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8-K - 8-K - J.G. Wentworth Coa14-24395_18k.htm

Exhibit 99.1

 

The J.G. Wentworth Company™ Reports Third Quarter Results; Company Makes Progress Towards Transformation

 

RADNOR, Pa.—(BUSINESS WIRE)—11.13.14 — 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 third quarter of 2014. “We are in the early stages of transforming J.G. Wentworth and are excited about the groundwork we have laid to achieve the three key strategic pillars — Grow the Core, Become an Information-Based Company, and Diversify,” said Stewart A. Stockdale, Chief Executive Officer, The J.G. Wentworth Company.

 

The following are highlights from the third quarter results:

 

Third Quarter Highlights

 

·                  Total Receivables Balance, or TRB, purchases were $263.3 million, as compared to $299.3 million in the third quarter of 2013.

 

·                  Adjusted Net Income*, or ANI, increased to $7.2 million, as compared to $1.4 million in the third quarter of 2013,  driven primarily by lower cost of funds and lower interest expense.

 

·                  Adjusted unrealized gains on VIE and other finance receivables, long term debt and derivatives, net of the gain (loss) on swap terminations*, [or Spread Revenue*], was $51.3 million, as compared to $49.0 million in the third quarter of 2013.

 

·                  Revenues were $107.0 million, an increase of 3.8% from revenues of $103.1 million in the third 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 $12.7 million, as compared to a loss of $0.9 million in the third quarter of 2013, due primarily to decreasing cost of funds and lower interest expense.

 

John R. Schwab, J.G. Wentworth’s Chief Financial Officer, said, “After a strong second quarter, the third quarter purchases started off slower than anticipated, but returned to expected levels by the end of the period.  We continue to focus on driving profitability in our Core business and leveraging our industry-leading financing platform.  We were pleased with the execution of our 2014-2 securitization and look forward to the launch of the 2014-3 securitization.”

 


* 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 nine month periods ended September 30, 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™

 

J.G. Wentworth 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 J.G. Wentworth, visit www.jgw.com or use the contact information provided below.

 

Conference Call and Webcast

 

Management will host a webcast to discuss the third quarter 2014 financial results today, November 13, 2014, 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™ Third Quarter 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™ Third Quarter 2014 Financial Results Webcast may dial (877) 201-0168 and reference conference ID 21425036.  A playback of the call is available until November 20, 2014 at (855) 859-2056 with conference ID 21425036. 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, 2013, these risks and uncertainties include, among other things:  our ability to continue to purchase structured settlement payments and other assets; our ability to complete future securitizations or other financings on beneficial terms; availability of or increases in the cost of our financing sources relative to our purchase discount rate; 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 dependence on the effectiveness of our direct response marketing; 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; the lack of an established market for the subordinated interest in the receivables that we retain after a securitization is executed; our exposure to underwriting risk; 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; the insolvency or downgrade of a material number of structured settlement issuers; changes in current tax law relating to the tax treatment of structured settlements; changes to state or federal, licensing and regulatory regimes; 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 or in general; adverse judicial developments; potential litigation and regulatory proceedings; unfavorable press reports about our business model; our access to personally identifiable confidential information of current and prospective customers and the improper use or failure to protect that information; the public disclosure of the identities of structured settlement holders; our business model being susceptible to litigation; our dependence on a small number of key personnel; our ability to successfully enter new lines of business and broaden the scope of our business; changes in our expectations regarding the likelihood, timing or terms of any potential acquisitions described herein; our computer systems being subject to security and privacy breaches; 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.

 



 

Schedule A

 

The J.G. Wentworth Company

(Prior to November 14, 2013, J.G. Wentworth, LLC and Subsidiaries)

Condensed Consolidated Balance Sheets

(In thousands, except for shares and per share data)

 

 

 

September 30,

 

December 31,

 

 

 

2014

 

2013

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

76,068

 

$

39,061

 

Restricted cash and investments

 

118,020

 

109,338

 

VIE finance receivables, at fair market value

 

4,274,954

 

3,818,704

 

Other finance receivables, at fair market value

 

81,504

 

51,945

 

VIE finance receivables, net of allowances for losses of $7,426 and $6,443, respectively

 

114,453

 

117,826

 

Other finance receivables, net of allowances for losses of $2,031 and $1,899, respectively

 

18,435

 

15,166

 

Notes receivable, at fair market value

 

 

5,610

 

Other receivables, net of allowances for losses of $252 and $243, respectively

 

12,281

 

13,529

 

Fixed assets, net of accumulated depreciation of $5,516 and $4,544, respectively

 

3,414

 

3,112

 

Intangible assets, net of accumulated amortization of $19,728 and $17,781, respectively

 

45,980

 

47,878

 

Goodwill

 

84,993

 

84,993

 

Marketable securities

 

106,490

 

121,954

 

Deferred tax assets, net

 

 

1,830

 

Other assets

 

34,980

 

41,151

 

Total Assets

 

$

4,971,572

 

$

4,472,097

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Accounts payable

 

$

7,987

 

$

3,903

 

Accrued expenses

 

24,639

 

21,181

 

Accrued interest

 

17,113

 

14,485

 

VIE derivative liabilities, at fair market value

 

70,016

 

70,296

 

VIE borrowings under revolving credit facilities and other similar borrowings

 

25,358

 

41,274

 

VIE long-term debt

 

183,310

 

150,802

 

VIE long-term debt issued by securitization and permanent financing trusts, at fair market value

 

3,836,856

 

3,431,283

 

Term loan payable

 

436,433

 

434,184

 

Other liabilities

 

6,965

 

7,646

 

Deferred tax liabilities, net

 

15,688

 

1,707

 

Installment obligations payable

 

106,490

 

121,954

 

Total Liabilities

 

$

4,730,855

 

$

4,298,715

 

 

 

 

 

 

 

Class A common stock, par value $0.00001 per share; 500,000,000 shares authorized; Issued and outstanding at September 30, 2014 - 14,347,143 and 14,255,194; 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 September 30, 2014 - 10,680,530; 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 September 30, 2014 and December 31, 2013 - 0

 

 

 

Additional paid-in-capital

 

94,059

 

70,236

 

Retained earnings (accumulated deficit)

 

13,805

 

(5,577

)

Accumulated other comprehensive income

 

 

612

 

 

 

$

107,864

 

$

65,271

 

Less: Treasury stock at cost; purchased at September 30, 2014 - 91,949; December 31, 2013 - 3,929

 

(139

)

 

Total stockholders’ equity, The J.G. Wentworth Company

 

107,725

 

65,271

 

Non-controlling interests

 

132,992

 

108,111

 

Total Stockholders’ Equity

 

$

240,717

 

$

173,382

 

Total Liabilities and Stockholders’ Equity

 

$

4,971,572

 

$

4,472,097

 

 



 

Schedule B

 

The J.G. Wentworth Company

(Prior to November 14, 2013, J.G. Wentworth, LLC and Subsidiaries)

Condensed Consolidated Statements of Operations - Unaudited

(In thousands, except for shares and per share data)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

REVENUES

 

 

 

 

 

 

 

 

 

Interest income

 

$

44,644

 

$

45,710

 

$

139,104

 

$

126,293

 

Unrealized gains on VIE and other finance receivables, long-term debt, and derivatives

 

63,731

 

50,226

 

221,359

 

214,068

 

Gain (loss) on swap terminations, net

 

(54

)

525

 

(628

)

351

 

Servicing, broker, and other fees

 

1,049

 

1,156

 

3,221

 

3,691

 

Realized and unrealized gains (losses) on marketable securities, net

 

(2,615

)

5,525

 

1,741

 

10,523

 

Realized gain (loss) on notes receivable, at fair value

 

 

 

2,098

 

(1,862

)

Gain on debt extinguishment

 

270

 

 

270

 

 

Other

 

(1

)

(4

)

(63

)

(57

)

Total Revenues

 

$

107,024

 

$

103,138

 

$

367,102

 

$

353,007

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

Advertising

 

$

18,416

 

$

17,862

 

$

52,341

 

$

51,665

 

Interest expense

 

48,813

 

54,005

 

150,743

 

139,974

 

Compensation and benefits

 

11,096

 

9,100

 

30,865

 

32,494

 

General and administrative

 

4,858

 

4,519

 

13,941

 

14,881

 

Professional and consulting

 

4,520

 

4,807

 

13,482

 

13,906

 

Debt issuance

 

2,936

 

2,583

 

5,956

 

5,655

 

Securitization debt maintenance

 

1,551

 

1,543

 

4,672

 

4,526

 

Provision for losses on finance receivables

 

1,055

 

1,690

 

3,273

 

4,374

 

Depreciation and amortization

 

961

 

1,467

 

3,163

 

4,231

 

Installment obligations expense (income), net

 

(2,047

)

6,301

 

3,567

 

12,820

 

Total Expenses

 

$

92,159

 

$

103,877

 

$

282,003

 

$

284,526

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

$

14,865

 

$

(739

)

$

85,099

 

$

68,481

 

Provision for income taxes

 

2,176

 

146

 

16,169

 

1,301

 

Net Income (Loss)

 

12,689

 

$

(885

)

68,930

 

$

67,180

 

Less: Net income attributable to non-controlling interests

 

8,597

 

 

 

49,548

 

 

 

Net Income Attributable to The J.G. Wentworth Company

 

$

4,092

 

 

 

$

19,382

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of Class A common stock outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

13,095,194

 

 

 

12,438,143

 

 

 

Diluted

 

13,098,995

 

 

 

12,440,327

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to stockholders of Class A common stock of The J.G. Wentworth Company

 

 

 

 

 

 

 

 

 

Basic

 

$

0.31

 

 

 

$

1.56

 

 

 

Diluted

 

$

0.31

 

 

 

$

1.56

 

 

 

 



 

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, or 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, Adjusted Total 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, Adjusted Total 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 Adjusted Total Revenue and Spread Revenue, for the three and nine months ended September 30, 2014 and 2013 is provided below.  Certain prior year numbers have been reclassified to conform with current year presentation.

 



 

Schedule C

 

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

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

 12,689

 

$

 (885)

 

$

 68,930

 

$

 67,180

 

 

 

 

 

 

 

 

 

 

 

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

 

(12,392

)

(1,752

)

(59,649

)

(48,413

)

Elimination of interest income from securitized finance receivables permanent financing trusts

 

(40,188

)

(40,846

)

(125,532

)

(110,596

)

Interest income on retained interests in finance receivables

 

5,168

 

4,716

 

15,138

 

13,841

 

Servicing income on securitized finance receivables

 

1,323

 

1,388

 

3,823

 

4,245

 

Elimination of interest expense on long-term debt related to securitization and permanent financing trusts

 

34,162

 

35,508

 

107,660

 

93,463

 

Professional fees relating to securitizations

 

1,551

 

1,611

 

4,672

 

4,635

 

Other adjustments:

 

 

 

 

 

 

 

 

 

Share based compensation

 

431

 

441

 

1,731

 

1,511

 

Income tax provision

 

2,176

 

146

 

16,169

 

1,301

 

Severance, M & A, and consulting expenses

 

2,296

 

1,072

 

2,971

 

6,421

 

Other non-recurring items

 

 

 

(1,401

)

1,862

 

Adjusted Net Income

 

$

7,216

 

$

1,399

 

$

34,512

 

$

35,450

 

 

 

 

 

 

 

 

 

 

 

Other Data:

 

 

 

 

 

 

 

 

 

Securitized Product Total Receivables Balance (TRB) Purchases (1)

 

$

228,915

 

$

254,376

 

$

704,966

 

$

731,976

 

Life Contingent Purchases

 

28,471

 

40,165

 

86,483

 

117,265

 

Presettlement Fundings

 

5,910

 

4,785

 

20,134

 

15,302

 

Total TRB Purchases

 

$

263,296

 

$

299,326

 

$

811,583

 

$

864,543

 

Adjusted Net Income

 

$

7,216

 

$

1,399

 

$

34,512

 

$

35,450

 

Adjusted Net Income TRB Margin (2)

 

2.74

%

0.47

%

4.25

%

4.10

%

 

 

 

 

 

 

 

 

 

 

Company retained interests in finance receivables at fair market value

 

$

304,022

 

$

239,770

 

 

 

 

 

 


(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.

 



 

Schedule D

 

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)

 

 

 

 

 

Adjustments

 

Interest

 

 

 

 

 

Severance

 

Reclassification

 

 

 

 

 

 

 

Q3 2014

 

to reflect

 

Income on

 

Share

 

 

 

M&A

 

Associated with

 

Other

 

Q3 2014

 

 

 

GAAP

 

deconsolidation

 

Retained

 

Based

 

Income

 

and

 

Installment

 

Nonrecurring

 

Adjusted

 

 

 

Results

 

of securitizations

 

Interests

 

Compensation

 

Tax

 

Consulting

 

Obligation Payable

 

Items

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

44,644

 

$

(40,188

)

$

5,168

 

 

 

 

 

 

 

$

(568

)

$

 

$

9,056

 

Unrealized gains on VIE and other finance receivables, long-term debt and derivatives

 

63,731

 

(12,392

)

 

 

 

 

 

 

 

 

 

 

 

 

51,339

 

Loss on swap terminations, net

 

(54

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(54

)

Servicing, broker, and other fees

 

1,049

 

1,323

 

 

 

 

 

 

 

 

 

 

 

 

 

2,372

 

Realized and unrealized losses on marketable securities, net

 

(2,615

)

 

 

 

 

 

 

 

 

 

 

2,615

 

 

 

 

Realized gain on notes receivable, at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on debt extinguishment

 

270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

270

 

Other

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

Total Revenues

 

$

107,024

 

$

(51,257

)

$

5,168

 

$

 

$

 

$

 

$

2,047

 

$

 

$

62,982

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising

 

$

18,416

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

18,416

 

Interest expense

 

48,813

 

(34,162

)

 

 

 

 

 

 

 

 

 

 

 

 

14,651

 

Compensation and benefits

 

11,096

 

 

 

 

 

(431

)

 

 

(1,787

)

 

 

 

 

8,878

 

General and administrative

 

4,858

 

 

 

 

 

 

 

 

 

(320

)

 

 

 

 

4,538

 

Professional and consulting

 

4,520

 

 

 

 

 

 

 

 

 

(189

)

 

 

 

4,331

 

Debt issuance

 

2,936

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,936

 

Securitization debt maintenance

 

1,551

 

(1,551

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for losses on finance receivables

 

1,055

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,055

 

Depreciation and amortization

 

961

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

961

 

Installment obligations income, net

 

(2,047

)

 

 

 

 

 

 

 

 

 

 

2,047

 

 

 

 

Total Expenses

 

$

92,159

 

$

(35,713

)

$

 

$

(431

)

$

 

$

(2,296

)

$

2,047

 

$

 

$

55,766

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

14,865

 

$

(15,544

)

$

5,168

 

$

431

 

$

 

$

2,296

 

$

 

$

 

$

7,216

 

Provision for income taxes

 

2,176

 

 

 

 

 

 

 

(2,176

)

 

 

 

 

 

 

 

Net Income

 

$

12,689

 

$

(15,544

)

$

5,168

 

$

431

 

$

2,176

 

$

2,296

 

$

 

$

 

$

7,216

 

 


 


 

Schedule E

 

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)

 

 

 

 

 

Adjustments

 

Interest

 

 

 

 

 

Severance

 

Reclassification

 

 

 

 

 

 

 

Q3 2013

 

to reflect

 

Income on

 

Share

 

 

 

M&A

 

Associated with

 

Other

 

Q3 2013

 

 

 

GAAP

 

deconsolidation

 

Retained

 

Based

 

Income

 

and

 

Installment

 

Nonrecurring

 

Adjusted

 

 

 

Results

 

of securitizations

 

Interests

 

Compensation

 

Tax

 

Consulting

 

Obligation Payable

 

Items

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

45,710

 

$

(40,846

)

$

4,716

 

 

 

 

 

 

 

$

(776

)

 

 

$

8,804

 

Unrealized gains on VIE and other finance receivables, long-term debt and derivatives

 

50,226

 

(1,752

)

 

 

 

 

 

 

 

 

 

 

 

 

48,474

 

Gain on swap terminations, net

 

525

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

525

 

Servicing, broker, and other fees

 

1,156

 

1,388

 

 

 

 

 

 

 

 

 

 

 

 

 

2,544

 

Realized and unrealized gains on marketable securities, net

 

5,525

 

 

 

 

 

 

 

 

 

 

 

(5,525

)

 

 

 

Realized loss on notes receivable, at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

Total Revenues

 

$

103,138

 

$

(41,210

)

$

4,716

 

$

 

$

 

$

 

$

(6,301

)

$

 

$

60,343

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising

 

$

17,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

17,862

 

Interest expense

 

54,005

 

(35,508

)

 

 

 

 

 

 

 

 

 

 

 

 

18,497

 

Compensation and benefits

 

9,100

 

 

 

 

 

(441

)

 

 

 

 

 

 

 

 

8,659

 

General and administrative

 

4,519

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,519

 

Professional and consulting

 

4,807

 

(31

)

 

 

 

 

 

 

(1,072

)

 

 

 

 

3,704

 

Debt issuance

 

2,583

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,583

 

Securitization debt maintenance

 

1,543

 

(1,543

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for losses on finance receivables

 

1,690

 

(37

)

 

 

 

 

 

 

 

 

 

 

 

 

1,653

 

Depreciation and amortization

 

1,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,467

 

Installment obligations expense, net

 

6,301

 

 

 

 

 

 

 

 

 

 

 

(6,301

)

 

 

 

Total Expenses

 

$

103,877

 

$

(37,119

)

$

 

$

(441

)

$

 

$

(1,072

)

$

(6,301

)

$

 

$

58,944

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

$

(739

)

$

(4,091

)

$

4,716

 

$

441

 

$

 

$

1,072

 

$

 

$

 

$

1,399

 

Provision for income taxes

 

146

 

 

 

 

 

 

 

(146

)

 

 

 

 

 

 

 

Net Income (Loss)

 

$

(885

)

$

(4,091

)

$

4,716

 

$

441

 

$

146

 

$

1,072

 

$

 

$

 

$

1,399

 

 



 

Schedule F

 

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)

 

 

 

 

 

Adjustments

 

Interest

 

 

 

 

 

Severance

 

Reclassification

 

 

 

 

 

 

 

YTD 2014

 

to reflect

 

Income on

 

Share

 

 

 

M&A

 

Associated with

 

Other

 

YTD 2014

 

 

 

GAAP

 

deconsolidation

 

Retained

 

Based

 

Income

 

and

 

Installment

 

Nonrecurring

 

Adjusted

 

 

 

Results

 

of securitizations

 

Interests

 

Compensation

 

Tax

 

Consulting

 

Obligation Payable

 

Items

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

139,104

 

$

(125,532

)

$

15,138

 

 

 

 

 

 

 

$

(1,826

)

$

6

 

$

26,890

 

Unrealized gains on VIE and other finance receivables, long-term debt and derivatives

 

221,359

 

(59,649

)

 

 

 

 

 

 

 

 

 

 

 

 

161,710

 

Loss on swap terminations, net

 

(628

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(628

)

Servicing, broker, and other fees

 

3,221

 

3,823

 

 

 

 

 

 

 

 

 

 

 

 

 

7,044

 

Realized and unrealized gains on marketable securities, net

 

1,741

 

 

 

 

 

 

 

 

 

 

 

(1,741

)

 

 

 

Realized gain on notes receivable, at fair value

 

2,098

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,098

)

 

Gain on debt extinguishment

 

270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

270

 

Other

 

(63

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(63

)

Total Revenues

 

$

367,102

 

$

(181,358

)

$

15,138

 

$

 

$

 

$

 

$

(3,567

)

$

(2,092

)

$

195,223

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising

 

$

52,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

52,341

 

Interest expense

 

150,743

 

(107,660

)

 

 

 

 

 

 

 

 

 

 

 

 

43,083

 

Compensation and benefits

 

30,865

 

 

 

 

 

(1,731

)

 

 

(1,900

)

 

 

 

 

27,234

 

General and administrative

 

13,941

 

 

 

 

 

 

 

 

 

(234

)

 

 

 

 

13,707

 

Professional and consulting

 

13,482

 

 

 

 

 

 

 

 

 

(837

)

 

 

(691

)

11,954

 

Debt issuance

 

5,956

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,956

 

Securitization debt maintenance

 

4,672

 

(4,672

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for losses on finance receivables

 

3,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,273

 

Depreciation and amortization

 

3,163

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,163

 

Installment obligations expense, net

 

3,567

 

 

 

 

 

 

 

 

 

 

 

(3,567

)

 

 

 

Total Expenses

 

$

282,003

 

$

(112,332

)

$

 

$

(1,731

)

$

 

$

(2,971

)

$

(3,567

)

$

(691

)

$

160,711

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

85,099

 

$

(69,026

)

$

15,138

 

$

1,731

 

$

 

$

2,971

 

$

 

$

(1,401

)

$

34,512

 

Provision for income taxes

 

16,169

 

 

 

 

 

 

 

(16,169

)

 

 

 

 

 

 

 

Net Income

 

$

68,930

 

$

(69,026

)

$

15,138

 

$

1,731

 

$

16,169

 

$

2,971

 

$

 

$

(1,401

)

$

34,512

 

 



 

Schedule G

 

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)

 

 

 

 

 

Adjustments

 

Interest

 

 

 

 

 

Severance

 

Reclassification

 

 

 

 

 

 

 

YTD 2013

 

to reflect

 

Income on

 

Share

 

 

 

M&A

 

Associated with

 

Other

 

YTD 2013

 

 

 

GAAP

 

deconsolidation

 

Retained

 

Based

 

Income

 

and

 

Installment

 

Nonrecurring

 

Adjusted

 

 

 

Results

 

of securitizations

 

Interests

 

Compensation

 

Tax

 

Consulting

 

Obligation Payable

 

Items

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

126,293

 

$

(110,596

)

$

13,841

 

 

 

 

 

 

 

$

(2,298

)

 

 

$

27,240

 

Unrealized gains on VIE and other finance receivables, long-term debt and derivatives

 

214,068

 

(48,413

)

 

 

 

 

 

 

 

 

 

 

 

 

165,655

 

Gain on swap terminations, net

 

351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

351

 

Servicing, broker, and other fees

 

3,691

 

4,245

 

 

 

 

 

 

 

 

 

 

 

 

 

7,936

 

Realized and unrealized gains on marketable securities, net

 

10,523

 

 

 

 

 

 

 

 

 

 

 

(10,522

)

 

 

1

 

Realized loss on notes receivable, at fair value

 

(1,862

)

 

 

 

 

 

 

 

 

 

 

 

 

1,862

 

 

Other

 

(57

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(57

)

Total Revenues

 

$

353,007

 

$

(154,764

)

$

13,841

 

$

 

$

 

$

 

$

(12,820

)

$

1,862

 

$

201,126

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertising

 

$

51,665

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

51,665

 

Interest expense

 

139,974

 

(93,463

)

 

 

 

 

 

 

 

 

 

 

 

 

46,511

 

Compensation and benefits

 

32,494

 

 

 

 

 

(1,511

)

 

 

(2,692

)

 

 

 

 

28,291

 

General and administrative

 

14,881

 

 

 

 

 

 

 

 

 

(610

)

 

 

 

 

14,271

 

Professional and consulting

 

13,906

 

(71

)

 

 

 

 

 

 

(3,119

)

 

 

 

 

10,716

 

Debt issuance

 

5,655

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,655

 

Securitization debt maintenance

 

4,526

 

(4,527

)

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

Provision for losses on finance receivables

 

4,374

 

(37

)

 

 

 

 

 

 

 

 

 

 

 

 

4,337

 

Depreciation and amortization

 

4,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,231

 

Installment obligations expense, net

 

12,820

 

 

 

 

 

 

 

 

 

 

 

(12,820

)

 

 

 

Total Expenses

 

$

284,526

 

$

(98,098

)

$

 

$

(1,511

)

$

 

$

(6,421

)

$

(12,820

)

$

 

$

165,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

$

68,481

 

$

(56,666

)

$

13,841

 

$

1,511

 

$

 

$

6,421

 

$

 

$

1,862

 

$

35,450

 

Provision for income taxes

 

1,301

 

 

 

 

 

 

 

(1,301

)

 

 

 

 

 

 

 

Net Income

 

$

67,180

 

$

(56,666

)

$

13,841

 

$

1,511

 

$

1,301

 

$

6,421

 

$

 

$

1,862

 

$

35,450

 

 



 

Schedule H

 

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

 

TRB:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securitized Product Total Receivables Balance (TRB) Purchases (1)

 

$

230,705

 

$

246,895

 

$

254,376

 

$

214,437

 

$

223,507

 

$

252,544

 

$

228,915

 

Life Contingent Purchases

 

34,222

 

42,878

 

40,165

 

39,054

 

29,827

 

28,185

 

28,471

 

Presettlement Fundings

 

5,444

 

5,073

 

4,785

 

6,997

 

7,247

 

6,977

 

5,910

 

Total

 

$

270,371

 

$

294,846

 

$

299,326

 

$

260,488

 

$

260,581

 

$

287,706

 

$

263,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ANI Basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

$

76,850

 

$

63,933

 

$

60,343

 

$

71,603

 

$

63,131

 

$

69,110

 

$

62,982

 

Total Expenses

 

$

53,323

 

$

53,409

 

$

58,944

 

$

60,439

 

$

53,010

 

$

51,935

 

$

55,766

 

ANI

 

$

23,527

 

$

10,524

 

$

1,399

 

$

11,164

 

$

10,121

 

$

17,175

 

$

7,216

 

ANI Margin (2)

 

30.6

%

16.5

%

2.3

%

15.6

%

16.0

%

24.9

%

11.5

%

ANI TRB Margin (3)

 

8.7

%

3.6

%

0.5

%

4.3

%

3.9

%

6.0

%

2.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Spread Revenue (4)

 

$

64,727

 

$

52,281

 

$

48,999

 

$

44,637

 

$

51,846

 

$

57,951

 

$

51,285

 

TRB Spread Margin (5)

 

24.4

%

18.0

%

16.6

%

17.6

%

20.5

%

20.6

%

19.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Basis:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

183,208

 

$

66,661

 

$

103,138

 

$

106,556

 

$

136,590

 

$

123,488

 

$

107,024

 

Expenses (6)

 

$

93,503

 

$

88,301

 

$

104,023

 

$

111,918

 

$

102,057

 

$

101,780

 

$

94,335

 

Net Income (Loss)

 

$

89,705

 

$

(21,640

)

$

(885

)

$

(5,362

)

$

34,533

 

$

21,708

 

$

12,689

 

Net Income (Loss) Attributable to The J.G. Wentworth Company

 

 

 

 

 

 

 

$

(5,577

)

$

9,022

 

$

6,268

 

$

4,092

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Diluted Shares

 

 

 

 

 

 

 

10,395,574

 

11,642,283

 

12,562,042

 

13,098,995

 

All-in Shares (7)

 

 

 

 

 

 

 

14,967,315

 

29,556,961

 

29,507,944

 

29,331,537

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

 

 

 

 

 

 

$

(0.54

)

$

0.77

 

$

0.50

 

$

0.31

 

ANI EPS (8)

 

 

 

 

 

 

 

$

0.75

 

$

0.34

 

$

0.58

 

$

0.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residual Asset Balance

 

$

249,345

 

$

234,918

 

$

239,770

 

$

239,591

 

$

280,208

 

$

294,637

 

$

304,022

 

Residual Loan Balance

 

$

70,000

 

$

70,000

 

$

69,560

 

$

68,785

 

$

67,989

 

$

107,540

 

$

107,329

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10-Year Swap Rate

 

2.01

%

2.70

%

2.77

%

3.09

%

2.84

%

2.63

%

2.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term Loan Interest Expense

 

$

7,673

 

$

12,287

 

$

14,595

 

$

13,457

 

$

9,917

 

$

10,020

 

$

10,082

 

ANI Interest Expense

 

$

12,267

 

$

15,748

 

$

18,497

 

$

18,298

 

$

13,945

 

$

14,487

 

$

14,651

 

 


(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)

(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.

(8)       ANI EPS is defined as ANI / All-in Shares

 

Source: The J.G. Wentworth Company

 

Investor Relations:

Jennifer Gambol

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