Clayton Announces First Quarter 2006 Financial Results

Business Wire, May 2, 2006

SHELTON, Conn. -- Clayton Holdings, Inc. (NASDAQ:CLAY), an information and analytics company serving the debt markets, today announced its results for the quarter ended March 31, 2006. Clayton's first quarter 2006 results include:

--Total revenues of $55.2 million, an increase of $7.3 million, or 15.3%, as compared to the first quarter of 2005;

--Gross profit of $16.3 million, an increase of $0.4 million, or 2.7%, as compared to the first quarter of 2005; and

--Net cash provided from operations of $2.0 million.

Excluding acquisition-related amortization and loss from extinguishment of debt, Clayton's first quarter 2006 adjusted (non-GAAP) results include:

--Adjusted net income of $0.8 million, or $.06 per fully diluted share, as compared to adjusted net income of $3.4 million, or $.28 per fully diluted share in the first quarter of 2005. On a GAAP basis, there was a net loss of $1.1 million, or $0.09 per share, in the first quarter of 2006 as compared to net income of $1.9 million, or $0.16 per share in the first quarter of 2005.

For a reconciliation of net income to adjusted net income, please refer to the tables on the following pages.

"The first quarter marked a significant milestone in Clayton's history with the completion of our initial public offering in March," said Frank Filipps, Chairman and Chief Executive Officer of Clayton. "The revenue growth in the first quarter reflected our success in expanding the scope of our services through the various stages of the mortgage loan lifecycle. As anticipated, the results for the first quarter of 2006 as compared to 2005 reflect the impact of increased infrastructure costs and the different debt and capital structures in place during the periods."

Conference Call

Management will hold a conference call today at 9:00 a.m. EDT. A live webcast of the conference call will be available online at http://www.clayton.com. Web participants are encouraged to go to Clayton's website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. Listening to the webcast requires speakers and RealPlayer(TM) software, downloadable without charge at http://www.real.com. Those without Web access should access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are (866) 202-1971 for domestic callers and (617) 213-8842 for international callers. The participant passcode for both is 86954963.

After the live webcast, the call will remain available on Clayton's website, through June 1, 2006. In addition, a telephonic replay of the call will be available until June 1, 2006. The replay dial-in number is (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. The participant passcode for both is 57270212.

About Clayton Holdings, Inc.

Clayton Holdings, Inc., headquartered in Shelton, Connecticut, is an information and analytics company serving leading capital markets firms, lending institutions, fixed income investors and loan servicers with a full suite of information-based analytics, specialty consulting and outsourced services. Clayton's services include due diligence analytics, conduit support services, professional staffing, compliance products and services, credit risk management and surveillance and specialized loan servicing services. Additional information is available at www.clayton.com.

Safe Harbor Statement

Certain items in this press release may constitute forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Clayton can give no assurance that expectations will be attained. Factors that could cause actual results to differ materially from Clayton's expectations include, but are not limited to, adverse changes in the mortgage-backed securities market, the mortgage lending industry or the housing market; the level of competition for its services; the loss of one or more of its largest clients; Clayton's ability to maintain its professional reputation; management's ability to execute Clayton's business strategy; Clayton's ability to recruit and retain additional qualified independent loan review specialists; and other risks detailed in Clayton's Registration Statement on Form S-1 (File No. 333-129526), filed with the Securities and Exchange Commission on November 7, 2005, and other reports filed with the Securities and Exchange Commission. Such forward-looking statements speak only as of the date of this press release. Clayton expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Clayton's expectations with regard thereto or change in events, conditions, or circumstances on which any such statement is based.