that are contributing to $88 million in annualized revenue increase. How is that split, you know, that's slide six; how does that split between the default services and the market? I mean, I'm assuming that has nothing to do with the HUBZoo side, the marketplace, and also how does that split with origination? Sure. So, hey Raj, let me turn to that slide.

Michelle: In the second quarter. So we expect some modest revenue growth in Q2 compared to Q1.

Michelle: But EBITDA.

Michelle: There'll be a modest impact to EBITDA given some of the hiring in advance of this revenue getting to us are sort of a stabilized level, but we think thats very good hiring.

Michelle: And certainly in line with our margin expectations that new business is certainly in line with our margin expectations.

Speaker Change: Got it and just a couple more questions. If you can better meet the new.

Speaker Change: Obviously.

Speaker Change: You are focusing on the earlier stage of the foreclosure process.

Speaker Change: The wins there there is.

Speaker Change: Normal run rate scenario that you have talked about in the past.

Rajiv Sharma: You know, the service revenue scenario. Yes, sir, you're on slide six. So of that $88 million, I would say a meaningful portion of that is tied to the growth of our renovation business. Then some of it is tied to the growth of these trustee wins, and I think this is a sales win through April 20th or so. It may be April 24th.

William B. Shepro: You know, the service revenue scenario. Yes, sir, you're on slide six. So of that $88 million, I would say a meaningful portion of that is tied to the growth of our renovation business. Then some of it is tied to the growth of these trustee wins, and I think this is a sales win through April 20th or so. It may be April 24th.

Speaker Change: $45 million of EBITDA.

Speaker Change: And $2 $35 million of revenues.

Speaker Change: How does that change that thing changes incrementally by this $88 million.

Speaker Change: Yes.

unknown: Yes, Raj I think that's a very good question look we did a bit of a back of the envelope and this of course several assumptions that go into how we think about this.

Rajiv Sharma: But if if the market were also to get back to normal and now we're assuming that our ankle portfolio as they continue to run off over the next couple of years and we're also assuming a little bit of a <unk>.

William B. Shepro: So this includes the trustee business and the renovation business would probably be the two. The renovation business being the largest, then the two trustee wins, and then the next largest would probably be, I don't have that right in front of me, but I think some of that REO auction work that we're doing for a loan servicer is a market share gain, and then there's some on the origination side, but it's pretty small, relatively speaking, compared to what's the growth in the servicer and real estate segment There's a little bit of tidal winds in there as well.

Rajiv Sharma: Turn on our on our pre pandemic legacy business, if you take that into consideration and we're back to a normal operating environment roughly at normal.

Rajiv Sharma: At pre pandemic delinquency levels, we think EBITDA could it could grow by as much as what Michelle close to <unk>.

Rajiv Sharma: 2000, $25 million, that's probably closer to 25 and your revenue would grow by as much as $60 million above the scenario. We presented today. So there's a lot of upside even if delinquency rates just stay at the historically low levels, but the market gets back to normal the foreclosure initiations.

Rajiv Sharma: Right. So, all this is, if I'm correct and understanding all that all this, all these wins are in the earlier stage of the foreclosure process, basically, if the foreclosures market is not moving up considerably, and you know, there's more loss mitigation, and there's more loan modifications and other early. So, this is the earlier stage. Could you talk about the trustee?

William B. Shepro: Right. So, all this is, if I'm correct and understanding all that all this, all these wins are in the earlier stage of the foreclosure process, basically, if the foreclosures market is not moving up considerably, and you know, there's more loss mitigation, and there's more loan modifications and other early. So, this is the earlier stage. Could you talk about the trustee?

Rajiv Sharma: Foreclosure sale conversion rates gets back to normal there is a lot of upside. In addition, our scenario we presented today doesn't include sales.

Rajiv Sharma: Take place beyond April 20th.

Rajiv Sharma: As we continue to win new business that should improve our performance as well, we're just isolating the first quarter and the <unk>.

Rajiv Sharma: And pro forma.

Rajiv Sharma: Analyzing the sales wins.

Rajiv Sharma: We've already had.

Rajiv Sharma: Is, you know, the trustee deferral expansion business? You are taking a share there, um, and that's largely all of the gains, but do you do you make much money if there is? There's loss mitigation, loan modification. Yeah.

William B. Shepro: Is, you know, the trustee deferral expansion business? You are taking a share there, um, and that's largely all of the gains, but do you do you make much money if there is? There's loss mitigation, loan modification. Yeah.

Speaker Change: Got it.

Speaker Change: Thank you for that that's really good color. Thank you for taking my questions.

Speaker Change: Take this offline. Thank you great. Thank you Raj.

Speaker Change: Thank you.

Speaker Change: I'm showing no further questions at this time.

Speaker Change: I would now like to turn it back to Bill CFO for closing remarks.

William B. Shepro: Great. Thanks, operator, we're very pleased with our first quarter financial performance and believe we are well positioned for the rest of this year and beyond and thanks for joining today.

William B. Shepro: So, we're a foreclosure trustee, and I think it's 11 or 12 states. And there's milestone billing, Raj. So, and we're not assuming that each foreclosure file we receive makes it all the way through the end of the process. But in the milestone billing process, I think you're probably billing 60% or 70% of the total fees in the first couple months of receiving the referral. So it's not dependent on making it all the way through to the end.

William B. Shepro: Okay.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

William B. Shepro: [music].

William B. Shepro: Yeah.

William B. Shepro: And our analysis or forecast of what the revenue could look like on a stabilized basis is in today's market, not in a rising delinquency rate environment or a more normal delinquency environment. And yes, it's a very profitable business for us.

William B. Shepro: [music].

William B. Shepro: Okay.

William B. Shepro: [music].

Rajiv Sharma: And then on the cost base, so clearly, you've had some cost cuts and that's also, that's contributed to the increase in revenues. Are you done with the cost cuts or, you know, your cost base currently is that to stay? Um, or there are more cost cuts to come? We have seen some.

William B. Shepro: Okay.

William B. Shepro: [music].

William B. Shepro: Yeah, so let's talk first about on the corporate side. There were some one-time benefits we got in the first quarter. But even if you normalize for those one-time benefits, we still brought the cost down compared to the fourth quarter. So we won't, we're not anticipating those one-time benefits to continue in future quarters. I think there's some modest and Michelle jump in savings in corporate in the second half of the year. That's right; it's in corporate tech; it's in the technology and communications line.

William B. Shepro: Yes.

William B. Shepro: That's right, it's in corporate tech, it's in the technology and communications line. Yeah, so I think you'll see a little bit of savings there, maybe just a little bit of occupancy as well, a modest amount. But for the most part, I think we don't have any new set of initiatives beyond what's already been planned for the rest of the year.

William B. Shepro: Yeah, so I think you'll see a little bit of savings there, maybe just a little bit of occupancy as well, a modest amount. But for the most part, I think we don't have any new set of initiatives beyond what's already been planned for the rest of the year. And then when you look at the business units, Raj, there will be a little bit of ramping up of some costs in the second quarter in anticipation of what we think is going to be very meaningful growth going into the third and fourth quarters.

William B. Shepro: And then when you look at the business units, Raj, there will be a little bit of ramping up of some costs in the second quarter in anticipation of what we think is going to be very meaningful growth going into the third and fourth quarters. But that would just be sort of normal, you know; you would expect there to be some hiring in advance of that revenue coming in in the second quarter.

William B. Shepro: But that would just be sort of a normal, you know, you would expect there's going to be some hiring in advance of that revenue coming in in the second quarter. So we expect some modest revenue growth in Q2 compared to Q1. But EBITDA, there'll be a modest impact on EBITDA given some of the hiring in advance of this revenue getting to a sort of a stabilized level, but we think that's very good hiring and certainly in line with our margin expectations.

William B. Shepro: So we expect some modest revenue growth in Q2 compared to Q1. But EBITDA, there'll be a modest impact on EBITDA given some of the hiring in advance of this revenue getting to a sort of a stabilized level. But we think that's very good hiring and certainly in line with our margin expectations. The new business is certainly in line with our margin expectations. Got it, and just a couple more questions if you can bear with me. Obviously, you are focusing on the earlier stage of the foreclosure process. You're having wins there. There is the normal run rate scenario that you have talked about in the past, you know, 45 million of EBITDA and 235 million How does that change? That changes incrementally by this 88 million. Yeah, so, Raj, I think that's a very good question.

William B. Shepro: The new business is certainly in line with our margin, got it, and just a couple more questions, if you can bear with me. Obviously, you are focusing on the earlier stage of the foreclosure process; you're having wins there. There is the normal run rate scenario that you have talked about in the past, you know, 45 million of EBITDA and 235 million of revenues. How does that change? That changes incrementally by this 88 million. Yeah, so, Raj, I think that's a very good question.

William B. Shepro: [music].

Rajiv Sharma: Look, we did a bit of a back of the envelope, and there's, of course, several assumptions that go into how we think about this. But if the market were also to get back to normal, and now we're assuming that, you know, of our anchor portfolios, they continue to run off over the next couple of years, and we're also assuming a little bit of a churn on our pre-pandemic legacy business, if you take that into consideration and we're back to a normal operating environment, roughly at normal, you know, at pre-pandemic delinquency levels, we think EBITDA could grow by as much as what, Michelle, close to, you know, 20, $25 million, probably closer to 25, and your revenue would grow by as much as $60 million above the scenario we presented today.

William B. Shepro: Look, we did a bit of a back of the envelope, and there's, of course, several assumptions that go into how we think about this. But if the market were also to get back to normal, and now we're assuming that, you know, of our anchor portfolios, they continue to run off over the next couple of years, and we're also assuming a little bit of a churn on our pre-pandemic legacy business, if you take that into consideration and we're back to a normal operating environment, roughly at normal, you know, at pre-pandemic delinquency levels, we think EBITDA could grow by as much as what, Michelle, close to, you know, 20, $25 million, probably closer to 25, and your revenue would grow by as much as $60 million above the scenario we presented today.

Rajiv Sharma: So there's a lot of upside, even if delinquency rates just stay at historically low levels, but the market gets back to normal, you know, the foreclosure initiations and foreclosure sale conversion rates get back to normal. In addition, our scenario we presented today doesn't include sales that take place beyond April 20th. As we continue to win new business, that should improve our performance as well. We're just isolating the first quarter and pro forma analyzing the sales win we've already had. Got it. Thank you for that. That's a really good color.

William B. Shepro: So there's a lot of upside, even if delinquency rates just stay at historically low levels, but the market gets back to normal, you know, the foreclosure initiations and foreclosure sale conversion rates get back to normal. In addition, our scenario we presented today doesn't include sales that take place beyond April 20th. As we continue to win new business, that should improve our performance as well. We're just isolating the first quarter and pro forma analyzing the sales win we've already had. Got it. Thank you for that. That's a really good color.

Rajiv Sharma: Thank you for taking my questions. I'll take this offline. Thank you. Great. Thank you, Raj. Thank you. I'm not asking any further questions at this time. I would now like to turn it back to Bill Shepro for closing remarks.

William B. Shepro: Thanks, Operator. We're very pleased with our first quarter financial performance and believe we're well positioned for the rest of this year and beyond. And thanks for joining us. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Welcome to the Altisource Portfolio Solutions first quarter 2024 earnings call. At this time, all participants are in listen-only mode.

William B. Shepro: Thanks, Operator. We're very pleased with our first quarter financial performance and believe we're well positioned for the rest of this year and beyond, and thanks for joining us. This does conclude the program. You may now disconnect. This video is educational and is not meant to replace proper medical or therapeutic treatment advice.

Operator: Although EFT is widely used as a self help technique it is still in the experimental stages. Users should seek the advice of qualified physicians and health professionals regarding its use. ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Day 73 Day 74 Day 75 Day 76 Day 77 Day 88 Day 89 Day 90 Day 91 ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? This video is sponsored by the American Heart Association, Good day and thank you for standing by. Welcome to the Altisource Portfolio Solutions first quarter 2024 earnings call. At this time, all participants are in listen-only mode.

Operator: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star-one-one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Michelle Esterman, Chief Financial Officer. Thank you, Operator.

Michelle D. Esterman: Please review the forward-looking statements sections in the company's earnings release and quarterly slides, as well as the risk factors contained in our 2023 Form 10-K, describing some factors that may lead to different results. We undertake no obligation to update statements, financial scenarios, and projections previously provided or provided herein as a result of a change in circumstances, new information, or future events.

Michelle D. Esterman: During this call, we will present both GAAP and non-GAAP financial measures. In our earnings release and quarterly slides, you will find additional disclosures regarding non-GAAP measures. A reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides.

Michelle D. Esterman: Joining me for today's call is Bill Shepro, our Chairman and Chief Executive Officer. I will now turn the call over to Bill. Thanks, Michelle, and good morning.

William B. Shepro: I'll begin on slide 4. I'm very pleased with our 1st quarter performance. We generated $4.6M of adjusted EBITDA, marking our best quarterly performance since the 3rd quarter of 2020 on $36.9M of service revenue. We believe our financial results and sales wins demonstrate that we are not waiting for the default market to return to normal or for delinquency rates to rise to achieve growth. We improved adjusted EBITDA by more than $30 million over the last two calendar years in an incredibly difficult environment of low origination volume coupled with close to historically low mortgage delinquency rates.

William B. Shepro: For 2024, in what continues to be a difficult environment, we forecast that we will grow revenue by 23% and adjusted EBITDA by $21 million compared to last year at the midpoint of our guidance. If achieved, this represents an adjusted EBITDA improvement of approximately $52 million over the three-year period. For the balance of this year, we anticipate quarter-over-quarter service revenue and adjusted EBIT of growth compared to the same quarters in 2023, as we continue to ramp sales wins and win new business on a lower cost base. And as the default market returns to normal and origination volumes increase, Altisource should benefit even more.

William B. Shepro: In our Service Earned Real Estate segment, we are winning market share. Of the three exciting servicer and real estate pipeline opportunities I discussed with you last month, we entered into agreements with two, one in March and one in May. We anticipate signing a third agreement this quarter. In our Origination segment, we are increasing the adoption of our solutions that help originators save money. During the quarter, we signed another 13 agreements for our tri-merge credit product and related retailer services.

William B. Shepro: We are already seeing the benefit of our growth initiatives and believe this will be reflected in our financial results as the year progresses. I'll discuss our sales progress and pipeline in more detail in a few minutes. Slide 5 provides additional information on our financial performance and trends. Total company service revenue grew 15% compared to the fourth quarter of 2023, with 11% growth in the service and real estate segment and 30% in the origination segment.

William B. Shepro: Compared to the first quarter of 2023, total company service revenue was almost flat, driven by growth in the origination segment, offset by a decline in the service and real estate segment from an estimated $1 million of one-time revenue in March 2023. Company-wide adjusted EBITDA of $4.6 million was $4.4 million higher than the fourth quarter and $3.2 million higher than the first quarter, 2023, and represents 23% of the midpoint of our 2024 guidance, which will be provided on our fourth quarter call.

William B. Shepro: Adjusted EBITDA margins expanded to 12.6% in the first quarter of 2024 compared to 0.7% in the fourth quarter of 2023 and 4% in the first quarter of 2023. First quarter 2024 total company-adjusted EBITDA included an estimated $600,000 in non-recurring net benefits, and first quarter last year included an estimated $2.1 million in non-recurring net benefits. Total company improvement was driven by margin expansion in both of our segments and lower corporate costs. Over the last couple of years, we have provided you with a run rate scenario to demonstrate what Altisource's run rate revenue and adjusted EBITDA could look like in a normal pre-pandemic default operating environment while holding the origination segment comp.

William B. Shepro: While we believe that our 2024 guidance takes a conservative approach to the recovery of the default market, we also believe the market will return to a more normal environment in time. Mortgages originated over the last couple of years after a massive increase in home values generally don't have the same level of home equity compared to loans originated before then. In addition, FHA loans are typically originated with only 3% down, providing a much lower equity cushion, even with home price appreciation over the last several years.

William B. Shepro: Of course, we are not waiting for the market to recover to seek to grow our business. We have a strong suite of solutions that we believe support both the servicer and origination markets and are winning new business. To help you understand the magnitude of the revenue and earnings opportunity from our sales wins in both segments, we are providing a financial scenario on slide 6. The scenario annualizes and adjusts our first-quarter performance to exclude non-recurring items and adds estimated fully ramped service revenue and adjusted EBITDA related to business we have already won, net of an assumed level of churn.

William B. Shepro: We have made tremendous progress winning new business and improving our operational efficiency in a tough market. We believe this scenario illustrates the bright future ahead for Altisource as we ramp up our sales wins with additional growth potential. Slide 7 provides additional information on our servicer and real estate side. First quarter 2024 service revenue in this segment was 11% higher than the fourth quarter of 2023 and 2% lower than the first quarter of 2023.

William B. Shepro: If you exclude the estimated $1 million of non-recurring revenue from the first quarter of last year, revenue for the first quarter of this year would have been modestly higher than the first quarter of last year. We continue to experience growth in certain higher-margin businesses that support the earlier stage of the default process. Adjusted EBITDA of $10.4 million was 21% higher than the fourth quarter of 2023 and 6% lower than the first quarter of last year. Adjusted EBITDA margins were 35.8% in the first quarter of 2024, compared to 32.9% in the fourth quarter of 2023 and 37.4% in the same period last year.

William B. Shepro: The improvement compared to last quarter reflects our efficiency initiatives, partially offset by an estimated $600,000 in net nonrecurring expenses in the first quarter of this year. First quarter 2023 margins were modestly higher, from an estimated $1 million of prior year non-recurring revenue, the majority of which increased adjusted EBITDA, and the estimated $600,000 of current year net non-recurring expenses I just discussed. Slide 8 provides a summary of our servicer and real estate sales wins and pipelines.

William B. Shepro: We have completed the onboarding process for both WINS and began receiving referrals this month. These WINS represent an expansion of services that we provide to existing customers. We also made progress ramping sales wins in 2023. In the fourth quarter of 2023, we signed agreements to provide REO renovation services for one of the larger owners of REO assets. We received our first renovation referrals last week.

William B. Shepro: The decline in the sales pipeline compared to last quarter primarily reflects our sales win. Turning to the macroeconomic environment in slide 9, as we discussed on our call in March, we continue to believe that there are early signs of consumer financial stress and that these could be precursors to a rise in mortgage delinquency rates. Moving to our origination segment, in slide 10, our origination segment performed very well.

William B. Shepro: Despite the 6% decline in industry-wide residential origination volume in the first quarter compared to the fourth quarter of 2023, the origination segment outperformed the market with service revenue growth of 30% and an adjusted EBITDA improvement of $900,000 to $500,000. We also grew service revenue by 7% and adjusted EBITDA by $1.2 million compared to last year. Revenue growth was driven by customer wins from our newer solutions and price increases in the LendersOne business. Adjusted EBITDA improved from revenue growth and cost savings and efficiency initiatives.

William B. Shepro: Turning to our corporate segment on slide 12, we continue to bring down our operating costs. First quarter 2024 corporate adjusted EBITDA loss of $6.3 million was $1.8 million, or 22% better than the fourth quarter of 2023, and $2.7 million, or 30% better than the first quarter of 2023. The first quarter of 2024 results included an estimated $1.2 million of net non-recurring benefits, and the first quarter of 2023 included an estimated $1.3 million of non-recurring benefits. Absent these benefits, the first quarter 2024 adjusted EBITDA loss in corporate was 4% better than the fourth quarter 2023 and 25% better than the first quarter 2020.

William B. Shepro: [music].

William B. Shepro: The lower adjusted EBITDA loss also reflects our cost savings and efficiency this year. Moving to slide 13. In summary, I'm pleased with our first quarter performance. We continue to win meaningful new business and are making good progress ramping 2023 sales wins in a historically difficult market. As a result, we anticipate that we will generate quarterly year-over-year service revenue growth and adjusted EBITDA growth compared to the same quarters in 2023 for the balance of the year.

William B. Shepro: We believe we are also on track to achieve 13 to 32 percent service revenue growth over 2023 and adjusted EBIT of between $17.5 and $22.5 million in 2024. If achieved, this represents an adjusted EBITDA improvement of approximately $52 million over a three-year period. I'll now open up the call to questions. Operator.

William B. Shepro: Good day, and thank you for standing by welcome to the ultra source portfolio solution.

William B. Shepro: In first quarter 'twenty 'twenty four earnings call.

Speaker Change: Time, all participants are in listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press star one one.

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Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: Now like to hand, the conference over to your first speaker today, Michelle estrogen Chief Financial Officer.

Michelle D. Esterman: Thank you operator, we first want to remind you that the earnings release Form 10-Q, and quarterly slides are available on our website at www dot out to source Dot com.

Michelle D. Esterman: These provide additional information investors may find useful our remarks today include forward looking statements, which involve a number of risks and uncertainties that could cause actual results to differ.

Michelle D. Esterman: Financial projections and scenarios are expressly qualified as forward looking statements and as with other forward looking statements should not be unduly relied upon.

Michelle D. Esterman: In addition to the usual uncertainty associated with forward looking statements. The continuing impacts of government and service are responsive to the COVID-19 pandemic governmental fiscal policies and current economic conditions make it extremely difficult to predict the future state of the economy and the industries in which we operate.

Michelle D. Esterman: <unk> as well as the potential impact on LTE source.

Michelle D. Esterman: Please review the forward looking statements sections in the company's earnings release, and quarterly slides as well as the risk factors contained in our 2023 Form 10-K, describing some factors that may lead to different results.

Michelle D. Esterman: We undertake no obligation to update statements financial scenarios and projections previously provided or provided herein as a result of a change in circumstances.

Michelle D. Esterman: Information or future events.

Michelle D. Esterman: During this call we will present, both GAAP and non-GAAP financial measures in our earnings release and quarterly slides you will find additional disclosures regarding the non-GAAP measures a reconciliation.

Michelle D. Esterman: Affiliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides.

Michelle D. Esterman: Joining me for today's call is Bill Chaperone, our chairman and Chief Executive Officer, I will now turn the call over to Bill.

William B. Shepro: Thanks, Michelle and good morning, I'll begin on slide four.

William B. Shepro: We believe our financial results and sales wins demonstrate that we are not waiting for a default market to return to normal or for Duane currency rates to rise to achieve growth.

William B. Shepro: Proved adjusted EBITDA by more than $30 million over the last two calendar years.

Michelle D. Esterman: Incredibly difficult environment of lower origination volume, coupled with close to historically low mortgage delinquency rates.

Michelle D. Esterman: For 2024, and what continues to be a difficult environment, we forecast that we will grow revenue by 23% and adjusted EBITDA by $21 million compared to last year at the midpoint of our guidance. If achieved this represents an adjusted EBITDA improvement of approximately $52 million over the three year.

Michelle D. Esterman: Period.

Michelle D. Esterman: So the balance of this year, we anticipate quarter over quarter service revenue and adjusted EBITDA growth compared to the same quarters in 2023, because we continue to ramp sales wins, we're winning new business on a lower cost base.

Michelle D. Esterman: And as the default market returns to normal and origination volumes increased outsource should benefit even more.

Michelle D. Esterman: In our servicer, our real estate segment, we are winning market share.

Michelle D. Esterman: Of the three exciting servicer, our real estate pipeline opportunities I discussed with you last month, we entered into agreements with two one in March and one next month we.

Michelle D. Esterman: We anticipate on a third agreement this quarter and.

Michelle D. Esterman: In our originations segment, we are increasing adoption of our solutions that help originators save money during the quarter. We signed another 13 agreements for Tri merge credit product and related retailer services.

Michelle D. Esterman: We are already seeing the benefit of our growth initiatives and believe this will be reflected in our financial results as the year progresses.

Michelle D. Esterman: I'll discuss our sales progress and pipeline in more detail in a few minutes.

Michelle D. Esterman: Slide five provides additional information on our financial performance and trends.

Michelle D. Esterman: Total company service revenue grew 15% compared to the fourth quarter of 2023 with 11% growth in the service of our real estate segment.

Michelle D. Esterman: 3% and the origination segment.

Michelle D. Esterman: Compared to the first quarter of 2023 total company service revenue was almost flat driven by growth in the origination segment offset by a decline in the servicer in real estate segment from an estimated $1 billion of one time revenue in March 2023.

Operator: Thank you. And at this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

Operator: To withdraw your question, please press star 11 again, and then please stand by now as we compile our Q&A. The first question comes from Mike Grondahl with Northland. Mike, go ahead; your line is open. Hey, thank you. Just trying to think through... Bill, kind of your latest thoughts on when foreclosure sales are going to happen and is there any other leading indicator? We should, um, you know delinquent GSE loans macro things on job loss, but where's your head kind of today? For that ramp, and I don't know, what are you looking for? to help you kind of bend.

Michelle D. Esterman: Companywide adjusted EBITDA of $4 $6 million was $4 $4 million higher than the fourth quarter of $3 $2 million higher than the first quarter 2023 and represents 23% at the midpoint of our 2020 for guidance.

Michelle D. Esterman: Provided on our fourth quarter call.

Michelle D. Esterman: Adjusted EBITDA margins expanded to 12, 6% in the first quarter of 2024 compared to <unk>, 7% and the <unk>.

Michael John Grondahl: Yeah, hey, Mike. Thanks for the question. So I guess the first point I want to make is, we're not waiting for the market to recover, you know, the default market to get back to normal, or for delinquency rates to rise to improve our revenue and earnings. I think that's really important.

Michelle D. Esterman: Fourth quarter of 23, 4% in the first quarter of 'twenty three.

Michelle D. Esterman: First quarter 2024 total company adjusted EBITDA included an estimated $600000 in nonrecurring net benefits in first quarter last year included an estimated $2 1 million in nonrecurring net benefits.

William B. Shepro: And so, we're paying close attention, and we do anticipate that, over time, the market will get back to normal. If you look, and I talked a little bit about this in my prepared remarks. If you look at loans originated, you know, and there have been several million loans originated over the last couple of years that followed the run-up in home prices, and if you look at FHA loans that have 97% loan-to-value, you know, even with the run-up in home prices over the last couple of years, there's not a lot of equity in those homes.

Michelle D. Esterman: Total company improvement was driven by margin expansion in both of our segments and lower corporate costs.

Michelle D. Esterman: Over the last couple of years, we have provided you with a run rate scenario to demonstrate what alpha sources run rate revenue and adjusted EBITDA could look like in a normal pre pandemic default operating environment, while holding the origination segment comp state.

Michelle D. Esterman: While we believe that our 2024 guidance takes a conservative approach to the recovery of the default market. We also believe the market will return to a more normal environment in time.

Michelle D. Esterman: Loans originated over the last couple of years after a massive increase in home values generally don't have the same level of home equity compared to loans originated before then.

Michelle D. Esterman: Please review the forward-looking statements sections in the company's earnings release and quarterly slides, as well as the risk factors contained in our 2023 Form 10-K, describing some factors that may lead to different results. We undertake no obligation to update statements, financial scenarios, and projections previously provided or provided herein as a result of a change in circumstances, new information, or future events.

Michelle D. Esterman: In addition, FHA loans are typically originated with only 3% down providing a much lower equity cushion even with home price appreciation over the last several years.

Michelle D. Esterman: Of course, we are not waiting for the market to recover to seek to grow our business. We have a strong suite of solutions that we believe support both the servicer and origination markets and are winning new business.

Michelle D. Esterman: To help you understand the magnitude of the revenue and earnings opportunity from our sales wins in both segments, we are providing our financial scenario on slide six.

Michelle D. Esterman: During this call, we will present both GAAP and non-GAAP financial measures. In our earnings release and quarterly slides, you will find additional disclosures regarding non-GAAP measures. A reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides. I will now turn the call over to Bill Shepro, our Chairman and Chief Executive Officer. Thank you, Michelle, and good morning.

Michelle D. Esterman: This scenario annualize and adjust our first quarter performance to exclude nonrecurring items and add estimated fully ramped service revenue and adjusted EBITDA.

William B. Shepro: And so, I think as the economy, you know, as things get back to normal, you would expect the operating environment for those more recent cohorts of loan originations to return to a more normal operating environment. And, by the way, Mike, if the market, we did run the math and said what happens if the market were to get back to normal to this scenario we presented today? And I think you would see, you know, when we look back at the run rate scenario we provided, I think, in the third or fourth quarter of last year, and we account for some potential runoff of our anchor client portfolios and some other churn from customers.

Michelle D. Esterman: Related to business, we've already won net of an assumed level of churn.

Michelle D. Esterman: As you can see on the slide ramping estimated revenue from existing sales wins at estimated EBITDA margins could increase first quarter 2024 annualized service revenue.

William B. Shepro: I mean, we could, in a normal environment, add another $30 million, roughly of adjusted EBITDA to the scenario we presented today. So on top of the, I think it was, $35 million of adjusted EBITDA in our scenario, you could add as much as another $30 million of EBITDA. Now there may be a little bit of additional fixed costs we would add, but the number, you know, EBITDA, becomes quite interesting as that market recovers.

Michelle D. Esterman: From $147 million to $219 million and adjusted EBITDA from 16 million to $35 million.

William B. Shepro: So it's hard for us to tell when it's going to recover. We think some of the early signs exist that there could be some stress in the market, but we're not waiting for that to happen to grow our revenue. Got it. And then, two questions kind of related to slide 17.

Michelle D. Esterman: This doesn't assume any further wins from our current sales pipeline.

Michelle D. Esterman: <unk> default operating environment revenue from the launch of new lenders one solutions, an increase in delinquency rates, nor a return to a higher level of origination volume.

Michelle D. Esterman: We've made tremendous progress, winning new business and improving our operational efficiency and a tough market.

William B. Shepro: For 2024, in what continues to be a difficult environment, we forecast that we will grow revenue by 23% and adjusted EBITDA by $21 million compared to last year at the midpoint of our guidance. If achieved, this represents an adjusted EBITDA improvement of approximately $52 million over the three-year period. For the balance of this year, we anticipate quarter-over-quarter service revenue and adjusted EBIT of growth compared to the same quarters in 2023, as we continue to ramp sales wins and win new business on a lower cost base. And as the default market returns to normal and origination volumes increase, Altisource should benefit even more.

Michelle D. Esterman: We believe this scenario illustrates the bright future ahead for Alto source as we ramp our sales wins with additional growth potential.

Michelle D. Esterman: Slide seven provides additional information on our servicer, our real estate segment.

Michelle D. Esterman: First quarter 2020 for service revenue in this segment was 11% higher than the fourth quarter of 2023, and 2% lower than the first quarter of 2023.

Michelle D. Esterman: If you exclude the estimated $1 million of nonrecurring revenue from the first quarter of last year revenue for the first quarter of this year would have been modestly higher than the first quarter of last year.

Michelle D. Esterman: We continue to experience growth in certain higher margin businesses that support the earlier stage of the default process.

William B. Shepro: In our Service Earned Real Estate segment, we are winning market share. Of the three exciting servicer and real estate pipeline opportunities I discussed with you last month, we entered into agreements with two, one in March and one in May. We anticipate signing a third agreement this quarter. In our Origination segment, we are increasing the adoption of our solutions that help originators save money. During the quarter, we signed another 13 agreements for our tri-merge credit product and related retailer services.

Michelle D. Esterman: Adjusted EBITDA of $10 4 million was 21% higher than the fourth quarter of 2023 and.

Michelle D. Esterman: 6% lower than the first quarter of last year.

Michelle D. Esterman: Adjusted EBITDA margins were 35, 8% in the first quarter of 2024 compared to 32, 9% in the fourth quarter of 2023 and 37, 4% from the same period last year.

Michelle D. Esterman: The improving compared to last quarter reflects our efficiency initiatives, partially offset by an estimated $600000 of net nonrecurring expenses in the first quarter of this year.

William B. Shepro: We are already seeing the benefit of our growth initiatives and believe this will be reflected in our financial results as the year progresses. I'll discuss our sales progress and pipeline in more detail in a few minutes. Slide 5 provides additional information on our financial performance and trends. Total company service revenue grew 15% compared to the fourth quarter of 2023, with 11% growth in the service and real estate segment and 30% in the origination segment.

Michael John Grondahl: The first one, you know, the consolidated sales pipeline. You guys had a bunch of women in 23, right? Sixty-eight million dollars worth, and you've cumulatively got about 8 million of that into revenue. If we look at the same time period, those five quarters, how should we think about the next, I don't know, I'll call it the remaining 60 million, flowing in? Yeah, that's a very good question, Mike.

Michelle D. Esterman: First quarter 2023 margins were modestly higher.

Michelle D. Esterman: An estimated $1 billion of prior year nonrecurring revenue the majority of which increased adjusted EBITDA and the estimated $600000 of current year net nonrecurring expenses I just discussed.

Michelle D. Esterman: Slide eight provides a summary of our servicer and real estate sales wins and pipeline.

Michelle D. Esterman: For the quarter, we won new business that we estimate will generate $6 $3 million in annual revenue on a stabilized basis over the next couple of years.

Michelle D. Esterman: Last quarter I highlighted three larger late stage opportunities in the pipeline.

William B. Shepro: But I think from an EBITDA perspective, we're expecting to be north of a $30 million EBITDA run rate if you annualize our fourth quarter performance. So you're going to start to see the benefit. And again, we're being very conservative on the default market recovering.

William B. Shepro: This is primarily from ramping sales wins from a more efficient cost base or lower cost. Got it, and then you know that that's helpful for that exit run rate and then, My last question, on the top line, an attractive sales pipeline. I sort of get... 3Q23, 4Q23, you know, those numbers were kind of flattish, and I think a chunk of the pipeline went down into the wind. But then, if I go 4Q23 to 1Q24. Yes, you had 10 million fallout to win.

Michelle D. Esterman: Turkey towards the end of the first quarter, we signed the agreement to provide REO auction services for a loan servicer.

Michelle D. Esterman: In April we signed an agreement to provide foreclosure trustees services for a loan servicer and anticipate signing the second trustee agreement this quarter.

Michelle D. Esterman: We have completed the onboarding process for both wins and began receiving referrals this month.

Michelle D. Esterman: These wins represent an expansion of services that we provide to existing customers.

Michelle D. Esterman: We also made progress ramping sales wins from 2023 in the fourth quarter of 2023, we signed agreements to provide REO renovation services for one of the larger owners of our REO assets.

Michelle D. Esterman: We received our first renovation referrals last week.

Michelle D. Esterman: We anticipate referral volume from this customer will ramp as the year progresses.

Michelle D. Esterman: Another fourth quarter win was an expansion of wallet share with an existing customer and our higher margin trustee business.

Michelle D. Esterman: We started to receive an increase in referrals in January which continued to grow through the quarter we.

Michelle D. Esterman: We anticipate these referral volumes to ramp through the summer and stabilize thereafter.

Michelle D. Esterman: We ended the quarter with a total weighted average sales pipeline of $26 $7 million of annual revenue on a stabilized basis, most of which we forecast will impact 2025 and beyond.

Michelle D. Esterman: The decline in the sales pipeline compared to last quarter, primarily reflects our sales wins.

Michelle D. Esterman: Turning to the macroeconomic environment in slide nine.

Michelle D. Esterman: As we discussed on our call in March we continue to believe that there are early signs of consumer financial stress and that these could be precursors to arise in mortgage delinquency rates.

William B. Shepro: Of course, we are not waiting for the market to recover to seek to grow our business. We have a strong suite of solutions that we believe support both the servicer and origination markets and are winning new business. As you can see on the slide, ramping estimated revenue from existing sales wins at estimated EBITDA margins could increase first quarter 2024 annualized service revenue from $147 million to $219 million and adjusted EBITDA from $16 million to $35 million.

Michelle D. Esterman: Moving to our origination segment on slide 10.

Michelle D. Esterman: Our origination segment performed very well.

Michelle D. Esterman: Despite the 6% decline in industry wide residential origination volume in the first quarter compared to the fourth quarter of 2023 the.

Michelle D. Esterman: The originations segment outperformed the market with service revenue growth of 30% and an adjusted EBITDA improvement of $900000 to $500000.

Michelle D. Esterman: We also grew service revenue by 7% and adjusted EBITDA by $1 $2 million compared to last year.

Michelle D. Esterman: Revenue growth was driven by customer wins from our newer solutions and price increases and the lenders one business.

Michelle D. Esterman: Adjusted EBIT improved from revenue growth and cost savings and efficiency initiatives.

Michelle D. Esterman: As you can see on the slide the origination segments gross profit gross profit margins adjusted EBITDA and adjusted EBITDA margins, all improved relative to prior quarters.

Michelle D. Esterman: Slide 11 provides a summary of our origination segment sales wins and pipeline.

Michelle D. Esterman: We continue to focus on helping our lenders one members save money and better compete.

William B. Shepro: We have made tremendous progress winning new business and improving our operational efficiency in a tough market. Slide 7 provides additional information on our servicer and real estate side. If you exclude the estimated $1 million of non-recurring revenue from the first quarter of last year, revenue for the first quarter of this year would have been modestly higher than the first quarter of last year.

Michelle D. Esterman: This is driving substantial interest in our solutions.

Michelle D. Esterman: On an.

Michelle D. Esterman: <unk> stabilized basis, we want an estimated $4 $2 million in new business in the first quarter.

Michelle D. Esterman: Our weighted average sales pipeline at the end of the quarter was $13 $9 million.

Michelle D. Esterman: We are excited about our progress in the origination segment during difficult times lenders are more diligently examining their costs and we are winning a lot of new business as a result.

Michelle D. Esterman: With sustained low origination volumes, we have been provided an attractive window of opportunity.

Michelle D. Esterman: We expect to benefit from this growth both today and even more when origination volumes return to more normal levels.

Michelle D. Esterman: Additionally, we continue to focus on rolling out new solutions to help our lenders one members to make more money.

William B. Shepro: Adjusted EBITDA of $10.4 million was 21% higher than the fourth quarter of 2023 and 6% lower than the first quarter of last year. Adjusted EBITDA margins were 35.8% in the first quarter of 2024, compared to 32.9% in the fourth quarter of 2023 and 37.4% in the same period last year. First quarter 2023 margins were modestly higher, from an estimated $1 million of prior year non-recurring revenue, the majority of which increased adjusted EBITDA, and the estimated $600,000 of current year net non-recurring expenses I just discussed.

Michelle D. Esterman: We believe the regular launch of new solutions to lenders one members combined with greater adoption of our existing solutions will strengthen our value proposition for lenders one members and support further revenue and earnings growth in our origination segment.

Michelle D. Esterman: Turning to our corporate segment in slide 12.

Michelle D. Esterman: We continue to bring down our operating costs.

Michelle D. Esterman: First quarter 2020 for corporate adjusted EBITDA loss of $6 3 million was $1 $8 million or 22% better than the fourth quarter of 2023, and $2 7 million or 30% better than the first quarter of 2023.

Michelle D. Esterman: The first quarter 2024 results included an estimated $1.2 million of net nonrecurring benefits in the first quarter of 2023 included an estimated $1 3 million of nonrecurring benefits.

William B. Shepro: Slide 8 provides a summary of our servicer and real estate sales wins and pipelines. In April, we signed an agreement to provide foreclosure trustee services for a loan servicer and anticipate signing the second trustee agreement this quarter.

Michelle D. Esterman: Absent these benefits first quarter 2024, adjusted EBITDA loss in corporate was 4% better than the fourth quarter of 2023.

Michelle D. Esterman: And 25% better than the first quarter 2023.

Michelle D. Esterman: The lower adjusted EBITDA loss also reflects our cost savings and efficiency initiatives.

Michelle D. Esterman: Moving to slide 13.

Michelle D. Esterman: In summary, I'm pleased with our first quarter performance, we continue to win meaningful new business and are making good progress ramping 2023 sales wins in the historically difficult market.

Michael John Grondahl: But the number dropped by about 8 million. Are you happy where your pipeline is? Do you kind of need to rebuild some of that now? Or, I don't know, just help us think about that pipeline, the size of it? What does it need to be to Yeah, I think you're right, Mike. The reason for the drop primarily reflects sales wins. And we have some pretty meaningful sales when you see, I think there's a footnote to it, but in April, we had a pretty good sales win that I talked about in my prepared remarks related to our trustee business. We think we're going to sign a second agreement, hopefully this quarter, which will go into the win column as well. Look, we're never happy with the sales pipeline. We always want it to be bigger, Mike.

Michelle D. Esterman: As a result, we anticipate that we will generate quarterly year over year service revenue and adjusted EBITDA growth compared to the same quarters in 2023 for the balance of the year.

William B. Shepro: These WINS represent an expansion of services that we provide to existing customers. We also made progress ramping up sales wins from 2023. In the fourth quarter of 2023, we signed agreements to provide REO renovation services for one of the larger owners of REO assets. We ended the quarter with a total weighted average sales pipeline of $26.7 million in annual revenue on a stabilized basis, most of which we forecast will impact 2025 and beyond. As we discussed on our call in March, we continue to believe that there are early signs of consumer financial stress and that these could be precursors to a rise in mortgage delinquency rates.

Michelle D. Esterman: We believe we are also on track to achieve 13% to 32% service revenue growth over 2023, and adjusted EBITDA of between $17 five in 'twenty, two and a half million dollars in 2024.

Michelle D. Esterman: If achieved this represents an adjusted EBITDA improvement of approximately $52 million over a three year period.

Speaker Change: I will now open up the call for questions operator.

Speaker Change: To withdraw your question. Please press Star one again and then please standby now as we compile our Q&A.

Speaker Change: Yes.

Speaker Change: First question comes from Mike Grondahl with Northland. Mike Go ahead. Your line is open.

Michael John Grondahl: Okay. Thank you.

Michael John Grondahl: <unk>.

Michael John Grondahl: Okay.

Speaker Change: Just trying to think through.

Michael John Grondahl: Bill kind of your latest thoughts on when foreclosure sales.

Michael John Grondahl: Ramp.

William B. Shepro: And is there any other leading indicator.

William B. Shepro: We should look to.

William B. Shepro: Delinquent GSE loans Matt.

William B. Shepro: Macro things on job loss, but where's your head kind of today.

William B. Shepro: Moving to our origination segment, on slide 10, adjusted EBITDA improved from revenue growth and cost savings and efficiency initiatives. As you can see on the slide, the origination segment's gross profit, gross profit margins, adjusted EBITDA, and adjusted EBITDA margins all improved relative to the prior quarter. This is driving substantial interest in our solution. On an annualized, stabilized basis, we won an estimated $4.2 million in new business in the first quarter. With sustained low origination volumes, we have been provided with an attractive window of opportunity.

Matt: For that ramp and I don't know what are you looking to to help you kind of bench market.

Matt: Yeah, Hey, Mike. Thanks for the question. So I guess, the first point I want to make is we're not waiting for the market to recover and that the default market to get back to normal or for delinquency rates to rise to improve our revenue and earnings I think that's a really important message.

Matt: But then specifically to your question Mike look I think the market is recovering less then we at a slower pace than we expected I thought there given those precursors and horizon auto delinquencies credit card student loan delinquencies. We all thought these were good solid indicators of what ultimately was going to.

Matt: Or what ultimately should happen with mortgage delinquency rates, but today they are sitting in a roughly flat to where they were.

Matt: A year ago.

Matt: And so we're paying close attention and we do anticipate that over time, the market will get back to normal.

Matt: If you look and I talked a little bit about this in my prepared remarks, if you look at.

Matt: Loans originated and there are several million loans originated over the last couple of years that followed the run up in home prices and if you look at FHA loans that are 97% loan to value. There is even with the run up of home prices over the last couple of years, there's not a lot of equity in those homes and so I think as the.

Matt: The economy is it things get back to normal you would expect those.

Matt: The operating environment for those more recent cohorts of loan originations.

Matt: To return to a more normal operating environment.

Speaker Change: And by the way I think Mike if the market, we did run the math and say what happens if the market were to get back to normal to this scenario, we presented today and I think you would see.

Speaker Change: When we when we look back to the run rate scenario, we've provided I think in the third or fourth quarter of last year.

Matt: We.

Matt: We account for some potential run off of our anchor client portfolios and <unk> and some other churn from customers I mean, we could in a normal environment add another $30 million roughly of adjusted EBITDA to the scenario we presented today.

William B. Shepro: We believe the regular launch of new solutions to Lenders1 members, combined with greater adoption of our existing solutions, will strengthen our value proposition for Lenders1 members and support further revenue and earnings growth in our origination site. We continue to bring down our operating costs. First quarter 2024 corporate adjusted EBITDA loss of $6.3 million was $1.8 million, or 22% better than the fourth quarter of 2023, and $2.7 million, or 30% better than the first quarter of 2023.

Matt: So on top of the I think it was.

Matt: 35 million of adjusted EBITDA in our scenario you could add as much as another $30 million of EBITDA now there may be a little bit of additional fixed costs, we would add but the number the EBITDA becomes quite interesting as that market recovers. So it's hard for us to tell when it's going to recover we think some of the early signs.

Matt: <unk> exist.

William B. Shepro: The first quarter of 2024 results included an estimated $1.2 million of net non-recurring benefits, and the first quarter of 2023 included an estimated $1.3 million of non-recurring benefits. Absent these benefits, the first quarter 2024 adjusted EBITDA loss in corporate was 4% better than the fourth quarter 2023 and 25% better than the first quarter 2020. The lower adjusted EBITDA loss also reflects our cost savings and efficiency this year.

Matt: That there could be some stress in the market, but we're not waiting for that to happen to grow our revenue and earnings.

Speaker Change: Got it and then.

Speaker Change: Two questions kind of related to slide 17.

Speaker Change: Okay.

Speaker Change: First one.

Speaker Change: The consolidated sales pipeline and when you guys had a bunch of wins.

Matt: In 'twenty three right Blake.

Matt: $68 million worth.

Matt: And you have cumulatively got about $8 million of that into revenue.

Matt: If we look at the same time period, those five quarters presented.

William B. Shepro: And we've got a really strong sales team that's done a really nice job of building the pipeline, winning market share in a really tough market today, particularly on the default side. And so I'm pleased with the progress we're making, but I'm never, I always want that pipeline to be bigger. And we talk about it internally, not just this quarter, but each quarter. We set pretty aggressive goals around how we want to grow the pipeline, but we feel good.

Matt: How should we think about the next.

William B. Shepro: We continue to win meaningful new business and are making good progress ramping 2023 sales wins in a historically difficult market. As a result, we anticipate that we will generate quarterly year-over-year service revenue and adjusted EBITDA growth compared to the same quarters in 2023 for the balance of the year. We believe we are also on track to achieve 13 to 32 percent service revenue growth over 2023 and adjusted EBIT of between $17.5 and $22.5 million in 2024. If achieved, this represents an adjusted EBITDA improvement of approximately $52 million over a three-year period. Bill, kind of your latest thoughts on when foreclosure sales... But then, if I go from 4Q23 to 1Q24.

Speaker Change: I'll call it the remaining $60 million flowing into revenue.

Matt: Yeah.

Speaker Change: Very good question, Mike So I think look what youre going to see is we're now ramping and you'll see that on the bottom row of that slide 17, where we did I think $3 5 billion. So we are starting to ramp it youre going to see that we're going to continue to ramp.

Speaker Change: The sales wins as the year progresses.

Speaker Change: When we.

Speaker Change: Look when we get to the fourth quarter, we're not going to be quite at that.

Speaker Change: Run rate, but I think from an EBIT perspective.

Speaker Change: We're expecting to be north of a $30 million EBIT run rate. If you annualize our fourth quarter performance youre going to start to see the benefit and again were being very conservative on the default market recovering. This is primarily from our ramping sales wins from on a more efficient cost base, our lower cost base.

Michael John Grondahl: This is a weighted average pipeline. Keep in mind that the actual pipeline is much higher. Got it, got it. Okay, well that, hey, that color's helpful.

Operator: Thanks and good luck. Thanks Mike. One moment for our next question. Your next question comes from Raj Sharma with B. Reilly.

Speaker Change: Got it and then.

Speaker Change: That's helpful.

Speaker Change: Exit run rate.

Speaker Change: And then.

Matt: My last question on the top line attractive sales pipeline.

Matt: I sort of get.

Matt: Three Q23, <unk> 23, those numbers were kind of flattish.

Operator: Raj, go ahead. Your line is open. Yeah, hi. So congratulations on the increase in profitability. I wanted to ask you some questions on the slide. You know, at the earlier stage, the business wins that are contributing to $88 million in annualized revenue increase. How is that split, you know, that's slide six; how does that split between the default services and the market? I mean, I'm assuming that has nothing to do with the HUBZoo side of the marketplace, and also how does that split with origination? Sure. So, hey Raj, let me turn to that slide.

Matt: A chunk of the pipeline went down into wins.

Matt: But then if I go for <unk> 23 to <unk> 24.

Speaker Change: Yes, you had 10 million fallout to wins, but the number dropped by about 8 million are you happy where youre pipeline is.

Speaker Change: You kind of need to rebuild some of that now or I don't know if I can just help us think about that pipeline the size of it what does it need to be to kind of.

Speaker Change: We continue to support these these wins.

Speaker Change: I think youre right, Mike the reason for the drop reflects primarily reflects the sales wins.

Rajiv Sharma: You know, the service revenue scenario. Yes, sir. You're on slide six.

Speaker Change: And we have some pretty meaningful sales when youre going to see.

Speaker Change: Nice job building the pipeline.

Speaker Change: Winning market share in a really tough market today, particularly on the default side and so I'm pleased with the progress, we're making but I'm never I always want that pipeline to be bigger and we talk about it internally not just this quarter, but each quarter, we set pretty aggressive goals around how we want to grow the pipeline.

Speaker Change: But we feel good this is a weighted average pipeline keep in mind, the actual pipeline is much higher than that.

William B. Shepro: So of that $88 million, I would say a meaningful portion of that is tied to the growth of our renovation business. Then some of it is tied to the growth of these trustee wins, and I think this is a sales win through April 20th or so. It may be April 24th.

Speaker Change: Got it got it.

Speaker Change: That color is helpful.

Speaker Change: Thanks, and good luck. Thanks.

Speaker Change: Thanks, Mike.

Speaker Change: One moment for our next question.

Speaker Change: The next question comes from.

Speaker Change: Raj Sharma with B Riley Ross go ahead your line is open.

Speaker Change: Yes, hi, so congratulations on the increase in profitability.

Speaker Change: I wanted to.

Rajiv Sharma: Wanted to ask you two questions on this slide.

Rajiv Sharma: Steve the business wins that are contributing to $88 million.

William B. Shepro: Dollars in annualized revenue increase.

Rajiv Sharma: Is that right.

Steve: That's slide <unk>.

Speaker Change: Does that link between.

Steve: The default services.

Speaker Change: And the market.

Speaker Change: Im assuming that has nothing to do with the hub two sided marketplaces.

William B. Shepro: And also how does that relate with.

Speaker Change: Originations.

Bill: Sure, So hey, Raj, let me turn to next slide.

Speaker Change: Okay.

Speaker Change: The servicing revenue scenario.

Rajiv Sharma: So here on slide six.

Speaker Change: So of that $88 million I would say a a meaningful portion of that is tied to the growth of our renovation business.

Speaker Change: Then some of it is tied to the growth of these trustee wins and I think this is a sales wins through April or April 'twenty. After so it may be April 24th.

Speaker Change: So this includes.

Speaker Change: The trustee business the renovation business would probably be the two the renovation being the largest in the two trustee wins and then the next largest would be.

Speaker Change: Probably I don't have that right in front of me, but I think some of that Oreo auction work that we're doing for a loan servicer.

Speaker Change: Market share gain and then there are some in the origination side, but it's pretty small relatively speaking compared to whats the growth in the servicer in real estate segment. So I think just to repeat largely its the renovation business.

Speaker Change: Two trustee wins, and then the Fort via Oreo auction business.

Speaker Change: There's a little bit of title wins in there as well.

Speaker Change: Right. So all of this is.

Speaker Change: If I'm correct in understanding all that all this all these wins are in the earliest stage of the foreclosure process basically.

William B. Shepro: If the foreclosures market is that moving up.

Speaker Change: Considerably.

Speaker Change: There's more loss mitigation.

Speaker Change: And there's more loan modifications.

Speaker Change: And other early so this is the earliest stage could you talk about the trustee is the customer deferral expansion business.

Speaker Change: You are taking share there.

Speaker Change: And that largely all of the gains but are you.

Speaker Change: Do you do you make much money if there is.

William B. Shepro: That is loss model, there's loss mitigation loan modifications.

Speaker Change: Yes, so where foreclosure trustee and I think it's 11 or 12 states and Theres milestone billing Raj, so and we're not assuming that each foreclosure file we receive makes it all the way through the end of the process, but in the milestone billing process Youre I think youre, probably billing 60 or 70% of the total fees.

Speaker Change: In the first.

William B. Shepro: A couple of months of receiving the referral so it's not dependent on making it all the way through the end.

Speaker Change: And our analysis, our forecast of of what the revenue could look like on a stabilized basis is in today's market not and are not in a rising delinquency rate environment or a more normal.

Speaker Change: Quincy environment.

Speaker Change: And yes.

Speaker Change: It's a very profitable.

Speaker Change: Business for us.

Bill: Got it and then on the on the cost base. So clearly there were you had some cost cuts and that's also that's contributed and the increase in revenues contributed to the increase in profitability.

William B. Shepro: None.

Speaker Change: With the cost cuts.

Speaker Change: Or your cost base currently is that to stay.

Speaker Change: Or are there more cost cuts to come more.

Speaker Change: Some of them.

William B. Shepro: So we won't we're not anticipating those one time benefits to continue in future quarters. I think there is some modest and Michelle jump in savings in corporate in the second half of the year.

Michelle: Michelle right that's right.

William B. Shepro: Great.

Michelle D. Esterman: Technology and communications line.

Michelle: Yes, so I think youll see a little bit of savings there, maybe just a little bit in occupancy as well a modest amount, but for the most part I think.

Bill: We don't have any new set of initiatives beyond what's already been planned for the rest of the year.

Speaker Change: And then when you look at the business units Raj there will be a little bit of <unk>.

William B. Shepro: Ramping up some costs in the second quarter in anticipation of what we think is going to be very meaningful growth going into third and fourth quarter, but that would just be sort of a normal you would expect there's going to be some hiring in advance of that revenue coming in the second quarter. So we expect some modest revenue growth in Q.

William B. Shepro: Your next question comes from dollars in annualized revenue increase. How is that split, you know, that's slide six; how does that split between? Then some of it is tied to the growth of these trustee wins, and I think this is a sales win through April 20th or so. It may be April 24th. So this includes: And that's largely all of, you know, the gains, but are you doing much money if there is, And yes, it's a very profitable business for us, um, or are there more cost cuts to come, or you know we haven't seen some of, and certainly in line with our margin expectations. The new business is certainly in line with our margin, the normal run rate scenario that you have talked about in the past. You know, 45 million of EBITDA and 235 million of revenues we already have.

William B. Shepro: Two compared to Q1, but by the EBITDA.

William B. Shepro: There'll be a modest impact to EBITDA given some of the hiring in advance of this revenue getting to us are sort of a stabilized level.

William Shepro: But we think thats very good hiring.

William B. Shepro: And certainly in line with our margin expectations for the new business is certainly in line with our margin expectations.

Speaker Change: Got it and just a couple more questions. If you can bear it needs.

William B. Shepro: <unk>.

William B. Shepro: You know obviously.

William B. Shepro: You are focusing on the earlier stage in the foreclosure process.

William B. Shepro: Having wins there.

William B. Shepro: D.

William B. Shepro: Normal run rate scenario that you have talked about in the past.

William B. Shepro: $45 million of EBITDA.

William B. Shepro: And $2 $35 million revenues.

William B. Shepro: How does that change that thing changes incrementally by this $88 million.

Speaker Change: Yes so.

Speaker Change: Yes, Raj I think that's a very good question look we did a bit of a back of the envelope and Theres no of course, several assumptions that go into how we think about this.

William B. Shepro: But if if the market were also to get back to normal and now we're assuming that our ankle portfolio.

William B. Shepro: So this includes the trustee business and the renovation business. The renovation being the largest, then the two trustee wins.

William B. Shepro: <unk> they continue to run off over the next couple of years and we're also assuming a little bit of <unk>.

William B. Shepro: Churn on our on our pre pandemic legacy business, if you take that into consideration and we're back to a normal operating environment roughly at normal.

William B. Shepro: And then the next largest would probably be, I don't have it right in front of me, but I think some of that REO auction work that we're doing for a loan servicer. That's a market share gain. And then there's some in the origination side, but it's pretty small, relatively speaking, compared to the growth in the servicer and real estate segments. So, I think just to repeat, largely, it's the renovation business, the two trustee wins, and then the REO auction. There's a little bit of title wins in there as well.

William B. Shepro: At pre pandemic delinquency levels, we think EBITDA could it could grow by as much as what Michelle close to.

William B. Shepro: 2000, $25 million, that's probably closer to 25 and your revenue would grow by as much as $60 million above the scenario. We presented today. So there's a lot of upside even if delinquency rates just stay at the historically low levels, but the market gets back to normal the foreclosure initiations and.

William B. Shepro: Right. So, all this is, if I'm correct and understanding all that, all these wins are in the earlier stage of the foreclosure process, basically, if the foreclosures market is not moving up considerably, and you know, there's more loss mitigation, and there's more loan modifications and other early. So this is the earlier stage. Could you talk about the trustee is, you know, the trustee referral expansion business, you are taking a share there, um, and that's largely all of the gains, but do you do you make much money if there is? There's loss mitigation, loan modification. Yeah. So, we're a foreclosure trustee in 11 or 12 states.

William B. Shepro: Foreclosure sale conversion rates gets back to normal there is a lot of upside. In addition, our scenario we presented today doesn't include sales.

William B. Shepro: Take place beyond April 20th.

William B. Shepro: As we continue to win new business that should improve our performance as well, we're just isolating the first quarter and the pro forma.

William B. Shepro: Analyzing the sales wins, we have.

William B. Shepro: <unk> already had.

Speaker Change: Got it.

Speaker Change: Thank you for that that's really good color. Thank you for taking my questions.

Speaker Change: I'll take this offline. Thank you great. Thank you Raj.

Speaker Change: Thank you.

Speaker Change: No further questions at this time.

William B. Shepro: I'd now like to turn it back to Bill CFO for closing remarks.

Speaker Change: Thanks, Operator, we're very pleased with our first quarter financial performance and believe we are well positioned for the rest of this year and beyond thanks for joining today.

William B. Shepro: And there's milestone billing, Raj. So, we're not assuming that each foreclosure file we receive makes it all the way through the end of the process. But in the milestone billing process, I think you're probably billing 60% or 70% of the total fees in the first couple months of receiving the referral. So, it's not dependent on making it all the way through the end.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Rajiv Sharma: And then on the cost base, so clearly, you've had some cost cuts and that's also, that's contributed to the increase in profitability. Are you done with the cost cuts, or is your cost base currently going to stay the same? Um, or are there more cost cuts to come, or you know we haven't seen some of? Yeah, so let's talk just first about on the corporate side. There were some one-time benefits we got in the first quarter.

Rajiv Sharma: But even if you normalize for those one-time benefits, we still brought the cost down compared to the fourth quarter. So we won't we're not anticipating those one-time benefits to continue in future quarters. I think there's some modest and Michelle jump in savings in corporate in the second half of the year. That's right. It's in corporate tech. It's in the technology and communications field. Yeah, so I think you'll see a little bit of savings there, maybe just a little bit of occupancy as well, a modest amount. But for the most part, I think we don't have any new set of initiatives beyond what's already been planned for the rest of the year.

William B. Shepro: So, we expect some modest revenue growth in Q2 compared to Q1, but EBITDA, there'll be a modest impact on EBITDA given some of the hiring in advance of this revenue getting to a sort of a stabilized level.

William B. Shepro: But we think that's very good hiring and certainly in line with our margin expectations. The new business is certainly in line with our margin, got it, and just a couple more questions, if you can bear with me. Obviously, you are focusing on the earlier stage of the foreclosure process; you're having wins there. There is the normal run rate scenario that you have talked about in the past, you know, 45 million of EBITDA and 235 million of revenues.

William B. Shepro: How does that change? That changes incrementally by this 88 million. Yeah, so, Raj, I think that's a very good question. Look, we did a bit of a back of the envelope, and there's, of course, several assumptions that go into how we think about this. But if the market were also to get back to normal, and now we're assuming that, you know, of our anchor portfolios, they continue to run off over the next couple of years, and we're also assuming a little bit of a churn on our pre-pandemic legacy business, if you take that into consideration and we're back to a normal operating environment, roughly at normal, you know, at pre-pandemic delinquency levels, we think EBITDA could grow by as much as what, Michelle, close to, you know, 20, $25 million, probably closer to 25, and your revenue would grow by as much as $60 million above the scenario we presented today.

Rajiv Sharma: Got it. Thank you for that. That's a really good color.

Rajiv Sharma: Thank you for taking my questions. I'll take this offline. Thank you. Great. Thank you, Raj. Thank you. I'm showing no further questions at this time.

Rajiv Sharma: Thank you for taking my questions. I'll take this offline. Thank you. Great. Thank you, Raj. Thank you. I'm showing no further questions at this time. I would now like to turn it back to Bill Shepro for closing remarks. Great. Thanks, Operator. We're very pleased with our first quarter financial performance and believe we're well positioned for the rest of this year and beyond, and thanks for joining us. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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