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| 8-K - 8-K - EMERGENT CAPITAL, INC. | a8kq12017.htm |
Emergent Capital, Inc. Announces First Quarter 2017 Results
Boca Raton, Fla., May 15, 2017 – Emergent Capital, Inc. (OTCQB: EMGC) ("Emergent" or the "Company"), today announced its financial results for the three month period ended March 31, 2017.
Three Months Ended March 31, 2017
Total income from continuing operations was $25.6 million for the three month period ended March 31, 2017 compared to $8.5 million for the same period in 2016. The increase was primarily due to a $16.3 million gain on the maturity of four policies compared to an $8.3 million gain on maturity of six policies for the same period in 2016.
The following table provides a summary of the components of income from the Company's life settlements.
Three Months Ended March 31, 2017 | Three Months Ended March 31, 2016 | |||||||
Change in estimated probabilistic cash flows | $ | 22,600 | $ | 18,480 | ||||
Premiums paid during period | (20,582) | (16,653) | ||||||
Change in life expectancy evaluation | 7,298 | (2,067) | ||||||
Change in discount rates | (40 | ) | — | |||||
Unrealized gain on acquisitions | — | 349 | ||||||
Realized gain on maturities | 16,264 | 8,279 | ||||||
Change in fair value of life settlements | $ | 25,540 | $ | 8,388 | ||||
Total expenses from continuing operations were $23.7 million for the three month period ended March 31, 2017 compared to $15.9 million for the same period in 2016. The increase was primarily attributable to an increase of $7.7 million on the loss in fair value of the Revolving Credit Facility and a $1.5 million increase in interest expense associated with increased borrowings on the Company's Revolving Credit Facility, 8.5% Senior Unsecured Convertible Notes, and 15% Senior Secured Notes. These were offset by a reduction in operating expenses of $1.4 million primarily related to a decrease in legal fees and personnel costs.
The Company reported net income from continuing operations of $1.9 million, or $0.07 per diluted share for the three month period ended March 31, 2017, compared to a net loss of $7.4 million, or $(0.27) per diluted share for the same period in 2016.
Life Settlements Portfolio Highlights
On March 31, 2017, the estimated fair value of the Company’s 617 life insurance policies was $506.7 million compared to $498.4 million for 621 life insurance policies at December 31, 2016. The weighted average discount rate was 16.37% at March 31, 2017 and December 31, 2016. The aggregate face value of the Company's portfolio of life insurance policies was approximately $2.9 billion on March 31, 2017.
During the quarter, four life insurance policies that served as collateral under the revolving credit facility matured totaling $37.9 million.
As of March 31, 2017, the Company had cash and cash equivalents and certificates of deposit of $19.0 million and a Book Value per share of $6.15.
About Emergent Capital, Inc.
Emergent (OTCQB: EMGC) is a specialty finance company that invests in life settlements. More information about Emergent can be found at www.emergentcapital.com.
Safe Harbor Statement
This press release may contain certain "forward-looking statements" relating to the business of Emergent Capital, Inc. and its subsidiary companies. All statements, other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, and involve known and unknown risks and uncertainties. Although Emergent believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required under the securities laws, Emergent does not assume a duty to update these forward-looking statements.
Company Contact:
David Sasso
Emergent Capital, Inc.
Senior Vice President, Corporate Development & Investor Relations
561.995.4300
IR@emergentcapital.com
www.emergentcapital.com
# # #
-SELECTED FINANCIAL TABLES FOLLOW-
Emergent Capital, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
(in thousands, except share and per share data) | ||||||||
Income | ||||||||
Change in fair value of life settlements | $ | 25,540 | $ | 8,388 | ||||
Other income | 50 | 66 | ||||||
Total income | 25,590 | 8,454 | ||||||
Expenses | ||||||||
Interest expense | 7,535 | 6,050 | ||||||
Change in fair value of Revolving Credit Facilities | 11,831 | 4,097 | ||||||
Personnel costs | 1,085 | 1,557 | ||||||
Legal fees | 995 | 1,818 | ||||||
Professional fees | 1,604 | 1,643 | ||||||
Insurance | 192 | 244 | ||||||
Other selling, general and administrative expenses | 464 | 490 | ||||||
Total expenses | 23,706 | 15,899 | ||||||
Income (loss) from continuing operations before income taxes | 1,884 | (7,445 | ) | |||||
Benefit for income taxes | — | — | ||||||
Net income (loss) from continuing operations | $ | 1,884 | $ | (7,445 | ) | |||
Discontinued Operations: | ||||||||
Income (loss) from discontinued operations | (189 | ) | (68 | ) | ||||
Benefit for income taxes | — | — | ||||||
Net income (loss) from discontinued operations | (189 | ) | (68 | ) | ||||
Net income (loss) | $ | 1,695 | $ | (7,513 | ) | |||
Basic and diluted income (loss) per share: | ||||||||
Continuing operations | $ | 0.07 | $ | (0.27 | ) | |||
Discontinued operations | $ | (0.01 | ) | $ | — | |||
Net income (loss) | $ | 0.06 | $ | (0.27 | ) | |||
Weighted average shares outstanding: | ||||||||
Basic and Diluted | 28,148,632 | 27,481,249 | ||||||
Emergent Capital, Inc.
CONSOLIDATED BALANCE SHEETS
March 31, 2017 | December 31, 2016* | ||||||
(Unaudited) | |||||||
(In thousands except share data) | |||||||
ASSETS | |||||||
Assets | |||||||
Cash and cash equivalents | $ | 2,100 | $ | 2,246 | |||
Cash and cash equivalents (VIE) | 15,923 | 9,072 | |||||
Certificates of deposit | 1,004 | 6,025 | |||||
Prepaid expenses and other assets | 2,601 | 1,112 | |||||
Deposits - other | 1,377 | 1,347 | |||||
Life settlements, at estimated fair value | 708 | 680 | |||||
Life settlements, at estimated fair value (VIE) | 505,964 | 497,720 | |||||
Receivable for maturity of life settlements (VIE) | 32,850 | 5,000 | |||||
Fixed assets, net | 208 | 232 | |||||
Investment in affiliates | 2,384 | 2,384 | |||||
Total assets | $ | 565,119 | $ | 525,818 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Liabilities | |||||||
Accounts payable and accrued expenses | 3,873 | $ | 2,590 | ||||
Accounts payable and accrued expenses (VIE) | 683 | 593 | |||||
Other liabilities | 273 | 359 | |||||
Interest payable - Convertible Notes | 806 | 2,272 | |||||
Convertible Notes, net of discount and deferred debt costs | 65,002 | 60,535 | |||||
Interest payable - Senior Secured Notes | 213 | 213 | |||||
Senior Secured Notes, net of discount and deferred debt costs | 29,387 | 29,297 | |||||
White Eagle Revolving Credit Facility, at estimated fair value (VIE) | 290,200 | 257,085 | |||||
Total liabilities | 390,437 | 352,944 | |||||
Commitments and Contingencies | |||||||
Stockholders’ Equity | |||||||
Common stock (par value $0.01 per share, 80,000,000 authorized at March 31, 2017 and December 31, 2016; 29,021,844 issued and 28,413,844 outstanding as of March 31, 2017 and December 31, 2016 | 290 | 290 | |||||
Preferred stock (par value $0.01 per share, 40,000,000 authorized; 0 issued and outstanding as of March 31, 2017 and December 31, 2016) | — | — | |||||
Treasury Stock, net of cost (608,000 shares as of March 31, 2017 and December 31, 2016) | (2,534 | ) | (2,534 | ) | |||
Additional paid-in-capital | 307,760 | 307,647 | |||||
Accumulated deficit | (130,834 | ) | (132,529 | ) | |||
Total stockholders’ equity | 174,682 | 172,874 | |||||
Total liabilities and stockholders’ equity | $ | 565,119 | $ | 525,818 | |||
* Derived from audited consolidated financial statements.
Selected Operating Data (dollars in thousands):
For the Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Period Acquisitions — Policies Owned | ||||||||
Number of policies acquired | — | — | ||||||
Weighted average age of insured at acquisition | — | — | ||||||
Weighted average life expectancy — Calculated LE (Years) | — | — | ||||||
Average death benefit | $ | — | $ | — | ||||
Aggregate purchase price | $ | — | $ | — | ||||
End of Period — Policies Owned | ||||||||
Number of policies owned | 617 | 626 | ||||||
Weighted average age of insured | 82.7 | 81.7 | ||||||
Average death benefit per policy | $ | 4,715 | $ | 4,744 | ||||
Weighted average Life Expectancy — Calculated LE (Years) | 8.9 | 9.7 | ||||||
Aggregate Death Benefit | $ | 2,908,876 | $ | 2,969,670 | ||||
Aggregate fair value | $ | 506,672 | $ | 475,360 | ||||
Monthly premium — average per policy | $ | 11.4 | $ | 9.6 | ||||
Period Maturities | ||||||||
Number of policies matured | 4 | 6 | ||||||
Weighted average age of insured at maturity | 82.8 | 84.9 | ||||||
Weighted average life expectancy - Calculated LE (Years) | 3.5 | 5.5 | ||||||
Aggregate death benefit | $ | 37,850 | $ | 12,980 | ||||
Gains on maturity | $ | 16,264 | $ | 8,279 | ||||
Proceeds collected | $ | 10,000 | $ | 15,480 | ||||
Company Contact:
David Sasso
Emergent Capital, Inc.
Senior Vice President, Corporate Development & Investor Relations
561.995.4300
IR@emergentcapital.com
www.emergentcapital.com