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| 8-K - 8-K - EMERGENT CAPITAL, INC. | a8kq12018-earnings.htm |
Emergent Capital, Inc. Announces First Quarter 2018 Results
Boca Raton, Fla., May 10, 2018 – Emergent Capital, Inc. (OTCQB: EMGC) ("Emergent" or the "Company"), today announced its financial results for the three month period ended March 31, 2018.
First Quarter 2018 Financial Highlights
Total income from continuing operations was $5.6 million for the three month period ended March 31, 2018 compared to $25.6 million for the same period in 2017. Income was impacted by a $17.2 million gain on the maturity of five policies during the quarter compared to a $16.3 million gain on maturity of four policies for the same period in 2017. Income for the three month period ended March 31, 2018 was lower than for the same period in 2017 due to the results of updated life expectancies procured by the Company in respect to the insureds' lives, the results had a negative impact on the change in fair value of our life settlements. The updated life expectancy reports implied that in aggregate, the insureds’ health improved, therefore, lengthening their life expectancies relative to the prior life expectancies.
The following table provides a summary of the components of income from the Company's life settlements.
Three Months Ended March 31, 2018 | Three Months Ended March 31, 2017 | |||||||
Change in estimated probabilistic cash flows | $ | 23,343 | $ | 22,600 | ||||
Premiums paid during period | (22,392) | (20,582) | ||||||
Change in life expectancy evaluation | (12,746) | 7,298 | ||||||
Change in discount rates | — | (40 | ) | |||||
Realized gain on maturities | 17,239 | 16,264 | ||||||
Change in fair value of life settlements | $ | 5,444 | $ | 25,540 | ||||
Total expenses from continuing operations were $9.6 million for the three month period ended March 31, 2018 compared to $23.7 million for the same period in 2017. The decrease was primarily attributable to a decrease of $14.2 million on the gain in fair value of the Revolving Credit Facility, and $365,000 and $319,000 decrease in professional fees and personnel costs, respectively. These were offset mainly by an increase in legal fees of approximately $728,000.
The Company reported net loss from continuing operations of $4.0 million, or $(0.03) per diluted share for the three month period ended March 31, 2018, compared to a net income of $1.9 million, or $0.07 per diluted share for the same period in 2017.
Life Settlements Portfolio Highlights
On March 31, 2018, the estimated fair value of the Company’s 603 life insurance policies was $567.6 million compared to $567.5 million for 608 life insurance policies at December 31, 2017. The weighted average discount rate was 15.99% and 15.95% at March 31, 2018 and December 31, 2017, respectively. The aggregate face value of the Company's portfolio of life insurance policies was approximately $2.9 billion on March 31, 2018.
During the quarter, five life insurance policies that served as collateral under our revolving credit facility matured with a face value totaling $27.7 million.
As of March 31, 2018, the Company had cash and cash equivalents and certificates of deposit of $42.2 million and a book value per share of $1.22.
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.
# # #
-SELECTED FINANCIAL TABLES FOLLOW-
Emergent Capital, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
(in thousands, except share and per share data) | ||||||||
Income | ||||||||
Change in fair value of life settlements | $ | 5,444 | $ | 25,540 | ||||
Other income | 147 | 50 | ||||||
Total income | 5,591 | 25,590 | ||||||
Expenses | ||||||||
Interest expense | 7,604 | 7,535 | ||||||
Loss on Extinguishment of Debt | — | — | ||||||
Change in fair value of Revolving Credit Facility | (2,389 | ) | 11,831 | |||||
Personnel costs | 766 | 1,085 | ||||||
Legal fees | 1,723 | 995 | ||||||
Professional fees | 1,239 | 1,604 | ||||||
Insurance | 197 | 192 | ||||||
Other selling, general and administrative expenses | 445 | 464 | ||||||
Total expenses | 9,585 | 23,706 | ||||||
Income (loss) from continuing operations before income taxes | (3,994 | ) | 1,884 | |||||
(Benefit) provision for income taxes | — | — | ||||||
Net income (loss) from continuing operations | $ | (3,994 | ) | $ | 1,884 | |||
Discontinued Operations: | ||||||||
Income (loss) from discontinued operations | (1 | ) | (189 | ) | ||||
(Benefit) provision for income taxes | — | — | ||||||
Net income (loss) from discontinued operations | (1 | ) | (189 | ) | ||||
Net income (loss) | $ | (3,995 | ) | $ | 1,695 | |||
Basic and Diluted income (loss) per share: | ||||||||
Continuing operations | $ | (0.03 | ) | $ | 0.07 | |||
Discontinued operations | $ | — | $ | (0.01 | ) | |||
Net income (loss) basic and diluted | $ | (0.03 | ) | $ | 0.06 | |||
Weighted average shares outstanding: | ||||||||
Basic and diluted | 155,789,599 | 28,148,632 | ||||||
Emergent Capital, Inc.
CONSOLIDATED BALANCE SHEETS
March 31, 2018 | December 31, 2017* | ||||||
(Unaudited) | |||||||
(In thousands except share data) | |||||||
ASSETS | |||||||
Assets | |||||||
Cash and cash equivalents | $ | 12,917 | $ | 18,131 | |||
Cash and cash equivalents (VIE) | 28,302 | 13,136 | |||||
Certificates of deposit | 1,012 | 1,010 | |||||
Prepaid expenses and other assets | 1,100 | 617 | |||||
Prepaid expenses and other assets (VIE) | 24 | 53 | |||||
Deposits - other | 1,377 | 1,377 | |||||
Life settlements, at estimated fair value | 782 | 750 | |||||
Life settlements, at estimated fair value (VIE) | 566,846 | 566,742 | |||||
Receivable for maturity of life settlements (VIE) | 34,400 | 30,045 | |||||
Fixed assets, net | 124 | 145 | |||||
Investment in affiliates | 2,384 | 2,384 | |||||
Total assets | $ | 649,268 | $ | 634,390 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Liabilities | |||||||
Accounts payable and accrued expenses | 1,946 | $ | 2,015 | ||||
Accounts payable and accrued expenses (VIE) | 971 | 753 | |||||
Other liabilities | 1,086 | 451 | |||||
Interest payable - 8.5% Convertible Notes | 21 | 46 | |||||
8.5% Convertible Notes, net of discount and deferred debt costs | 1,118 | 1,098 | |||||
Interest payable - 5.0% Convertible Notes | 485 | 1,432 | |||||
5.0% Convertible Notes, net of discount and deferred debt costs | 68,929 | 68,654 | |||||
Interest payable - 8.5% Senior Secured Notes | 132 | 132 | |||||
8.5% Senior Secured Notes, net of deferred debt costs | 33,990 | 33,927 | |||||
White Eagle Revolving Credit Facility, at estimated fair value (VIE) | 347,860 | 329,240 | |||||
Total liabilities | $ | 456,538 | $ | 437,748 | |||
Commitments and Contingencies | |||||||
Stockholders’ Equity | |||||||
Common stock (par value $0.01 per share, 415,000,000 authorized at March 31, 2018 and December 31, 2017; 158,600,399 issued and 157,992,399 outstanding as of March 31, 2018;158,495,399 issued and 157,887,399 outstanding as of December 31, 2017) | 1,586 | 1,585 | |||||
Preferred stock (par value $0.01 per share, 40,000,000 authorized; 0 issued and outstanding as of March 31, 2018 and December 31, 2017) | — | — | |||||
Treasury Stock, net of issuance cost (608,000 shares as of March 31, 2018 and December 31, 2017) | (2,534 | ) | (2,534 | ) | |||
Additional paid-in-capital | 333,711 | 333,629 | |||||
Accumulated deficit | (140,033 | ) | (136,038 | ) | |||
Total stockholders’ equity | 192,730 | 196,642 | |||||
Total liabilities and stockholders’ equity | $ | 649,268 | $ | 634,390 | |||
* Derived from audited consolidated financial statements.
Selected Operating Data (dollars in thousands):
Three Months Ended March 31, | |||||||||
2018 | 2017 | ||||||||
Period Acquisitions — Policies Owned | |||||||||
Number of policies acquired | — | — | |||||||
Average age of insured at acquisition | — | — | |||||||
Average life expectancy — Calculated LE (Years) | — | — | |||||||
Average death benefit | $ | — | $ | — | |||||
Aggregate purchase price | $ | — | $ | — | |||||
End of Period — Policies Owned | |||||||||
Number of policies owned | 603 | 617 | |||||||
Average age of insured | 83.7 | 82.7 | |||||||
Average death benefit per policy | $ | 4,731 | $ | 4,715 | |||||
Average Life Expectancy — Calculated LE (Years) | 8.1 | 8.9 | |||||||
Aggregate Death Benefit | $ | 2,852,803 | $ | 2,908,876 | |||||
Aggregate fair value | $ | 567,628 | $ | 506,672 | |||||
Monthly premium — average per policy | $ | 12.8 | $ | 11.4 | |||||
Period Maturities | |||||||||
Number of policies matured | 5 | 4 | |||||||
Average age of insured at maturity | 84.8 | 82.8 | |||||||
Average life expectancy - Calculated LE (Years) | 6.2 | 3.5 | |||||||
Aggregate death benefit | $ | 27,700 | $ | 37,850 | |||||
Gains on maturity | $ | 17,239 | $ | 16,264 | |||||
Proceeds collected | $ | 23,345 | $ | 10,000 | |||||
Company Contact:
Investor Relations
Rob Fink
Hayden IR
Phone: 646.415.8972
Email: Rob@HaydenIR.com
IR@emergentcapital.com
www.emergentcapital.com