The J.G. Wentworth Company™ Reports Fourth Quarter Results; Adjusted Net Income of $9.1 Million and Total Receivables Balance Purchased of $266 Million Continuing Progress to Become a Diversified Consumer Financial Services Company

RADNOR, Pa.--()--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 fourth quarter of 2014. “I am pleased with the results and how we finished 2014. In addition, we have made significant progress on our growth strategies by announcing our entrance into the Prepaid Payment Products, Personal Lending and Mortgage categories,” said Stewart A. Stockdale, Chief Executive Officer, The J.G. Wentworth Company™.

The following are highlights from the fourth quarter and full year results:

Fourth Quarter Highlights

  • Total Receivables Balance, or TRB, purchases were $266.2 million, as compared to $260.5 million in the fourth quarter of 2013.
  • Adjusted unrealized gains on VIE and other finance receivables, long term debt and derivatives, net of the gain (loss) on swap terminations*, ("Spread Revenue"*), was $52.5 million, as compared to $44.6 million in the fourth quarter of 2013.
  • Adjusted Net Income*, or ANI, decreased to $9.1 million, as compared to $11.2 million in the fourth quarter of 2013, which was driven primarily by the $14.2 million gain on debt extinguishment in the fourth quarter of 2013, offset by lower interest expense in the fourth quarter of 2014.
  • Revenues were $127.3 million, an increase of 19.4% from revenues of $106.6 million in the fourth 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 $27.7 million, as compared to a loss of $5.4 million in the fourth quarter of 2013, due primarily to an increase in revenues, lower interest expense, and the loss on disposal/impairment of fixed assets in 2013.

Full Year Highlights

  • Total Receivables Balance, or TRB, purchases were $1,077.8 million, as compared to $1,125.0 million in 2013.
  • Spread Revenue* was $213.6 million, as compared to $210.6 million in 2013.
  • Adjusted Net Income*, or ANI, decreased to $43.6 million, as compared to $46.6 million in 2013, which was driven primarily by the $14.2 million gain on debt extinguishment in 2013, offset by lower interest expense in 2014.
  • Revenues were $494.4 million, an increase of 7.6% from revenues of $459.6 million in 2013, due primarily to a $47.9 million increase in unrealized gains on VIE and other finance receivables, long-term debt and derivatives and a $14.5 million increase in interest income. This was partially offset by a $14.4 million decrease in realized and unrealized gains on marketable securities, net, and a $14.2 million gain on extinguishment of debt in 2013.
  • Net income increased to $96.6 million, as compared to $61.8 million in 2013, primarily due to an increase in unrealized gains on VIE and other finance receivables, long-term debt and derivatives that resulted from a more favorable movement in the fair value interest rate used to value our finance receivables. These increases were offset by an increase in interest expense.

John R. Schwab, J.G. Wentworth’s Chief Financial Officer, said, “We are excited about the synergies we have created by leveraging our competencies in the fourth quarter. Revenue increased from prior year, which was primarily driven by lower cost of funds and an increase in TRB. We are pleased with 2014 and look forward to further diversifying our business in 2015.”

* 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 twelve month periods ended December 31, 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™

The J.G. Wentworth Company 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 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 fourth quarter and fiscal year 2014 financial results today, March 12, 2015, 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™ Fourth Quarter and Fiscal Year 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™ Fourth Quarter and Fiscal Year 2014 Financial Results may dial Participant conference number: (866) 393-4306, Conference ID: 97929143.

A playback will be available through Thursday, March 19th, 2015. To participate, utilize the dial-in information listed below: Playback conference number: (855) 859-2056, Conference ID: 97929143. 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, 2014, these risks and uncertainties include, among other things: our ability to implement our business strategy; our ability to continue to purchase structured settlement payments and other assets; 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; changes in current tax law relating to the tax treatment of structured settlements; our ability to complete future securitizations or other financings on beneficial terms; 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 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; availability of or increases in the cost of our financing sources relative to our purchase discount rate; changes to state or federal, licensing and regulatory regimes; unfavorable press reports about our business model; our dependence on the effectiveness of our direct response marketing; adverse judicial developments; our ability to successfully enter new lines of business and broaden the scope of our business; potential litigation and regulatory proceedings; changes in our expectations regarding the likelihood, timing or terms of any potential acquisitions described herein; the lack of an established market for the subordinated interest in the receivables that we retain after a securitization is executed; 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 in general; our dependence on a small number of key personnel; our exposure to underwriting risk; our access to personally identifiable confidential information of current and prospective customers and the improper use or failure to protect that information; our computer systems being subject to security and privacy breaches; the public disclosure of the identities of structured settlement holders; our business model being susceptible to litigation; the insolvency of a material number of structured settlement issuers; 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)

Consolidated Balance Sheets

(In thousands, except for per share data)

   

December 31,
2014

December 31,
2013

 
ASSETS
Cash and cash equivalents $ 41,648 $ 39,061
Restricted cash and investments 198,206 109,338
VIE finance receivables, at fair market value 4,422,033 3,818,704
Other finance receivables, at fair market value 101,802 51,945
VIE finance receivables, net of allowances for losses of $7,674 and $6,443, respectively 113,489 117,826
Other finance receivables, net of allowances for losses of $2,454 and $1,899, respectively 17,803 15,166
Notes receivable, at fair market value 5,610
Other receivables, net of allowances for losses of $204 and $243, respectively 14,165 13,529
Fixed assets, net of accumulated depreciation of $5,976 and $4,544, respectively 3,758 3,112
Intangible assets, net of accumulated amortization of $20,273 and $17,781, respectively 45,436 47,878
Goodwill 84,993 84,993
Marketable securities 103,419 121,954
Deferred tax assets 2,170 1,830
Other assets 33,787   41,151  
Total Assets $ 5,182,709   $ 4,472,097  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable $ 5,301 $ 3,903
Accrued expenses 13,955 21,181
Accrued interest 17,416 14,485
VIE derivative liabilities, at fair market value 75,706 70,296
VIE borrowings under revolving credit facilities and other similar borrowings 19,339 41,274
VIE long-term debt 181,558 150,802
VIE long-term debt issued by securitization and permanent financing trusts, at fair market value 4,031,864 3,431,283
Term loan payable 437,183 434,184
Other liabilities 6,677 7,646
Deferred tax liabilities 36,656 1,707
Installment obligations payable 103,419   121,954  
Total Liabilities 4,929,074   4,298,715  
 

Class A common stock, par value $0.00001 per share; 500,000,000 shares authorized; Issued and
outstanding at December 31, 2014 - 15,021,147 and 14,420,392; 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 December 31, 2014 - 9,963,750; 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 December 31, 2014 and December 31, 2013 - 0

Additional paid-in-capital 95,453 70,236
Retained earnings (accumulated deficit) 25,634 (5,577 )
Accumulated other comprehensive income   612  
121,087 65,271
Less: Treasury stock at cost; purchased at December 31, 2014 - 600,755; December 31, 2013 - 3,929 (2,443 )  
Total stockholders’ equity, The J.G. Wentworth Company 118,644 65,271
Non-controlling interests 134,991   108,111  
Total Stockholders’ Equity 253,635   173,382  
Total Liabilities and Stockholders’ Equity $ 5,182,709   $ 4,472,097  
 
 

Schedule B

 

The J.G. Wentworth Company

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

Consolidated Statements of Operations

(In thousands, except for per share data)

   

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2014   2013 2014   2013
REVENUES
Interest income $ 47,854 $ 46,130 $ 186,958 $ 172,423

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

79,343 38,733 300,702 252,801
Gain (loss) on swap terminations, net (151 ) (628 ) 200
Servicing, broker, and other fees 928 1,585 4,149 5,276

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

(853 ) 4,776 888 15,299

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

2,098 (1,862 )
Gain on debt extinguishment, net 14,217 270 14,217
Other 2   1,266   (61 ) 1,209  
Total Revenues 127,274   106,556   494,376   459,563  
 
EXPENSES
Advertising 16,148 18,639 68,489 70,304
Interest expense 50,055 53,061 200,798 193,035
Compensation and benefits 10,243 10,101 41,108 42,595
General and administrative 4,626 5,298 18,567 20,179
Professional and consulting 4,970 4,914 18,452 18,820
Debt issuance 2,727 3,275 8,683 8,930
Securitization debt maintenance 1,489 1,565 6,161 6,091
Provision for losses on finance receivables 1,533 1,321 4,806 5,695
Depreciation and amortization 1,005 1,472 4,168 5,703
Installment obligations expense (income), net 1,755 6,827 5,322 19,647
Loss on disposal/impairment of fixed assets 69   4,200   69   4,200  
Total Expenses 94,620 110,673 376,623 395,199
Income (loss) before income taxes 32,654 (4,117 ) 117,753 64,364
Provision for income taxes 4,971   1,245   21,140     2,546  
Net Income (Loss) 27,683 (5,362 ) 96,613 61,818
Less: Net income attributable to non-controlling interests 15,854   215   65,402     67,395  
Net Income (Loss) Attributable to The J.G. Wentworth Company $ 11,829   $ (5,577 ) $ 31,211   $ (5,577 )
 
Weighted average shares of Class A common stock outstanding:
Basic 14,636,520 10,395,574 12,986,058 10,395,574
Diluted 14,640,860 10,395,574 12,988,781 10,395,574
 

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

Basic $ 0.81 $ (0.54 ) $ 2.40 $ (0.54 )
Diluted $ 0.81 $ (0.54 ) $ 2.40 $ (0.54 )
 

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, ("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, Total Adjusted 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, Total Adjusted 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 Total Adjusted Revenue and Spread Revenue, for the three and twelve months ended December 31, 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
December 31,

Twelve Months Ended
December 31,

2014   2013 2014   2013
       
Net Income (Loss) $ 27,683   $ (5,362 ) $ 96,613   $ 61,818  
 
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

(25,306 ) 6,055 (84,955 ) (42,358 )

Elimination of interest income from securitized finance
receivables permanent financing trusts

(41,356 ) (40,349 ) (166,888 ) (150,945 )

Interest income on retained interests in finance receivables

5,177 4,865 20,315 18,709
Servicing income on securitized finance receivables 1,306 1,303 5,129 5,548

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

35,247 34,763 142,907 128,226

Professional fees relating to securitizations

1,489 1,563 6,161 6,198
Other adjustments:
Share based compensation 653 (60 ) 2,384 1,452
Income tax provision 4,971 1,245 21,140 2,546

Impact of 2014-3 prefunding on unsecuritized finance
receivables

(1,566 ) (1,566 )
Severance, M & A, and consulting expenses 765 1,020 3,736 5,416
Other non-recurring items 18   6,121   (1,383 ) 10,004  
Adjusted Net Income $ 9,081   $ 11,164   $ 43,593   $ 46,614  
 
Other Data:

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

$ 234,084 $ 214,437 $ 939,050 $ 946,413
Life Contingent Purchases 25,107 39,054 111,590 156,319
Presettlement Fundings 7,021   6,997   27,155   22,299  
Total TRB Purchases $ 266,212   $ 260,488   $ 1,077,795   $ 1,125,031  
Adjusted Net Income $ 9,081 $ 11,164 $ 43,593 $ 46,614
Adjusted Net Income TRB Margin (2) 3.41 % 4.29 % 4.04 % 4.14 %
 

Company retained interests in finance receivables at fair
market value

$ 331,395   $ 239,591  
 
(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)

                   

Q4 2014
GAAP
Results

Adjustments
to reflect
deconsolidation
of securitizations

Impact of
2014-3
Prefunding on
Unsecuritized
Finance
Receivables

Interest
Income on
Retained
Interests

Share
Based
Compensation

Income
Tax

Severance
M&A
and
Consulting

Reclassification
Associated with
Installment
Obligation Payable

Other
Non-
recurring
Items

Q4 2014
Adjusted
Net Income

 
REVENUES
Interest income $ 47,854 $ (41,356 ) $ $ 5,177 $ $ $ $ (2,608 ) $ $ 9,067

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

79,343 (25,306 ) (1,566 ) 52,471

Servicing, broker, and
other fees

928 1,306 2,234

Realized and unrealized
losses on marketable
securities, net

(853 ) 853
Other 2                   2
Total Revenues $ 127,274   $ (65,356 ) $ (1,566 ) $ 5,177   $   $   $   $ (1,755 ) $   $ 63,774
 
EXPENSES
Advertising $ 16,148 $ 16,148
Interest expense 50,055 (35,247 ) 14,808

Compensation and
benefits

10,243 (653 ) (62 ) 9,528

General and
administrative

4,626 (18 ) 4,608

Professional and
consulting

4,970 (703 ) 4,267
Debt issuance 2,727 2,727

Securitization debt
maintenance

1,489 (1,489 )

Provision for losses on
finance receivables

1,533 1,533

Depreciation and
amortization

1,005 1,005

Installment obligations
income, net

1,755 (1,755 )

Loss on
disposal/impairment of
fixed assets

69                   69
Total Expenses $ 94,620   $ (36,736 ) $   $   $ (653 ) $   $ (765 ) $ (1,755 ) $ (18 ) $ 54,693
 

Income before income
taxes

$ 32,654 $ (28,620 ) $ (1,566 ) $ 5,177 $ 653 $ $ 765 $ $ 18 $ 9,081

Provision for income
taxes

4,971           (4,971 )        
Net Income $ 27,683   $ (28,620 ) $ (1,566 ) $ 5,177   $ 653   $ 4,971   $ 765   $   $ 18   $ 9,081
 
 

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)

                 

Q4 2013
GAAP
Results

Adjustments
to reflect
deconsolidation
of securitizations

Interest
Income on
Retained
Interests

Share
Based
Compensation

Income
Tax

Severance
M&A
and
Consulting

Reclassification
Associated with
Installment
Obligation Payable

Other Non-
recurring Items

Q4 2013
Adjusted
Net Income

 
REVENUES
Interest income $ 46,130 $ (40,349 ) $ 4,865 $ $ $ $ (2,051 ) $ $ 8,595

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

38,733 6,055 44,788

Loss on swap terminations,
net

(151 ) (151 )

Servicing, broker, and
other fees

1,585 1,303 2,888

Realized and unrealized
gains on marketable
securities, net

4,776 (4,776 )

Gain on extinguishment of
debt, net

14,217 14,217
Other 1,266                 1,266  
Total Revenues $ 106,556   $ (32,991 ) $ 4,865   $   $   $   $ (6,827 ) $   $ 71,603  
 
EXPENSES
Advertising $ 18,639 $ 18,639
Interest expense 53,061 (34,763 ) 18,298

Compensation and benefits

10,101 60 (147 ) 10,014
General and administrative 5,298 (325 ) 4,973

Professional and
consulting

4,914 (548 ) (1,921 ) 2,445
Debt issuance 3,275 3,275

Securitization debt
maintenance

1,565 (1,563 ) 2

Provision for losses on
finance receivables

1,321 1,321

Depreciation and
amortization

1,472 1,472

Installment obligations
expense, net

6,827 (6,827 )

Loss on
disposal/impairment of
fixed assets

4,200               (4,200 )  
Total Expenses $ 110,673   $ (36,326 ) $   $ 60   $   $ (1,020 ) $ (6,827 ) $ (6,121 ) $ 60,439  
 

Income (loss) before
income taxes

$ (4,117 ) $ 3,335 $ 4,865 $ (60 ) $ $ 1,020 $ 6,121 $ 11,164

Provision for income taxes

1,245         (1,245 )        
Net Income (Loss) $ (5,362 ) $ 3,335   $ 4,865   $ (60 ) $ 1,245   $ 1,020   $   $ 6,121   $ 11,164  
 
 

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)

                   

YTD 2014
GAAP
Results

Adjustments
to reflect
deconsolidation
of securitizations

Impact of
2014-3
Prefunding on
Unsecuritized
Finance
Receivables

Interest
Income on
Retained
Interests

Share
Based
Compensation

Income
Tax

Severance
M&A
and
Consulting

Reclassification
Associated with
Installment
Obligation Payable

Other

Non-
recurring
Items

YTD 2014
Adjusted
Net Income

 
REVENUES
Interest income $ 186,958 $ (166,888 ) $ $ 20,315 $ $ $ $ (4,434 ) $ 6 $ 35,957

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

300,702 (84,955 ) (1,566 ) 214,181

Loss on swap
terminations, net

(628 ) (628 )

Servicing, broker, and
other fees

4,149 5,129 9,278

Realized and unrealized
gains on marketable
securities, net

888 (888 )

Realized gain on notes
receivable, at fair value

2,098 (2,098 )

Gain on debt
extinguishment

270 270
Other (61 )                 (61 )
Total Revenues $ 494,376   $ (246,714 ) $ (1,566 ) $ 20,315   $   $   $   $ (5,322 ) $ (2,092 ) $ 258,997  
 
EXPENSES
Advertising $ 68,489 $ 68,489
Interest expense 200,798 (142,907 ) 57,891

Compensation and
benefits

41,108 (2,384 ) (1,962 ) 36,762

General and
administrative

18,567 (234 ) (18 ) 18,315

Professional and
consulting

18,452 (1,540 ) (691 ) 16,221
Debt issuance 8,683 8,683

Securitization debt
maintenance

6,161 (6,161 )

Provision for losses on
finance receivables

4,806 4,806

Depreciation and
amortization

4,168 4,168

Installment obligations
expense, net

5,322 (5,322 )

Loss on
disposal/impairment of
fixed assets

69                   69  
Total Expenses $ 376,623   $ (149,068 ) $   $   $ (2,384 ) $   $ (3,736 ) $ (5,322 ) $ (709 ) $ 215,404  
 

Income before income
taxes

$ 117,753 $ (97,646 ) $ (1,566 ) $ 20,315 $ 2,384 $ $ 3,736 $ $ (1,383 ) $ 43,593

Provision for income
taxes

21,140           (21,140 )        
Net Income $ 96,613   $ (97,646 ) $ (1,566 ) $ 20,315   $ 2,384   $ 21,140   $ 3,736   $   $ (1,383 ) $ 43,593  
 
 

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)

                 

YTD 2013
GAAP
Results

Adjustments
to reflect
deconsolidation
of securitizations

Interest
Income on
Retained
Interests

Share
Based
Compensation

Income
Tax

Severance
M&A
and
Consulting

Reclassification
Associated with
Installment
Obligation Payable

Other Non-
recurring Items

YTD 2013
Adjusted
Net Income

 
REVENUES
Interest income $ 172,423 $ (150,945 ) $ 18,709 $ $ $ $ (4,348 ) $ $ 35,839

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

252,801 (42,358 ) 210,443

Gain on swap terminations, net

200 200

Servicing, broker, and other
fees

5,276 5,548 10,824

Realized and unrealized gains
on marketable securities, net

15,299 (15,299 )

Realized loss on notes
receivable, at fair value

(1,862 ) 1,862

Gain on extinguishment of debt,
net

14,217 14,217
Other 1,209                 1,209
Total Revenues $ 459,563   $ (187,755 ) $ 18,709   $   $   $   $ (19,647 ) $ 1,862   $ 272,732
 
EXPENSES
Advertising $ 70,304 $ 70,304
Interest expense 193,035 (128,226 ) 64,809
Compensation and benefits 42,595 (1,452 ) (3,098 ) 38,045
General and administrative 20,179 (31 ) (698 ) 19,450
Professional and consulting 18,820 (49 ) (1,620 ) (3,942 ) 13,209
Debt issuance 8,930 8,930
Securitization debt maintenance 6,091 (6,091 )

Provision for losses on finance
receivables

5,695 (27 ) 5,668
Depreciation and amortization 5,703 5,703

Installment obligations expense,
net

19,647 (19,647 )

Loss on disposal/impairment of
fixed assets

4,200               (4,200 )
Total Expenses $ 395,199   $ (134,424 ) $   $ (1,452 ) $   $ (5,416 ) $ (19,647 ) $ (8,142 ) $ 226,118
 
Income before income taxes $ 64,364 $ (53,331 ) $ 18,709 $ 1,452 $ $ 5,416 $ 10,004 $ 46,614
Provision for income taxes 2,546         (2,546 )      
Net Income $ 61,818   $ (53,331 ) $ 18,709   $ 1,452   $ 2,546   $ 5,416   $   $ 10,004   $ 46,614
 
 

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   Q4 2014
TRB:  

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

$ 230,705 $ 246,895 $ 254,376 $ 214,437 $ 223,507 $ 252,544 $ 228,915 $ 234,084
Life Contingent Purchases 34,222 42,878 40,165 39,054 29,827 28,185 28,471 25,107
Presettlement Fundings 5,444   5,073   4,785   6,997   7,247   6,977   5,910     7,021  
Total $ 270,371   $ 294,846   $ 299,326   $ 260,488   $ 260,581   $ 287,706   $ 263,296     $ 266,212  
 
ANI Basis:
Total Revenue $ 76,850 $ 63,933 $ 60,343 $ 71,603 $ 63,131 $ 69,110 $ 62,982 $ 63,774
Total Expenses $ 53,323   $ 53,409   $ 58,944   $ 60,439   $ 53,010   $ 51,935   $ 55,766     $ 54,693  
ANI $ 23,527   $ 10,524   $ 1,399   $ 11,164   $ 10,121   $ 17,175   $ 7,216     $ 9,081  
ANI Margin (2) 30.6 % 16.5 % 2.3 % 15.6 % 16.0 % 24.9 % 11.5 % 14.2 %
ANI TRB Margin (3) 8.7 % 3.6 % 0.5 % 4.3 % 3.9 % 6.0 % 2.7 % 3.4 %
 
Spread Revenue (4) $ 64,726 $ 52,281 $ 48,999 $ 44,637 $ 51,846 $ 57,951 $ 51,285 $ 52,471
TRB Spread Margin (5) 24.4 % 18.0 % 16.6 % 17.6 % 20.5 % 20.6 % 19.9 % 20.2 %
 
GAAP Basis:
Revenue $ 183,208 $ 66,661 $ 103,138 $ 106,556 $ 136,590 $ 123,488 $ 107,024 $ 127,274
Expenses (6) $ 93,503   $ 88,301   $ 104,023   $ 111,918   $ 102,057   $ 101,780   $ 94,335     $ 99,591  
Net Income (Loss) $ 89,705   $ (21,640 ) $ (885 ) $ (5,362 ) $ 34,533   $ 21,708   $ 12,689     $ 27,683  

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

      $ (5,577 ) $ 9,022   $ 6,268   $ 4,092     $ 11,829  
 
Weighted Average Diluted Shares 10,395,574 11,642,283 12,562,042 13,098,995 14,640,860
All-in Shares (7) 17,476,995 29,555,639 29,510,029 29,335,338 29,019,913
 
Diluted EPS $ (0.54 ) $ 0.77 $ 0.50 $ 0.31 $ 0.81
ANI EPS (8) $ 0.64 $ 0.34 $ 0.58 $ 0.25 $ 0.31
 
Residual Asset Balance $ 249,345 $ 234,918 $ 239,770 $ 239,591 $ 280,208 $ 294,637 $ 304,022 $ 331,395
Residual Loan Balance $ 70,000 $ 70,000 $ 69,560 $ 68,785 $ 67,989 $ 107,540 $ 107,329 $ 107,043
 
10-Year Swap Rate 2.01 % 2.70 % 2.77 % 3.09 % 2.84 % 2.63 % 2.64 % 2.28 %
 
Term Loan Interest Expense $ 7,673 $ 12,287 $ 14,595 $ 13,457 $ 9,917 $ 10,020 $ 10,082 $ 10,182
ANI Interest Expense $ 12,267 $ 15,748 $ 18,496 $ 18,298 $ 13,945 $ 14,487 $ 14,651 $ 14,808
 
(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. Calculated as the sum of: (a) the weighted average number of Common Interests outstanding and (b) the impact of dilutive potential common shares.
(8) ANI EPS is defined as ANI / All-in Shares
 

Contacts

The J.G. Wentworth Company™
Investor Relations:
866-386-3853
investor@jgwentworth.com
or
Media Inquiries:
866-386-3853
media@jgwentworth.com
or
Makovsky for The J.G. Wentworth Company™
Michael Goodwin, 212-508-9639
mgoodwin@makovsky.com

Contacts

The J.G. Wentworth Company™
Investor Relations:
866-386-3853
investor@jgwentworth.com
or
Media Inquiries:
866-386-3853
media@jgwentworth.com
or
Makovsky for The J.G. Wentworth Company™
Michael Goodwin, 212-508-9639
mgoodwin@makovsky.com