BOCA RATON, Fla., Nov. 7,
2016 /PRNewswire/ -- Emergent Capital, Inc. (NYSE: EMG)
("Emergent" or the "Company"), today announced its financial
results for the three and nine month periods ended
September 30, 2016.
Three Months Ended September 30,
2016
Total income from continuing operations was $4.8 million for the three month period ended
September 30, 2016 compared to
$2.8 million for the same period in
2015. The increase was primarily due to a $4.0 million gain on the maturity of two policies
compared to a $2.4 million gain on
maturity of two policies for the same period in 2015.
The following table provides a summary of the components of
income from the Company's life settlements.
|
|
Three Months
Ended
September 30, 2016
|
|
Three Months
Ended
September 30, 2015
|
Change in estimated
probabilistic cash flows
|
|
$
|
21,143
|
|
$
|
19,870
|
Premiums paid during
period
|
|
(18,414)
|
|
(16,826)
|
Change in life
expectancy evaluation
|
|
(2,008)
|
|
(4,258)
|
Unrealized gain on
acquisitions
|
|
—
|
|
1,460
|
Realized gain on
maturities
|
|
4,014
|
|
2,421
|
Change in fair
value of life settlements
|
|
$
|
4,735
|
|
$
|
2,667
|
|
|
|
|
|
Total expenses from continuing operations were $13.3 million for the three month period ended
September 30, 2016 compared to
$21.0 million for the same period in
2015. The decrease was primarily attributable to an $8.8 million charge related to the extinguishment
of the Secured Notes during the quarter ended September 30,
2015, and a reduction of $1.5
million, $719,000 and
$642,000 in legal fees, interest
expense and personnel costs, respectively.
The Company reported a net loss from continuing operations of
$8.5 million, or $(0.31) per diluted share for the three month
period ended September 30, 2016,
compared to a net loss of $13.5
million, or $(0.48) per
diluted share for the same period in 2015. The net loss for the
quarter ended September 30, 2015 includes an income tax
benefit of $4.7 million. There was no
income tax benefit during the quarter ended September 30,
2016.
Nine Months Ended September 30,
2016
Total income from continuing operations for the nine month
period ended September 30, 2016 was a
loss of $2.6 million compared to
total income of $43.8 million during
the same period in 2015. The loss is primarily due to a
$25.4 million reduction in realized
gains due to policy maturities and further impacted by the adoption
of the 2015 VBT, which reduced the fair value of the Company's life
settlements by $17.6 million.
The following table provides a summary of the components of
income from the Company's life settlements.
|
|
Nine Months
Ended
September 30, 2016
|
|
Nine Months
Ended
September 30, 2015
|
Change in estimated
probabilistic cash flows
|
|
$
|
57,762
|
|
$
|
60,588
|
Premiums paid during
period
|
|
(52,750)
|
|
(48,243)
|
2015 VBT
Adoption
|
|
(17,638)
|
|
—
|
Change in life
expectancy evaluation
|
|
(12,252)
|
|
(18,700)
|
Change in discount
rates
|
|
7,149
|
|
3,841
|
Unrealized gain on
acquisitions
|
|
262
|
|
5,856
|
Realized gain on
maturities
|
|
14,777
|
|
40,240
|
Change in fair
value of life settlements
|
|
$
|
(2,690)
|
|
$
|
43,582
|
|
|
|
|
|
Total expenses from continuing operations were $23.2 million for the nine month period ended
September 30, 2016 compared to
$67.5 million for the same period in
2015. The reduction was primarily associated with the
adoption of the 2015 VBT which resulted in a $15.7 million reduction in the fair value of the
Revolving Credit Facilities, an $8.8
million reduction associated with the extinguishment of the
Secured Notes, and a $5.7 million
reduction in operating expenses primarily due to a $5.0 million decrease in legal expenses compared
to the nine month period ended September 30,
2015.
The Company reported a net loss from continuing operations of
$25.8 million, or $(0.94) per fully diluted share, for the nine
month period ended September 30, 2016
compared to a net loss of $16.7
million, or $(0.70) per fully
diluted share, for the same period in 2015. The net loss for the
nine month period ended September 30,
2015 includes an income tax benefit of $7.0 million. The Company did not recognize
an income tax benefit during the nine month period ended
September 30, 2016.
Life Settlements Portfolio Highlights
On September 30, 2016, the estimated fair value of the
Company's 623 life insurance policies was $483.4 million compared to $461.9 million for 632 life insurance policies at
December 31, 2015. The weighted average discount rate was
16.52% on September 30, 2016 compared to 17.02% on
December 31, 2015. The aggregate face value of the Company's
portfolio of life insurance policies was approximately $3.0 billion on September 30, 2016.
During the quarter, two life insurance policies that served as
collateral under the revolving credit facilities matured totaling
$12.8 million.
As of September 30, 2016, the Company had cash and cash
equivalents and certificates of deposit of $24.9 million and a Book Value per share of
$6.95.
Conference Call
The Company will be hosting a conference call today at
5:00 pm ET. To join the call, please
dial toll free (855) 656-0929, or from outside the U.S. (412)
317-6021. The conference call will also be broadcast live through a
link on the Investor Relations section of the Company's website at
www.emergentcapital.com. Please visit the website at least 10
minutes prior to the call to register, download and install any
necessary audio software.
About Emergent Capital, Inc.
Emergent (NYSE: EMG) is a specialty finance company that invests
in life settlements. More information about Emergent can be found
at www.emergentcapital.com.
Safe Harbor Statement
This press release may contain
certain "forward-looking statements" relating to the business of
Emergent Capital, Inc. and its subsidiary companies. All
statements, other than statements of historical fact included
herein are "forward-looking statements." These forward-looking
statements are often identified by the use of forward-looking
terminology such as "believes," "expects" or similar expressions,
and involve known and unknown risks and uncertainties. Although
Emergent believes that the expectations reflected in these
forward-looking statements are reasonable, they do involve
assumptions, risks and uncertainties, and these expectations may
prove to be incorrect. Investors should not place undue reliance on
these forward-looking statements, which speak only as of the date
of this press release. Other than as required under the securities
laws, Emergent does not assume a duty to update these
forward-looking statements.
-SELECTED FINANCIAL TABLES FOLLOW-
Emergent Capital,
Inc.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
|
|
|
|
|
|
For the Three
Months Ended
September 30,
|
|
For the Nine
Months Ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(in thousands,
except share and per share data)
|
Income
|
|
Change in fair value
of life settlements
|
$
|
4,735
|
|
|
$
|
2,667
|
|
|
$
|
(2,690)
|
|
|
$
|
43,582
|
|
Other
income
|
32
|
|
|
102
|
|
|
125
|
|
|
201
|
|
Total income
(loss)
|
4,767
|
|
|
2,769
|
|
|
(2,565)
|
|
|
43,783
|
|
Expenses
|
|
|
|
|
|
|
|
Interest
expense
|
7,895
|
|
|
8,614
|
|
|
21,330
|
|
|
21,491
|
|
Extinguishment of
Secured Notes
|
—
|
|
|
8,782
|
|
|
—
|
|
|
8,782
|
|
Change in fair value
of Revolving Credit Facilities
|
(551)
|
|
|
(4,203)
|
|
|
(16,121)
|
|
|
13,489
|
|
Personnel
costs
|
1,303
|
|
|
1,945
|
|
|
5,133
|
|
|
5,425
|
|
Legal fees
|
1,833
|
|
|
3,370
|
|
|
5,361
|
|
|
10,345
|
|
Professional
fees
|
2,136
|
|
|
1,579
|
|
|
5,347
|
|
|
5,284
|
|
Insurance
|
200
|
|
|
309
|
|
|
639
|
|
|
966
|
|
Other selling,
general and administrative expenses
|
494
|
|
|
585
|
|
|
1,511
|
|
|
1,671
|
|
Total
expenses
|
13,310
|
|
|
20,981
|
|
|
23,200
|
|
|
67,453
|
|
Income (loss) from
continuing operations before income taxes
|
(8,543)
|
|
|
(18,212)
|
|
|
(25,765)
|
|
|
(23,670)
|
|
Benefit for income
taxes
|
—
|
|
|
(4,721)
|
|
|
—
|
|
|
(6,981)
|
|
Net income (loss)
from continuing operations
|
$
|
(8,543)
|
|
|
$
|
(13,491)
|
|
|
$
|
(25,765)
|
|
|
$
|
(16,689)
|
|
Discontinued
Operations:
|
|
|
|
|
|
|
|
Income (loss) from
discontinued operations
|
(54)
|
|
|
(147)
|
|
|
(248)
|
|
|
(640)
|
|
Benefit for income
taxes
|
—
|
|
|
(34)
|
|
|
—
|
|
|
(224)
|
|
Net income (loss)
from discontinued operations
|
(54)
|
|
|
(113)
|
|
|
(248)
|
|
|
(416)
|
|
Net income
(loss)
|
$
|
(8,597)
|
|
|
$
|
(13,604)
|
|
|
$
|
(26,013)
|
|
|
$
|
(17,105)
|
|
Basic and diluted
income (loss) per share:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
(0.31)
|
|
|
$
|
(0.48)
|
|
|
$
|
(0.94)
|
|
|
$
|
(0.70)
|
|
Discontinued
operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.01)
|
|
|
$
|
(0.02)
|
|
Net income
(loss)
|
$
|
(0.31)
|
|
|
$
|
(0.48)
|
|
|
$
|
(0.95)
|
|
|
$
|
(0.72)
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic and
Diluted
|
27,614,441
|
|
|
28,084,254
|
|
|
27,529,120
|
|
|
23,827,030
|
|
Emergent Capital,
Inc.
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
September 30,
2016
|
|
December 31,
2015*
|
|
(Unaudited)
|
|
|
|
(In thousands except share data)
|
ASSETS
|
|
|
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
9,801
|
|
|
$
|
12,946
|
|
Cash and cash
equivalents (VIE)
|
9,098
|
|
|
7,395
|
|
Certificates of
deposit
|
6,008
|
|
|
2,501
|
|
Prepaid expenses and
other assets
|
1,488
|
|
|
1,017
|
|
Deposits -
other
|
1,347
|
|
|
1,347
|
|
|
|
|
|
|
|
Life settlements, at
estimated fair value
|
7,810
|
|
|
11,946
|
|
Life settlements, at
estimated fair value (VIE)
|
475,585
|
|
|
449,979
|
|
Receivable for
maturity of life settlements (VIE)
|
20,088
|
|
|
18,223
|
|
Fixed assets,
net
|
256
|
|
|
322
|
|
Investment in
affiliates
|
2,384
|
|
|
2,384
|
|
Total
assets
|
$
|
533,865
|
|
|
$
|
508,060
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Liabilities
|
|
|
|
Accounts payable and
accrued expenses
|
3,550
|
|
|
$
|
3,051
|
|
Accounts payable and
accrued expenses (VIE)
|
521
|
|
|
419
|
|
Other
liabilities
|
395
|
|
|
360
|
|
Interest payable -
Convertible Notes
|
768
|
|
|
2,272
|
|
Convertible Notes,
net of discount and deferred debt costs
|
59,532
|
|
|
56,812
|
|
Interest payable -
Senior Secured Notes
|
200
|
|
|
—
|
|
Senior Secured Notes,
net of discount and deferred debt costs
|
29,209
|
|
|
—
|
|
|
|
|
|
|
|
White Eagle Revolving
Credit Facility, at estimated fair value (VIE)
|
182,128
|
|
|
169,131
|
|
Red Falcon Revolving
Credit Facility, at estimated fair value (VIE)
|
61,451
|
|
|
55,658
|
|
Total
liabilities
|
337,754
|
|
|
287,703
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
Stockholders'
Equity
|
|
|
|
Common stock (par
value $0.01 per share, 80,000,000 authorized at September 30,
2016 and December 31, 2015; 28,836,573 issued and 28,228,573
outstanding as of
September 30, 2016; 28,130,508 issued and 27,522,508 outstanding at
December 31,
2015)
|
288
|
|
|
281
|
|
Preferred stock (par
value $0.01 per share, 40,000,000 authorized; 0 issued and
outstanding as of September 30, 2016 and December 31,
2015)
|
—
|
|
|
—
|
|
Treasury Stock, net
of cost (608,000 shares as of September 30, 2016 and December
31, 2015)
|
(2,534)
|
|
|
(2,534)
|
|
Additional
paid-in-capital
|
307,210
|
|
|
305,450
|
|
Accumulated
deficit
|
(108,853)
|
|
|
(82,840)
|
|
Total stockholders'
equity
|
196,111
|
|
|
220,357
|
|
|
Total liabilities and
stockholders' equity
|
$
|
533,865
|
|
|
$
|
508,060
|
|
|
* Derived from audited
consolidated financial statements.
|
Selected Operating
Data (dollars in thousands):
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Period
Acquisitions — Policies Owned
|
|
|
|
|
|
|
|
|
Number of policies
acquired
|
|
—
|
|
|
3
|
|
|
1
|
|
|
41
|
|
Average age of
insured at acquisition
|
|
—
|
|
|
85.4
|
|
|
90.3
|
|
|
85.0
|
|
Average life
expectancy — Calculated LE (Years)
|
|
—
|
|
|
5.6
|
|
|
2.3
|
|
|
5.4
|
|
Average death
benefit
|
|
$
|
—
|
$
|
|
|
6,232
|
$
|
|
|
690
|
$
|
|
|
2,924
|
|
Aggregate purchase
price
|
|
$
|
—
|
$
|
|
|
2,679
|
$
|
|
|
16
|
$
|
|
|
30,534
|
|
End of Period —
Policies Owned
|
|
|
|
|
|
|
|
|
Number of policies
owned
|
|
623
|
|
|
634
|
|
|
623
|
|
|
634
|
|
Average Life
Expectancy — Calculated LE (Years)
|
|
9.2
|
|
|
10.0
|
|
|
9.2
|
|
|
10.0
|
|
Aggregate Death
Benefit
|
|
$
|
2,953,796
|
$
|
|
|
2,997,903
|
$
|
|
|
2,953,796
|
$
|
|
|
2,997,903
|
|
Aggregate fair
value
|
|
$
|
483,395
|
$
|
|
|
457,810
|
$
|
|
|
483,395
|
$
|
|
|
457,810
|
|
Monthly premium —
average per policy
|
|
$
|
10.6
|
$
|
|
|
8.9
|
$
|
|
|
10.6
|
$
|
|
|
8.9
|
|
Period
Maturities
|
|
|
|
|
|
|
|
|
Number of policies
matured
|
|
2
|
|
|
2
|
|
|
10
|
|
|
14
|
|
Average age of
insured at maturity
|
|
85.2
|
|
|
86.8
|
|
|
85.6
|
|
|
84.1
|
|
Average life
expectancy - Calculated LE (Years)
|
|
1.8
|
|
|
5.4
|
|
|
3.7
|
|
|
7.4
|
|
Aggregate death
benefit
|
|
$
|
12,800
|
$
|
|
|
3,700
|
$
|
|
|
29,980
|
$
|
|
|
53,468
|
|
Gains on
maturity
|
|
$
|
4,014
|
$
|
|
|
2,421
|
$
|
|
|
14,777
|
$
|
|
|
40,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
collected
|
|
$
|
7,000
|
$
|
|
|
28,280
|
$
|
|
|
27,980
|
$
|
|
|
47,519
|
|
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SOURCE Emergent Capital, Inc.