Attached files
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| 8-K - 8-K - J.G. Wentworth Co | jgw331168-ker.htm |
Exhibit 99.1
The J.G. Wentworth Company® Reports First Quarter 2016 Results
Home Lending's Results Exceed Expectations; First Quarter Closed Mortgage Loans of $568.3 million
Total Receivable Balances Purchased of $203.7 million
RADNOR, Pa. - (BUSINESS WIRE) - May 10, 2016 The J.G. Wentworth Company® (“J.G. Wentworth” or the “Company”) (NYSE: JGW), a diversified financial services company, today reports financial results for the first quarter 2016. “We are pleased with the improvements of business drivers in the quarter compared to the fourth quarter. Our Home Lending business exceeded expectations and we are looking forward to a bright future in the segment as we lay the foundation to scale the business. The Structured Settlement Payments business benefited from the actions taken to improve our cost structure and the marketing and operations initiatives are making an impact,” said Stewart A. Stockdale, Chief Executive Officer, The J.G. Wentworth Company.
The following are highlights from the first quarter:
GAAP First Quarter 2016 Results:
• | Consolidated revenues were $66.6 million, a decrease of $20.2 million from the $86.8 million reported in the first quarter 2015. The decrease was due to a $42.1 million decline in the Structured Settlement Payments segment’s (“Structured Settlements”) revenue that was primarily the result of a decline in realized and unrealized gains on VIE and other finance receivables, long-term debt and derivatives. The decline was partially offset by $21.9 million in revenue generated by the Home Lending segment (“Home Lending”) that we acquired on July 31, 2015. |
▪ | The Company had $4.4 billion in VIE and other finance receivables, at fair value and $4.0 billion in VIE long-term debt issued by securitization and permanent financing trusts, at fair value as of March 31, 2016. |
• | Consolidated net loss was $35.1 million compared to the $5.5 million consolidated net loss in the first quarter 2015. The $29.6 million unfavorable change was principally due to a $38.5 million increase in Structured Settlement's pre-tax loss driven by the $42.1 million decline in the segment's revenue, partially offset by a net $3.6 million reduction in Structured Settlement's operating expenses that have begun to reflect the benefits of our recently implemented cost savings initiatives. Partially offsetting the increase in Structured Settlement's pre-tax loss was Home Lending's $5.5 million in pre-tax income driven by $1.1 billion of locked loan volume and a $3.5 million favorable change in our consolidated provision (benefit) for income taxes. |
Adjusted Non-GAAP* First Quarter 2016 Results:
• | Consolidated adjusted total revenues* were $57.1 million, a decrease of $5.3 million from $62.4 million in the first quarter 2015. The decrease was primarily due to a $26.8 million decline in Structured Settlement's Spread Revenue* (i.e., realized & unrealized gains on unsecuritized finance receivables and related derivatives adjusted for the impact of prefundings) resulting from a decrease in Total Receivable Balances (“TRB”) purchases and a combination of changes in cost of funds and purchase yields. Partially offsetting the decline in Structured Settlement's Spread Revenue* was $21.9 million in revenue generated by Home Lending. |
▪ | Structured Settlement's guaranteed and life contingent structured settlement, annuity and lottery TRB purchases were $203.7 million in the first quarter of 2016, a $50.8 million decrease from $254.5 million in the first quarter of 2015. |
▪ | Home Lending generated mortgage lock volume of $1,077.1 million and closed loan volume of $568.3 million in the first quarter of 2016. |
• | Consolidated Adjusted Net Income (“ANI”)* was a loss of $4.1 million compared to ANI* of $8.2 million in the first quarter 2015. The $12.3 million unfavorable change was due to an $18.2 million decline in Structured Settlement's ANI* that was principally the result of the $26.8 million decline in Spread Revenue*. Partially offsetting the decline in Structured Settlement's ANI* was $5.9 million in ANI* generated by Home Lending. |
▪ | Consolidated Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA*”) was $8.0 million for the first quarter of 2016 compared to $21.9 million for the first quarter of 2015. |
Scott Stevens, J.G. Wentworth’s Chief Financial Officer, said, “We continue to execute on our strategic initiatives including growing the Home Lending business, stabilizing the Structured Settlements segment and maintaining strong fiscal discipline, which contributed to the $5.0 million improvement in 2016's first quarter Adjusted EBITDA over the fourth quarter of 2015.”
Exhibit 99.1
Operating Highlights
• | For the three months ended March 31, 2016, the Company generated Adjusted EBITDA* of $8.0 million and had cash and cash equivalents of $26.5 million as of March 31, 2016. |
• | Expense initiatives are on target to realize $25-$30 million of annual savings; Structured Settlements' adjusted total expenses* decreased $9.0 million in the first quarter of 2016 from the first quarter of 2015. |
• | In February 2016, we executed a direct asset sale of $161.3 million in discounted TRB purchases based on a discount rate of 5.02% that consisted of two pools. The first pool closed on February 18, 2016, consisted of $91.3 million of discounted TRB purchases and generated net cash proceeds to us of $27.0 million. The second pool closed on April 21, 2016, consisted of $70.0 million of discounted TRB purchases and generated net cash proceeds to us of $21.6 million. |
Other News
The Company expects to receive notice from the New York Stock Exchange (“NYSE”) of being below the NYSE’s continued listing standards. The Company is considered below criteria established by NYSE because the Company’s average market capitalization was below $50 million over a consecutive 30 trading-day period, and its stockholders’ equity being reported today was less than $50 million as of March 31, 2016. The Company intends to remain a listed company and plans to develop and submit a business plan to the NYSE demonstrating how it expects to regain compliance with the NYSE’s continued listing standards. The Company has reviewed the criteria for the NYSE-MKT, and, as an alternative, may also consider transferring its stock listing to the NYSE-MKT if that platform proves to be a better long-term option.
The NYSE notification does not affect the Company’s business operations or its SEC reporting requirements and does not conflict with or cause an event of default under any of the Company’s material debt or other agreements.
* 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 month period ended March 31, 2016 and 2015, as well as our reconciliation of non-GAAP measures, are included in the accompanying financial information.
About The J.G. Wentworth Company®
The J.G. Wentworth Company is a diversified financial services company that specializes in providing solutions to consumers in need of cash. Our direct-to-consumer businesses use the internet, television, direct mailing, and other channels to offer a variety of solutions including structured settlement payment purchasing, mortgage origination (both purchase and refinancing), prepaid cards, and access to personal lending. We warehouse, securitize, sell or otherwise finance the financial assets that we purchase in transactions that are structured to ultimately generate cash proceeds to us that exceed the purchase price we paid for those assets. 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 first quarter 2016 financial results today, May 10, 2016, at 10:00 AM Eastern time. The webcast will include remarks from J.G. Wentworth’s Chief Executive Officer, Stewart Stockdale, and Executive Vice President & Chief Financial Officer, Scott Stevens.
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 listed below.
The J.G. Wentworth Company® First Quarter 2016 Webcast.
Interested parties unable to access the conference call and view the presentation via the webcast through this link: The J.G. Wentworth Company® First Quarter 2016 Webcast, may dial the Participant conference number: (877) 648-7976, Conference ID: 98405380.
A playback will be available through Tuesday, May 17th, 2016. To participate, utilize the dial-in information listed below: Playback conference number: (855) 859-2056, Conference ID: 98405380. The presentation will be posted to the Company’s website after the call.
Exhibit 99.1
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, 2015, these risks and uncertainties include, among other things: our ability to execute on our business strategy; our ability to successfully compete in the industries in which we operate; our dependence on the effectiveness of direct response marketing; our ability to retain and attract qualified senior management; any improper use of or failure to protect the personally identifiable information of past, current and prospective customers to which we have access; our ability to upgrade and integrate our operational and financial information systems, maintain uninterrupted access to such systems and adapt to technological changes in the industries in which we operate; our dependence on third parties, including our ability to maintain relationships with such third parties and our potential exposure to liability for the actions of such third parties; damage to our reputation and increased regulation of our industries which could result from unfavorable press reports about our business model; the accuracy of the estimates and assumptions of our financial models; infringement of our trademarks or service marks; our ability to maintain our state licenses or obtain new licenses in new markets; changes in, and our ability to comply with, federal, state and local laws and regulations governing us; our business model being susceptible to litigation; our ability to continue to purchase structured settlement payments and other financial assets; the public disclosure of the identities of structured settlement holders maintained in our proprietary database; our dependence on the opinions of certain credit rating agencies of the credit quality of our securitizations; our ability to complete future securitizations or other financings on favorable terms; the insolvency of a material number of structured settlement issuers; adverse changes in the residential mortgage lending and real estate markets, including any increases in defaults or delinquencies, especially in geographic areas where our loans are concentrated; our ability to grow our loan origination volume, acquire mortgage servicing rights and recapture loans that are refinanced; changes in the guidelines of government-sponsored entities, or GSEs, or any discontinuation of, or significant reduction in, the operation of GSEs; potential misrepresentations by borrowers, counterparties and other third-parties; changes in prevailing interest rates and our ability to mitigate interest rate risk through hedging strategies; our ability to obtain sufficient working capital at attractive rates or obtain sufficient capital to meet the financing requirements of our business; our ability to remain in compliance with the terms of our substantial indebtedness; and our ability to meet the continued listing requirements of the New York Stock Exchange.
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.
Contacts:
The J.G. Wentworth Company®
Erik Hartwell, VP, Investor Relations
866-386-3853
investor@jgwentworth.com
or
Media Inquiries
The Glover Park Group
Ray Conger
202-292-6961
rconger@gpg.com
Schedule A
The J.G. Wentworth Company
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
March 31, 2016 | December 31, 2015 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 26,465 | $ | 57,322 | |||
Restricted cash and investments | 131,534 | 136,780 | |||||
VIE finance receivables, at fair value | 4,439,811 | 4,376,458 | |||||
Other finance receivables, at fair value | 23,263 | 9,689 | |||||
VIE finance receivables, net of allowances for losses of $8,759 and $8,659, respectively | 95,534 | 99,874 | |||||
Other finance receivables, net of allowances for losses of $1,551 and $1,707, respectively | 9,450 | 10,468 | |||||
Other receivables, net of allowances for losses of $273 and $273, respectively | 16,755 | 16,285 | |||||
Mortgage loans held for sale, at fair value | 187,146 | 124,508 | |||||
Mortgage servicing rights, at fair value | 30,164 | 29,287 | |||||
Premises and equipment, net of accumulated depreciation of $9,219 and $7,961, respectively | 5,262 | 5,674 | |||||
Intangible assets, net of accumulated amortization of $21,330 and $20,700, respectively | 29,799 | 30,429 | |||||
Goodwill | 8,369 | 8,369 | |||||
Marketable securities | 79,414 | 84,994 | |||||
Deferred tax assets, net | — | 2,250 | |||||
Other assets | 78,162 | 82,577 | |||||
Total Assets | $ | 5,161,128 | $ | 5,074,964 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Accrued expenses and accounts payable | $ | 22,902 | $ | 21,548 | |||
Accrued interest | 23,944 | 22,380 | |||||
Term loan payable | 440,930 | 440,181 | |||||
VIE derivative liabilities, at fair value | 72,363 | 66,519 | |||||
VIE borrowings under revolving credit facilities and other similar borrowings | 38,191 | 48,828 | |||||
Other borrowings under revolving credit facilities and other similar borrowings | 181,526 | 122,243 | |||||
VIE long-term debt | 198,133 | 199,363 | |||||
VIE long-term debt issued by securitization and permanent financing trusts, at fair value | 4,016,993 | 3,928,818 | |||||
Other liabilities | 55,380 | 65,106 | |||||
Deferred tax liabilities, net | 9,936 | 18,825 | |||||
Installment obligations payable | 79,414 | 84,994 | |||||
Total Liabilities | $ | 5,139,712 | $ | 5,018,805 | |||
Class A common stock, par value $0.00001 per share; 500,000,000 shares authorized, 16,270,113 issued and 15,728,041 outstanding as of March 31, 2016, 16,076,444 issued and 15,534,372 outstanding as of December 31, 2015. | $ | — | $ | — | |||
Class B common stock, par value $0.00001 per share; 500,000,000 shares authorized, 8,715,029 issued and outstanding as of March 31, 2016, 8,908,698 issued and outstanding as of December 31, 2015, respectively. | — | — | |||||
Class C common stock, par value $0.00001 per share; 500,000,000 shares authorized, 0 issued and outstanding as of March 31, 2016 and December 31, 2015, respectively. | — | — | |||||
Additional paid-in-capital | 105,200 | 104,713 | |||||
Accumulated deficit | (86,852 | ) | (70,765 | ) | |||
18,348 | 33,948 | ||||||
Less: treasury stock at cost, 542,072 shares as of March 31, 2016 and December 31, 2015, respectively. | (2,138 | ) | (2,138 | ) | |||
Total stockholders’ equity, The J.G. Wentworth Company | 16,210 | 31,810 | |||||
Non-controlling interests | 5,206 | 24,349 | |||||
Total Stockholders’ Equity | $ | 21,416 | $ | 56,159 | |||
Total Liabilities and Stockholders’ Equity | $ | 5,161,128 | $ | 5,074,964 | |||
Schedule B
The J.G. Wentworth Company
Consolidated Statements of Operations - Unaudited
(Dollars in thousands, except per share data)
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
REVENUES | ||||||||
Interest income | $ | 53,659 | $ | 44,392 | ||||
Realized and unrealized (losses) gains on VIE and other finance receivables, long-term debt and derivatives | (9,857 | ) | 39,739 | |||||
Realized and unrealized gains on sale of mortgage loans held for sale, net of direct costs | 16,656 | — | ||||||
Changes in mortgage servicing rights, net | 877 | — | ||||||
Servicing, broker, and other fees | 3,469 | 869 | ||||||
Loan origination fees | 1,636 | — | ||||||
Realized and unrealized gains on marketable securities, net | 137 | 1,830 | ||||||
Total Revenues | $ | 66,577 | $ | 86,830 | ||||
EXPENSES | ||||||||
Advertising | $ | 13,975 | $ | 15,840 | ||||
Interest expense | 59,500 | 48,835 | ||||||
Compensation and benefits | 18,545 | 12,798 | ||||||
General and administrative | 7,109 | 4,639 | ||||||
Professional and consulting | 3,657 | 4,438 | ||||||
Debt issuance | 3 | 2,749 | ||||||
Securitization debt maintenance | 1,432 | 1,496 | ||||||
Provision for losses | 1,588 | 1,339 | ||||||
Direct subservicing costs | 640 | — | ||||||
Depreciation and amortization | 1,302 | 991 | ||||||
Installment obligations expense, net | 515 | 2,320 | ||||||
Total Expenses | $ | 108,266 | $ | 95,445 | ||||
Loss before income taxes | (41,689 | ) | (8,615 | ) | ||||
Benefit for income taxes | (6,639 | ) | (3,155 | ) | ||||
Net Loss | $ | (35,050 | ) | $ | (5,460 | ) | ||
Less net loss attributable to non-controlling interests | (18,963 | ) | (4,115 | ) | ||||
Net loss attributable to The J.G. Wentworth Company | $ | (16,087 | ) | $ | (1,345 | ) | ||
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Weighted average shares of Class A common stock outstanding: | ||||||||
Basic | 15,574,746 | 14,271,842 | ||||||
Diluted | 15,574,746 | 14,271,842 | ||||||
Net loss per share attributable to stockholders of Class A common stock of The J.G. Wentworth Company | ||||||||
Basic | $ | (1.03 | ) | $ | (0.09 | ) | ||
Diluted | $ | (1.03 | ) | $ | (0.09 | ) | ||
Schedule C
Unaudited
The J.G. Wentworth Company
Reconciliation of Net Loss to Adjusted Net (Loss) Income and Adjusted EBITDA and other Non-GAAP Measures Used in this Release and the Related Presentation
We use the Non-GAAP financial measures of Adjusted Net (Loss) Income (“ANI”) and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) as measures of our results from operations. We define ANI as our net (loss) income under U.S. GAAP before non-cash compensation expenses, certain other expenses, provision for or benefit from income taxes, and for our Structured Settlement's segment, amounts related to the consolidation of the securitization and permanent financing trusts we use to finance the segment’s business. We define Adjusted EBITDA as ANI before term loan interest expense, debt issuance costs, broker and legal fees incurred in connection with sale of finance receivables and depreciation and amortization. The Company believes ANI and Adjusted EBITDA are useful to investors and management as measures of our operating performance, as the operations of the associated variable interest entities do not impact the Structured Settlements segment's 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 realized & unrealized gains on unsecuritized finance receivables and related derivatives (“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 Structured Settlements business and adjusted for the impact of prefundings on unsecuritized finance receivables,as applicable. We also use the non-GAAP measure of adjusted total expense, which we define as total expense under U.S. GAAP before non-cash compensation expenses, certain other expenses, provision for or benefit from income taxes, and for our Structured Settlement's segment, amounts related to the consolidation of the securitization and permanent financing trusts we use to finance the segment’s business.We use these measures because we believe they represent useful measures of our revenues and expenses, as the operations of these variable interest entities also do not impact business performance.
We use Adjusted Cash Flow, a Non-GAAP financial measure, as a measure of our cash flows from operations. We define Adjusted Cash Flow as it is presented on the accompanying table. The Company believes Adjusted Cash Flow is useful to investors and management as a measure of cash generated by business operations that can be used to repay debt, invest in future growth or repurchase stock. This metric can also be used to evaluate the Company’s ability to generate cash flow from business operations and the impact that this cash flow has on the Company’s liquidity.
You should not consider ANI, Adjusted EBITDA, Total Adjusted Revenue, Spread Revenue, Total Adjusted Expense, or Adjusted Cash Flow 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 ANI, Adjusted EBITDA, Total Adjusted Revenue, Spread Revenue, Total Adjusted Expense and Adjusted Cash Flow may not be comparable to other similarly titled measures of other companies.
A reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) to Adjusted EBITDA, which includes line items for Total Adjusted Revenue, Spread Revenue, and Total Adjusted Expense, for the three months ended March 31, 2016 and 2015, respectively, is provided below. Certain prior period numbers have been reclassified to conform with current period's presentation.
Schedule C
The J.G. Wentworth Company
Consolidated Reconciliation of Net Loss to Adjusted Net (Loss) Income* and Adjusted EBITDA* - Unaudited
(In thousands)
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Net Loss | $ | (35,050 | ) | $ | (5,460 | ) | ||
Adjustments to reflect de-consolidation of securitizations: | ||||||||
Elimination of unrealized gain/loss on finance receivables, long-term debt and derivatives post securitization due to changes in interest rates | 34,838 | 9,129 | ||||||
Elimination of interest income from securitized finance receivables | (49,815 | ) | (39,969 | ) | ||||
Interest income on retained interests in finance receivables | 5,834 | 5,166 | ||||||
Servicing income on securitized finance receivables | 1,339 | 1,315 | ||||||
Elimination of interest expense on long-term debt related to securitization and permanent financing trusts | 43,036 | 34,208 | ||||||
Swap termination expense related to securitization entities | 3,053 | — | ||||||
Professional fees relating to securitizations | 1,432 | 1,496 | ||||||
Other adjustments: | ||||||||
Share based compensation | 307 | 410 | ||||||
Income tax benefit | (6,639 | ) | (3,155 | ) | ||||
Impact of prefunding on unsecuritized finance receivables | (4,253 | ) | 2,272 | |||||
Severance, mergers and acquisitions and other non-routine expenses | 1,794 | 2,834 | ||||||
Adjusted Net (Loss) Income* | $ | (4,124 | ) | $ | 8,246 | |||
Term loan interest expense | 10,087 | 9,957 | ||||||
Debt issuance | 3 | 2,749 | ||||||
Broker and legal fees incurred in connection with sale of finance receivables | 714 | — | ||||||
Depreciation and amortization | 1,302 | 991 | ||||||
Adjusted EBITDA* | $ | 7,982 | $ | 21,943 | ||||
*Represents a non-GAAP measure which, as calculated by the Company is not necessarily comparable to similarly titled measures reported by other companies.
Schedule D
The J.G. Wentworth Company
Consolidated Reconciliation of Net Loss to ANI* and Adjusted EBITDA* - Unaudited
For the Three Months Ending March 31, 2016
(In thousands)
GAAP Results | Deconsolidation of Securitizations | Impact of Prefunding on Unsecuritized Finance Receivables | Interest Income on Retained Interests | Share Based Compensation | Income Tax | Severance, Mergers and Acquisitions, and Other Non-Routine Expenses | Reclassification for Installment Obligation Payable | ANI* | Term Loan Interest Expense | Debt Issuance | Broker and Legal Fees Incurred in Connection with Sale of Finance Receivables | Depreciation and Amortization | Adjusted EBITDA* | |||||||||||||||||||||||||||||||||||||||||||
REVENUES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | $ | 53,659 | $ | (49,815 | ) | $ | — | $ | 5,834 | $ | — | $ | — | $ | — | $ | (378 | ) | $ | 9,300 | $ | — | $ | — | $ | — | $ | — | $ | 9,300 | ||||||||||||||||||||||||||
Realized and unrealized (losses) gains on VIE and other finance receivables, long-term debt and derivatives | (9,857 | ) | 37,891 | (4,253 | ) | — | — | — | — | — | 23,781 | — | — | — | — | 23,781 | ||||||||||||||||||||||||||||||||||||||||
Realized and unrealized gains on sale of mortgage loans held for sale, net of direct costs | 16,656 | — | — | — | — | — | — | — | 16,656 | — | — | — | — | 16,656 | ||||||||||||||||||||||||||||||||||||||||||
Changes in mortgage servicing rights, net | 877 | — | — | — | — | — | — | — | 877 | — | — | — | — | 877 | ||||||||||||||||||||||||||||||||||||||||||
Servicing, broker, and other fees | 3,469 | 1,339 | — | — | — | — | — | — | 4,808 | — | — | — | — | 4,808 | ||||||||||||||||||||||||||||||||||||||||||
Loan origination fees | 1,636 | — | — | — | — | — | — | — | 1,636 | — | — | — | — | 1,636 | ||||||||||||||||||||||||||||||||||||||||||
Realized and unrealized gains on marketable securities, net | 137 | — | — | — | — | — | — | (137 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Total Revenues | $ | 66,577 | $ | (10,585 | ) | $ | (4,253 | ) | $ | 5,834 | $ | — | $ | — | $ | — | $ | (515 | ) | $ | 57,058 | $ | — | $ | — | $ | — | $ | — | $ | 57,058 | |||||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advertising | $ | 13,975 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 13,975 | $ | — | $ | — | $ | — | $ | — | $ | 13,975 | ||||||||||||||||||||||||||||
Interest expense | 59,500 | (43,036 | ) | — | — | — | — | (549 | ) | — | 15,915 | (10,087 | ) | — | — | — | 5,828 | |||||||||||||||||||||||||||||||||||||||
Compensation and benefits | 18,545 | — | — | — | (307 | ) | — | (1,245 | ) | — | 16,993 | — | — | — | — | 16,993 | ||||||||||||||||||||||||||||||||||||||||
General and administrative | 7,109 | — | — | — | — | — | — | — | 7,109 | — | — | (639 | ) | — | 6,470 | |||||||||||||||||||||||||||||||||||||||||
Professional and consulting | 3,657 | — | — | — | — | — | — | — | 3,657 | — | — | (75 | ) | — | 3,582 | |||||||||||||||||||||||||||||||||||||||||
Debt issuance | 3 | — | — | — | — | — | — | — | 3 | — | (3 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Securitization debt maintenance | 1,432 | (1,432 | ) | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Provision for losses | 1,588 | — | — | — | — | — | — | — | 1,588 | — | — | — | — | 1,588 | ||||||||||||||||||||||||||||||||||||||||||
Direct subservicing costs | 640 | — | — | — | — | — | — | — | 640 | — | — | — | — | 640 | ||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 1,302 | — | — | — | — | — | — | — | 1,302 | — | — | — | (1,302 | ) | — | |||||||||||||||||||||||||||||||||||||||||
Installment obligations expense, net | 515 | — | — | — | — | — | — | (515 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Total Expenses | $ | 108,266 | $ | (44,468 | ) | $ | — | $ | — | $ | (307 | ) | $ | — | $ | (1,794 | ) | $ | (515 | ) | $ | 61,182 | $ | (10,087 | ) | $ | (3 | ) | $ | (714 | ) | $ | (1,302 | ) | $ | 49,076 | ||||||||||||||||||||
(Loss) income before income taxes | (41,689 | ) | 33,883 | (4,253 | ) | 5,834 | 307 | — | 1,794 | — | (4,124 | ) | 10,087 | 3 | 714 | 1,302 | 7,982 | |||||||||||||||||||||||||||||||||||||||
Benefit for income taxes | (6,639 | ) | — | — | — | — | 6,639 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Net (Loss) Income | $ | (35,050 | ) | $ | 33,883 | $ | (4,253 | ) | $ | 5,834 | $ | 307 | $ | (6,639 | ) | $ | 1,794 | $ | — | $ | (4,124 | ) | $ | 10,087 | $ | 3 | $ | 714 | $ | 1,302 | $ | 7,982 | ||||||||||||||||||||||||
*Represents a non-GAAP measure which, as calculated by the Company is not necessarily comparable to similarly titled measures reported by other companies. Refer to Schedule C for management's discussion on its use of non-GAAP measures.
Schedule E
The J.G. Wentworth Company
Structured Settlement Payments Segment Reconciliation of Net Loss to ANI* and Adjusted EBITDA* - Unaudited
For the Three Months Ending March 31, 2016
(In thousands)
GAAP Results | Deconsolidation of Securitizations | Impact of Prefunding on Unsecuritized Finance Receivables | Interest Income on Retained Interests | Share Based Compensation | Income Tax | Severance, Mergers and Acquisitions, and Other Non-Routine Expenses | Reclassification for Installment Obligation Payable | ANI* | Term Loan Interest Expense | Debt Issuance | Broker and Legal Fees Incurred in Connection with Sale of Finance Receivables | Depreciation and Amortization | Adjusted EBITDA* | |||||||||||||||||||||||||||||||||||||||||||
REVENUES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | $ | 53,002 | $ | (49,815 | ) | $ | — | $ | 5,834 | $ | — | $ | — | $ | — | $ | (378 | ) | $ | 8,643 | $ | — | $ | — | $ | — | $ | — | $ | 8,643 | ||||||||||||||||||||||||||
Realized and unrealized (losses) gains on VIE and other finance receivables, long-term debt and derivatives | (9,857 | ) | 37,891 | (4,253 | ) | — | — | — | — | — | 23,781 | — | — | — | — | 23,781 | ||||||||||||||||||||||||||||||||||||||||
Servicing, broker, and other fees | 1,417 | 1,339 | — | — | — | — | — | — | 2,756 | — | — | — | — | 2,756 | ||||||||||||||||||||||||||||||||||||||||||
Realized and unrealized gains on marketable securities, net | 137 | — | — | — | — | — | — | (137 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Total Revenues | $ | 44,699 | $ | (10,585 | ) | $ | (4,253 | ) | $ | 5,834 | $ | — | $ | — | $ | — | $ | (515 | ) | $ | 35,180 | $ | — | $ | — | $ | — | $ | — | $ | 35,180 | |||||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advertising | $ | 12,033 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 12,033 | $ | — | $ | — | $ | — | $ | — | $ | 12,033 | ||||||||||||||||||||||||||||
Interest expense | 58,375 | (43,036 | ) | — | — | — | — | (549 | ) | — | 14,790 | (10,087 | ) | — | — | — | 4,703 | |||||||||||||||||||||||||||||||||||||||
Compensation and benefits | 9,197 | — | — | — | (307 | ) | — | (865 | ) | — | 8,025 | — | — | — | — | 8,025 | ||||||||||||||||||||||||||||||||||||||||
General and administrative | 5,345 | — | — | — | — | — | — | — | 5,345 | — | — | (639 | ) | — | 4,706 | |||||||||||||||||||||||||||||||||||||||||
Professional and consulting | 3,187 | — | — | — | — | — | — | — | 3,187 | — | — | (75 | ) | — | 3,112 | |||||||||||||||||||||||||||||||||||||||||
Debt issuance | 3 | — | — | — | — | — | — | — | 3 | — | (3 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Securitization debt maintenance | 1,432 | (1,432 | ) | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Provision for losses | 897 | — | — | — | — | — | — | — | 897 | — | — | — | — | 897 | ||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 876 | — | — | — | — | — | — | — | 876 | — | — | — | (876 | ) | — | |||||||||||||||||||||||||||||||||||||||||
Installment obligations expense, net | 515 | — | — | — | — | — | — | (515 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Total Expenses | $ | 91,860 | $ | (44,468 | ) | $ | — | $ | — | $ | (307 | ) | $ | — | $ | (1,414 | ) | $ | (515 | ) | $ | 45,156 | $ | (10,087 | ) | $ | (3 | ) | $ | (714 | ) | $ | (876 | ) | $ | 33,476 | ||||||||||||||||||||
Loss before income taxes | (47,161 | ) | 33,883 | (4,253 | ) | 5,834 | 307 | — | 1,414 | — | (9,976 | ) | 10,087 | 3 | 714 | 876 | 1,704 | |||||||||||||||||||||||||||||||||||||||
Benefit for income taxes | (6,639 | ) | — | — | — | — | 6,639 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Net (Loss) Income | $ | (40,522 | ) | $ | 33,883 | $ | (4,253 | ) | $ | 5,834 | $ | 307 | $ | (6,639 | ) | $ | 1,414 | $ | — | $ | (9,976 | ) | $ | 10,087 | $ | 3 | $ | 714 | $ | 876 | $ | 1,704 | ||||||||||||||||||||||||
*Represents a non-GAAP measure which, as calculated by the Company is not necessarily comparable to similarly titled measures reported by other companies. Refer to Schedule C for management's discussion on its use of non-GAAP measures.
Schedule F
The J.G. Wentworth Company
Home Lending Segment Reconciliation of Net Income to ANI* and Adjusted EBITDA* - Unaudited
For the Three Months Ending March 31, 2016
(In thousands)
GAAP Results | Severance, Mergers and Acquisitions, and Other Non-Routine Expenses | ANI* | Depreciation and Amortization | Adjusted EBITDA* | ||||||||||||||||
REVENUES | ||||||||||||||||||||
Interest income | $ | 657 | $ | — | $ | 657 | $ | — | $ | 657 | ||||||||||
Realized and unrealized gains on sale of mortgage loans held for sale, net of direct costs | 16,656 | — | 16,656 | — | 16,656 | |||||||||||||||
Changes in mortgage servicing rights, net | 877 | — | 877 | — | 877 | |||||||||||||||
Servicing, broker, and other fees | 2,052 | — | 2,052 | — | 2,052 | |||||||||||||||
Loan origination fees | 1,636 | — | 1,636 | — | 1,636 | |||||||||||||||
Total Revenues | $ | 21,878 | $ | — | $ | 21,878 | $ | — | $ | 21,878 | ||||||||||
EXPENSES | ||||||||||||||||||||
Advertising | $ | 1,942 | $ | — | $ | 1,942 | $ | — | $ | 1,942 | ||||||||||
Interest expense | 1,125 | — | 1,125 | — | 1,125 | |||||||||||||||
Compensation and benefits | 9,348 | (380 | ) | 8,968 | — | 8,968 | ||||||||||||||
General and administrative | 1,764 | — | 1,764 | — | 1,764 | |||||||||||||||
Professional and consulting | 470 | — | 470 | — | 470 | |||||||||||||||
Provision for losses | 691 | — | 691 | — | 691 | |||||||||||||||
Direct subservicing costs | 640 | — | 640 | — | 640 | |||||||||||||||
Depreciation and amortization | 426 | — | 426 | (426 | ) | — | ||||||||||||||
Total Expenses | $ | 16,406 | $ | (380 | ) | $ | 16,026 | $ | (426 | ) | $ | 15,600 | ||||||||
Income before income taxes | 5,472 | 380 | 5,852 | 426 | 6,278 | |||||||||||||||
Provision for income taxes | — | — | — | — | — | |||||||||||||||
Net Income | $ | 5,472 | $ | 380 | $ | 5,852 | $ | 426 | $ | 6,278 | ||||||||||
*Represents a non-GAAP measure which, as calculated by the Company is not necessarily comparable to similarly titled measures reported by other companies. Refer to Schedule C for management's discussion on its use of non-GAAP measures.
Schedule G
The J.G. Wentworth Company
Consolidated Reconciliation of Net Loss to ANI* and Adjusted EBITDA* - Unaudited
For the Three Months Ending March 31, 2015
(In thousands)
GAAP Results | Deconsolidation of Securitizations | Impact of Prefunding on Unsecuritized Finance Receivables | Interest Income on Retained Interests | Share Based Compensation | Income Tax | Severance, Mergers and Acquisitions, and Other Non-Routine Expenses | Reclassification for Installment Obligation Payable | ANI* | Term Loan Interest Expense | Debt Issuance | Depreciation and Amortization | Adjusted EBITDA* | |||||||||||||||||||||||||||||||||||||||
REVENUES | |||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | $ | 44,392 | $ | (39,969 | ) | $ | — | $ | 5,166 | $ | — | $ | — | $ | — | $ | (490 | ) | $ | 9,099 | $ | — | $ | — | $ | — | $ | 9,099 | |||||||||||||||||||||||
Realized and unrealized (losses) gains on VIE and other finance receivables, long-term debt and derivatives | 39,739 | 9,129 | 2,272 | — | — | — | — | — | 51,140 | — | — | — | 51,140 | ||||||||||||||||||||||||||||||||||||||
Servicing, broker, and other fees | 869 | 1,315 | — | — | — | — | — | — | 2,184 | — | — | — | 2,184 | ||||||||||||||||||||||||||||||||||||||
Realized and unrealized gains on marketable securities, net | 1,830 | — | — | — | — | — | — | (1,830 | ) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Total Revenues | $ | 86,830 | $ | (29,525 | ) | $ | 2,272 | $ | 5,166 | $ | — | $ | — | $ | — | $ | (2,320 | ) | $ | 62,423 | $ | — | $ | — | $ | — | $ | 62,423 | |||||||||||||||||||||||
EXPENSES | |||||||||||||||||||||||||||||||||||||||||||||||||||
Advertising | $ | 15,840 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 15,840 | $ | — | $ | — | $ | — | $ | 15,840 | |||||||||||||||||||||||||
Interest expense | 48,835 | (34,208 | ) | — | — | — | — | — | — | 14,627 | (9,957 | ) | — | — | 4,670 | ||||||||||||||||||||||||||||||||||||
Compensation and benefits | 12,798 | — | — | — | (410 | ) | — | (2,237 | ) | — | 10,151 | — | — | — | 10,151 | ||||||||||||||||||||||||||||||||||||
General and administrative | 4,639 | — | — | — | — | — | (3 | ) | — | 4,636 | — | — | — | 4,636 | |||||||||||||||||||||||||||||||||||||
Professional and consulting | 4,438 | — | — | — | — | — | (594 | ) | — | 3,844 | — | — | — | 3,844 | |||||||||||||||||||||||||||||||||||||
Debt issuance | 2,749 | — | — | — | — | — | — | — | 2,749 | — | (2,749 | ) | — | — | |||||||||||||||||||||||||||||||||||||
Securitization debt maintenance | 1,496 | (1,496 | ) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Provision for losses | 1,339 | — | — | — | — | — | — | — | 1,339 | — | — | — | 1,339 | ||||||||||||||||||||||||||||||||||||||
Direct subservicing costs | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 991 | — | — | — | — | — | — | — | 991 | — | — | (991 | ) | — | |||||||||||||||||||||||||||||||||||||
Installment obligations expense, net | 2,320 | — | — | — | — | — | — | (2,320 | ) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Total Expenses | $ | 95,445 | $ | (35,704 | ) | $ | — | $ | — | $ | (410 | ) | $ | — | $ | (2,834 | ) | $ | (2,320 | ) | $ | 54,177 | $ | (9,957 | ) | $ | (2,749 | ) | $ | (991 | ) | $ | 40,480 | ||||||||||||||||||
(Loss) income before taxes | $ | (8,615 | ) | $ | 6,179 | $ | 2,272 | $ | 5,166 | $ | 410 | $ | — | $ | 2,834 | $ | — | $ | 8,246 | $ | 9,957 | $ | 2,749 | $ | 991 | $ | 21,943 | ||||||||||||||||||||||||
Benefit for income taxes | (3,155 | ) | — | — | — | — | 3,155 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Net (Loss) Income | $ | (5,460 | ) | $ | 6,179 | $ | 2,272 | $ | 5,166 | $ | 410 | $ | (3,155 | ) | $ | 2,834 | $ | — | $ | 8,246 | $ | 9,957 | $ | 2,749 | $ | 991 | $ | 21,943 | |||||||||||||||||||||||
*Represents a non-GAAP measure which, as calculated by the Company is not necessarily comparable to similarly titled measures reported by other companies. Refer to Schedule C for management's discussion on its use of non-GAAP measures.
Schedule H
The J.G. Wentworth Company
Consolidated Adjusted Cash Flow* of Operations - Unaudited
(In thousands)
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Purchases of finance receivables | $ | (71,674 | ) | $ | (106,993 | ) | ||
Gross proceeds from revolving credit facilites | 614,665 | 89,468 | ||||||
Issuance of VIE long-term debt | 2,275 | 216,955 | ||||||
Repayments of revolving credit facilities | (566,019 | ) | (70,092 | ) | ||||
Collections on finance receivables | 133,133 | 128,476 | ||||||
Repayment of long-term debt and derivatives | (86,511 | ) | (84,985 | ) | ||||
Net proceeds from sale of finance receivables | 91,335 | — | ||||||
Changes in restricted cash and investments | 5,246 | (6,052 | ) | |||||
Loss on swap terminations, net | (4,374 | ) | (275 | ) | ||||
Servicing, broker, and other fees | 3,469 | 881 | ||||||
Loan origination fees | 1,636 | — | ||||||
Originations and purchases of mortgage loans held for sale | (574,662 | ) | — | |||||
Proceeds from sale and principal payments on mortgage loans held for sale | 524,130 | — | ||||||
Subtotal | $ | 72,649 | $ | 167,383 | ||||
Advertising | 13,975 | 15,840 | ||||||
Cash paid for interest | 59,609 | 58,322 | ||||||
Compensation and benefits | 18,545 | 12,798 | ||||||
General and administrative | 7,109 | 4,639 | ||||||
Professional and consulting | 3,657 | 4,438 | ||||||
Debt issuance | 3 | 2,749 | ||||||
Securitization debt maintenance | 1,432 | 1,496 | ||||||
Direct subservicing costs | 640 | — | ||||||
Subtotal | $ | 104,970 | $ | 100,282 | ||||
Share-based compensation expense included in compensation and benefits | 307 | 410 | ||||||
Adjusted Cash Flow* | $ | (32,014 | ) | $ | 67,511 | |||
*Represents a non-GAAP measure which, as calculated by the Company is not necessarily comparable to similarly titled measures reported by other companies. Refer to Schedule C for management's discussion on its use of non-GAAP measures.
Schedule I
The J.G. Wentworth Company
Reconciliation of Adjusted Cash Flow* to Net (Decrease) Increase in
Cash & Cash Equivalents & End of Period Balances - Unaudited
(In thousands)
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Adjusted Cash Flow* | $ | (32,014 | ) | $ | 67,511 | |||
Adjustments to reconcile Adjusted Cash Flow* to net (decrease) increase in cash and cash equivalents per Consolidated Statement of Cash Flows | ||||||||
Purchase of Home Lending, net of cash acquired | (7,630 | ) | — | |||||
Purchases of premises and equipment, net of sales proceeds | (260 | ) | (905 | ) | ||||
Purchases of treasury stock | — | (2,797 | ) | |||||
Subtotal | $ | (7,890 | ) | $ | (3,702 | ) | ||
Changes in other assets | 7,845 | 388 | ||||||
Changes in other receivables | (470 | ) | 2,092 | |||||
Changes in accrued expenses and accounts payable | 1,354 | 5,353 | ||||||
Changes in other liabilities | (620 | ) | 396 | |||||
Other reconciling items | 938 | 173 | ||||||
Subtotal | $ | 9,047 | $ | 8,402 | ||||
Net (decrease) increase in cash and cash equivalents | (30,857 | ) | 72,211 | |||||
Cash and cash equivalents at beginning of period | 57,322 | 41,648 | ||||||
Cash and cash equivalents at end of period | $ | 26,465 | $ | 113,859 | ||||
Restricted cash and investments at end of period | $ | 131,534 | $ | 204,258 | ||||
*Represents a non-GAAP measure which, as calculated by the Company is not necessarily comparable to similarly titled measures reported by other companies. Refer to Schedule C for management's discussion on its use of non-GAAP measures.
Schedule J
The J.G. Wentworth Company
Consolidated Selected Quarterly Data - Unaudited
(In thousands, except share data)
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Consolidated | ||||||||
Net Loss | $ | (35,050 | ) | $ | (5,460 | ) | ||
Net loss attributable to The J.G. Wentworth Company | $ | (16,087 | ) | $ | (1,345 | ) | ||
Adjusted Net (Loss) Income* | $ | (4,124 | ) | $ | 8,246 | |||
Adjusted EBITDA* | $ | 7,982 | $ | 21,943 | ||||
Weighted Average Diluted Shares | 15,574,746 | 14,271,842 | ||||||
All-in Shares (1)* | 28,737,655 | 28,597,051 | ||||||
Diluted EPS | $ | (1.03 | ) | $ | (0.09 | ) | ||
ANI EPS (2)* | $ | (0.14 | ) | $ | 0.29 | |||
Structured Settlement Payments Segment | ||||||||
Total Receivables Balance (TRB) Purchases | ||||||||
Guaranteed structured settlements, annuities and lotteries | $ | 166,384 | $ | 234,972 | ||||
Life contingent structured settlements and annuities | 37,300 | 19,499 | ||||||
Pre-settlement fundings | — | 6,360 | ||||||
Total TRB Purchases | $ | 203,684 | $ | 260,831 | ||||
Spread Revenue (3)* | $ | 23,781 | $ | 50,547 | ||||
TRB Spread Margin (4)* | 11.68 | % | 19.86 | % | ||||
Home Lending Segment | ||||||||
Mortgage Originations: | ||||||||
Locked - Units | 3,978 | N/A | ||||||
Locked - Loan Volume | $ | 1,077,097 | N/A | |||||
Closed - Units | 2,064 | N/A | ||||||
Closed - Loan Volume | $ | 568,302 | N/A | |||||
As of: | ||||||||
March 31, 2016 | December 31, 2015 | |||||||
(Dollars in thousands) | ||||||||
Mortgage Servicing: | ||||||||
Loan count - servicing | 13,181 | 12,504 | ||||||
Average loan amount | $ | 239 | $ | 238 | ||||
Average interest rate | 3.72 | % | 3.72 | % | ||||
*Represents a non-GAAP measure which, as calculated by the Company is not necessarily comparable to similarly titled measures reported by other companies. Refer to Schedule C for management's discussion on its use of non-GAAP measures.
(1) | 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. |
(2) | ANI EPS is defined as ANI / All-in Shares. |
(3) | Spread Revenue is defined as realized & unrealized gains on unsecuritized finance receivables and related derivatives adjusted for the impact of prefundings. |
(4) | TRB Spread Margin is defined as Spread Revenue / Guaranteed and life contingent structured settlements, annuities and lotteries. |
(5) | N/A - Not applicable |