LUXEMBOURG, Oct. 27, 2016 (GLOBE NEWSWIRE) -- Altisource Portfolio Solutions S.A. (“Altisource” or the “Company”) (NASDAQ:ASPS) today reported financial results for the third quarter of 2016, reporting strong cash flows from operations and service revenue. Service revenue growth from non-Ocwen customers and higher property preservation referrals from Ocwen largely offset the expected loss in revenue from Ocwen’s declining portfolio and lower delinquencies, resulting in a decline of only 2% compared to the third quarter of 2015.
While third quarter 2016 service revenue of $239.8 million was relatively flat compared to third quarter 2015, pretax income attributable to Altisource(1) of $17.9 million and adjusted pretax income attributable to Altisource(1) of $29.4 million declined by 56% and 42%, respectively. This was primarily the result of increased investments to support the Company’s growth initiatives, service revenue mix changes and technology price concessions provided to Ocwen effective January 1, 2016. Net income attributable to Altisource of $10.6 million was further impacted by an increase in the 2016 effective tax rate and adjustments to true-up tax expense from prior quarters, resulting in an anticipated 2016 annual effective tax rate of approximately 20%. The effective tax rate increased primarily due to lower pretax income margins which changed the expected mix of taxable income across the jurisdictions in which we operate. Over the next couple of years, the Company believes that margins will expand and the effective cash tax rate will return to a rate that is closer to Altisource’s historical rate.
“During the quarter, Altisource continued to execute on its strategy to diversify and grow its customer base through our four initiatives. We believe the investments in our diversification strategy along with the growing stability of our largest customers position us to be a larger, stronger company,” said Chief Executive Officer William B. Shepro.
Shepro further commented, “While we have experienced tremendous non-Ocwen service revenue growth over the last three years, we have not achieved our very high growth expectations for 2016. In our Servicer Solutions initiative, this is primarily a function of timing as it is taking substantially longer than anticipated to achieve stabilized revenue from new customers and close transactions from our robust pipeline of opportunities. We fully expect that we will achieve our revenue growth expectations as we reach stabilization with our newer clients and continue to win new business. In our Consumer Real Estate Solutions initiative, we launched our buy side brokerage offering in February 2016 in two initial markets. We have since expanded to 18 markets, and the good news is that the consumer interest in our offering has more than met our expectations. However, we did not have sufficient capacity to respond to all of the leads and our initial approach did not provide a sufficient in-person experience to manage a prospect from lead to home purchase. We are adjusting our operational model and the changes are beginning to make a difference, better positioning us to capitalize on this very large market opportunity.”
Third Quarter 2016 Results Compared to Second Quarter 2016 and Third Quarter 2015:
- Service revenue of $239.8 million, a 1% decrease compared to the second quarter 2016 and a 2% decrease compared to the third quarter 2015
- Pretax income attributable to Altisource(1) of $17.9 million, a 23% decrease compared to the second quarter 2016 and a 56% decrease compared to the third quarter 2015
- Adjusted pretax income attributable to Altisource(1) of $29.4 million, an 18% decrease compared to the second quarter 2016 and a 42% decrease compared to the third quarter 2015
- Net income attributable to Altisource of $10.6 million, a 47% decrease compared to the second quarter 2016 and a 71% decrease compared to the third quarter 2015
- Adjusted net income attributable to Altisource(1) of $17.6 million, a 43% decrease compared to the second quarter 2016 and a 62% decrease compared to the third quarter 2015
- Diluted earnings per share of $0.54, a 47% decrease compared to the second quarter 2016 and a 70% decrease compared to the third quarter 2015
- Adjusted diluted earnings per share(1) of $0.90, a 43% decrease compared to the second quarter 2016 and a 60% decrease compared to the third quarter 2015
- Cash from operations of $36.6 million, a 9% decrease compared to the second quarter 2016 and a 33% decrease compared to the third quarter 2015; cash from operations would have been $43.2 million had the Company not invested $6.6 million for the purchase of real estate in the Real Estate Investor Solutions business that Altisource is renovating and will resell
Third Quarter 2016 highlights include:
Servicer Solutions:
- Executed a master services agreement with a top ten bank customer and signed a statement of work with this customer to provide Equator software to manage its short sales
- Executed an agreement with a mortgage insurance company to manage and sell its REO
- Acquired Granite Loan Management of Delaware, LLC, a residential and commercial loan disbursement processing, risk mitigation and construction inspection services company, for $9.6 million
Origination Solutions:
- Grew third quarter 2016 service revenue in the Origination Solutions businesses by 22% over the second quarter of 2016
Consumer Real Estate Solutions:
- Grew the total number of Owners.com monthly leads from 5,000 in April 2016 to 28,000 in September 2016, a 460% increase
- Grew the total number of Owners.com real estate agents from 21 as of July 1, 2016 to 97 as of September 30, 2016
- Launched the beta version of the Owners.com real estate agent app in mid-October 2016
Real Estate Investor Solutions:
- Executed an agreement with RESI providing a limited waiver of Altisource’s exclusive right to provide property management and other services to RESI relating to its acquisition of single family rental homes from investment funds sponsored by Amherst Holdings LLC (the “Amherst Portfolio Acquisition”) in exchange for the right to receive a $60 million payment from RESI in the event that it sells, liquidates or otherwise disposes of 50% or more of its single family rental portfolio managed by Altisource(2)
- Provided due diligence and title services to RESI in connection with the Amherst Portfolio Acquisition
Capital Allocation
- Repurchased $14.6 million of our common stock (0.5 million shares at an average price of $28.68 per share)
__________________________
(1) This is a non-GAAP measure that is defined and reconciled to the corresponding GAAP measure herein.
(2) The terms are more fully described in the Amendment and Waiver Agreement which we filed with the Securities and Exchange Commission on Form 8-K on October 3, 2016.
Forward-Looking Statements
This press release contains forward-looking statements that involve a number of risks and uncertainties. These forward-looking statements include all statements that are not historical fact, including statements about management’s beliefs and expectations. These statements may be identified by words such as “anticipate,” “intend,” “expect,” “may,” “could,” “should,” “would,” “plan,” “estimate,” “seek,” “believe,” “potential” and similar expressions. Forward-looking statements are based on management’s beliefs as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to the future and are not statements of historical fact, actual results may differ materially from what is contemplated by the forward-looking statements. Altisource undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to, Altisource’s ability to integrate acquired businesses, retain key executives or employees, retain existing customers and attract new customers, general economic and market conditions, behavior of customers, suppliers and/or competitors, technological developments, governmental regulations, taxes and policies, availability of adequate and timely sources of liquidity and other risks and uncertainties detailed in the “Forward-Looking Statements,” “Risk Factors” and other sections of Altisource’s Form 10-K and other filings with the Securities and Exchange Commission.
Webcast
Altisource will host a webcast at 11:00 a.m. EDT today to discuss our third quarter results. A link to the live audio webcast will be available on Altisource’s website in the Investor Relations section. Those who want to listen to the call should go to the website at least fifteen minutes prior to the call to register, download and install any necessary audio software. A replay of the conference call will be available via the website approximately two hours after the conclusion of the call and will remain available for approximately 30 days.
About Altisource
Altisource Portfolio Solutions S.A. is a premier marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries. Altisource’s proprietary business processes, vendor and electronic payment management software and behavioral science-based analytics improve outcomes for marketplace participants. Additional information is available at www.Altisource.com.
| ALTISOURCE PORTFOLIO SOLUTIONS S.A. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Service revenue | ||||||||||||||||
| Mortgage Services | $ | 191,766 | $ | 182,222 | $ | 569,038 | $ | 492,277 | ||||||||
| Financial Services | 17,566 | 21,314 | 57,376 | 66,977 | ||||||||||||
| Technology Services | 41,544 | 51,437 | 120,291 | 159,399 | ||||||||||||
| Eliminations | (11,094 | ) | (9,504 | ) | (31,319 | ) | (28,773 | ) | ||||||||
| Total service revenue | 239,782 | 245,469 | 715,386 | 689,880 | ||||||||||||
| Reimbursable expenses | 12,080 | 26,456 | 41,317 | 89,242 | ||||||||||||
| Non-controlling interests | 883 | 851 | 1,973 | 2,457 | ||||||||||||
| Total revenue | 252,745 | 272,776 | 758,676 | 781,579 | ||||||||||||
| Cost of revenue | 161,922 | 147,394 | 475,919 | 425,593 | ||||||||||||
| Reimbursable expenses | 12,080 | 26,456 | 41,317 | 89,242 | ||||||||||||
| Gross profit | 78,743 | 98,926 | 241,440 | 266,744 | ||||||||||||
| Selling, general and administrative expenses | 53,886 | 51,338 | 161,709 | 155,310 | ||||||||||||
| Change in the fair value of Equator Earn Out | — | — | — | (7,591 | ) | |||||||||||
| Income from operations | 24,857 | 47,588 | 79,731 | 119,025 | ||||||||||||
| Other income (expense), net: | ||||||||||||||||
| Interest expense | (5,952 | ) | (7,041 | ) | (18,481 | ) | (21,396 | ) | ||||||||
| Loss on HLSS equity securities and dividends received, net | — | — | — | (1,854 | ) | |||||||||||
| Other income (expense), net | (109 | ) | 653 | 2,608 | 1,477 | |||||||||||
| Total other income (expense), net | (6,061 | ) | (6,388 | ) | (15,873 | ) | (21,773 | ) | ||||||||
| Income before income taxes and non-controlling interests | 18,796 | 41,200 | 63,858 | 97,252 | ||||||||||||
| Income tax provision | (7,324 | ) | (3,303 | ) | (12,808 | ) | (8,101 | ) | ||||||||
| Net income | 11,472 | 37,897 | 51,050 | 89,151 | ||||||||||||
| Net income attributable to non-controlling interests | (883 | ) | (851 | ) | (1,973 | ) | (2,457 | ) | ||||||||
| Net income attributable to Altisource | $ | 10,589 | $ | 37,046 | $ | 49,077 | $ | 86,694 | ||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.57 | $ | 1.94 | $ | 2.63 | $ | 4.42 | ||||||||
| Diluted | $ | 0.54 | $ | 1.82 | $ | 2.49 | $ | 4.19 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 18,715 | 19,091 | 18,669 | 19,608 | ||||||||||||
| Diluted | 19,568 | 20,411 | 19,738 | 20,688 | ||||||||||||
| Comprehensive income: | ||||||||||||||||
| Net income | $ | 11,472 | $ | 37,897 | $ | 51,050 | $ | 89,151 | ||||||||
| Other comprehensive income (loss), net of tax: | ||||||||||||||||
| Unrealized gain (loss) on securities, net of income tax benefit (provision) of $(2,070), $0, $889, $0 | 5,016 | — | (2,156 | ) | — | |||||||||||
| Comprehensive income, net of tax | 16,488 | 37,897 | 48,894 | 89,151 | ||||||||||||
| Comprehensive income attributable to non-controlling interests | (883 | ) | (851 | ) | (1,973 | ) | (2,457 | ) | ||||||||
| Comprehensive income attributable to Altisource | $ | 15,605 | $ | 37,046 | $ | 46,921 | $ | 86,694 | ||||||||
| ALTISOURCE PORTFOLIO SOLUTIONS S.A. | ||||||||||||||||||||
| SEGMENT FINANCIAL INFORMATION | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| Three months ended September 30, 2016 | ||||||||||||||||||||
| Mortgage Services | Financial Services | Technology Services | Corporate Items and Eliminations | Consolidated Altisource | ||||||||||||||||
| Revenue | ||||||||||||||||||||
| Service revenue | $ | 191,766 | $ | 17,566 | $ | 41,544 | $ | (11,094 | ) | $ | 239,782 | |||||||||
| Reimbursable expenses | 12,047 | 33 | — | — | 12,080 | |||||||||||||||
| Non-controlling interests | 883 | — | — | — | 883 | |||||||||||||||
| 204,696 | 17,599 | 41,544 | (11,094 | ) | 252,745 | |||||||||||||||
| Cost of revenue | 132,399 | 13,238 | 38,557 | (10,192 | ) | 174,002 | ||||||||||||||
| Gross profit (loss) | 72,297 | 4,361 | 2,987 | (902 | ) | 78,743 | ||||||||||||||
| Selling, general and administrative expenses | 27,543 | 4,002 | 6,115 | 16,226 | 53,886 | |||||||||||||||
| Income (loss) from operations | 44,754 | 359 | (3,128 | ) | (17,128 | ) | 24,857 | |||||||||||||
| Total other income (expense), net | 8 | 28 | 1 | (6,098 | ) | (6,061 | ) | |||||||||||||
| Income (loss) before income taxes and non-controlling interests | $ | 44,762 | $ | 387 | $ | (3,127 | ) | $ | (23,226 | ) | $ | 18,796 | ||||||||
| Three months ended September 30, 2015 | ||||||||||||||||||||
| Mortgage Services | Financial Services | Technology Services | Corporate Items and Eliminations | Consolidated Altisource | ||||||||||||||||
| Revenue | ||||||||||||||||||||
| Service revenue | $ | 182,222 | $ | 21,314 | $ | 51,437 | $ | (9,504 | ) | $ | 245,469 | |||||||||
| Reimbursable expenses | 26,433 | 23 | — | — | 26,456 | |||||||||||||||
| Non-controlling interests | 851 | — | — | — | 851 | |||||||||||||||
| 209,506 | 21,337 | 51,437 | (9,504 | ) | 272,776 | |||||||||||||||
| Cost of revenue | 122,724 | 15,418 | 44,419 | (8,711 | ) | 173,850 | ||||||||||||||
| Gross profit (loss) | 86,782 | 5,919 | 7,018 | (793 | ) | 98,926 | ||||||||||||||
| Selling, general and administrative expenses | 23,399 | 4,553 | 7,628 | 15,758 | 51,338 | |||||||||||||||
| Income (loss) from operations | 63,383 | 1,366 | (610 | ) | (16,551 | ) | 47,588 | |||||||||||||
| Total other income (expense), net | 9 | 31 | 38 | (6,466 | ) | (6,388 | ) | |||||||||||||
| Income (loss) before income taxes and non-controlling interests | $ | 63,392 | $ | 1,397 | $ | (572 | ) | $ | (23,017 | ) | $ | 41,200 | ||||||||
| ALTISOURCE PORTFOLIO SOLUTIONS S.A. | ||||||||||||||||||||
| SEGMENT FINANCIAL INFORMATION | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| Nine months ended September 30, 2016 | ||||||||||||||||||||
| Mortgage Services | Financial Services | Technology Services | Corporate Items and Eliminations | Consolidated Altisource | ||||||||||||||||
| Revenue | ||||||||||||||||||||
| Service revenue | $ | 569,038 | $ | 57,376 | $ | 120,291 | $ | (31,319 | ) | $ | 715,386 | |||||||||
| Reimbursable expenses | 41,232 | 85 | — | — | 41,317 | |||||||||||||||
| Non-controlling interests | 1,973 | — | — | — | 1,973 | |||||||||||||||
| 612,243 | 57,461 | 120,291 | (31,319 | ) | 758,676 | |||||||||||||||
| Cost of revenue | 381,543 | 41,645 | 122,874 | (28,826 | ) | 517,236 | ||||||||||||||
| Gross profit (loss) | 230,700 | 15,816 | (2,583 | ) | (2,493 | ) | 241,440 | |||||||||||||
| Selling, general and administrative expenses | 83,119 | 12,515 | 20,113 | 45,962 | 161,709 | |||||||||||||||
| Income (loss) from operations | 147,581 | 3,301 | (22,696 | ) | (48,455 | ) | 79,731 | |||||||||||||
| Total other income (expense), net | 57 | 63 | 101 | (16,094 | ) | (15,873 | ) | |||||||||||||
| Income (loss) before income taxes and non-controlling interests | $ | 147,638 | $ | 3,364 | $ | (22,595 | ) | $ | (64,549 | ) | $ | 63,858 | ||||||||
| Nine months ended September 30, 2015 | ||||||||||||||||||||
| Mortgage Services | Financial Services | Technology Services | Corporate Items and Eliminations | Consolidated Altisource | ||||||||||||||||
| Revenue | ||||||||||||||||||||
| Service revenue | $ | 492,277 | $ | 66,977 | $ | 159,399 | $ | (28,773 | ) | $ | 689,880 | |||||||||
| Reimbursable expenses | 89,139 | 103 | — | — | 89,242 | |||||||||||||||
| Non-controlling interests | 2,457 | — | — | — | 2,457 | |||||||||||||||
| 583,873 | 67,080 | 159,399 | (28,773 | ) | 781,579 | |||||||||||||||
| Cost of revenue | 350,238 | 46,058 | 144,565 | (26,026 | ) | 514,835 | ||||||||||||||
| Gross profit (loss) | 233,635 | 21,022 | 14,834 | (2,747 | ) | 266,744 | ||||||||||||||
| Selling, general and administrative expenses | 69,188 | 13,856 | 22,189 | 50,077 | 155,310 | |||||||||||||||
| Change in the fair value of Equator Earn Out | — | — | (7,591 | ) | — | (7,591 | ) | |||||||||||||
| Income (loss) from operations | 164,447 | 7,166 | 236 | (52,824 | ) | 119,025 | ||||||||||||||
| Total other income (expense), net | 28 | 21 | 21 | (21,843 | ) | (21,773 | ) | |||||||||||||
| Income (loss) before income taxes and non-controlling interests | $ | 164,475 | $ | 7,187 | $ | 257 | $ | (74,667 | ) | $ | 97,252 | |||||||||
| ALTISOURCE PORTFOLIO SOLUTIONS S.A. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands, except per share data) | ||||||||
| (unaudited) | ||||||||
| September 30, 2016 | December 31, 2015 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 134,948 | $ | 179,327 | ||||
| Available for sale securities | 45,174 | — | ||||||
| Accounts receivable, net | 101,580 | 105,023 | ||||||
| Prepaid expenses and other current assets | 31,927 | 21,751 | ||||||
| Total current assets | 313,629 | 306,101 | ||||||
| Premises and equipment, net | 109,785 | 119,121 | ||||||
| Goodwill | 89,905 | 82,801 | ||||||
| Intangible assets, net | 162,976 | 197,003 | ||||||
| Deferred tax assets, net | 4,847 | 3,619 | ||||||
| Other assets | 12,190 | 13,153 | ||||||
| Total assets | $ | 693,332 | $ | 721,798 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 101,361 | $ | 91,871 | ||||
| Current portion of long-term debt | 5,945 | 5,945 | ||||||
| Deferred revenue | 10,927 | 15,060 | ||||||
| Other current liabilities | 13,846 | 16,266 | ||||||
| Total current liabilities | 132,079 | 129,142 | ||||||
| Long-term debt, less current portion | 468,689 | 522,233 | ||||||
| Other non-current liabilities | 13,790 | 18,153 | ||||||
| Equity: | ||||||||
| Common stock ($1.00 par value; 25,413 shares authorized and issued and 18,878 outstanding as of September 30, 2016; 25,413 shares authorized and issued and 19,021 outstanding as of December 31, 2015) | 25,413 | 25,413 | ||||||
| Additional paid-in capital | 101,013 | 96,321 | ||||||
| Retained earnings | 359,435 | 369,270 | ||||||
| Accumulated other comprehensive loss | (2,156 | ) | — | |||||
| Treasury stock, at cost (6,535 shares as of September 30, 2016 and 6,392 shares as of December 31, 2015) | (406,559 | ) | (440,026 | ) | ||||
| Altisource equity | 77,146 | 50,978 | ||||||
| Non-controlling interests | 1,628 | 1,292 | ||||||
| Total equity | 78,774 | 52,270 | ||||||
| Total liabilities and equity | $ | 693,332 | $ | 721,798 | ||||
| ALTISOURCE PORTFOLIO SOLUTIONS S.A. | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (in thousands) | |||||||
| (unaudited) | |||||||
| Nine months ended September 30, | |||||||
| 2016 | 2015 | ||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 51,050 | $ | 89,151 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 27,521 | 27,637 | |||||
| Amortization of intangible assets | 36,432 | 27,995 | |||||
| Loss on HLSS equity securities and dividends received, net | — | 1,854 | |||||
| Change in the fair value of acquisition related contingent consideration | (1,174 | ) | (7,302 | ) | |||
| Share-based compensation expense | 4,692 | 3,258 | |||||
| Bad debt expense | 763 | 3,477 | |||||
| Gain on early extinguishment of debt | (5,464 | ) | (1,986 | ) | |||
| Amortization of debt discount | 307 | 379 | |||||
| Amortization of debt issuance costs | 850 | 1,045 | |||||
| Deferred income taxes | 17 | 54 | |||||
| Loss on disposal of fixed assets | 30 | 50 | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | 3,505 | (19,681 | ) | ||||
| Prepaid expenses and other current assets | (10,167 | ) | 2,001 | ||||
| Other assets | 496 | 2,085 | |||||
| Accounts payable and accrued expenses | 7,005 | (20,876 | ) | ||||
| Other current and non-current liabilities | (9,828 | ) | 10 | ||||
| Net cash provided by operating activities | 106,035 | 109,151 | |||||
| Cash flows from investing activities: | |||||||
| Additions to premises and equipment | (16,525 | ) | (27,670 | ) | |||
| Acquisition of businesses, net of cash acquired | (9,617 | ) | (11,193 | ) | |||
| Purchase of available for sale securities | (48,219 | ) | (29,966 | ) | |||
| Proceeds received from sale of and dividends from HLSS equity securities | — | 28,112 | |||||
| Other investing activities | 266 | 722 | |||||
| Net cash used in investing activities | (74,095 | ) | (39,995 | ) | |||
| Cash flows from financing activities: | |||||||
| Repayment and repurchases of long-term debt | (49,237 | ) | (29,087 | ) | |||
| Proceeds from stock option exercises | 8,876 | 332 | |||||
| Purchase of treasury stock | (34,321 | ) | (48,971 | ) | |||
| Distributions to non-controlling interests | (1,637 | ) | (2,144 | ) | |||
| Other financing activities | — | (500 | ) | ||||
| Net cash used in financing activities | (76,319 | ) | (80,370 | ) | |||
| Net decrease in cash and cash equivalents | (44,379 | ) | (11,214 | ) | |||
| Cash and cash equivalents at the beginning of the period | 179,327 | 161,361 | |||||
| Cash and cash equivalents at the end of the period | $ | 134,948 | $ | 150,147 | |||
| Supplemental cash flow information: | |||||||
| Interest paid | $ | 17,244 | $ | 19,770 | |||
| Income taxes paid, net | 14,178 | 6,638 | |||||
| Non-cash investing and financing activities: | |||||||
| Acquisition of businesses with restricted shares | $ | — | $ | 14,427 | |||
| Increase (decrease) in payables for purchases of premises and equipment | 2,458 | (5,326 | ) | ||||
ALTISOURCE PORTFOLIO SOLUTIONS S.A.
NON-GAAP MEASURES
(in thousands, except per share data)
(unaudited)
Pretax income attributable to Altisource, adjusted pretax income attributable to Altisource, adjusted net income attributable to Altisource and adjusted diluted earnings per share are non-GAAP measures used by management, existing shareholders and potential shareholders to measure Altisource’s performance. Pretax income attributable to Altisource is calculated by deducting non-controlling interests from income before income taxes and non-controlling interests. Adjusted pretax income attributable to Altisource is calculated by adding intangible asset amortization expense to, and deducting the gain associated with the reduction of the Equator earn out liability from, pretax income attributable to Altisource. Adjusted net income attributable to Altisource is calculated by adding intangible asset amortization expense (net of tax) to, and deducting the gain associated with the reduction of the Equator earn out liability (net of tax) from, GAAP net income attributable to Altisource. Adjusted diluted earnings per share is calculated by dividing net income attributable to Altisource plus intangible asset amortization expense (net of tax) less the gain associated with the reduction of the Equator earn out liability (net of tax) by the weighted average number of diluted shares. Reconciliations of the non-GAAP measures to the corresponding GAAP measures are as follows:
| Three months ended September 30, | Three months ended June 30, | Nine months ended September 30, | |||||||||||||||||
| 2016 | 2015 | 2016 | 2016 | 2015 | |||||||||||||||
| Income before income taxes and non-controlling interests | $ | 18,796 | $ | 41,200 | $ | 23,977 | $ | 63,858 | $ | 97,252 | |||||||||
| Non-controlling interests | (883 | ) | (851 | ) | (692 | ) | (1,973 | ) | (2,457 | ) | |||||||||
| Pretax income attributable to Altisource | 17,913 | 40,349 | 23,285 | 61,885 | 94,795 | ||||||||||||||
| Amortization of intangible assets | 11,465 | 10,118 | 12,756 | 36,432 | 27,995 | ||||||||||||||
| Gain on Equator earn out liability | — | — | — | — | (7,591 | ) | |||||||||||||
| Adjusted pretax income attributable to Altisource | $ | 29,378 | $ | 50,467 | $ | 36,041 | $ | 98,317 | $ | 115,199 | |||||||||
| Net income attributable to Altisource | $ | 10,589 | $ | 37,046 | $ | 19,994 | $ | 49,077 | $ | 86,694 | |||||||||
| Amortization of intangible assets | 11,465 | 10,118 | 12,756 | 36,432 | 27,995 | ||||||||||||||
| Tax benefit on amortization of intangible assets | (4,467 | ) | (811 | ) | (1,751 | ) | (7,307 | ) | (2,332 | ) | |||||||||
| Amortization of intangible assets, net of tax | 6,998 | 9,307 | 11,005 | 29,125 | 25,663 | ||||||||||||||
| Gain on Equator earn out liability | — | — | — | — | (7,591 | ) | |||||||||||||
| Tax provision from the gain on Equator earn out liability | — | — | — | — | 651 | ||||||||||||||
| Gain on Equator earn out liability, net of tax | — | — | — | — | (6,940 | ) | |||||||||||||
| Adjusted net income attributable to Altisource | $ | 17,587 | $ | 46,353 | $ | 30,999 | $ | 78,202 | $ | 105,417 | |||||||||
| Diluted earnings per share | $ | 0.54 | $ | 1.82 | $ | 1.02 | $ | 2.49 | $ | 4.19 | |||||||||
| Amortization of intangible assets, net of tax, per diluted share | 0.36 | 0.46 | 0.56 | 1.48 | 1.24 | ||||||||||||||
| Gain on Equator earn out liability, net of tax, per diluted share | — | — | — | — | (0.34 | ) | |||||||||||||
| Adjusted diluted earnings per share | $ | 0.90 | $ | 2.27 | $ | 1.58 | $ | 3.96 | $ | 5.10 | |||||||||
| Weighted average shares outstanding - diluted | 19,568 | 20,411 | 19,604 | 19,738 | 20,688 | ||||||||||||||
__________________________
Note: Amounts may not add to the total due to rounding.