Altisource Asset Management Corp Com

Q4 2022 Earnings Conference Call

3/23/2023

spk_0: your day and welcome to the amc investor call today's calls being recorded at this time i'd like to turn the call over to danya sawyer please go ahead
spk_1: good morning everyone and welcome a antes que four and twenty twenty two annual earnings call the tall and on his lawyer and you tube operating officer of mining operations that am see the boy began let me remind you that today's press release and the presentation made by our executive may include forward looking statements as defined in a private security litigation the format of magnified these statements are subject to risks and uncertainties better cause actual results to differ materially from our expectations and production beat risks and uncertainties include but are not limited to the factors identified in the release and and are filing for the securities and exchange commission consequently you should not rely on only forward looking statements at predicting the future events statement made during the cop and call are made of today's date and the company undertakes no obligation to update or revise and forward looking statements what are the without a new information future events or otherwise as previously mentioned today call it been recorded and a link to this like cats will be posted to our website later today with that joining me to today's call or chief executive officer jason cop jack jason will provide an update on our fourth quarter and four year twenty twenty few activity review additional corporate development and present an overview of our outlook for the your head we will then open the line for question lastly material to the call can be found in our that your presentation which with issue earlier this morning related information can also be found on the stockholders page of our website at www dot outdoors a m c dot com and now i'll turn it over the jason
spk_2: they do danya
spk_3: jonjo as mentioned is a new chief operating officer other alternative when a group we are extremely happy to have large you start or create countrywide disagreed over twenty years of experience across the mortgage and alternative acid industry he will be instrumental in helping us to actually do transactions across all of adjacent channels and manage relationships with institutional buyers also joining me in this meeting is the prom and or chief financial officer you to argue for financial performance at a high level is as follows for the fourth quarter a amc generate a loss of one point one billion unraveling of two point five million i would like to highlight several factors you one rub you improve relatively que three by increasing the of six hundred thousand or thirty three percent duck me to for included roughly one point one million legal charges ran expensive the other items we consider to be non recurring three eliminating the special items and just a queue for a lot of three million was less than the four million from that we realize the you three our strategy which is unique in the industry that we are capital light light or a private credit products these products include both short duration or you'll be fixed income assets cured by wonderful for single family residential mulvey family residential probably going to they are you prove it's also known as residential transitional lounge or rg else as well as long duration it was only secured by income producing residential properties also known as the of your lunch dutch products are distributed to choose to the permanent capital such as insurance companies pension fund and a damage i picked years of unique experience relations with these institutions i'm like our peers we do not use long to cure nations as an actor for a lot instead we establish individual criteria or a buyback to sell long insurance coverage or other ones that are backed by damage intensifies these institutions have large stable cash that these be invested in texting and products we then go to market your written a be launched the or three channels bracket a borrower wholesale rubber direct back in purchasers must be in place before we can ramp up origination that one seen a recent weeks compete with permit chapel such as assurance cubbies are at a premium on my banks from that depend on the securitization market you can we do not have the infrastructure to written a private credit products therefore they look at party with from such as ourselves the sure companies pension fund the damage have potentially over a trillion dollars allocated to be invested in alternative fixed income as it a terrific think i'm at it such as ours are detracting best navigate the contrary resetting to the market the typical metrics include shorter duration originations with a range of ten a half the twelve percent growth weighted average coupon or whack what they wanted to your turn be there to do not have the same interest rate risk such as those that banks typically deal with with government agency more portfolios long duration very low yields as a reminder the underlying was short duration notes were right by one of one single family or mob a family residential properties that are going through value improvements during her accomplishments the queue for we quote our second warehouses fifty nine our warehouse one we close our first for take out with a fifty five billion are plus money manager the own insurance company we wanted an arbitration hearing against a former ceo with a judgment a one point six million plus unpaid interest trying to argue one two thousand twenty three goals and obering standards i started gross revenue prolong for archaeology is it a range between three hundred basis points to as high as four hundred basis points are term or df your loans have a range between two hundred basis points and three hundred database points the bob ranges reflect the all in annual revenue expected be receive from a reading the lungs consisting of relations these going on sales and it's or strips our focus is originating as opposed to purchase the close lungs we are expecting because of inquiry appreciate we're expecting the cost of acquiring a client on the directed by channel to be around getting hours for a quiet and overtime to spread over a about i've sort of historical experience that we can improve costs to capture required from getting hundred to eight hundred are expected costly process prophecy alone is a hundred and sixty dollars for a while this represents a significant competitive advantage due to having or long production princely in bangalore india expected average loan size for archaeology is a proxy five rj lol they expected average loan size for df young been launched his three hundred k at the march twentieth we have a pipeline director borrow channel of origination the thirty five million and we aren't acting negotiations with an additional twenty five million or tablet or that nine as for a wholesale gl which had a soft roll out on friday march seventeenth we have committed by him a fifteen million he plans to roll out a brother directional over the next three weeks but that are trying to call back to operate for questions
spk_0: thank you if she was like to ask a question you may signal by pressing star one on your telephone keypad once again star one for questions as resemble the queue alternate call over stephen comment for priest submitted questions
spk_4: segregated
spk_3: forgot my have what if any impact have felt or could we be exposed to in light of the recent crisis of confidence and the us regional banking sector that that's great question is the and i'm in this environment which we feel that question may time so we we haven't experienced any any issues we have our our take our partners a permit capital providers there are not affected by the short term fluctuations in the capital markets or capital partners partners are not dependent upon on on to be able to pottage or the securities market that's the beauty of our business model furthermore it more clear than ever there are proud of you the hedge your arthritis short short duration or yield an underlying cuero is improving over the duration of alone a national has and he rightly rate environment and like the old low yield long duration a that emerges recall the banks be under severe stress if an opera to be hatched
spk_5: he started doing my job if gets we have what one additional questions have we lost access to any lines of credit that we get previously negotiated for
spk_3: no a actually like start own by near community bank reach out to us about increasing our line if you seen it in the news dear to me bank which owns why dark acquired the the pod and from since your bank as well some the lumber boil your community banks back as a chili ran up since the news of acquisition of signatures deposits though he got very good but both are think lenders were outlined by
spk_6: others you dayton's
spk_0: is that the operator for a the for further questions via via via the phone can request
spk_7: thank you as a reminder star one if you'd like to ask a question attack and first question from just more with burnt out capital
spk_3: jason a good presentation or really helpful and and and whatnot i'm out here my first question isn't how our housing stock repurchase think on it
spk_7: the site it with we purchased about one point two million and stock repurchases that information will will be an hour and are tank a pile out on monday we couldn't have stick okay and then given the bad bad kind of progress with the business and whatnot i i i do want to ask a little bit about the pipeline and you have had laid out when you talk about that thirty five million a number what can you give a little bit more clarity is what that means because it's i'm like you're twenty five million it was
spk_3: like kind of committed the deals your are gonna close but with be want more clearly thirty five now actually go to thirty great question chapter when you look at thirty five nine overseen as we have the bar which would move forward sign term sheet we've were already appraisal the didn't practice headed towards the closing though we just turn on our our our marketing we have thirty five million committed directed by our we are behind that you know weren't taught another between twenty five and and forty million of choir the of prospects you are interesting and doing
spk_7: wiring alone or get rehab loans from a job you know we just really turn on originations and wasn't around fifty to sixty million direct originations though that's that were added to the different stages of that a process that that's different than thirty by and twenty five thirty by committed by the borrowers and twenty five were in talks with and then you go another fifteen and wholesale so the quick math yeah would be know it was a great question no idea it was he hit the t get fifty percent of the the twenty five million the same process that you know what it's called a fifteen million so you're basically
spk_8: in all likelihood gonna be getting safe sixty five million dollars and rich nations
spk_3: ah from kind of what's in the pipeline now without really getting more marketing going where your broker channel the out so you know the timeframe for causing one of these loans is private what thirty to forty five days a the and i think what you're saying is that is exactly we get turned on the rich nations where we found his you know we're working with the a pipeline of between fifty and sixty million was just turning out to direct borrowers nations obsolete as smooth things that we can increase arm market penetration their wholesale we'd ruled that what we call a soft rollout we literally are getting calls every day from counterparties who want to face as one of the i writing so right now we reach around with one counterparty we have some fifteen million committed lounge we have probably another seventy able to roll out the next two weeks counterparties show what we're trying to do in an organized fashion wrought the wholesale side is frankly we're very carpet between the cause we received a request received there's a tremendous amount of demand to face as and the hopes outside which will obscene you know the volume were tried to to manage it probably they us to go out and just go hard and turn on we could cause you production crops or we're trying to like into it with that being said with one counterparty we have fifty nine it's emissions we have another by the eight that we're going to turn live on in next two weeks so we got very good that over the next three months or wholesale are also production's going around quickly okay and then finally we've done a lot of work around the broker channel and we haven't turned out on yet and we haven't started marking directly brokers in our space brokers are very important part of the business as
spk_7: and with down we work at brokers but frankly we haven't started
spk_9: focus are marching towards them which we plan on donald and next three to four weeks and as it has a third channel them we expect to see material by and come in and origination so you know if it were sitting at fifty sixty miles directed by our fifteen million from a week a one week been turned on a week
spk_3: i'd say that from like three days i think you can extrapolate that did the ramp should be pretty strong over the next thirty am sorry i got or next three months but our business yeah i mean it it it sounds like you're probably be will hit you since you're six hundred million dollar goal this year and like he on a runway just absolutely destroy that so given that
spk_7: we know when when should we expect profitability for the the company yeah look any a day and provided metric tons some framework to howard looking at the cost and restructured and the and iraqi side of it i'm is eager to anybody that term profit i think is most important for us to focus on a production as you your first question is rob production so i'm very focused on getting off reach out why i don't want to give up for it statement but the you know my a terrific why a language shareholders to get that brickwork or or whether going to get problem of the base of the to has popped my i don't think it's gonna be terribly far down
spk_3: into oh okay so so given the the huge amount of worms that are not only coming your way but seem to be wants you he could turn on the the wholesale channel that more and what not and and broker channel i have how are you gonna be able to underwrite like all those loans that that seems like a lot til at we were pretty staff was there pretty well we we added
spk_7: fair amount staffing yeah oh september october november over in bangalore we have it a great team there's we can easily absorbed you probably triple what we have right now we you know will have the add a couple processors are more practice are quite frankly we felt good at our current team can handle afterwards over a hundred hundred fifty nine a month a and standard maybe adding one processor but there's a lot of of there's a lot of slack out there in in and talent between bangalore here that we could hire pretty easily though that that we've already we've been out looking at it as you know what's out there supply late of labor and we feel very good oh yeah if we needed in it the demands there we can add the the people on a challenge to
spk_3: protestant the lot that's not a concern or it nk and then what what would be operating processes and stuff like for that
spk_1: you know like worse than the differences with having a a a really remote workforce and how does that kind of play into you just to how you guys are going about operating with with the loan origination whatnot yeah that that's a great question in look where an amateur night over die a second but just the be clear the oh i work on the street our mortgage joined the more and we we had asked all rounder of we have people working all across the country is wanda robbie things move through pretty seamlessly and the reason we brought down your board to she's had a tremendous history in building out these platforms as well as revealing his platform so with that had loved loved it but danya yeah answer that daddy are you here i am yes ah and just thanks to the question though as adjacent to highlighted earlier in the call you would you have a pipeline that is in various stages at this point more heavily weighted an earlier stage and them it's my job to make sure that we have the operational infrastructure that is required to facilitate that i'm still a lot of the work that we've been focusing on in recent weeks at then really development of documented guideline making sure that will you be standardized form making sure that we have automated prophetess to the extent possible and you somebody think the it on specifically job as you were trying to make it easier due process and underwriting so while we have tremendous capabilities that are proprietary to our nature and given the investor take out and outlets that jason had negotiated we still need to create favorable path as we can't look at every be a like a customer the ah and toward that end we created a lot of to sell think about kind of a rudimentary or
spk_7: emitted underwriting system that at this point in excelled a model at some point in the future a web based form that not only can be used internally by loan officers to more quickly identify whether or not they are qualified deal but also externally they to broke a partner are we doing things like creating standard i formed for basic thing appraisal order title order just make sure that the things are being processed and consistent fashion and that was shaping up that and minutes whatever it is an internal processes the that we can scale more ah additionally i think we're trying to get ahead of thing of to eliminate duplicate processes for borrowers and broke a partner is obviously there's a lot of touch points in alone manufacturing process with action
spk_10: vendors that we have to coordinate with we want to make sure that to the extent we have special endorsements on our construction contract or state visit a consideration that were making those are quite the local title earlier in the process to that we don't run into eleventh hour embarrass yourself in short a lot of coordination with communication protocols and right operating procedures automate
spk_7: a tool to the extent possible to make sure that not only can we process the old in a fashion that is in alignment with our credit risk or that that we can do so inefficient manner and create those sealable class
spk_11: oh full detail the your deflate the head of a lot of the local banks i used for for loans on my property so
spk_12: at that really gets that here thanks tony
spk_13: nope i'm jim
spk_14: oh i love or got more questions but i'll hop off in the out a circle back once it is there's anyone else in the you thank you will take our next question from matthew how let with be riley
spk_3: danger things good morning everybody the couple i really have a run appreciation for the goblet knowledge of the direct selling directly you know to the to a life insurance companies are the of the biggest manager they get that my question on what's the outlook he signed up if he said here a pretty big as manager to leverage or will be will your conversations like with additional ads on that side really woody here anywhere you with that was a to enter third grade mad at too great question that's been a focus ours went when we chatted are are proprietary generation in late two three you for allegedly realize that we could rant could easily sell it became paramount the at these ford floats so with that being said he would work early signed up with three abiding party for take out partners three the for partners have pocket of my life life insurance were in addition we're talking by another sixty eight i would say requires larger like companies another three to five money managers at is your site a keg in a product it's just you know we can originate three hundred by a month and it it you know we couldn't sell the bucket so there's massive amount of mechanical they're under pressure to figure out different way to deploy
spk_14: their their capital into above market rates that we get away from the liquid agency market it's others from as not a cat will be raised sharp topic we see it like it's it's not a matter of bar do they have a bouncy taking that product though it but some on crop as we sat insurance from the the some time with anybody they they pick a or partners and they work with those people because they don't have the same ever structure they need to have a credible counterparty they need somebody who had the infrastructure has the resources to deliver quality product and with us
spk_3: having a long history with our team in india with our mantra with you here yeah we are you a pretty solid model for you know forty like coast departed wet and so it with that being said we found that begin to year like coast have a tonic capital and the money managers are some their voice and some better sit on the sidelines with the money managers and to digital he almost got a tattoo total of ten counterparty party them and i would they'd been what would the flow arrangements you look like them with a with the you know how big are they being indicted or you feed it you know he could do feel three hundred met and and he said the man's just insatiable still can just gives us a big each of them could be so them he said execs or in our stand up with get double check for sure three at map or categories when talked another seven eight okay i'm on a turnstile that vs your product we get originate just on the term product we could resonate to three hundred million mud and i still wouldn't be able to sell did the various in jerusalem is your talkative so he's a shirt companies have a mandate to you know him and talking to each one of the egg i can you tell you can be in ten of in as can be like i would assume they haven't they have a mandated to deploy three to five billion at least each and in the us your paper if not more and fill with have been said about before reading two hundred nine a month and has two billion in the district that the three different groups that seven hundred million per an insurance company it's just it's at the scratch in a bucket okay so typically you don't have captain how much you can sell to each insurance company but you know an idea rob become relevant it
spk_15: you're selling a monthly basis seventy five million turret to an insurance coverage you become relevant to that joe know for us the target is that you know he sounds seventy five million adequate amount to each trans calipari it would yell at the the we don't want to sell five nights and like the doesn't
spk_3: we're not we want become relative to them that we we have to quit they get to seventy five million much good we become very would we be a partner in his insurance companies to that done that on the term side and then we look at the the transitional died
spk_14: typically similar if you want to salvage yards come as yourself typically fifty to seventy five niner the you know slugs in already become relevant tell then i can look at you as you get to that site so and with that you know that's our strategy is to get no time to get that i can't lot of work with cable get that kind of by numbers i think the are you
spk_3: talking to and up with know he can get there that's why they signed up with us directly they'll get let's hope that helps met doctor did in it is they for clarifying that it took me great to hear about let you know what they're seeing on the other side is just a yellow that you can deliver them this this product to just incredible model and i get my next question on the margins look like you want they went up on the art or t l last time he gave to us or just curse words what's driving that and you'll get to three fifty margin is the village been termed you look at as sustainable for you
spk_16: here's a look at a bit on the space a long time and up
spk_3: i seen on the on alert and arch rtl island transitional alongside you actually margins wise by six hundred points so you're typically you know is the market has more involved so when there's more secure date and the more players in the spreadex you why now though you're curtain the current market when there's a shake of that going on and what unless last year and eight and the scares a market does your grand banks actor and the short run it shake that a lot that we players lot of the people who don't have the capital markets don't have good take our parties as don't have had the infrastructure the handled a tough environment so you know again when we start able to originate fifty seventy five million month that ability to deliver into your companies with that being said we'd know if there's a lack of liquidity and might say that it borrowers just can't go to any shop now cause you're allows lobby smaller nice as players are getting shot at checkout that's why lies guys from it's was brought up the fun wholesale like the with that being said are spread have white or red wine because were liquidity provider the we know that what we have is valuable the we been able to exercise pricing control because we are deeply provider and we have capital and we have you know which the strong take our partners to have helped permit capital source read have wide because we're not a price tag or this point in the market so that's why on the and a transitional loans are spread of wine and so it's more about how much production we do what really focused on and trying to get a production up because the fact the matter is we know that would work in a very positive we haven't had the advantage on that side on the ds your side same thing they had on you know what we're seeing as there is insatiable demand by the trust them is where the as your product at the whole is competition but yeah there's a lot of the originators
spk_17: which are structured copy and so they're get washed out going to trump's i was you have a lot more competition them with you want the rtl site
spk_7: but the fact is the market shaken out people right now and it's it gives us more pricing power job that you know at the position right the market market turbulence lately is causing us to be in a position of strength
spk_0: so there goes the to say that were very much focused on a production or ago right now we have read the right counterparts in place we're talking to brother kind of are you can be it's value add it's it's simply this point how much effort to we have to put in to get up production to where does the be and we have austria channels the channels are directed by our
spk_7: also and then surely brother channel so that how met absolutely incredible margins out that than the last and i will appreciate all the at the god that fletcher
spk_3: thank you will take our next question from just more burn out capital i'm the house with with rising rates and in in in a lot of the bank failures that are happening you know how how's that affect your model and then if lending freezes up a banks what do you think you'll be able to do with originations and sales deep is is a better environment for you is it a worse environment kind of what are you general thoughts on them yeah look great question center right for them as the mad when when banks a great now i'm going to happen by the banks they they they have attempted a landmass the your see their landing pulls back and the so with that being said that at the potter for us he had more that the prep your bank back the street firms are in love with the space to they don't quite understand it so the fact that matters is this does less competition it get us more pricing power this is a natural product insurance companies love the product the shirts can be can't get enough of it and frankly have had play conversation the shirt ms know they're in the driver's see right now they know it and so yeah it would tear to answer a question is in this environment it's long term it's very bad for us yeah this puts us a weed without some the we heard players allows us take more market share give us more pricing power that allows us to build out our processes well it's it's a win win for us but you look at the under street the one thing you learn it when the i've learned over my fifteen years and look on the street is balotelli great opportunity the a good day yeah there are people were headed for the sidelines while the now being very experienced this is the market a great opportunity it's a very important for us to capitalize on the ball pld in it's again it's a great opportunity for us a product natural hedge it's genesis it's a high yield product short your
spk_7: in that reset the often the to the underlying cuero is always improving over life alone in has a lot of you have to it so the natural hedge that would you read what would you rather have you rather have it the a mortgage you know bought it at three fifty based point or would you rather heavy a loan book and eleven percent that has thirty point of equity that's when you're done
spk_18: what did it has for your forty five point that bloody it's a no brainer
spk_3: okay okay
spk_17: ah how much your line of credit availability would you need to have to do say
spk_3: two three hundred million dollars a month and originations or even kind of the numbers the you know we can kind of pencil in the you're probably going to be doing at some point
spk_19: what a lovely it we have one hundred know right now
spk_7: frankly the east village which about your nose and those lines three to four time the mud like without being pressured though our our current were outlined as a kid more than enough handled two to three hundred nine hours and production and imagine earlier and the our runners come to us asking us if we want more more balance sheet more warehouse like
spk_20: and they like the product and like deal though and they like the profiled added to the opera the increasing our facilities
spk_7: the goal right now
spk_3: the bugs on production but we have enough were outlined to hit the numbers your the your indicating and we have enough people in the back office the a primary to get those numbers as well
spk_7: i would have been
spk_3: i thought my my last question is
spk_0: hum
spk_3: pat how are the that how are there any of the summer that looks or or the the red leaf lawsuits
spk_0: the that that a break you get the job in our ten k which will be this the on monday service exam
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This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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