Altisource Portfolio Solutions S.A.

While mortgage foreclosures could rise as a result of macroeconomic uncertainty, Altisource's higher-margin marketplace business likely won't fully benefit from new foreclosures until 2024. That being said, the company reported positive EBITDA in fourth-quarter 2022 and first-quarter 2023, with fourth-quarter 2022 being the first positive EBITDA quarter since 2020. The company's senior secured term loan matures in April 2025, with the option to extend to April 2026 subject to certain terms and conditions, including a $30 million par pay down ($20 million of which was met as of first-quarter 2023). We believe refinancing risk for the term loan remains; Altisource may struggle with paying down another $10 million of its term loan given its negative operating cash flow and the

...Altisource Portfolio Solutions S.A. currently has negative cash flow due to its largely countercyclical business model, and we think 2024 is the earliest that cash flow could turn positive. With most of its revenue correlating with the level of residential mortgage foreclosures and delinquencies, Altisource has been hurt by the moratorium on foreclosures from the CARES Act. Although the moratorium ended in 2021, foreclosure initiations and defaults remain below pre-pandemic levels, leading Altisource's cash flow from operations to remain negative in 2022. While mortgage foreclosures could rise as a result of macroeconomic uncertainty, Altisource's higher-margin marketplace business likely won't fully benefit from new foreclosures until 2024. That being said, the company reported positive EBITDA in fourth-quarter 2022 and first-quarter 2023, with fourth-quarter 2022 being the first positive EBITDA quarter since 2020. We think Altisource has enough liquidity to sustain another 12 months of...

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