Breaking News

Tweet TWEET

Home Loan Servicing Solutions, Ltd. Reports EPS of $0.76 and Net Income of $54.1 Million in the Second Quarter of 2014 and

Home Loan Servicing Solutions, Ltd. Reports EPS of $0.76 and Net Income of $54.1 Million in the Second Quarter of 2014 and Declares Monthly Dividend of $0.16 Per Share  GEORGE TOWN, Grand Cayman, July 17, 2014 (GLOBE NEWSWIRE) -- Home Loan Servicing Solutions, Ltd. ("HLSS", "our", "we" or the "Company") (Nasdaq:HLSS) today reported net income of $54.1 million, or $0.76 per ordinary share, for the second quarter of 2014. Additionally, the Company's Board of Directors today declared monthly dividends of $0.16 per ordinary share for July, August and September 2014.  Second quarter business performance highlights:    *Earned $41.4 million, or $0.58 per ordinary share, after adjusting for the     increase in the fair value of our MSR assets of $12.7 million, or $0.18     per ordinary share. The increase in the annualized prepayment speed to     10.9 percent reduced earnings by $0.02 per ordinary share relative to     first quarter earnings.   *Issued $400 million of unrated four-year term notes secured by servicing     advance receivables at a weighted average fixed interest rate of 2.88%.   *Acquired re-performing whole loans with an aggregate UPB of $396.9 million     from a large bank. The purchase price for these loans was $276.3 million.   *Borrowed $219.5 million on a new $290.0 million mortgage loan facility to     finance the re-performing loan purchase.  Subsequent to the end of the second quarter of 2014:    *On July 16, 2014, entered into agreements to extend the maturity of our     variable funding notes with an aggregate borrowing capacity of $2.1     billion to August 28, 2015.   *On July 17, 2014, declared monthly dividends of $0.16 per ordinary share     for each of the months of July, August and September 2014.  "After adjusting for the revaluation of our MSR assets, earnings were close to the high-end of our expectations as prepayment speeds increased only modestly from the record low last quarter. This increase was due to the predicted recovery in the rate of liquidations on seriously delinquent loans," said President and CEO John Van Vlack. "Earnings stability will benefit from the issuance of four-year fixed rate term notes and from the reinvestment of cash generated in excess of our dividend in the purchase of re-performing loans."  "As an asset class, I expect re-performing loans to provide an attractive risk-adjusted yield based on the Company's experience with modified loans in our existing servicing portfolio," said Chairman William Erbey. "The strategic fit of re-performing loans is enhanced as the income generated from the prepayment of loans purchased at a discount offers a hedge against prepayments in HLSS' existing non-agency MSRs."  For more information on prior releases and SEC Filings, please refer to the "Shareholders" section of our website at www.hlss.com.  HLSS is an internally-managed owner of residential mortgage assets with historically stable valuations and cash flows. HLSS' largest asset is mortgage servicing advances that, along with the related servicing rights, are over-collateralized more than 25 times by the underlying residential real estate. HLSS' objective is to generate stable, recurring fee-based earnings and dividends throughout the economic cycle. For more information, visit www.hlss.com.  This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release, including, without limitation, statements we make about our business model, dividend, future earnings, financing, market opportunities, asset performance, asset valuation, business strategy and expectations and objectives for our future performance, are forward-looking statements. These forward-looking statements include declarations regarding our management's beliefs and current expectations. All forward-looking statements are subject to certain risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results, performance or achievements could differ materially from those expressed in, or implied by, any such forward-looking statements. Important factors that could cause or contribute to such difference include those risks specific to our business detailed within our reports and filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on February 6, 2014 (the "2013 Form 10-K") and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 (the "Q2 Form 10-Q"). You should not place undue reliance on such forward-looking statements, which speak only as of their dates. We undertake no obligation to update or revise forward-looking statements¸ whether as a result of new information, future events or otherwise. You should carefully consider the risk factors described under the heading "Risk Factors" within our 2013 Form 10-K and our Q2 Form 10-Q.  The following table presents our consolidated results of operations in accordance with U.S. GAAP ("GAAP") reconciled to our internally reported financial results. Accordingly, adjustments are made to reflect Servicing fee revenue, Servicing expense and Amortization expense on a gross rather than a net basis.  Our income from operations as presented in our Management Reporting format shown below should be considered in addition to, and not as a substitute for, income from operations determined in accordance with GAAP.  For the three months ended     Condensed                        Management June 30, 2014:                 Consolidated      Adjustments    Reporting                                Results (GAAP)                   (Non-GAAP)                                                               Revenue                                                                                                                      Servicing fee revenue          $—              $185,690     $185,690 Interest income - notes        89,969           (89,969)      — receivable – Rights to MSRs Interest income – other        7,790            —             7,790 Related party revenue(1)       773             —            773 Total revenue                  98,532          95,721       194,253                                                               Operating expenses                                             Compensation and benefits      2,031            —             2,031 Servicing expense              —                90,901        90,901 Amortization of MSRs           —                17,535        17,535 Change in fair value of Notes  —                (12,715)      (12,715) receivable – Rights to MSRs Related party expenses (2)     496              —             496 General and administrative     1,949           —            1,949 expenses Total operating expenses       4,476           95,721       100,197 Income from operations         $94,056         $—           $94,056  (1) Revenue earned as part of our Professional Services Agreement with Ocwen Financial Corporation (together with its subsidiaries, collectively "Ocwen"). (2) Expenses incurred as part of our Professional Services Agreement and Administrative Services Agreement with Ocwen and Altisource Portfolio Solutions, S.A., respectively.                                          HOME LOAN SERVICING SOLUTIONS, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share data) (UNAUDITED)                                  Three months           Six months For the periods ended June 30,   2014       2013        2014       2013 Revenue                                                          Interest income – notes          $89,969   $49,852    $171,821  $94,422 receivable – Rights to MSRs Interest income – other          7,790     97         10,750    199 Total interest income            97,759    49,949     182,571   94,621 Related party revenue            773       560        1,401     967 Total revenue                    98,532    50,509     183,972   95,588                                                                 Operating expenses                                               Compensation and benefits        2,031     1,602      3,765     2,768 Related party expenses           496       226        868       452 General and administrative       1,949     734        4,098     1,379 expenses Total operating expenses         4,476     2,562      8,731     4,599                                                                 Income from operations           94,056    47,947     175,241   90,989                                                                 Other expense                                                    Interest expense                 40,001    20,034     77,512    38,276 Other expense                    40,001    20,034     77,512    38,276                                                                 Income before income taxes       54,055    27,913     97,729    52,713 Income tax expense               —         27         —         39 Net income                       $54,055   $27,886    $97,729   $52,674                                                                                                                                 Earnings per share Basic                           $0.76     $0.48     $1.38     $0.92 Diluted                          $0.76     $0.48     $1.38     $0.92                                                                 Weighted average ordinary shares                                 outstanding Basic                           71,016,771 57,633,399 71,016,771 57,133,888 Diluted                          71,016,771 57,633,399 71,016,771 57,133,888                                                                 Dividends declared per share     $0.48     $0.42      $0.93     $0.80                                          HOME LOAN SERVICING SOLUTIONS, LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data) (UNAUDITED)                                                  June 30, 2014 December 31,                                                                 2013 Assets                                                          Cash and cash equivalents                         $89,418     $87,896 Match funded advances                             6,133,758    6,387,781 Notes receivable – Rights to MSRs                 629,579      651,060 Loans held for investment                         802,091      — Related party receivables                         17,054       70,049 Deferred tax assets                               1,024        1,024 Other assets                                      261,579     130,153 Total assets                                      $7,934,503  $7,327,963                                                                Liabilities and Equity                                          Liabilities                                                     Match funded liabilities                          $5,593,927  $5,715,622 Other borrowings                                  1,049,728    343,386 Dividends payable                                 11,363       10,653 Income taxes payable                              600          682 Deferred tax liabilities                          578         1,266 Related party payables                            2,990        10,732 Other liabilities                                 11,147      11,884 Total liabilities                                 6,670,333   6,094,225                                                                                                                                                       Equity                                                                      Equity – Ordinary shares, $.01 par value; 200,000,000 shares authorized; 71,016,771 and     710          710          71,016,771 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively Additional paid-in capital                        1,210,121    1,210,057    Retained earnings                                 52,488       20,804       Accumulated other comprehensive income, net of    851         2,167       tax Total equity                                      1,264,170   1,233,738   Total liabilities and equity                      $7,934,503  $7,327,963   CONTACT: James E. Lauter          Senior Vice President &          Chief Financial Officer          T: +1 345-815-3932          E: James.Lauter@hlss.com  Home Loan Servicing Solutions, Ltd. Logo  
Press spacebar to pause and continue. Press esc to stop.