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.–(BUSINESS WIRE)–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
Full Year Highlights
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:
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.
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.
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.
(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
Source: The J.G. Wentworth Company®
The J.G. Wentworth Company®