The J.G. Wentworth Company® Reports Fourth Quarter and Full Year 2015 Results
Fourth Quarter Total Receivable Balances Purchased of $224.2 million & Closed Mortgage Loans of $490.3 million
Actions Implemented To Reduce Annual Operating Costs by $25 to $30 million
RADNOR, Pa.—(BUSINESS WIRE) – March 8, 2016 The J.G. Wentworth Company® (“J.G. Wentworth” or the “Company”) (NYSE: JGW), a diversified financial services company, today reports financial results for the fourth quarter and full year 2015. “Although we made significant advances in diversifying the company, the fourth quarter results were disappointing. We doubled our efforts to reduce costs and realign the Structured Settlements Payments business, while positioning Home Lending for growth. The actions taken should yield improvement to the Structured Settlement Payments business, and Home Lending is scaling in line with our expectations. Certain business indicators confirm that we are making progress, including an already achieved run rate cost savings of $20 million to be recognized in 2016,” said Stewart A. Stockdale, Chief Executive Officer, The J.G. Wentworth Company®.
The following are highlights from the fourth quarter and full year results:
GAAP Fourth Quarter 2015 Results:
Adjusted Non-GAAP* Fourth Quarter 2015 Results:
GAAP Full Year 2015 Results:
Adjusted Non-GAAP* Full Year 2015 Results:
Scott Stevens, J.G. Wentworth’s Chief Financial Officer, said, “We have implemented aggressive actions across the operations to support revenue growth and improve the profitability of the enterprise. Despite volatile market conditions, we continue to access the capital market allowing us to generate cash and diversify our funding sources.”
* 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, 2015 and 2014, as well as our reconciliation of non-GAAP measures and historic financial information from 2014 to the present, are included in the accompanying financial information.
About The J.G. Wentworth Company®
The J.G. Wentworth Company is a diversified financial services company that specializes in providing solutions to consumers in need of cash. Our direct-to-consumer businesses use the internet, television, direct mailing, and other channels to offer a variety of solutions including structured settlement payment purchasing, mortgage origination (both purchase and refinancing), prepaid cards, and access to personal lending. We warehouse, securitize, sell or otherwise finance the financial assets that we purchase in transactions that are structured to ultimately generate cash proceeds to us that exceed the purchase price we paid for those assets. 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 2015 financial results today, March 8, 2016, at 10:00 AM Eastern time. The webcast will include remarks from J.G. Wentworth’s Chief Executive Officer, Stewart Stockdale, and Executive Vice President & Chief Financial Officer, Scott Stevens.
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 listed below.
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 2015 Webcast, may dial the Participant conference number: (877) 201-0168, Conference ID: 24125258.
A playback will be available through Tuesday, March 15th, 2016. To participate, utilize the dial-in information listed below:
Playback conference number: (855) 859-2056, Conference ID: 24125258. 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, 2015, these risks and uncertainties include, among other things: our ability to execute on our business strategy; our ability to successfully compete in the industries in which we operate; our dependence on the effectiveness of direct response marketing; our ability to retain and attract qualified senior management; any improper use of or failure to protect the personally identifiable information of past, current and prospective customers to which we have access; our ability to upgrade and integrate our operational and financial information systems, maintain uninterrupted access to such systems and adapt to technological changes in the industries in which we operate; our dependence on third parties, including our ability to maintain relationships with such third parties and our potential exposure to liability for the actions of such third parties; damage to our reputation and increased regulation of our industries which could result from unfavorable press reports about our business model; the accuracy of the estimates and assumptions of our financial models; infringement of our trademarks or service marks; our ability to maintain our state licenses or obtain new licenses in new markets; changes in, and our ability to comply with, federal, state and local laws and regulations governing us; our business model being susceptible to litigation; our ability to continue to purchase structured settlement payments and other financial assets; the public disclosure of the identities of structured settlement holders maintained in our proprietary database; our dependence on the opinions of certain credit rating agencies of the credit quality of our securitizations; our ability to complete future securitizations or other financings on favorable terms; the insolvency of a material number of structured settlement issuers; adverse changes in the residential mortgage lending and real estate markets, including any increases in defaults or delinquencies, especially in geographic areas where our loans are concentrated; our ability to grow our loan origination volume, acquire MSRs and recapture loans that are refinanced; changes in the guidelines of government-sponsored entities, or GSEs, or any discontinuation of, or significant reduction in, the operation of GSEs; potential misrepresentations by borrowers, counterparties and other third-parties; changes in prevailing interest rates and our ability to mitigate interest rate risk through hedging strategies; our ability to obtain sufficient working capital at attractive rates; and our ability to remain in compliance with the terms of our substantial indebtedness.
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.
The J.G. Wentworth Company®
Erik Hartwell, VP, Investor Relations
The Glover Park Group
The J.G. Wentworth Company
Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income and Adjusted EBITDA and other Non-GAAP Measures Used in this Release and the Related Presentation
We use the Non-GAAP financial measures of Adjusted (Loss) Net Income (“ANI”) and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) as measures of our results from operations. We define ANI as our net (loss) income under U.S. GAAP before non-cash compensation expenses, certain other expenses, provision for or benefit from income taxes, and for our Structured Settlement and Annuity Purchasing (“Structured Settlements”) segment, amounts related to the consolidation of the securitization and permanent financing trusts we use to finance the segment’s business. We define Adjusted EBTIDA as ANI before term loan interest expense, debt issuance costs and depreciation and amortization. The Company believes ANI and Adjusted EBTIDA are useful to investors and management as measures of our operating performance, as the operations of the associated variable interest entities do not impact the Structured Settlements segment’s 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 Structured Settlements business. We use these measures to measure our revenues because we believe they represent useful measures of our revenues, as the operations of these variable interest entities also do not impact business performance.
You should not consider Adjusted Net (Loss) Income, Adjusted EBITDA, 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 (Loss) Income, Adjusted EBITDA, Total Adjusted Revenue and Spread Revenue may not be comparable to other similarly titled measures of other companies.
A reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income and Adjusted EBITDA, which includes line items for Total Adjusted Revenue and Spread Revenue for the three and twelve months ended December 31, 2015 and 2014 is provided below. Certain prior period numbers have been reclassified to conform with current period’s presentation.