RADNOR, Pa.--(BUSINESS WIRE)--The J.G. Wentworth Company® (“J.G. Wentworth” or the “Company”) (NYSE:JGW), a diversified consumer financial services company specializing in structured settlement payment purchasing, home lending, prepaid cards, and loan options through a marketplace platform, today reported financial results for the second quarter of 2015. “From an operating perspective the business produced another consistent quarter with TRB purchases of $263 million, in-line with the previous three quarters. We are disappointed with the bottom line results that were heavily impacted by the interest rate environment which led to a rapid increase in our cost of funds for the quarter. Price actions have been enacted to mitigate our increased cost of funds,” said Stewart A. Stockdale, Chief Executive Officer, The J.G. Wentworth Company®. "Our operating model remains sound, and we are delivering on our diversification strategy with the completed acquisition of WestStar Mortgage, Inc., the addition of leading lending relationships and the upcoming launch of our prepaid cards program."
The following are highlights from the second quarter:
GAAP Results
- Revenues were $61.4 million, a decrease of 50.3% as compared to revenues of $123.5 million in the second quarter of 2014, due primarily to: (i) an increase in our cost of funds during Q2 2015 as compared to Q2 2014 and the resulting impact on unrealized gains on VIE and other finance receivables, long term debt and derivatives primarily from our $4.4 billion of previously securitized finance receivables, and (ii) to a lesser extent, the impact of a decrease in purchase yield on fundings and in Total Receivables Balance ("TRB") purchases in Q2 2015 as compared to Q2 2014.
- Net income decreased to a loss of $26.6 million, as compared to net income of $21.7 million in the second quarter of 2014, due primarily to: (i) an increase in our cost of funds during Q2 2015 as compared to Q2 2014 and the resulting impact on unrealized gains on VIE and other finance receivables, long term debt and derivatives primarily from our $4.4 billion of previously securitized finance receivables, and (ii) to a lesser extent, the impact of a decrease in purchase yield on fundings and in TRB purchases in Q2 2015 as compared to Q2 2014.
Non GAAP Operating Results*
- TRB purchases were $262.9 million, as compared to $287.7 million in the second quarter of 2014 and $260.8 million in the first quarter of 2015.
- Adjusted Net Income*, or ANI, decreased to a loss of $2.3 million, as compared to income of $17.2 million in the second quarter of 2014 and $8.2 million in the first quarter of 2015.
- The leading driver in the decrease in ANI was an increase in the cost of funds. To a lesser extent, the size and duration mix on fundings and decrease in purchase yield also contributed to the decrease in ANI. The second quarter 2014 TRB purchases and ANI reflect results higher than Company averages over the more recent quarters.
- Spread Revenue* (Adjusted unrealized gains on VIE and other finance receivables, long term debt and derivatives, net of the gain (loss) on swap terminations) decreased to $38.0 million, as compared to $58.0 million in the second quarter of 2014 and $50.5 million in the first quarter of 2015, primarily as a result of increasing cost of funds, and to a lesser extent, the size and duration mix on fundings and decrease in purchase yield.
Subsequent Highlights
- Successfully closed the WestStar Mortgage, Inc. ("WestStar") acquisition on July 31, 2015 for a purchase price of $66.7 million. For the second quarter 2015, WestStar originated approximately $630 million in new loans and reported $6.5 million in net income which represented a year over year increase of 72% and 41%, respectively. For the first half of 2015 WestStar originated approximately $1.2 billion in new loans resulting in $11.1 million of net income.**
- Launched new transactional website www.jgwentworth.com to enable full marketplace platform of multi-products for customers including structured settlements, personal and business lending, prepaid cards and mortgage loans.
- Completed the 2015-2 securitization, which consisted of $158,476,000 Fixed Asset Backed Notes. The issue comprised of two classes of placed notes: $142,126,000 Class A Fixed Rate Asset Backed Notes that will pay 3.87%, and $16,350,000 Class B Fixed Rate Asset Backed Notes that will pay 4.83%. The notes are rated AAA (DBRS) and Aaa (Moody’s); and BBB (DBRS) and Baa2 (Moody’s), respectively.
John R. Schwab, J.G. Wentworth’s Chief Financial Officer, said, “We are implementing operational strategies to increase pricing to alleviate an increasing cost of funds environment and the possibility of future rising interest rates. As we launch our new products we continue to instill expense discipline within the organization to focus on improving profitability. Furthermore, after the WestStar acquisition the Company remains well positioned from a liquidity standpoint to manage day-to-day operations and continue to execute on our diversification strategy.”
* 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 six month periods ended June 30, 2015 and 2014, 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.
** WestStar results have not been finalized, are subject to change, and were provided by WestStar Mortgage, Inc.
About The J.G. Wentworth Company®
The J.G. Wentworth Company® is a diversified consumer financial services company. The Company is focused on providing direct-to-consumer access to financing needs through a variety of solutions, including: mortgage lending and refinancing, personal and business lending, structured settlement payment purchasing, and prepaid cards.
Mortgage loans are offered by J.G. Wentworth Home Lending, Inc. NMLS ID # 2925 (www.nmlsconsumeraccess.org) 3350 Commission Court, Woodbridge, VA 22192; 888-349-3773.
For more information about The J.G. Wentworth Company®, visit www.jgw.com or use the information provided below.
Conference Call and Webcast
Management will host a webcast to discuss the second quarter 2015 financial results tomorrow, August 6, 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® Second Quarter 2015 Webcast.
Interested parties unable to access the conference call and view the presentation via the webcast through this link: The J.G. Wentworth Company® Second Quarter 2015 Webcast, may dial Participant conference number: (877) 201-0168, Conference ID: 85833614.
Please dial in at least 10 minutes before the call to ensure timely participation.
A playback will be available through Thursday, August 13th, 2015. To participate, utilize the dial-in information listed below:
Playback conference number: (855) 859-2056, Conference ID: 85833614. 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 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.
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Schedule A |
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The J.G. Wentworth Company |
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Condensed Consolidated Balance Sheets |
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(In thousands, except share and per share data) |
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June 30, |
December 31, |
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| (Unaudited) | ||||||||||
| ASSETS | ||||||||||
| Cash and cash equivalents | $ | 56,091 | $ | 41,648 | ||||||
| Restricted cash and investments | 130,604 | 198,206 | ||||||||
| VIE finance receivables, at fair market value | 4,402,887 | 4,422,033 | ||||||||
| Other finance receivables, at fair market value | 66,753 | 101,802 | ||||||||
| VIE finance receivables, net of allowances for losses of $8,494 and $7,674, respectively | 112,152 | 113,489 | ||||||||
| Other finance receivables, net of allowances for losses of $2,474 and $2,454, respectively | 13,541 | 17,803 | ||||||||
| Other receivables, net of allowances for losses of $273 and $204, respectively | 13,979 | 14,165 | ||||||||
| Fixed assets, net of accumulated depreciation of $7,076 and $5,976, respectively | 4,375 | 3,758 | ||||||||
| Intangible assets, net of accumulated amortization of $21,168 and $20,273, respectively | 44,541 | 45,436 | ||||||||
| Goodwill | 84,993 | 84,993 | ||||||||
| Marketable securities | 96,649 | 103,419 | ||||||||
| Deferred tax assets, net | — | 2,170 | ||||||||
| Other assets | 30,235 | 33,787 | ||||||||
| Total Assets | $ | 5,056,800 | $ | 5,182,709 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Accounts payable | $ | 8,952 | $ | 5,301 | ||||||
| Accrued expenses | 18,367 | 13,955 | ||||||||
| Accrued interest | 19,815 | 17,416 | ||||||||
| VIE derivative liabilities, at fair market value | 68,251 | 75,706 | ||||||||
| VIE borrowings under revolving credit facilities and other similar borrowings | 41,672 | 19,339 | ||||||||
| VIE long-term debt | 178,619 | 181,558 | ||||||||
| VIE long-term debt issued by securitization and permanent financing trusts, at fair market value | 3,938,740 | 4,031,864 | ||||||||
| Term loan payable | 438,682 | 437,183 | ||||||||
| Other liabilities | 7,717 | 6,677 | ||||||||
| Deferred tax liabilities, net | 28,541 | 36,656 | ||||||||
| Installment obligations payable | 96,649 | 103,419 | ||||||||
| Total Liabilities | 4,846,005 | 4,929,074 | ||||||||
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Class A common stock, par value $0.00001 per share; 500,000,000
shares authorized, 15,928,585 |
— | — | ||||||||
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Class B common stock, par value $0.00001 per share; 500,000,000
shares authorized, 9,042,349 |
— | — | ||||||||
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Class C common stock, par value $0.00001 per share; 500,000,000
shares authorized, 0 issued |
— | — | ||||||||
| Additional paid-in-capital | 104,109 | 95,453 | ||||||||
| Retained earnings | 11,993 | 25,634 | ||||||||
| 116,102 | 121,087 | |||||||||
| Less: treasury stock at cost, 1,825,084 and 600,755 shares as of June 30, 2015 and December 31, 2014, respectively. | (8,453 | ) | (2,443 | ) | ||||||
| Total stockholders’ equity, The J.G. Wentworth Company | 107,649 | 118,644 | ||||||||
| Non-controlling interests | 103,146 | 134,991 | ||||||||
| Total Stockholders’ Equity | 210,795 | 253,635 | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | 5,056,800 | $ | 5,182,709 | ||||||
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Schedule B |
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The J.G. Wentworth Company |
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Condensed Consolidated Statements of Operations - Unaudited |
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(In thousands, except share and per share data) |
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Three Months Ended
June 30, |
Six Months Ended June 30, |
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| 2015 | 2014 | 2015 | 2014 | |||||||||||||||
| REVENUES | ||||||||||||||||||
| Interest income | $ | 45,568 | $ | 46,638 | $ | 89,960 | $ | 94,460 | ||||||||||
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Unrealized gains on VIE and other finance receivables, long-term |
15,581 | 70,317 | 55,002 | 157,628 | ||||||||||||||
| Loss on swap terminations, net | — | — | (275 | ) | (574 | ) | ||||||||||||
| Servicing, broker, and other | 1,130 | 968 | 1,999 | 2,110 | ||||||||||||||
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Realized and unrealized (losses) gains on marketable securities, |
(916 | ) | 3,467 | 914 | 4,356 | |||||||||||||
| Realized gain on notes receivable, at fair value | — | 2,098 | — | 2,098 | ||||||||||||||
| Gain on extinguishment of debt | — | — | 593 | — | ||||||||||||||
| Total Revenues | $ | 61,363 | $ | 123,488 | $ | 148,193 | $ | 260,078 | ||||||||||
| EXPENSES | ||||||||||||||||||
| Advertising | $ | 16,942 | $ | 16,432 | $ | 32,782 | $ | 33,925 | ||||||||||
| Interest expense | 50,068 | 50,700 | 98,903 | 101,930 | ||||||||||||||
| Compensation and benefits | 9,418 | 10,483 | 22,216 | 19,769 | ||||||||||||||
| General and administrative | 4,733 | 4,613 | 9,372 | 9,083 | ||||||||||||||
| Professional and consulting | 4,861 | 5,518 | 9,299 | 8,962 | ||||||||||||||
| Debt issuance | 123 | 19 | 2,872 | 3,020 | ||||||||||||||
| Securitization debt maintenance | 1,494 | 1,564 | 2,990 | 3,121 | ||||||||||||||
| Provision for losses on finance receivables | 1,618 | 1,127 | 2,957 | 2,218 | ||||||||||||||
| Depreciation and amortization | 1,004 | 1,121 | 1,995 | 2,202 | ||||||||||||||
| Installment obligations (income) expense, net | (249 | ) | 4,122 | 2,071 | 5,614 | |||||||||||||
| Total Expenses | $ | 90,012 | $ | 95,699 | $ | 185,457 | $ | 189,844 | ||||||||||
| (Loss) income before income taxes | (28,649 | ) | 27,789 | (37,264 | ) | 70,234 | ||||||||||||
| (Benefit) provision for income taxes | (2,016 | ) | 6,081 | (5,171 | ) | 13,993 | ||||||||||||
| Net (Loss) Income | $ | (26,633 | ) | $ | 21,708 | $ | (32,093 | ) | $ | 56,241 | ||||||||
| Less net (loss) income attributable to non-controlling interests | (14,337 | ) | 15,440 | (18,452 | ) | 40,951 | ||||||||||||
| Net (loss) income attributable to The J.G. Wentworth Company | $ | (12,296 | ) | $ | 6,268 | $ | (13,641 | ) | $ | 15,290 | ||||||||
| Weighted average shares of Class A common stock outstanding: | ||||||||||||||||||
| Basic | 14,113,990 | 12,559,957 | 14,192,480 | 12,104,172 | ||||||||||||||
| Diluted | 14,113,990 | 12,562,042 | 14,192,480 | 12,105,548 | ||||||||||||||
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Net (loss) income per share attributable to stockholders of Class A |
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| Basic | $ | (0.87 | ) | $ | 0.50 | $ | (0.96 | ) | $ | 1.26 | ||||||||
| Diluted | $ | (0.87 | ) | $ | 0.50 | $ | (0.96 | ) | $ | 1.26 | ||||||||
ANI Bridge - Unaudited
The J.G. Wentworth Company and Subsidiaries
Reconciliation of Net (Loss) Income to Adjusted Net Income (Loss) and other Non-GAAP Measures Used in this Release and the Related Presentation
We use Adjusted Net Income (Loss) (a non-GAAP financial measure) as a measure of our results from operations, which we define as our net income (loss) 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 (Loss) to measure our overall performance because we believe it represents the best measure of our operating performance, as the operations of these 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 loss on swap termination, net ("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 these variable interest entities do not impact business performance.
You should not consider Adjusted Net Income (Loss), 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 (Loss) to Adjusted Net Income (Loss), which includes line items for Total Adjusted Revenue and Spread Revenue, for the three and six months ended June 30, 2015 and 2014, respectively, is provided below.
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Schedule C |
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The J.G. Wentworth Company |
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Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) - Unaudited |
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(In thousands) |
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Three Months Ended
June 30, |
Six Months Ended
June 30, |
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| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||||||||
| Net (Loss) Income | $ | (26,633 | ) | $ | 21,708 | $ | (32,093) | $ | 56,241 | ||||||||||||||||||||
| Adjustments to reflect deconsolidation of securitizations: | |||||||||||||||||||||||||||||
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Elimination of unrealized gain/loss on finance receivables, |
23,062 | (12,366 | ) | 32,191 | (47,257 | ) | |||||||||||||||||||||||
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Elimination of interest income from securitized finance |
(41,267 | ) | (42,041 | ) | (81,236 | ) | (85,344 | ) | |||||||||||||||||||||
| Interest income on retained interests in finance receivables | 5,267 | 5,001 | 10,433 | 9,970 | |||||||||||||||||||||||||
| Servicing income on securitized finance receivables | 1,316 | 1,242 | 2,631 | 2,500 | |||||||||||||||||||||||||
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Elimination of interest expense on long-term debt related to |
35,679 | 36,213 | 69,887 | 73,498 | |||||||||||||||||||||||||
| Professional fees relating to securitizations | 1,494 | 1,564 | 2,990 | 3,121 | |||||||||||||||||||||||||
| Other adjustments: | |||||||||||||||||||||||||||||
| Share based compensation | 706 | 798 | 1,116 | 1,300 | |||||||||||||||||||||||||
| Income tax (benefit) provision | (2,016 | ) | 6,081 | (5,171) | 13,993 | ||||||||||||||||||||||||
| Impact of prefunding on unsecuritized finance receivables | (654 | ) | — | 1,618 | — | ||||||||||||||||||||||||
| Severance and M&A expenses | 730 | 376 | 3,564 | 675 | |||||||||||||||||||||||||
| Other nonrecurring items | — | (1,401 | ) | — | (1,401 | ) | |||||||||||||||||||||||
| Adjusted Net (Loss) Income | $ | (2,316 | ) | $ | 17,175 | $ | 5,930 | $ | 27,296 | ||||||||||||||||||||
| Other Data: | |||||||||||||||||||||||||||||
| Securitized Product Total Receivables Balance (TRB) Purchases (1) | $ | 231,654 | $ | 252,544 | $ | 466,626 | $ | 476,051 | |||||||||||||||||||||
| Life Contingent Purchases | 26,807 | 28,185 | 46,306 | 58,012 | |||||||||||||||||||||||||
| Presettlement Fundings | 4,404 | 6,977 | 10,763 | 14,224 | |||||||||||||||||||||||||
| Total TRB Purchases | $ | 262,865 | $ | 287,706 | $ | 523,695 | $ | 548,287 | |||||||||||||||||||||
| Adjusted Net (Loss) Income | $ | (2,316 | ) | $ | 17,175 | $ | 5,930 | $ | 27,296 | ||||||||||||||||||||
| Adjusted Net (Loss) Income TRB Margin (2) | (0.88 | )% | 5.97 | % | 1.13 | % | 4.98 | % | |||||||||||||||||||||
| Company retained interests in finance receivables at fair market value | $ | 299,412 | $ | 294,637 | |||||||||||||||||||||||||
| (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 (Loss) TRB Margin is Adjusted Net Income (Loss) divided by Total TRB Purchases during the period. | ||
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Schedule D |
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The J.G. Wentworth Company |
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Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income - Unaudited |
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(In thousands) |
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Q2 2015 |
Adjustments |
Impact of |
Interest |
Share |
Income |
Severance and |
Reclassification |
Q2 2015 |
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| REVENUES | ||||||||||||||||||||||||||||||||||||||
| Interest income | $ | 45,568 | $ | (41,267 | ) | $ | — | $ | 5,267 | $ | — | $ | — | $ | — | $ | (667 | ) | $ | 8,901 | ||||||||||||||||||
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Unrealized gains on VIE and other |
15,581 | 23,062 | (654 | ) | — | — | — | — | — | 37,989 | ||||||||||||||||||||||||||||
| Servicing, broker, and other | 1,130 | 1,316 | — | — | — | — | — | — | 2,446 | |||||||||||||||||||||||||||||
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Realized and unrealized (losses) on |
(916 | ) | — | — | — | — | — | — | 916 | — | ||||||||||||||||||||||||||||
| Total Revenues | $ | 61,363 | $ | (16,889 | ) | $ | (654 | ) | $ | 5,267 | $ | — | $ | — | $ | — | $ | 249 | $ | 49,336 | ||||||||||||||||||
| EXPENSES | ||||||||||||||||||||||||||||||||||||||
| Advertising | $ | 16,942 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 16,942 | ||||||||||||||||||||
| Interest expense | 50,068 | (35,679 | ) | 14,389 | ||||||||||||||||||||||||||||||||||
| Compensation and benefits | 9,418 | — | — | — | (706 | ) | — | (35 | ) | — | 8,677 | |||||||||||||||||||||||||||
| General and administrative | 4,733 | — | — | — | — | — | (10 | ) | — | 4,723 | ||||||||||||||||||||||||||||
| Professional and consulting | 4,861 | — | — | — | — | — | (685 | ) | — | 4,176 | ||||||||||||||||||||||||||||
| Debt issuance | 123 | — | — | — | — | — | — | — | 123 | |||||||||||||||||||||||||||||
| Securitization debt maintenance | 1,494 | (1,494 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
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Provision for losses on finance |
1,618 | — | — | — | — | — | — | — | 1,618 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 1,004 | — | — | — | — | — | — | — | 1,004 | |||||||||||||||||||||||||||||
| Installment obligations income, net | (249 | ) | — | — | — | — | — | — | 249 | — | ||||||||||||||||||||||||||||
| Total Expenses | $ | 90,012 | $ | (37,173 | ) | $ | — | $ | — | $ | (706 | ) | $ | — | $ | (730 | ) | $ | 249 | $ | 51,652 | |||||||||||||||||
| Loss before income taxes | $ | (28,649 | ) | $ | 20,284 | $ | (654 | ) | $ | 5,267 | $ | 706 | $ | — | $ | 730 | $ | — | $ | (2,316 | ) | |||||||||||||||||
| Benefit for income taxes | (2,016 | ) | — | — | — | — | 2,016 | — | — | — | ||||||||||||||||||||||||||||
| Net Loss | $ | (26,633 | ) | $ | 20,284 | $ | (654 | ) | $ | 5,267 | $ | 706 | $ | (2,016 | ) | $ | 730 | $ | — | $ | (2,316 | ) | ||||||||||||||||
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Schedule E |
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The J.G. Wentworth Company |
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Reconciliation of Net Income to Adjusted Net Income - Unaudited |
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(In thousands) |
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Q2 2014 |
Adjustments |
Interest |
Share |
Income |
Severance and |
Reclassification |
Other |
Q2 2014 |
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| REVENUES | ||||||||||||||||||||||||||||||||||||
| Interest income | $ | 46,638 | $ | (42,041 | ) | $ | 5,001 | $ | — | $ | — | $ | — | $ | (655 | ) | $ | 6 | $ | 8,949 | ||||||||||||||||
|
Unrealized gains on VIE and |
70,317 | (12,366 | ) | — | — | — | — | — | — | 57,951 | ||||||||||||||||||||||||||
| Servicing, broker, and other | 968 | 1,242 | — | — | — | — | — | — | 2,210 | |||||||||||||||||||||||||||
|
Realized and unrealized gains on |
3,467 | — | — | — | — | — | (3,467 | ) | — | — | ||||||||||||||||||||||||||
| Realized gain on notes receivable | 2,098 | — | — | — | — | — | — | (2,098 | ) | — | ||||||||||||||||||||||||||
| Total Revenues | $ | 123,488 | $ | (53,165 | ) | $ | 5,001 | $ | — | $ | — | $ | — | $ | (4,122 | ) | $ | (2,092 | ) | $ | 69,110 | |||||||||||||||
| EXPENSES | ||||||||||||||||||||||||||||||||||||
| Advertising | $ | 16,432 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 16,432 | ||||||||||||||||||
| Interest expense | 50,700 | (36,213 | ) | — | — | — | — | — | — | 14,487 | ||||||||||||||||||||||||||
| Compensation and benefits | 10,483 | — | — | (798 | ) | — | (86 | ) | — | — | 9,599 | |||||||||||||||||||||||||
| General and administrative | 4,613 | — | — | — | — | 86 | — | — | 4,699 | |||||||||||||||||||||||||||
| Professional and consulting | 5,518 | — | — | — | — | (376 | ) | — | (691 | ) | 4,451 | |||||||||||||||||||||||||
| Debt issuance | 19 | — | — | — | — | — | — | — | 19 | |||||||||||||||||||||||||||
| Securitization debt maintenance | 1,564 | (1,564 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
|
Provision for losses on finance |
1,127 | — | — | — | — | — | — | — | 1,127 | |||||||||||||||||||||||||||
| Depreciation and amortization | 1,121 | — | — | — | — | — | — | — | 1,121 | |||||||||||||||||||||||||||
|
Installment obligations expense, |
4,122 | — | — | — | — | — | (4,122 | ) | — | — | ||||||||||||||||||||||||||
| Total Expenses | $ | 95,699 | $ | (37,777 | ) | $ | — | $ | (798 | ) | $ | — | $ | (376 | ) | $ | (4,122 | ) | $ | (691 | ) | $ | 51,935 | |||||||||||||
| Income before income taxes | $ | 27,789 | $ | (15,388 | ) | $ | 5,001 | $ | 798 | $ | — | $ | 376 | $ | — | $ | (1,401 | ) | $ | 17,175 | ||||||||||||||||
| Provision for income taxes | 6,081 | — | — | — | (6,081 | ) | — | — | — | — | ||||||||||||||||||||||||||
| Net Income | $ | 21,708 | $ | (15,388 | ) | $ | 5,001 | $ | 798 | $ | 6,081 | $ | 376 | $ | — | $ | (1,401 | ) | $ | 17,175 | ||||||||||||||||
|
Schedule F |
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|
The J.G. Wentworth Company |
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|
Reconciliation of Net Income to Adjusted Net Income - Unaudited |
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|
(In thousands) |
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|
YTD 2015 |
Adjustments |
Impact of |
Interest |
Share |
Income |
Severance |
Reclassification |
YTD 2015 |
|||||||||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||||||||||||||||
| Interest income | $ | 89,960 | $ | (81,236 | ) | $ | — | $ | 10,433 | $ | — | $ | — | $ | — | $ | (1,157 | ) | $ | 18,000 | |||||||||||||||||
|
Unrealized gains on VIE and other finance |
55,002 | 32,191 | 1,618 | — | — | — | — | — | 88,811 | ||||||||||||||||||||||||||||
| Loss on swap terminations, net | (275 | ) | — | — | — | — | — | — | — | (275 | ) | ||||||||||||||||||||||||||
| Servicing, broker, and other | 1,999 | 2,631 | — | — | — | — | — | — | 4,630 | ||||||||||||||||||||||||||||
|
Realized and unrealized gains on |
914 | — | — | — | — | — | — | (914 | ) | — | |||||||||||||||||||||||||||
| Gain on debt extinguishment | 593 | — | — | — | — | — | — | — | 593 | ||||||||||||||||||||||||||||
| Total Revenues | $ | 148,193 | $ | (46,414 | ) | $ | 1,618 | $ | 10,433 | $ | — | $ | — | $ | — | $ | (2,071 | ) | $ | 111,759 | |||||||||||||||||
| EXPENSES | |||||||||||||||||||||||||||||||||||||
| Advertising | $ | 32,782 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 32,782 | |||||||||||||||||||
| Interest expense | 98,903 | (69,887 | ) | — | — | — | — | — | — | 29,016 | |||||||||||||||||||||||||||
| Compensation and benefits | 22,216 | — | — | — | (1,116 | ) | — | (2,272 | ) | — | 18,828 | ||||||||||||||||||||||||||
| General and administrative | 9,372 | — | — | — | — | — | (13 | ) | — | 9,359 | |||||||||||||||||||||||||||
| Professional and consulting | 9,299 | — | — | — | — | — | (1,279 | ) | — | 8,020 | |||||||||||||||||||||||||||
| Debt issuance | 2,872 | — | — | — | — | — | — | — | 2,872 | ||||||||||||||||||||||||||||
| Securitization debt maintenance | 2,990 | (2,990 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
|
Provision for losses on finance |
2,957 | — | — | — | — | — | — | — | 2,957 | ||||||||||||||||||||||||||||
| Depreciation and amortization | 1,995 | — | — | — | — | — | — | — | 1,995 | ||||||||||||||||||||||||||||
| Installment obligations expense, net | 2,071 | — | — | — | — | — | — | (2,071 | ) | — | |||||||||||||||||||||||||||
| Total Expenses | $ | 185,457 | $ | (72,877 | ) | $ | — | $ | — | $ | (1,116 | ) | $ | — | $ | (3,564 | ) | $ | (2,071 | ) | $ | 105,829 | |||||||||||||||
| (Loss) income before income taxes | $ | (37,264 | ) | $ | 26,463 | $ | 1,618 | $ | 10,433 | $ | 1,116 | $ | — | $ | 3,564 | $ | — | $ | 5,930 | ||||||||||||||||||
| Benefit for income taxes | (5,171 | ) | — | — | — | — | 5,171 | — | — | — | |||||||||||||||||||||||||||
| Net (Loss) Income | $ | (32,093 | ) | $ | 26,463 | $ | 1,618 | $ | 10,433 | $ | 1,116 | $ | (5,171 | ) | $ | 3,564 | $ | — | $ | 5,930 | |||||||||||||||||
|
Schedule G |
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|
The J.G. Wentworth Company |
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|
Reconciliation of Net Income to Adjusted Net Income - Unaudited |
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|
(In thousands) |
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|
YTD 2014 |
Adjustments |
Interest |
Share |
Income |
Severance and |
Reclassification |
Other |
YTD |
||||||||||||||||||||||||||||
| REVENUES | ||||||||||||||||||||||||||||||||||||
| Interest income | $ | 94,460 | $ | (85,344 | ) | $ | 9,970 | $ | — | $ | — | $ | — | $ | (1,258 | ) | $ | 6 | $ | 17,834 | ||||||||||||||||
|
Unrealized gains on VIE and |
157,628 | (47,257 | ) | — | — | — | — | — | — | 110,371 | ||||||||||||||||||||||||||
| Loss on swap terminations, net | (574 | ) | — | — | — | — | — | — | — | (574 | ) | |||||||||||||||||||||||||
| Servicing, broker, and other | 2,110 | 2,500 | — | — | — | — | — | — | 4,610 | |||||||||||||||||||||||||||
|
Realized and unrealized gains |
4,356 | — | — | — | — | — | (4,356 | ) | — | — | ||||||||||||||||||||||||||
|
Realized gain on notes |
2,098 | — | — | — | — | — | — | (2,098 | ) | — | ||||||||||||||||||||||||||
| Total Revenues | $ | 260,078 | $ | (130,101 | ) | $ | 9,970 | $ | — | $ | — | $ | — | $ | (5,614 | ) | $ | (2,092 | ) | $ | 132,241 | |||||||||||||||
| EXPENSES | ||||||||||||||||||||||||||||||||||||
| Advertising | $ | 33,925 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 33,925 | ||||||||||||||||||
| Interest expense | 101,930 | (73,498 | ) | — | — | — | — | — | — | 28,432 | ||||||||||||||||||||||||||
| Compensation and benefits | 19,769 | — | — | (1,300 | ) | — | (113 | ) | — | — | 18,356 | |||||||||||||||||||||||||
| General and administrative | 9,083 | — | — | — | — | 86 | — | — | 9,169 | |||||||||||||||||||||||||||
| Professional and consulting | 8,962 | — | — | — | — | (648 | ) | — | (691 | ) | 7,623 | |||||||||||||||||||||||||
| Debt issuance | 3,020 | 3,020 | ||||||||||||||||||||||||||||||||||
| Securitization debt maintenance | 3,121 | (3,121 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
|
Provision for losses on finance |
2,218 | — | — | — | — | — | — | — | 2,218 | |||||||||||||||||||||||||||
| Depreciation and amortization | 2,202 | — | — | — | — | — | — | — | 2,202 | |||||||||||||||||||||||||||
| Installment obligations expense, net | 5,614 | — | — | — | — | — | (5,614 | ) | — | — | ||||||||||||||||||||||||||
| Total Expenses | $ | 189,844 | $ | (76,619 | ) | $ | — | $ | (1,300 | ) | $ | — | $ | (675 | ) | $ | (5,614 | ) | $ | (691 | ) | $ | 104,945 | |||||||||||||
| Income before income taxes | $ | 70,234 | $ | (53,482 | ) | $ | 9,970 | $ | 1,300 | $ | — | $ | 675 | $ | — | $ | (1,401 | ) | $ | 27,296 | ||||||||||||||||
| Provision for income taxes | 13,993 | — | — | — | (13,993 | ) | — | — | — | — | ||||||||||||||||||||||||||
| Net Income | $ | 56,241 | $ | (53,482 | ) | $ | 9,970 | $ | 1,300 | $ | 13,993 | $ | 675 | $ | — | $ | (1,401 | ) | $ | 27,296 | ||||||||||||||||
|
Schedule H |
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|
The J.G. Wentworth Company |
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Selected Quarterly Data - Unaudited |
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|
(In thousands, except share and per share data) |
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| Q4 2013 | Q1 2014 | Q2 2014 | Q3 2014 | Q4 2014 | Q1 2015 | Q2 2015 | |||||||||||||||||||||||
| TRB: | |||||||||||||||||||||||||||||
|
Securitized Product Total Receivables Balance (TRB) |
$ | 214,437 | $ | 223,507 | $ | 252,544 | $ | 228,915 | $ | 234,084 | $ | 234,972 | $ | 231,654 | |||||||||||||||
| Life Contingent Purchases | 39,054 | 29,827 | 28,185 | 28,471 | 25,107 | 19,499 | 26,807 | ||||||||||||||||||||||
| Presettlement Fundings | 6,997 | 7,247 | 6,977 | 5,910 | 7,021 | 6,360 | 4,404 | ||||||||||||||||||||||
| Total TRB Purchases | $ | 260,488 | $ | 260,581 | $ | 287,706 | $ | 263,296 | $ | 266,212 | $ | 260,830 | $ | 262,865 | |||||||||||||||
| ANI Basis: | |||||||||||||||||||||||||||||
| Total Revenue | $ | 71,603 | $ | 63,131 | $ | 69,110 | $ | 62,982 | $ | 63,774 | $ | 62,423 | $ | 49,336 | |||||||||||||||
| Total Expenses | $ | 60,439 | $ | 53,010 | $ | 51,935 | $ | 55,766 | $ | 54,693 | $ | 54,177 | $ | 51,652 | |||||||||||||||
| ANI | $ | 11,164 | $ | 10,121 | $ | 17,175 | $ | 7,216 | $ | 9,081 | $ | 8,246 | $ | (2,316 | ) | ||||||||||||||
| ANI Margin (2) | 15.6 | % | 16.0 | % | 24.9 | % | 11.5 | % | 14.2 | % | 13.2 | % | (4.7 | )% | |||||||||||||||
| ANI TRB Margin (3) | 4.3 | % | 3.9 | % | 6.0 | % | 2.7 | % | 3.4 | % | 3.2 | % | (0.9 | )% | |||||||||||||||
| Spread Revenue (4) | $ | 44,637 | $ | 51,846 | $ | 57,951 | $ | 51,285 | $ | 52,471 | $ | 50,547 | $ | 37,989 | |||||||||||||||
| TRB Spread Margin (5) | 17.6 | % | 20.5 | % | 20.6 | % | 19.9 | % | 20.2 | % | 19.9 | % | 14.7 | % | |||||||||||||||
| GAAP Basis: | |||||||||||||||||||||||||||||
| Revenue | $ | 106,556 | $ | 136,590 | $ | 123,488 | $ | 107,024 | $ | 127,274 | $ | 86,830 | $ | 61,363 | |||||||||||||||
| Expenses (6) | $ | 111,918 | $ | 102,057 | $ | 101,780 | $ | 94,335 | $ | 99,591 | $ | 92,290 | $ | 87,996 | |||||||||||||||
| Net (Loss) Income | $ | (5,362 | ) | $ | 34,533 | $ | 21,708 | $ | 12,689 | $ | 27,683 | $ | (5,460 | ) | $ | (26,633 | ) | ||||||||||||
|
Net (loss) income attributable to The J.G. Wentworth |
$ | (5,577 | ) | $ | 9,022 | $ | 6,268 | $ | 4,092 | $ | 11,829 | $ | (1,345 | ) | $ | (12,296 | ) | ||||||||||||
| Weighted Average Diluted Shares | 10,395,574 | 11,642,283 | 12,562,042 | 13,098,995 | 14,640,860 | 14,271,842 | 14,113,990 | ||||||||||||||||||||||
| All-in Shares (7) | 17,476,995 | 29,555,639 | 29,510,029 | 29,335,338 | 29,019,913 | 28,597,051 | 28,033,035 | ||||||||||||||||||||||
| Diluted EPS | $ | (0.54 | ) | $ | 0.77 | $ | 0.50 | $ | 0.31 | $ | 0.81 | $ | (0.09 | ) | $ | (0.87 | ) | ||||||||||||
| ANI EPS (8) | $ | 0.64 | $ | 0.34 | $ | 0.58 | $ | 0.25 | $ | 0.31 | $ | 0.29 | $ | (0.08 | ) | ||||||||||||||
| Residual Asset Balance | $ | 239,591 | $ | 280,208 | $ | 294,637 | $ | 304,022 | $ | 331,395 | $ | 318,493 | $ | 299,412 | |||||||||||||||
| Residual Loan Balance | $ | 68,785 | $ | 67,989 | $ | 107,540 | $ | 107,329 | $ | 107,043 | $ | 106,748 | $ | 106,465 | |||||||||||||||
| 10-Year Swap Rate | 3.09 | % | 2.84 | % | 2.63 | % | 2.64 | % | 2.28 | % | 2.02 | % | 2.46 | % | |||||||||||||||
| Term Loan Interest Expense | $ | 13,457 | $ | 9,917 | $ | 10,020 | $ | 10,082 | $ | 10,182 | $ | 9,932 | $ | 10,019 | |||||||||||||||
| ANI Interest Expense | $ | 18,298 | $ | 13,945 | $ | 14,487 | $ | 14,651 | $ | 14,808 | $ | 14,627 | $ | 14,389 | |||||||||||||||
| (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) | ANI Margin is defined as ANI / ANI Total Revenue | ||
| (3) | ANI TRB Margin is defined as ANI / Total TRB Purchases | ||
| (4) | Spread Revenue is defined as adjusted unrealized gains on VIE and other finance receivables, long term debt and derivatives, net of the 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 (benefit) 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 |
