The J.G. Wentworth Company® Reports Third Quarter Results; Company Makes Progress Towards Transformation
RADNOR, Pa.–(BUSINESS WIRE)–11.13.14 — The J.G. Wentworth Company® (“J.G. Wentworth” or the “Company”) (NYSE:JGW), a leading purchaser of structured settlement payments, annuity payments, lottery payments and other receivables through its J.G. Wentworth and Peachtree brands, today reports financial results for the third quarter of 2014. “We are in the early stages of transforming J.G. Wentworth and are excited about the groundwork we have laid to achieve the three key strategic pillars – Grow the Core, Become an Information-Based Company, and Diversify,” said Stewart A. Stockdale, Chief Executive Officer, The J.G. Wentworth Company®.
The following are highlights from the third quarter results:
Third Quarter Highlights
· Total Receivables Balance, or TRB, purchases were $263.3 million, as compared to $299.3 million in the third quarter of 2013.
· Adjusted Net Income*, or ANI, increased to $7.2 million, as compared to $1.4 million in the third quarter of 2013, driven primarily by lower cost of funds and lower interest expense.
· Adjusted unrealized gains on VIE and other finance receivables, long term debt and derivatives, net of the gain (loss) on swap terminations*, [or Spread Revenue*], was $51.3 million, as compared to $49.0 million in the third quarter of 2013.
· Revenues were $107.0 million, an increase of 3.8% from revenues of $103.1 million in the third quarter of 2013, due primarily to the impact of decreasing cost of funds on unrealized gains on VIE and other finance receivables, long-term debt and derivatives.
· Net income increased to $12.7 million, as compared to a loss of $0.9 million in the third quarter of 2013, due primarily to decreasing cost of funds and lower interest expense.
John R. Schwab, J.G. Wentworth’s Chief Financial Officer, said, “After a strong second quarter, the third quarter purchases started off slower than anticipated, but returned to expected levels by the end of the period. We continue to focus on driving profitability in our Core business and leveraging our industry-leading financing platform. We were pleased with the execution of our 2014-2 securitization and look forward to the launch of the 2014-3 securitization.”
* This earnings press release contains non-GAAP measures, which as calculated by the Company are not necessarily comparable to similarly-titled measures reported by other companies. Results for the three and nine month periods ended September 30, 2014 and 2013, as well as our reconciliation of non-GAAP measures, and historic financial information from 2013 to the present, are included in the accompanying financial information.
About The J.G. Wentworth Company®
J.G. Wentworth focuses on key sectors, including structured settlement payment purchasing, annuity payment purchasing, lottery payment purchasing and pre-settlement funding. Through our two market-leading and highly recognizable brands, J.G. Wentworth and Peachtree Financial Solutions, we purchase future structured settlement payment streams from our customers. For more information about J.G. Wentworth, visit www.jgw.com or use the contact information provided below.
Conference Call and Webcast
Management will host a webcast to discuss the third quarter 2014 financial results today, November 13, 2014, at 10:00 AM Eastern time. The webcast will include remarks from J.G. Wentworth’s Chief Executive Officer, Stewart Stockdale, and Chief Financial Officer, John Schwab.
This call will be accompanied by a presentation and will be available via a webcast of the conference call live on the Investor Relations section of the Company’s website:
Interested parties unable to access the conference call and view the presentation via the webcast through this link The J.G. Wentworth Company® Third Quarter 2014 Financial Results Webcast may dial (877) 201-0168 and reference conference ID 21425036. A playback of the call is available until November 20, 2014 at (855) 859-2056 with conference ID 21425036. The presentation will be posted to the Company’s website after the call.
Certain statements in this press release constitute “forward-looking statements.” All statements, other than statements of historical fact, are forward-looking statements. You can identify such statements because they contain words such as ‘‘plans,’’ ‘‘expects,’’ or ‘‘does expect,’’ ‘‘budget,’’ ‘‘forecasts,’’ ‘‘anticipates,’’ or ‘‘does not anticipate,’’ ‘‘believes,’’ ‘‘intends,’’ and similar expressions or statements that certain actions, events or results ‘‘may,’’ ‘‘could,’’ ‘‘would,’’ ‘‘might,’’ or ‘‘will,’’ be taken, occur or be achieved. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.
A number of factors could cause actual results, performance or achievements to differ materially from the results expressed or implied in the forward-looking statements. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. Forward-looking statements necessarily involve significant known and unknown risks, assumptions and uncertainties that may cause our actual results, performance and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. Consideration should also be given to the areas of risk set forth under the heading “Risk Factors” in our filings with the Securities and Exchange Commission, and as set forth more fully under “Part 1, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013, these risks and uncertainties include, among other things: our ability to continue to purchase structured settlement payments and other assets; our ability to complete future securitizations or other financings on beneficial terms; availability of or increases in the cost of our financing sources relative to our purchase discount rate; our dependence on the opinions of certain rating agencies; our dependence on outside parties to conduct our transactions including the court system, insurance companies, outside counsel, delivery services and notaries; our dependence on the effectiveness of our direct response marketing; the compression of the yield spread between the price we pay for and the price at which we sell assets due to changes in interest rates and/or other factors; changes in tax or accounting policies or changes in interpretation of those policies as applicable to our business; the lack of an established market for the subordinated interest in the receivables that we retain after a securitization is executed; our exposure to underwriting risk; our ability to remain in compliance with the terms of our substantial indebtedness; changes in existing state laws governing the transfer of structured settlement payments or the interpretation thereof; the insolvency or downgrade of a material number of structured settlement issuers; changes in current tax law relating to the tax treatment of structured settlements; changes to state or federal, licensing and regulatory regimes; the impact of the March 2014 Consumer Financial Protection Bureau inquiry and any findings or regulations it issues as related to us, our industries, or products or in general; adverse judicial developments; potential litigation and regulatory proceedings; unfavorable press reports about our business model; our access to personally identifiable confidential information of current and prospective customers and the improper use or failure to protect that information; the public disclosure of the identities of structured settlement holders; our business model being susceptible to litigation; our dependence on a small number of key personnel; our ability to successfully enter new lines of business and broaden the scope of our business; changes in our expectations regarding the likelihood, timing or terms of any potential acquisitions described herein; our computer systems being subject to security and privacy breaches; and infringement of our trademarks or service marks.
Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to publicly revise any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.
ANI Bridge – Unaudited
The J.G. Wentworth Company and Subsidiaries
Reconciliation of Net Income to Adjusted Net Income and other Non-GAAP Measures Used in this Release and the Related Presentation
We use Adjusted Net Income (a non-GAAP financial measure) as a measure of our results from operations, which we define as our net income under U.S. GAAP before non-cash compensation expenses, certain other expenses, provision for or benefit from income taxes and the amounts related to the consolidation of the securitization and permanent financing trusts we use to finance our business. We use Adjusted Net Income to measure our overall performance because we believe it represents the best measure of our operating performance, as the operations of the variable interest entities do not impact business performance. In addition, the add-backs described above are consistent with adjustments permitted under our Term Loan agreement.
We also use the non-GAAP measures of Total Adjusted Revenue and Adjusted unrealized gains on VIE and other finance receivables, long term debt and derivatives, net of the gain (loss) on swap termination, or Spread Revenue, as measures of our revenues, which we define as those measures under U.S. GAAP before the amounts related to the consolidation of the securitization and permanent financing trusts we use to finance our business. We use these measures to measure our revenues because we believe they represent better measures of our revenues, as the operations of the variable interest entities do not impact business performance.
You should not consider Adjusted Net Income, Adjusted Total Revenue or Spread Revenue in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Because not all companies use identical calculations, our presentation of Adjusted Net Income, Adjusted Total Revenue and Spread Revenue may not be comparable to other similarly titled measures of other companies.
A reconciliation of Net Income to Adjusted Net Income, which includes line items for Adjusted Total Revenue and Spread Revenue, for the three and nine months ended September 30, 2014 and 2013 is provided below. Certain prior year numbers have been reclassified to conform with current year presentation.
Source: The J.G. Wentworth Company®
Makovsky for The J.G. Wentworth Company®
Michael Goodwin, 212-508-9639