Attached files
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| 8-K - CURRENT REPORT - GWG Holdings, Inc. | f8k081115_gwgholdings.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE:
GWG Holdings, Inc. Announces Second Quarter Financial Results
Minneapolis, MN (August 11, 2015) – GWG Holdings, Inc. (NASDAQ: GWGH) (“GWG” or the “Company”), a specialty finance company and leader in the life insurance secondary market, today announced financial results for the three and six months ending June 30, 2015.
Highlights
GWGH reports the following highlights:
| ● | Quarterly revenue growth of 56% and 131% compared to the three and six month periods one year ago. |
| ● | Portfolio growth of $51.3 million in face value to over $806 million in face value of policy benefits, net of matured policy benefit payments as of June 30, 2015. |
| ● | Direct policy-sourcing efforts grew significantly, with 28% of the life insurance policies in the Company’s origination pipeline coming from direct sources as of August 3, 2015. |
| ● | Financial professionals approved to source life insurance policies for the Company increased to over 850 as of June 30, 2015. |
| ● | Financial professionals approved to sell the Company’s $1,000,000,000 high yield, non-correlated L Bond Offering increased by 1,700, bringing the total to approximately 3,100 as of August 3, 2015. |
| ● | Total liquidity position of $82.0 million – cash, policy benefit receivables plus senior lending facility surplus – was available for life insurance policy acquisitions and premium payments as of June 30, 2015. |
Q2 Results Call
The Company will host an informational call on Tuesday, August 11, 2015, at 5 p.m. EDT to discuss the quarterly results.
| Date: | Tuesday, August 11, 2015 | |
| Time: | 5 p.m. EDT | |
| Dial In: | (844) 423-9895 (domestic) / (716) 247-5865 (international) | |
| Passcode: | 91904457 | |
| Webcast: | Q2 2015 GWG Holdings, Inc. Earnings Conference Call | |
| Pre-Registration: | Please dial in at least 10 minutes in advance to register for the call. |
| GWG Press Release | Page 1 of 7 |
Three Months Ended June 30, 2015
Gross revenue for the quarter increased 56% versus the same period in 2014 to $8.6 million, a result driven by the recognition of $0.7 million gross policy benefits and $14.0 million of fair value gain in the quarter, which was related both to an increase in price competition experienced in the life insurance secondary market and the increase in the Company’s portfolio of life insurance policies net of maturities. Total expenses for the quarter ending June 30, 2015 were $12.0 million versus $9.4 million for the same period one year ago. The increase was driven by increased interest expense, continued investment in the Company’s marketing, branding and technology infrastructure as well as increased compensation and benefits costs related to the Company’s overall growth objectives.
Total net loss attributable to common shareholders was $1.9 million or $0.32 per both basic and fully diluted share, for the three months ended June 30, 2015, compared to a net loss of $2.7 million, or $0.59 per basic and fully diluted share, for the same period in 2014. The weighted average basic and fully diluted shares outstanding for the quarter was 5.9 million.
“All of the key drivers of long term growth – life insurance portfolio growth, expansion of direct policy origination, increased capital sources and awareness of the life settlement transaction among the senior population – were intact and evident in this quarter’s performance,” said William Acheson, GWG Holdings, Inc.’s Chief Financial Officer. “We continue to invest in high yield assets backed by investment-grade credits while providing owners of life insurance an unmatched value proposition, a true win-win.”
“We continue to make progress in positioning GWG as the premier provider of value-added products and services to the financial advisor community by developing a vertically integrated specialty finance company to address a growing opportunity in the life insurance secondary market,” said Jon Sabes, GWG Holdings, Inc.’s Chief Executive Officer. “We have made the investments and developed the strategies that enable consumers to recycle their unwanted life insurance into productive non-correlated investment assets. This unique business model provides seniors with valuable post-retirement financial solutions and investors with yield derived from assets whose performance is not tied to the stock market, commodities, or real estate. We are on the threshold of creating something great, which we expect will lead to explosive growth for the investors of GWGH.”
A Powerful Origination Model
“We have continued to sharpen our service offerings and marketing tools available to financial professionals who market our products and services, said Michael Freedman, President of GWG Holdings. “GWG’s Appointed Agent Program empowers financial professionals to bring the secondary market’s value proposition directly to consumers owning life insurance and we have made significant progress in our direct-to-consumer lead generation and origination protocols and practices. These key factors produce a powerful origination model that we believe will deliver consistent growth and value to all of our stakeholders.”
| GWG Press Release | Page 2 of 7 |
Life Insurance Portfolio Highlights
Life Insurance Portfolio Summary
| Total portfolio face value of policy benefits | $ | 806,274,000 | |||
| Average face value per policy | $ | 2,567,000 | |||
| Average face value per insured life | $ | 2,819,000 | |||
| Average age of insured (yrs.) * | 82.9 | ||||
| Average life expectancy estimate (yrs.) * | 6.56 | ||||
| Total number of policies | 314 | ||||
| Number of unique lives | 286 | ||||
| Demographics | 68% Males; 32% Females | ||||
| Number of smokers | 4 | ||||
| Largest policy as % of total portfolio | 1.24 | % | |||
| Average policy as % of total portfolio | 0.32 | % | |||
| Average Annual Premium as % of face value | 3.34 | % | |||
* Averages presented in the table are weighted averages.
Distribution of Policy Benefits by Current Age of Insured
| Min Age | Max Age | Policy Benefits | Weighted Average Life Expectancy (yrs.) | Distribution | ||||||||||||||
| 90 | 94 | $ | 47,497,000 | 3.02 | 5.89 | % | ||||||||||||
| 85 | 89 | 236,573,000 | 4.83 | 29.34 | % | |||||||||||||
| 80 | 84 | 278,567,000 | 6.92 | 34.55 | % | |||||||||||||
| 75 | 79 | 190,793,000 | 8.30 | 23.67 | % | |||||||||||||
| 70 | 74 | 42,437,000 | 9.90 | 5.26 | % | |||||||||||||
| 66 | 69 | 10,407,000 | 7.07 | 1.29 | % | |||||||||||||
| Total | $ | 806,274,000 | 6.56 | 100.00 | % | |||||||||||||
Distribution of Policies by Current Age of Insured
| Min Age | Max Age | Policies | Weighted Average Life Expectancy (yrs.) | Distribution | ||||||||||||||
| 90 | 94 | 22 | 3.02 | 7.01 | % | |||||||||||||
| 85 | 89 | 99 | 4.83 | 31.53 | % | |||||||||||||
| 80 | 84 | 103 | 6.92 | 32.79 | % | |||||||||||||
| 75 | 79 | 61 | 8.30 | 19.43 | % | |||||||||||||
| 70 | 74 | 20 | 9.90 | 6.37 | % | |||||||||||||
| 66 | 69 | 9 | 7.07 | 2.87 | % | |||||||||||||
| Total | 314 | 6.56 | 100.00 | % | ||||||||||||||
| GWG Press Release | Page 3 of 7 |
Life Insurance Portfolio Cash Flow vs Premium Payments
| Quarter End Date | Portfolio Face Amount | 12-Month Trailing Benefits Collected | 12-Month Trailing Premiums Paid | 12-Month Trailing Benefits/Premium Coverage Ratio | ||||||||||||
| March 31, 2012 | $ | 482,455,000 | $ | 4,203,000 | $ | 14,977,000 | 28.06 | % | ||||||||
| June 30, 2012 | 489,255,000 | 8,703,000 | 15,412,000 | 56.47 | % | |||||||||||
| September 30, 2012 | 515,661,000 | 7,833,000 | 15,837,000 | 49.46 | % | |||||||||||
| December 31, 2012 | 572,245,000 | 7,350,000 | 16,597,000 | 44.28 | % | |||||||||||
| March 31, 2013 | 639,755,000 | 11,350,000 | 18,044,000 | 62.90 | % | |||||||||||
| June 30, 2013 | 650,655,000 | 13,450,000 | 19,182,000 | 70.11 | % | |||||||||||
| September 30, 2013 | 705,069,000 | 18,450,000 | 20,279,000 | 90.98 | % | |||||||||||
| December 31, 2013 | 740,648,000 | 16,600,000 | 21,733,000 | 76.38 | % | |||||||||||
| March 31, 2014 | 771,940,000 | 12,600,000 | 21,930,000 | 57.46 | % | |||||||||||
| June 30, 2014 | 784,652,000 | 6,300,000 | 22,598,000 | 27.88 | % | |||||||||||
| September 30, 2014 | 787,964,000 | 4,300,000 | 23,121,000 | 18.60 | % | |||||||||||
| December 31, 2014 | 779,099,000 | 18,050,000 | 23,265,000 | 77.58 | % | |||||||||||
| March 31, 2015 | 754,942,000 | 46,675,000 | 23,786,000 | 196.23 | % | |||||||||||
| June 30, 2015 | 806,274,000 | 47,125,000 | 24,348,000 | 193.55 | % | |||||||||||
For the dates set above, the table illustrates the total face value of policy benefits owned, the trailing twelve months of life insurance policy benefits recognized and premiums paid on our portfolio. The trailing 12-month benefits/premium coverage ratio indicates the ratio of policy benefits recognized to premiums paid over the trailing 12-month period from our portfolio of life insurance policies.
About GWG Holdings, Inc.
GWG Holdings, Inc. (NASDAQ: GWGH) is a specialty finance company and leader in the life insurance secondary market. GWG, through its subsidiaries, purchases life insurance policies from seniors who no longer want, need or can afford their policies. Since 2006, GWG has purchased more than $1.7 billion in life insurance policy benefits and paid seniors over $291 million for their policies – approximately $274 million more than the surrender or lapse value offered by insurance carriers. GWG’s strategy is to originate and manage a diverse portfolio of life insurance policies that generate yields that exceed the costs to finance the policies (in aggregate). GWG finances the purchase and maintenance of a portfolio of policies primarily through a fixed income alternative investment product that is offered through independent broker-dealers and registered investment advisors nationwide. GWG’s goal is to generate financial returns for GWG’s investors and shareholders while providing valuable post-retirement financial solutions to seniors.
For more information about GWG, email info@gwglife.com or visit www.gwglife.com.
Contact
Rubenstein Associates
Stefan Prelog, Senior Vice President
Tel: (212) 843-8076
sprelog@rubenstein.com
| GWG Press Release | Page 4 of 7 |
GWG Holdings, Inc.
Rose Reifsnyder, Director of Communications and Media Relations
Tel: (612) 746-0941
Email: rreifsnyder@gwglife.com
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this press release regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management are forward-looking statements. The words "anticipate," "believe," "estimate," "expect," "intend," "may," "plan," "would," “target” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about our estimates regarding future revenue and financial performance, our ability to avail ourselves of market opportunities, the efficacy of our business model, our ability to successfully execute on our business model and our understanding of the recognition of our investment product and service offerings to investors and insured persons, respectively. We may not actually achieve the expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the expectations disclosed in the forward-looking statements we make. More information about potential factors that could affect our business and financial results is contained in our filings with the Securities and Exchange Commission, specifically including our registration statement on Form S-1 filed on March 13, 2015 and May 5, 2015, and any amendments and post-effective amendments thereto. Additional information will also be set forth in our future quarterly reports on Form 10-Q, annual reports on Form 10-K and other filings that we make with the Securities and Exchange Commission. We do not intend, and undertake no duty, to release publicly any updates or revisions to any forward-looking statements contained herein.
| GWG Press Release | Page 5 of 7 |
GWG HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| June
30, 2015 | December 31, 2014 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 38,198,189 | $ | 30,662,704 | ||||
| Restricted cash | 7,923,190 | 4,296,053 | ||||||
| Policy benefits receivable | 2,500,000 | 1,750,000 | ||||||
| Investment in life settlements, at fair value | 301,498,527 | 282,883,010 | ||||||
| Other assets | 6,623,561 | 3,478,762 | ||||||
| TOTAL ASSETS | $ | 356,743,467 | $ | 323,070,529 | ||||
| LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| LIABILITIES | ||||||||
| Revolving credit facility | $ | 65,011,048 | $ | 72,161,048 | ||||
| Series I Secured Notes payable | 24,347,531 | 27,616,578 | ||||||
| L Bonds | 223,118,514 | 182,782,884 | ||||||
| Interest payable | 11,593,220 | 11,128,519 | ||||||
| Accounts payable and accrued expenses | 2,071,879 | 1,718,009 | ||||||
| Deferred taxes, net | 6,525,336 | 5,273,555 | ||||||
| TOTAL LIABILITIES | 332,667,528 | 300,680,593 | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| CONVERTIBLE PREFERRED STOCK | ||||||||
| (par value $0.001; shares
authorized 40,000,000; shares outstanding 2,746,412 and 2,738,966; liquidation preference of $20,598,000 and $20,542,000, respectively) | 20,559,823 | 20,527,866 | ||||||
| COMMON STOCK | ||||||||
| Common stock (par value $0.001: shares authorized
210,000,000; shares issued and outstanding is 5,933,041 and 5,870,193 on June 30, 2015 and December 31, 2014, respectively) | 5,933 | 5,870 | ||||||
| Additional paid-in capital | 16,900,193 | 16,257,686 | ||||||
| Accumulated deficit | (13,390,010 | ) | (14,401,486 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | 24,075,939 | 22,389,936 | ||||||
| TOTAL LIABILITIES & EQUITY (DEFICIT) | $ | 356,743,467 | $ | 323,070,529 | ||||
| GWG Press Release | Page 6 of 7 |
GWG
HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | |||||||||||||
| REVENUE | ||||||||||||||||
| Gain on life settlements, net | $ | 8,473,886 | $ | 5,484,889 | $ | 25,257,295 | $ | 11,001,094 | ||||||||
| Interest and other income | 90,380 | 6,380 | 139,676 | 13,747 | ||||||||||||
| TOTAL REVENUE | 8,564,266 | 5,491,269 | 25,396,971 | 11,014,841 | ||||||||||||
| EXPENSES | ||||||||||||||||
| Employee compensation and benefits | 2,144,725 | 1,178,819 | 3,872,642 | 2,147,564 | ||||||||||||
| Legal and professional fees | 642,931 | 419,337 | 1,166,184 | 826,339 | ||||||||||||
| Interest expense | 7,322,347 | 6,608,043 | 14,498,881 | 12,934,591 | ||||||||||||
| Other expenses | 1,881,321 | 1,188,479 | 3,415,060 | 1,865,784 | ||||||||||||
| TOTAL EXPENSES | 11,991,324 | 9,394,678 | 22,952,767 | 17,774,278 | ||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | (3,427,058 | ) | (3,903,409 | ) | 2,444,204 | (6,759,437 | ) | |||||||||
| INCOME TAX EXPENSE (BENEFIT) | (1,176,643 | ) | (1,316,712 | ) | 1,432,728 | (2,271,570 | ) | |||||||||
| NET INCOME (LOSS) | $ | (2,250,415 | ) | $ | (2,586,697 | ) | $ | 1,011,476 | $ | (4,487,867 | ) | |||||
| (Income) loss attributable to preferred shareholders | 344,847 | (101,271 | ) | 698,003 | (226,984 | ) | ||||||||||
| INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | (1,905,568 | ) | $ | (2,687,968 | ) | $ | 1,709,478 | $ | (4,714,851 | ) | |||||
| NET INCOME (LOSS) PER SHARE | ||||||||||||||||
| Basic | $ | (0.32 | ) | $ | (0.59 | ) | $ | 0.29 | $ | (1.03 | ) | |||||
| Diluted | $ | (0.32 | ) | $ | (0.59 | ) | $ | 0.21 | $ | (1.03 | ) | |||||
| WEIGHTED AVERAGE SHARES OUTSTANDING | ||||||||||||||||
| Basic | 5,876,618 | 4,562,000 | 5,873,423 | 4,562,000 | ||||||||||||
| Diluted | 5,876,618 | 4,562,000 | 7,987,923 | 4,562,000 | ||||||||||||
| GWG Press Release | Page 7 of 7 |