Good day, ladies and gentlemen, and welcome to the Altisource Portfolio Solutions Fourth Quarter and Full Year 2018 Earnings Conference Call. [Operators Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Ms. Michelle Esterman, Chief Financial Officer. Ma’am, you may begin.

Thank you, operator. We first want to remind you that the earnings release, Form 10-K 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 include a number of risks and uncertainties that could cause actual results to differ. Please review the forward looking statements section in the company’s earnings release as well as risk factors identified in our 2018 10-K, which describes factors that may lead to different results. We undertake no obligation to update these statements as a result of new information or future events. During this call we’ll present both GAAP and non-GAAP financial measures. In our earnings release and quarterly slides, you’ll find additional disclosures regarding non-GAAP measures. A reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides. Joining me for today’s call is Bill Shepro, our Chief Executive Officer. I would now like to turn the call over to Bill.

Thanks, Michelle. Good morning, and thank you for joining today’s call. 2018 has been a productive year for Altisource. From a financial perspective, we substantially exceeded the midpoint of our adjusted pretax income and adjusted earnings per share financial scenarios and generated strong adjusted operating cash. Operationally, we began to exit certain businesses and establish Project Catalyst to streamline our organization, focus on our larger opportunities and help us achieve our longer term financial objectives. We also continue to work closely with our largest customers to strengthen and grow our relationships with them and win new business with leading financial institutions. Leveraging the work we’ve done in 2018, we believe we are turning the corner. The $54 million midpoint of our 2019 adjusted pretax income scenarios is $2 million better than what we anticipated achieving in 2018 and sets the stage for continued earnings growth in 2020. This morning, I’ll provide an update on each of these items and discuss our 2019 financial scenarios. As you can see on Slide six and seven, driven by a strong fourth quarter, we generated $2.43 of adjusted diluted earnings per share and $62 million of adjusted pretax income in 2018, significantly outperforming the midpoint of our scenarios. 2018 adjusted pretax income was stronger than anticipated and higher than the midpoint of our scenarios because we achieved cost savings from Project Catalyst in the fourth quarter that we didn’t expect to achieve until the first quarter of 2019. Notably, fourth quarter adjusted pretax income, which is typically seasonally slower than the second and third quarters, was the second strongest quarter in 2018 and 50% higher than the fourth quarter of 2017. Turning to Slide eight. From a capital perspective, we refinanced our term loan in April of 2018, extending the maturity date from December…

[Operators Instructions] And our first question comes from Mike Grondahl with Northland Security. Your line is open.

Hey, thanks Bill. So what’s the two or three takeaways from the agreement with Ocwen? And then how do we interpret an update on the LOI or what’s going on with NRZ? Sort of the opportunity or the challenges with NRZ?

Yes. So I think with Ocwen, Mike, I think it’s very clearly – we’re working with Ocwen now to transition them off of real servicing, which is a benefit for Ocwen. We’ve now formalized the ability for Ocwen to approve our sale of individual business lines, which is a benefit of Altisource. Ocwen is covering a large portion of our costs related to its servicing transition, and we’ve reaffirmed ourselves as Ocwen strategic provider through August 2025. And there’s a very modest impact in terms of the – we’re giving up a little bit of the referrals that we historically received, but the impact to our revenue, I think, this year, putting aside the real servicing transition, which we built into our financial scenarios, the impact to our revenue, we think, will be about approximately $6 million. So it’s very modest impact to our revenue this year. It helps Ocwen grow. And obviously, to the extent Ocwen is able to grow, it’s very good for us.

Got it. Got it. Okay, that’s helpful. And in NRZ, so I think you’re saying there – you didn’t come to an agreement on an LOI, but you still have your previous agreement in place, and they’re still sending you referrals after 12/15. If you could just provide a little clarity there?

Yes, so just a little background. So we signed the brokerage, the Cooperative Brokerage Agreement with NRZ back in 2017. And we think – so that dealt with REO assets on NRZ owned or to be owned MSRs, that are serviced by Ocwen or someone else. We have a separate agreement with Ocwen that provides us to do all the other default-related services on those portfolios. And we believe, Mike, that those agreements with Ocwen establish Altisource as the provider of downstream services on the Ocwen service portfolios. We separately have signed an LOI which expired in December 15 with NRZ because there’s some benefits to having a direct deal with NRZ. For example, if Ocwen was no longer the servicer, we would still be providing the services, if we did a direct deal. It’s also very good to sign a deal with one of the largest buyers of MSRs in the industry. So there are some benefits. That agreement expired. We’ve had some conversations with NRZ since the expiration of the LOI, and we remain open to formalizing the relationship. But in the meantime, we believe, our agreement with Ocwen controls and we’re the provider of services to Ocwen on those portfolios. And we’ve continued to receive the referrals on an uninterrupted basis, we believe, since December 15.

Okay. Project Catalyst. What do you think the expense savings is in 2019?

Yes. So Mike, we’re looking at it a little bit differently now. If you recall, I think, we originally said, we thought we could save, on an annualized basis, $60 million to $90 million. There’s been a lot of, sort of, moving parts at Altisource where we’ve exited certain businesses. We’re now getting off of – we’re permitting Ocwen to get off of real servicing sooner. So we’re looking at Project Catalyst now as what’s allowing us to achieve or helping up to achieve these scenarios that we put out today, which is basically $2 million higher than what the midpoint was for 2018. And so we’re looking at that from that perspective. But if you look – if you take the time and go through our slides, I think you’re going to see that even though sort of the mix of our business is changing a little bit, we’re increasing our margins across the company or overall company-wide and really on our way in our view towards turning the corner for growth this year over what we thought we would do last year and even additional or further growth in 2020.

Got it. And last question? It looked like you had some nice signings in 4Q 2018. What is the pipeline outside of what you have listed on Slide 9 look like?

Yes. So first I’d say that those deals that we signed, I think, most of which we reference on that Slide 9, are super exciting. And we don’t believe we’re close to getting to a normalized level yet with those customers. They’re just getting going. Also, from a sales pipeline perspective, we’re feeling really good about how the pipeline is developing so far in 2019. There’s a couple of REO transactions, REO asset management and REO auction that we’re working on. We think that could generate more than 100 referrals a month collectively at very attractive fees. On the field services side, we continue to get a lot of traction and are developing the pipeline with both large and small customers, and we’re in the middle of several RFPs that we’re optimistic about. So we’re feeling very good about how the pipeline is developing.

Got it, okay. Thank you.

[Operators Instructions] And I’m not showing any further questions at this time. I’d now like to turn the call back over to Mr. Shepro for any closing remarks.

Thanks, operator. We appreciate everyone joining today’s call. Have a great day.

Ladies and gentlemen, thank you for participating in today’s conference. This does concludes today’s program, and you may all disconnect. Everyone, have a great day.