The J.G. Wentworth Company™ Reports Fourth Quarter Results;
Adjusted Net Income of $9.1 Million and Total Receivables Balance Purchased of $266 Million
Continuing Progress to Become a Diversified Consumer Financial Services Company
RADNOR, Pa.—(BUSINESS WIRE)—03.12.15 — The J.G. Wentworth Company™ (“J.G. Wentworth” or the “Company”) (NYSE:JGW), a leading purchaser of structured settlement payments, annuity payments, lottery payments and other receivables through its J.G. Wentworth and Peachtree brands, today reports financial results for the fourth quarter of 2014. “I am pleased with the results and how we finished 2014. In addition, we have made significant progress on our growth strategies by announcing our entrance into the Prepaid Payment Products, Personal Lending and Mortgage categories,” said Stewart A. Stockdale, Chief Executive Officer, The J.G. Wentworth Company™.
The following are highlights from the fourth quarter and full year results:
Fourth Quarter Highlights
| |
• | Total Receivables Balance, or TRB, purchases were $266.2 million, as compared to $260.5 million in the fourth quarter of 2013. |
| |
• | Adjusted unrealized gains on VIE and other finance receivables, long term debt and derivatives, net of the gain (loss) on swap terminations*, ("Spread Revenue"*), was $52.5 million, as compared to $44.6 million in the fourth quarter of 2013. |
| |
• | Adjusted Net Income*, or ANI, decreased to $9.1 million, as compared to $11.2 million in the fourth quarter of 2013, which was driven primarily by the $14.2 million gain on debt extinguishment in the fourth quarter of 2013, offset by lower interest expense in the fourth quarter of 2014. |
| |
• | Revenues were $127.3 million, an increase of 19.4% from revenues of $106.6 million in the fourth quarter of 2013, due primarily to the impact of decreasing cost of funds on unrealized gains on VIE and other finance receivables, long-term debt and derivatives. |
| |
• | Net income increased to $27.7 million, as compared to a loss of $5.4 million in the fourth quarter of 2013, due primarily to an increase in revenues, lower interest expense, and the loss on disposal/impairment of fixed assets in 2013. |
Full Year Highlights
| |
• | Total Receivables Balance, or TRB, purchases were $1,077.8 million, as compared to $1,125.0 million in 2013. |
| |
• | Spread Revenue* was $213.6 million, as compared to $210.6 million in 2013. |
| |
• | Adjusted Net Income*, or ANI, decreased to $43.6 million, as compared to $46.6 million in 2013, which was driven primarily by the $14.2 million gain on debt extinguishment in 2013, offset by lower interest expense in 2014. |
| |
• | Revenues were $494.4 million, an increase of 7.6% from revenues of $459.6 million in 2013, due primarily to a $47.9 million increase in unrealized gains on VIE and other finance receivables, long-term debt and derivatives and a $14.5 million increase in interest income. This was partially offset by a $14.4 million decrease in realized and unrealized gains on marketable securities, net, and a $14.2 million gain on extinguishment of debt in 2013. |
| |
• | Net income increased to $96.6 million, as compared to $61.8 million in 2013, primarily due to an increase in unrealized gains on VIE and other finance receivables, long-term debt and derivatives that resulted from a more favorable movement in the fair value interest rate used to value our finance receivables. These increases were offset by an increase in interest expense. |
John R. Schwab, J.G. Wentworth’s Chief Financial Officer, said, “We are excited about the synergies we have created by leveraging our competencies in the fourth quarter. Revenue increased from prior year which was primarily driven by lower cost of funds and an increase in TRB. We are pleased with 2014 and look forward to further diversifying our business in 2015.”
* This earnings press release contains non-GAAP measures, which as calculated by the Company are not necessarily comparable to similarly-titled measures reported by other companies. Results for the three and twelve month periods ended December 31, 2014 and 2013, as well as our reconciliation of non-GAAP measures, and historic financial information from 2013 to the present, are included in the accompanying financial information.
About The J.G. Wentworth Company™
The J.G. Wentworth Company focuses on key sectors, including structured settlement payment purchasing, annuity payment purchasing, lottery payment purchasing and pre-settlement funding. Through our two market-leading and highly recognizable brands, J.G. Wentworth and Peachtree Financial Solutions, we purchase future structured settlement payment streams from our customers. For more information about The J.G. Wentworth Company, visit www.jgw.com or use the contact information provided below.
Conference Call and Webcast
Management will host a webcast to discuss the fourth quarter and fiscal year 2014 financial results today, March 12, 2015, at 10:00 AM Eastern time. The webcast will include remarks from J.G. Wentworth’s Chief Executive Officer, Stewart Stockdale, and Chief Financial Officer, John Schwab.
This call will be accompanied by a presentation and will be available via a webcast of the conference call live on the Investor Relations section of the Company’s website:
The J.G. Wentworth Company™ Fourth Quarter and Fiscal Year 2014 Financial Results Webcast
Interested parties unable to access the conference call and view the presentation via the webcast through this link: The J.G. Wentworth Company™ Fourth Quarter and Fiscal Year 2014 Financial Results, may dial Participant conference number: (866) 393-4306, Conference ID: 97929143.
A playback will be available through Thursday, March 19th, 2015. To participate, utilize the dial-in information listed below:
Playback conference number: (855) 859-2056, Conference ID: 97929143. The presentation will be posted to the Company’s website after the call.
Forward-Looking Statements
Certain statements in this press release constitute “forward-looking statements.” All statements, other than statements of historical fact, are forward-looking statements. You can identify such statements because they contain words such as “plans,” “expects,” or “does expect,” “budget,” “forecasts,” “anticipates,” or “does not anticipate,” “believes,” “intends,” and similar expressions or statements that certain actions, events or results “may,” “could,” “would,” “might,” or “will,” be taken, occur or be achieved. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.
A number of factors could cause actual results, performance or achievements to differ materially from the results expressed or implied in the forward-looking statements. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. Forward-looking statements necessarily involve significant known and unknown risks, assumptions and uncertainties that may cause our actual results, performance and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. Consideration should also be given to the areas of risk set forth under the heading “Risk Factors” in our filings with the Securities and Exchange Commission, and as set forth more fully under “Part 1, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31,
2014, these risks and uncertainties include, among other things: our ability to implement our business strategy; our ability to continue to purchase structured settlement payments and other assets; the compression of the yield spread between the price we pay for and the price at which we sell assets due to changes in interest rates and/or other factors; changes in tax or accounting policies or changes in interpretation of those policies as applicable to our business; changes in current tax law relating to the tax treatment of structured settlements; our ability to complete future securitizations or other financings on beneficial terms; our dependence on the opinions of certain rating agencies; our dependence on outside parties to conduct our transactions including the court system, insurance companies, outside counsel, delivery services and notaries; our ability to remain in compliance with the terms of our substantial indebtedness; changes in existing state laws governing the transfer of structured settlement payments or the interpretation thereof; availability of or increases in the cost of our financing sources relative to our purchase discount rate; changes to state or federal, licensing and regulatory regimes; unfavorable press reports about our business model; our dependence on the effectiveness of our direct response marketing; adverse judicial developments; our ability to successfully enter new lines of business and broaden the scope of our business; potential litigation and regulatory proceedings; changes in our expectations regarding the likelihood, timing or terms of any potential acquisitions described herein; the lack of an established market for the subordinated interest in the receivables that we retain after a securitization is executed; the impact of the March 2014 Consumer Financial Protection Bureau inquiry and any findings or regulations it issues as related to us, our industries, or products in general; our dependence on a small number of key personnel; our exposure to underwriting risk; our access to personally identifiable confidential information of current and prospective customers and the improper use or failure to protect that information; our computer systems being subject to security and privacy breaches; the public disclosure of the identities of structured settlement holders; our business model being susceptible to litigation; the insolvency of a material number of structured settlement issuers; and infringement of our trademarks or service marks.
Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to publicly revise any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.
The J.G. Wentworth Company
(Prior to November 14, 2013, J.G. Wentworth, LLC and Subsidiaries)
Consolidated Balance Sheets
(In thousands, except for per share data)
|
| | | | | | | |
| December 31, 2014 | | December 31, 2013 |
| | | |
ASSETS | |
| | |
|
Cash and cash equivalents | $ | 41,648 |
| | $ | 39,061 |
|
Restricted cash and investments | 198,206 |
| | 109,338 |
|
VIE finance receivables, at fair market value | 4,422,033 |
| | 3,818,704 |
|
Other finance receivables, at fair market value | 101,802 |
| | 51,945 |
|
VIE finance receivables, net of allowances for losses of $7,674 and $6,443, respectively | 113,489 |
| | 117,826 |
|
Other finance receivables, net of allowances for losses of $2,454 and $1,899, respectively | 17,803 |
| | 15,166 |
|
Notes receivable, at fair market value | — |
| | 5,610 |
|
Other receivables, net of allowances for losses of $204 and $243, respectively | 14,165 |
| | 13,529 |
|
Fixed assets, net of accumulated depreciation of $5,976 and $4,544, respectively | 3,758 |
| | 3,112 |
|
Intangible assets, net of accumulated amortization of $20,273 and $17,781, respectively | 45,436 |
| | 47,878 |
|
Goodwill | 84,993 |
| | 84,993 |
|
Marketable securities | 103,419 |
| | 121,954 |
|
Deferred tax assets | 2,170 |
| | 1,830 |
|
Other assets | 33,787 |
| | 41,151 |
|
Total Assets | $ | 5,182,709 |
| | $ | 4,472,097 |
|
| | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | |
|
Accounts payable | $ | 5,301 |
| | $ | 3,903 |
|
Accrued expenses | 13,955 |
| | 21,181 |
|
Accrued interest | 17,416 |
| | 14,485 |
|
VIE derivative liabilities, at fair market value | 75,706 |
| | 70,296 |
|
VIE borrowings under revolving credit facilities and other similar borrowings | 19,339 |
| | 41,274 |
|
VIE long-term debt | 181,558 |
| | 150,802 |
|
VIE long-term debt issued by securitization and permanent financing trusts, at fair market value | 4,031,864 |
| | 3,431,283 |
|
Term loan payable | 437,183 |
| | 434,184 |
|
Other liabilities | 6,677 |
| | 7,646 |
|
Deferred tax liabilities | 36,656 |
| | 1,707 |
|
Installment obligations payable | 103,419 |
| | 121,954 |
|
Total Liabilities | 4,929,074 |
| | 4,298,715 |
|
| | | |
Class A common stock, par value $0.00001 per share; 500,000,000 shares authorized; Issued and outstanding at December 31, 2014 - 15,021,147 and 14,420,392; December 31, 2013 - 11,220,358 and 11,216,429 | — |
| | — |
|
Class B common stock, par value $0.00001 per share; 500,000,000 shares authorized; Issued and outstanding at December 31, 2014 - 9,963,750; December 31, 2013 - 14,001,583 and 13,984,065 | — |
| | — |
|
Class C common stock, par value $0.00001 per share; 500,000,000 shares authorized; Issued and outstanding at December 31, 2014 and December 31, 2013 - 0 | — |
| | — |
|
Additional paid-in-capital | 95,453 |
| | 70,236 |
|
Retained earnings (accumulated deficit) | 25,634 |
| | (5,577 | ) |
Accumulated other comprehensive income | — |
| | 612 |
|
| 121,087 |
| | 65,271 |
|
Less: Treasury stock at cost; purchased at December 31, 2014 - 600,755; December 31, 2013 - 3,929 | (2,443 | ) | | — |
|
Total stockholders’ equity, The J.G. Wentworth Company | 118,644 |
| | 65,271 |
|
Non-controlling interests | 134,991 |
| | 108,111 |
|
Total Stockholders’ Equity | 253,635 |
| | 173,382 |
|
Total Liabilities and Stockholders’ Equity | $ | 5,182,709 |
| | $ | 4,472,097 |
|
The J.G. Wentworth Company
(Prior to November 14, 2013, J.G. Wentworth, LLC and Subsidiaries)
Consolidated Statements of Operations
(In thousands, except for per share data)
|
| | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Twelve Months Ended December 31, |
| 2014 | | 2013 | | 2014 | | 2013 |
REVENUES | |
| | |
| | |
| | |
|
Interest income | $ | 47,854 |
| | $ | 46,130 |
| | $ | 186,958 |
| | $ | 172,423 |
|
Unrealized gains on VIE and other finance receivables, long-term debt, and derivatives | 79,343 |
| | 38,733 |
| | 300,702 |
| | 252,801 |
|
Gain (loss) on swap terminations, net | — |
| | (151 | ) | | (628 | ) | | 200 |
|
Servicing, broker, and other fees | 928 |
| | 1,585 |
| | 4,149 |
| | 5,276 |
|
Realized and unrealized gains (losses) on marketable securities, net | (853 | ) | | 4,776 |
| | 888 |
| | 15,299 |
|
Realized gain (loss) on notes receivable, at fair value | — |
| | — |
| | 2,098 |
| | (1,862 | ) |
Gain on debt extinguishment, net | — |
| | 14,217 |
| | 270 |
| | 14,217 |
|
Other | 2 |
| | 1,266 |
| | (61 | ) | | 1,209 |
|
Total Revenues | 127,274 |
| | 106,556 |
| | 494,376 |
| | 459,563 |
|
| | | | | | | |
EXPENSES | |
| | |
| | |
| | |
|
Advertising | 16,148 |
| | 18,639 |
| | 68,489 |
| | 70,304 |
|
Interest expense | 50,055 |
| | 53,061 |
| | 200,798 |
| | 193,035 |
|
Compensation and benefits | 10,243 |
| | 10,101 |
| | 41,108 |
| | 42,595 |
|
General and administrative | 4,626 |
| | 5,298 |
| | 18,567 |
| | 20,179 |
|
Professional and consulting | 4,970 |
| | 4,914 |
| | 18,452 |
| | 18,820 |
|
Debt issuance | 2,727 |
| | 3,275 |
| | 8,683 |
| | 8,930 |
|
Securitization debt maintenance | 1,489 |
| | 1,565 |
| | 6,161 |
| | 6,091 |
|
Provision for losses on finance receivables | 1,533 |
| | 1,321 |
| | 4,806 |
| | 5,695 |
|
Depreciation and amortization | 1,005 |
| | 1,472 |
| | 4,168 |
| | 5,703 |
|
Installment obligations expense (income), net | 1,755 |
| | 6,827 |
| | 5,322 |
| | 19,647 |
|
Loss on disposal/impairment of fixed assets | 69 |
| | 4,200 |
| | 69 |
| | 4,200 |
|
Total Expenses | 94,620 |
| | 110,673 |
| | 376,623 |
| | 395,199 |
|
Income (loss) before income taxes | 32,654 |
| | (4,117 | ) | | 117,753 |
| | 64,364 |
|
Provision for income taxes | 4,971 |
| | 1,245 |
| | 21,140 |
| | 2,546 |
|
Net Income (Loss) | 27,683 |
| | (5,362 | ) | | 96,613 |
| | 61,818 |
|
Less: Net income attributable to non-controlling interests | 15,854 |
| | 215 |
| | 65,402 |
| | 67,395 |
|
Net Income (Loss) Attributable to The J.G. Wentworth Company | $ | 11,829 |
| | $ | (5,577 | ) | | $ | 31,211 |
| | $ | (5,577 | ) |
| | | | | | | |
Weighted average shares of Class A common stock outstanding: | |
| | |
| | |
| | |
|
Basic | 14,636,520 |
| | 10,395,574 |
| | 12,986,058 |
| | 10,395,574 |
|
Diluted | 14,640,860 |
| | 10,395,574 |
| | 12,988,781 |
| | 10,395,574 |
|
| | | | | | | |
Net income (loss) per share attributable to stockholders of Class A common stock of The J.G. Wentworth Company | |
| | |
| | |
| | |
|
Basic | $ | 0.81 |
| | $ | (0.54 | ) | | $ | 2.40 |
| | $ | (0.54 | ) |
Diluted | $ | 0.81 |
| | $ | (0.54 | ) | | $ | 2.40 |
| | $ | (0.54 | ) |
ANI Bridge - Unaudited
The J.G. Wentworth Company and Subsidiaries
Reconciliation of Net Income to Adjusted Net Income and other Non-GAAP Measures Used in this Release and the Related Presentation
We use Adjusted Net Income (a non-GAAP financial measure) as a measure of our results from operations, which we define as our net income under U.S. GAAP before non-cash compensation expenses, certain other expenses, provision for or benefit from income taxes and the amounts related to the consolidation of the securitization and permanent financing trusts we use to finance our business. We use Adjusted Net Income to measure our overall performance because we believe it represents the best measure of our operating performance, as the operations of the variable interest entities do not impact business performance. In addition, the add-backs described above are consistent with adjustments permitted under our Term Loan agreement.
We also use the non-GAAP measures of Total Adjusted Revenue and Adjusted unrealized gains on VIE and other finance receivables, long term debt and derivatives, net of the gain (loss) on swap termination, ("Spread Revenue"), as measures of our revenues, which we define as those measures under U.S. GAAP before the amounts related to the consolidation of the securitization and permanent financing trusts we use to finance our business. We use these measures to measure our revenues because we believe they represent better measures of our revenues, as the operations of the variable interest entities do not impact business performance.
You should not consider Adjusted Net Income, Total Adjusted Revenue or Spread Revenue in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Because not all companies use identical calculations, our presentation of Adjusted Net Income, Total Adjusted Revenue and Spread Revenue may not be comparable to other similarly titled measures of other companies.
A reconciliation of Net Income to Adjusted Net Income, which includes line items for Total Adjusted Revenue and Spread Revenue, for the three and twelve months ended December 31, 2014 and 2013 is provided below. Certain prior year numbers have been reclassified to conform with current year presentation.
The J.G. Wentworth Company
(Prior to November 14, 2013, J.G. Wentworth, LLC and Subsidiaries)
Reconciliation of Net Income (Loss) to Adjusted Net Income - Unaudited
(In thousands)
|
| | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Twelve Months Ended December 31, |
| 2014 | | 2013 | | 2014 | | 2013 |
| | | | | | | |
Net Income (Loss) | $ | 27,683 |
| | $ | (5,362 | ) | | $ | 96,613 |
| | $ | 61,818 |
|
| | | | | | | |
Adjustments to reflect deconsolidation of securitizations: | |
| | |
| | |
| | |
|
Elimination of unrealized gain/loss on finance receivables, long-term debt and derivatives from post securitization due to changes in interest rates | (25,306 | ) | | 6,055 |
| | (84,955 | ) | | (42,358 | ) |
Elimination of interest income from securitized finance receivables permanent financing trusts | (41,356 | ) | | (40,349 | ) | | (166,888 | ) | | (150,945 | ) |
Interest income on retained interests in finance receivables | 5,177 |
| | 4,865 |
| | 20,315 |
| | 18,709 |
|
Servicing income on securitized finance receivables | 1,306 |
| | 1,303 |
| | 5,129 |
| | 5,548 |
|
Elimination of interest expense on long-term debt related to securitization and permanent financing trusts | 35,247 |
| | 34,763 |
| | 142,907 |
| | 128,226 |
|
Professional fees relating to securitizations | 1,489 |
| | 1,563 |
| | 6,161 |
| | 6,198 |
|
Other adjustments: | |
| | |
| | |
| | |
|
Share based compensation | 653 |
| | (60 | ) | | 2,384 |
| | 1,452 |
|
Income tax provision | 4,971 |
| | 1,245 |
| | 21,140 |
| | 2,546 |
|
Impact of 2014-3 prefunding on unsecuritized finance receivables | (1,566 | ) | | — |
| | (1,566 | ) | | — |
|
Severance, M & A, and consulting expenses | 765 |
| | 1,020 |
| | 3,736 |
| | 5,416 |
|
Other non-recurring items | 18 |
| | 6,121 |
| | (1,383 | ) | | 10,004 |
|
Adjusted Net Income | $ | 9,081 |
| | $ | 11,164 |
| | $ | 43,593 |
| | $ | 46,614 |
|
| | | | | | | |
Other Data: | |
| | |
| | |
| | |
|
Securitized Product Total Receivables Balance (TRB) Purchases (1) | $ | 234,084 |
| | $ | 214,437 |
| | $ | 939,050 |
| | $ | 946,413 |
|
Life Contingent Purchases | 25,107 |
| | 39,054 |
| | 111,590 |
| | 156,319 |
|
Presettlement Fundings | 7,021 |
| | 6,997 |
| | 27,155 |
| | 22,299 |
|
Total TRB Purchases | $ | 266,212 |
| | $ | 260,488 |
| | $ | 1,077,795 |
| | $ | 1,125,031 |
|
Adjusted Net Income | $ | 9,081 |
| | $ | 11,164 |
| | $ | 43,593 |
| | $ | 46,614 |
|
Adjusted Net Income TRB Margin (2) | 3.41 | % | | 4.29 | % | | 4.04 | % | | 4.14 | % |
| | | | | | | |
Company retained interests in finance receivables at fair market value | $ | 331,395 |
| | $ | 239,591 |
| | |
| | |
|
(1) Securitized product TRB purchases includes purchases during the period of assets that are expected to be securitized (guaranteed structured settlements, annuities, and lottery payment streams).
(2) Adjusted Net Income TRB Margin is Adjusted Net Income divided by Total TRB Purchases during the period.
The J.G. Wentworth Company
(Prior to November 14, 2013, J.G. Wentworth, LLC and Subsidiaries)
Reconciliation of Net Income to Adjusted Net Income - Unaudited
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Q4 2014 GAAP Results | | Adjustments to reflect deconsolidation of securitizations | | Impact of 2014-3 Prefunding on Unsecuritized Finance Receivables | | Interest Income on Retained Interests | | Share Based Compensation | | Income Tax | | Severance M&A and Consulting | | Reclassification Associated with Installment Obligation Payable | | Other Non-recurring Items | | Q4 2014 Adjusted Net Income |
| | | | | | | | | | | | | | | | | | | |
REVENUES | |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Interest income | $ | 47,854 |
| | $ | (41,356 | ) | | $ | — |
| | $ | 5,177 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | (2,608 | ) | | $ | — |
| | $ | 9,067 |
|
Unrealized gains on VIE and other finance receivables, long-term debt and derivatives | 79,343 |
| | (25,306 | ) | | (1,566 | ) | | |
| | |
| | |
| | |
| | |
| | |
| | 52,471 |
|
Servicing, broker, and other fees | 928 |
| | 1,306 |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | 2,234 |
|
Realized and unrealized losses on marketable securities, net | (853 | ) | | |
| | | | |
| | |
| | |
| | |
| | 853 |
| | |
| | — |
|
Other | 2 |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | 2 |
|
Total Revenues | $ | 127,274 |
| | $ | (65,356 | ) | | $ | (1,566 | ) | | $ | 5,177 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | (1,755 | ) | | $ | — |
| | $ | 63,774 |
|
| | | | | | | | | | | | | | | | | | | |
EXPENSES | |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Advertising | $ | 16,148 |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | $ | 16,148 |
|
Interest expense | 50,055 |
| | (35,247 | ) | | | | |
| | |
| | |
| | |
| | |
| | |
| | 14,808 |
|
Compensation and benefits | 10,243 |
| | |
| | | | |
| | (653 | ) | | |
| | (62 | ) | | |
| | |
| | 9,528 |
|
General and administrative | 4,626 |
| | |
| | | | |
| | |
| | |
| | | | |
| | (18 | ) | | 4,608 |
|
Professional and consulting | 4,970 |
| | |
| | | | |
| | |
| | |
| | (703 | ) | | |
| | — |
| | 4,267 |
|
Debt issuance | 2,727 |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | 2,727 |
|
Securitization debt maintenance | 1,489 |
| | (1,489 | ) | | | | |
| | |
| | |
| | |
| | |
| | |
| | — |
|
Provision for losses on finance receivables | 1,533 |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | 1,533 |
|
Depreciation and amortization | 1,005 |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | 1,005 |
|
Installment obligations income, net | 1,755 |
| | |
| | | | |
| | |
| | |
| | |
| | (1,755 | ) | | |
| | — |
|
Loss on disposal/impairment of fixed assets | 69 |
| | | | | | | | | | | | | | | | | | 69 |
|
Total Expenses | $ | 94,620 |
| | $ | (36,736 | ) | | $ | — |
| | $ | — |
| | $ | (653 | ) | | $ | — |
| | $ | (765 | ) | | $ | (1,755 | ) | | $ | (18 | ) | | $ | 54,693 |
|
| | | | | | | | | | | | | | | | | | | |
Income before income taxes | $ | 32,654 |
| | $ | (28,620 | ) | | $ | (1,566 | ) | | $ | 5,177 |
| | $ | 653 |
| | $ | — |
| | $ | 765 |
| | $ | — |
| | $ | 18 |
| | $ | 9,081 |
|
Provision for income taxes | 4,971 |
| | | | | | | | | | (4,971 | ) | | | | | | | | |
Net Income | $ | 27,683 |
| | $ | (28,620 | ) | | $ | (1,566 | ) | | $ | 5,177 |
| | $ | 653 |
| | $ | 4,971 |
| | $ | 765 |
| | $ | — |
| | $ | 18 |
| | $ | 9,081 |
|
The J.G. Wentworth Company
(Prior to November 14, 2013, J.G. Wentworth, LLC and Subsidiaries)
Reconciliation of Net Income (Loss) to Adjusted Net Income - Unaudited
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Q4 2013 GAAP Results | | Adjustments to reflect deconsolidation of securitizations | | Interest Income on Retained Interests | | Share Based Compensation | | Income Tax | | Severance M&A and Consulting | | Reclassification Associated with Installment Obligation Payable | | Other Non-recurring Items | | Q4 2013 Adjusted Net Income |
| | | | | | | | | | | | | | | | | |
REVENUES | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Interest income | $ | 46,130 |
| | $ | (40,349 | ) | | $ | 4,865 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | (2,051 | ) | | $ | — |
| | $ | 8,595 |
|
Unrealized gains on VIE and other finance receivables, long-term debt and derivatives | 38,733 |
| | 6,055 |
| | |
| | |
| | |
| | |
| | |
| | |
| | 44,788 |
|
Loss on swap terminations, net | (151 | ) | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | (151 | ) |
Servicing, broker, and other fees | 1,585 |
| | 1,303 |
| | |
| | |
| | |
| | |
| | |
| | |
| | 2,888 |
|
Realized and unrealized gains on marketable securities, net | 4,776 |
| | |
| | |
| | |
| | |
| | |
| | (4,776 | ) | | | | — |
|
Gain on extinguishment of debt, net | 14,217 |
| | | | | | | | | | | | | | | | 14,217 |
|
Other | 1,266 |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | 1,266 |
|
Total Revenues | $ | 106,556 |
| | $ | (32,991 | ) | | $ | 4,865 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | (6,827 | ) | | $ | — |
| | $ | 71,603 |
|
| | | | | | | | | | | | | | | | | |
EXPENSES | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Advertising | $ | 18,639 |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | $ | 18,639 |
|
Interest expense | 53,061 |
| | (34,763 | ) | | |
| | |
| | |
| | |
| | |
| | |
| | 18,298 |
|
Compensation and benefits | 10,101 |
| | |
| | |
| | 60 |
| | |
| | (147 | ) | | |
| | |
| | 10,014 |
|
General and administrative | 5,298 |
| | |
| | |
| | |
| | |
| | (325 | ) | | |
| | |
| | 4,973 |
|
Professional and consulting | 4,914 |
| | | | |
| | |
| | |
| | (548 | ) | | | | (1,921 | ) | | 2,445 |
|
Debt issuance | 3,275 |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | 3,275 |
|
Securitization debt maintenance | 1,565 |
| | (1,563 | ) | | |
| | |
| | |
| | |
| | |
| | |
| | 2 |
|
Provision for losses on finance receivables | 1,321 |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | 1,321 |
|
Depreciation and amortization | 1,472 |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | 1,472 |
|
Installment obligations expense, net | 6,827 |
| | |
| | |
| | |
| | |
| | |
| | (6,827 | ) | | | | — |
|
Loss on disposal/impairment of fixed assets | 4,200 |
| | | | | | | | | | | | | | (4,200 | ) | | — |
|
Total Expenses | $ | 110,673 |
| | $ | (36,326 | ) | | $ | — |
| | $ | 60 |
| | $ | — |
| | $ | (1,020 | ) | | $ | (6,827 | ) | | $ | (6,121 | ) | | $ | 60,439 |
|
| | | | | | | | | | | | | | | | | |
Income (loss) before income taxes | $ | (4,117 | ) | | $ | 3,335 |
| | $ | 4,865 |
| | $ | (60 | ) | | $ | — |
| | $ | 1,020 |
| | | | $ | 6,121 |
| | $ | 11,164 |
|
Provision for income taxes | 1,245 |
| | | | | | | | (1,245 | ) | | | | | | | | |
Net Income (Loss) | $ | (5,362 | ) | | $ | 3,335 |
| | $ | 4,865 |
| | $ | (60 | ) | | $ | 1,245 |
| | $ | 1,020 |
| | $ | — |
| | $ | 6,121 |
| | $ | 11,164 |
|
The J.G. Wentworth Company
(Prior to November 14, 2013, J.G. Wentworth, LLC and Subsidiaries)
Reconciliation of Net Income to Adjusted Net Income - Unaudited
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| YTD 2014 GAAP Results | | Adjustments to reflect deconsolidation of securitizations | | Impact of 2014-3 Prefunding on Unsecuritized Finance Receivables | | Interest Income on Retained Interests | | Share Based Compensation | | Income Tax | | Severance M&A and Consulting | | Reclassification Associated with Installment Obligation Payable | | Other Non-recurring Items | | YTD 2014 Adjusted Net Income |
| | | | | | | | | | | | | | | | | | | |
REVENUES | |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Interest income | $ | 186,958 |
| | $ | (166,888 | ) | | $ | — |
| | $ | 20,315 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | (4,434 | ) | | $ | 6 |
| | $ | 35,957 |
|
Unrealized gains on VIE and other finance receivables, long-term debt and derivatives | 300,702 |
| | (84,955 | ) | | (1,566 | ) | | |
| | |
| | |
| | |
| | |
| | |
| | 214,181 |
|
Loss on swap terminations, net | (628 | ) | | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | (628 | ) |
Servicing, broker, and other fees | 4,149 |
| | 5,129 |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | 9,278 |
|
Realized and unrealized gains on marketable securities, net | 888 |
| | |
| | | | |
| | |
| | |
| | |
| | (888 | ) | | |
| | — |
|
Realized gain on notes receivable, at fair value | 2,098 |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | (2,098 | ) | | — |
|
Gain on debt extinguishment | 270 |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | 270 |
|
Other | (61 | ) | | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | (61 | ) |
Total Revenues | $ | 494,376 |
| | $ | (246,714 | ) | | $ | (1,566 | ) | | $ | 20,315 |
|
| $ | — |
| | $ | — |
| | $ | — |
| | $ | (5,322 | ) | | $ | (2,092 | ) | | $ | 258,997 |
|
| | | | | | | | | | | | | | | | | | | |
EXPENSES | |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Advertising | $ | 68,489 |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | $ | 68,489 |
|
Interest expense | 200,798 |
| | (142,907 | ) | | | | |
| | |
| | |
| | |
| | |
| | |
| | 57,891 |
|
Compensation and benefits | 41,108 |
| | |
| | | | |
| | (2,384 | ) | | |
| | (1,962 | ) | | |
| | |
| | 36,762 |
|
General and administrative | 18,567 |
| | |
| | | | |
| | |
| | |
| | (234 | ) | | |
| | (18 | ) | | 18,315 |
|
Professional and consulting | 18,452 |
| | |
| | | | |
| | |
| | |
| | (1,540 | ) | | |
| | (691 | ) | | 16,221 |
|
Debt issuance | 8,683 |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | 8,683 |
|
Securitization debt maintenance | 6,161 |
| | (6,161 | ) | | | | |
| | |
| | |
| | |
| | |
| | |
| | — |
|
Provision for losses on finance receivables | 4,806 |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | 4,806 |
|
Depreciation and amortization | 4,168 |
| | |
| | | | |
| | |
| | |
| | |
| | |
| | |
| | 4,168 |
|
Installment obligations expense, net | 5,322 |
| | |
| | | | |
| | |
| | |
| | |
| | (5,322 | ) | | |
| | — |
|
Loss on disposal/impairment of fixed assets | 69 |
| | | | | | | | | | | | | | | | | | 69 |
|
Total Expenses | $ | 376,623 |
| | $ | (149,068 | ) | | $ | — |
| | $ | — |
| | $ | (2,384 | ) | | $ | — |
| | $ | (3,736 | ) | | $ | (5,322 | ) | | $ | (709 | ) | | $ | 215,404 |
|
| | | | | | | | | | | | | | | | | | | |
Income before income taxes | $ | 117,753 |
| | $ | (97,646 | ) | | $ | (1,566 | ) | | $ | 20,315 |
| | $ | 2,384 |
| | $ | — |
| | $ | 3,736 |
| | $ | — |
| | $ | (1,383 | ) | | $ | 43,593 |
|
Provision for income taxes | 21,140 |
| | | | | | | | | | (21,140 | ) | | | | | | | | |
Net Income | $ | 96,613 |
| | $ | (97,646 | ) | | $ | (1,566 | ) | | $ | 20,315 |
| | $ | 2,384 |
| | $ | 21,140 |
| | $ | 3,736 |
| | $ | — |
| | $ | (1,383 | ) | | $ | 43,593 |
|
The J.G. Wentworth Company
(Prior to November 14, 2013, J.G. Wentworth, LLC and Subsidiaries)
Reconciliation of Net Income to Adjusted Net Income - Unaudited
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| YTD 2013 GAAP Results | | Adjustments to reflect deconsolidation of securitizations | | Interest Income on Retained Interests | | Share Based Compensation | | Income Tax | | Severance M&A and Consulting | | Reclassification Associated with Installment Obligation Payable | | Other Non-recurring Items | | YTD 2013 Adjusted Net Income |
| | | | | | | | | | | | | | | | | |
REVENUES | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Interest income | $ | 172,423 |
| | $ | (150,945 | ) | | $ | 18,709 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | (4,348 | ) | | $ | — |
| | $ | 35,839 |
|
Unrealized gains on VIE and other finance receivables, long-term debt and derivatives | 252,801 |
| | (42,358 | ) | | |
| | |
| | |
| | |
| | |
| | |
| | 210,443 |
|
Gain on swap terminations, net | 200 |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | 200 |
|
Servicing, broker, and other fees | 5,276 |
| | 5,548 |
| | |
| | |
| | |
| | |
| | |
| | |
| | 10,824 |
|
Realized and unrealized gains on marketable securities, net | 15,299 |
| | |
| | |
| | |
| | |
| | |
| | (15,299 | ) | | | | — |
|
Realized loss on notes receivable, at fair value | (1,862 | ) | | |
| | |
| | |
| | |
| | |
| | | | 1,862 |
| | — |
|
Gain on extinguishment of debt, net | 14,217 |
| | | | | | | | | | | | | | | | 14,217 |
|
Other | 1,209 |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | 1,209 |
|
Total Revenues | $ | 459,563 |
| | $ | (187,755 | ) | | $ | 18,709 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | (19,647 | ) | | $ | 1,862 |
| | $ | 272,732 |
|
| | | | | | | | | | | | | | | | | |
EXPENSES | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Advertising | $ | 70,304 |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | $ | 70,304 |
|
Interest expense | 193,035 |
| | (128,226 | ) | | |
| | |
| | |
| | |
| | |
| | |
| | 64,809 |
|
Compensation and benefits | 42,595 |
| | |
| | |
| | (1,452 | ) | | |
| | (3,098 | ) | | |
| | |
| | 38,045 |
|
General and administrative | 20,179 |
| | (31 | ) | | |
| | |
| | |
| | (698 | ) | | |
| | |
| | 19,450 |
|
Professional and consulting | 18,820 |
| | (49 | ) | | |
| | |
| | |
| | (1,620 | ) | | | | (3,942 | ) | | 13,209 |
|
Debt issuance | 8,930 |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | 8,930 |
|
Securitization debt maintenance | 6,091 |
| | (6,091 | ) | | |
| | |
| | |
| | |
| | |
| | |
| | — |
|
Provision for losses on finance receivables | 5,695 |
| | (27 | ) | | |
| | |
| | |
| | |
| | |
| | |
| | 5,668 |
|
Depreciation and amortization | 5,703 |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | 5,703 |
|
Installment obligations expense, net | 19,647 |
| | |
| | |
| | |
| | |
| | |
| | (19,647 | ) | | | | — |
|
Loss on disposal/impairment of fixed assets | 4,200 |
| | | | | | | | | | | | | | (4,200 | ) | | — |
|
Total Expenses | $ | 395,199 |
| | $ | (134,424 | ) | | $ | — |
| | $ | (1,452 | ) | | $ | — |
| | $ | (5,416 | ) | | $ | (19,647 | ) | | $ | (8,142 | ) | | $ | 226,118 |
|
| | | | | | | | | | | | | | | | | |
Income before income taxes | $ | 64,364 |
| | $ | (53,331 | ) | | $ | 18,709 |
| | $ | 1,452 |
| | $ | — |
| | $ | 5,416 |
| | | | $ | 10,004 |
| | $ | 46,614 |
|
Provision for income taxes | 2,546 |
| | — |
| | — |
| | — |
| | (2,546 | ) | | — |
| | — |
| | — |
| | — |
|
Net Income | $ | 61,818 |
| | $ | (53,331 | ) | | $ | 18,709 |
| | $ | 1,452 |
| | $ | 2,546 |
| | $ | 5,416 |
| | $ | — |
| | $ | 10,004 |
| | $ | 46,614 |
|
The J.G. Wentworth Company
Unaudited
(In thousands, except shares and per share data)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Private | | Public |
| Q1 2013 | | Q2 2013 | | Q3 2013 | | Q4 2013 | | Q1 2014 | | Q2 2014 | | Q3 2014 | Q4 2014 |
TRB: | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Securitized Product Total Receivables Balance (TRB) Purchases (1) | $ | 230,705 |
| | $ | 246,895 |
| | $ | 254,376 |
| | $ | 214,437 |
| | $ | 223,507 |
| | $ | 252,544 |
| | $ | 228,915 |
| $ | 234,084 |
|
Life Contingent Purchases | 34,222 |
| | 42,878 |
| | 40,165 |
| | 39,054 |
| | 29,827 |
| | 28,185 |
| | 28,471 |
| 25,107 |
|
Presettlement Fundings | 5,444 |
| | 5,073 |
| | 4,785 |
| | 6,997 |
| | 7,247 |
| | 6,977 |
| | 5,910 |
| 7,021 |
|
Total | $ | 270,371 |
| | $ | 294,846 |
| | $ | 299,326 |
| | $ | 260,488 |
| | $ | 260,581 |
| | $ | 287,706 |
| | $ | 263,296 |
| $ | 266,212 |
|
| | | | | | | | | | | | | | |
ANI Basis: | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Total Revenue | $ | 76,850 |
| | $ | 63,933 |
| | $ | 60,343 |
| | $ | 71,603 |
| | $ | 63,131 |
| | $ | 69,110 |
| | $ | 62,982 |
| $ | 63,774 |
|
Total Expenses | $ | 53,323 |
| | $ | 53,409 |
| | $ | 58,944 |
| | $ | 60,439 |
| | $ | 53,010 |
| | $ | 51,935 |
| | $ | 55,766 |
| $ | 54,693 |
|
ANI | $ | 23,527 |
| | $ | 10,524 |
| | $ | 1,399 |
| | $ | 11,164 |
| | $ | 10,121 |
| | $ | 17,175 |
| | $ | 7,216 |
| $ | 9,081 |
|
ANI Margin (2) | 30.6 | % | | 16.5 | % | | 2.3 | % | | 15.6 | % | | 16.0 | % | | 24.9 | % | | 11.5 | % | 14.2 | % |
ANI TRB Margin (3) | 8.7 | % | | 3.6 | % | | 0.5 | % | | 4.3 | % | | 3.9 | % | | 6.0 | % | | 2.7 | % | 3.4 | % |
| | | | | | | | | | | | | | |
Spread Revenue (4) | $ | 64,726 |
| | $ | 52,281 |
| | $ | 48,999 |
| | $ | 44,637 |
| | $ | 51,846 |
| | $ | 57,951 |
| | $ | 51,285 |
| $ | 52,471 |
|
TRB Spread Margin (5) | 24.4 | % | | 18.0 | % | | 16.6 | % | | 17.6 | % | | 20.5 | % | | 20.6 | % | | 19.9 | % | 20.2 | % |
| | | | | | | | | | | | | | |
GAAP Basis: | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Revenue | $ | 183,208 |
| | $ | 66,661 |
| | $ | 103,138 |
| | $ | 106,556 |
| | $ | 136,590 |
| | $ | 123,488 |
| | $ | 107,024 |
| $ | 127,274 |
|
Expenses (6) | $ | 93,503 |
| | $ | 88,301 |
| | $ | 104,023 |
| | $ | 111,918 |
| | $ | 102,057 |
| | $ | 101,780 |
| | $ | 94,335 |
| $ | 99,591 |
|
Net Income (Loss) | $ | 89,705 |
| | $ | (21,640 | ) | | $ | (885 | ) | | $ | (5,362 | ) | | $ | 34,533 |
| | $ | 21,708 |
| | $ | 12,689 |
| $ | 27,683 |
|
Net Income (Loss) Attributable to The J.G. Wentworth Company | |
| | |
| | |
| | $ | (5,577 | ) | | $ | 9,022 |
| | $ | 6,268 |
| | $ | 4,092 |
| $ | 11,829 |
|
| | | | | | | | | | | | | | |
Weighted Average Diluted Shares | |
| | |
| | |
| | 10,395,574 | | 11,642,283 | | 12,562,042 | | 13,098,995 | 14,640,860 |
All-in Shares (7) | |
| | |
| | |
| | 17,476,995 | | 29,555,639 | | 29,510,029 | | 29,335,338 | 29,019,913 |
| | | | | | | | | | | | | | |
Diluted EPS | |
| | |
| | |
| | $ | (0.54 | ) | | $ | 0.77 |
| | $ | 0.50 |
| | $ | 0.31 |
| $ | 0.81 |
|
ANI EPS (8) | |
| | |
| | |
| | $ | 0.64 |
| | $ | 0.34 |
| | $ | 0.58 |
| | $ | 0.25 |
| $ | 0.31 |
|
| | | | | | | | | | | | | | |
Residual Asset Balance | $ | 249,345 |
| | $ | 234,918 |
| | $ | 239,770 |
| | $ | 239,591 |
| | $ | 280,208 |
| | $ | 294,637 |
| | $ | 304,022 |
| $ | 331,395 |
|
Residual Loan Balance | $ | 70,000 |
| | $ | 70,000 |
| | $ | 69,560 |
| | $ | 68,785 |
| | $ | 67,989 |
| | $ | 107,540 |
| | $ | 107,329 |
| $ | 107,043 |
|
| | | | | | | | | | | | | | |
10-Year Swap Rate | 2.01 | % | | 2.70 | % | | 2.77 | % | | 3.09 | % | | 2.84 | % | | 2.63 | % | | 2.64 | % | 2.28 | % |
| | | | | | | | | | | | | | |
Term Loan Interest Expense | $ | 7,673 |
| | $ | 12,287 |
| | $ | 14,595 |
| | $ | 13,457 |
| | $ | 9,917 |
| | $ | 10,020 |
| | $ | 10,082 |
| $ | 10,182 |
|
ANI Interest Expense | $ | 12,267 |
| | $ | 15,748 |
| | $ | 18,496 |
| | $ | 18,298 |
| | $ | 13,945 |
| | $ | 14,487 |
| | $ | 14,651 |
| $ | 14,808 |
|
| |
(1) | Securitized product TRB purchases includes purchases during the period of assets that will be securitized (guaranteed structured settlements, annuities, and lottery payment streams) |
| |
(2) | ANI Margin is defined as ANI / ANI Total Revenue |
| |
(3) | ANI TRB Margin is defined as ANI / Total TRB |
| |
(4) | Spread Revenue is defined as adjusted unrealized gains on VIE and other finance receivables, long term debt and derivatives, net of the gain (loss) on swap terminations |
| |
(5) | TRB Spread Margin is defined as Spread Revenue / (the sum of Securitized Product TRB Purchases + Life Contingent Purchases) |
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(6) | Includes provision for income taxes |
| |
(7) | Represents the weighted average number of outstanding shares of Class A common stock if all Common Interests in The J.G. Wentworth Company, LLC were exchanged. Calculated as the sum of: (a) the weighted average number of Common Interests outstanding and (b) the impact of dilutive potential common shares. |
| |
(8) | ANI EPS is defined as ANI / All-in Shares |
Source: The J.G. Wentworth Company™
Investor Relations:
The J.G. Wentworth Company™
866-386-3853
investor@jgwentworth.com
Media Inquiries:
866-386-3853
media@jgwentworth.com
or
Makovsky for The J.G. Wentworth Company™
Michael Goodwin, 212-508-9639
mgoodwin@makovsky.com