Today, GWG Holdings, Inc. (Nasdaq: GWGH), an innovative financial
services firm based in Dallas, announced its financial and
operating results for the third quarter ended September 30,
2020. The results reflect consolidated accounting and financial
reporting of GWGH and The Beneficient Company Group, L.P. and its
consolidated subsidiaries (collectively, Beneficient). GWGH and
Beneficient are referred to collectively as the Companies.
Over the last quarter, the Companies and their
Boards of Directors have continued to focus on achieving a common
goal of increasing enterprise value by diversifying and maximizing
revenue streams while seeking to mitigate risk.
Beneficient Liquidity
Program
- Beneficient launched a suite of liquidity solutions, including
the Liquidity Bond, for owners of professionally managed illiquid
alternative investments who need liquidity from their investments.
Central to the launch was the ability to structure the program in a
manner that permits the Companies to publicly advertise and promote
their products; thereby, allowing the Companies to reach a broad
market.
- To assist Beneficient in offering its products in a simple,
rapid, and cost-effective manner, Beneficient built AltAccess, a
proprietary online secure portal that connects Beneficient to its
target market without a brick and mortar presence, expensive legacy
information technology needs, or bank branch technology operations
costs.
- Since launching its liquidity solutions, Beneficient has
sourced approximately $300 million of alternative investments from
registered investment advisers, family offices, general partners,
foundations, and other types of investors through its AltAccess
portal. Of these amounts, approximately $100 million of alternative
investments are currently being priced or are under active
consideration and approximately $200 million are waiting on
responses from potential counterparties.
- Beneficient closed financings of approximately $8.1 million of
principal balance in October 2020.
Beneficient Operational
Developments
- Beneficient’s Risk Management and Underwriting teams play a
critical role in identifying, evaluating, and managing
Beneficient’s collateral portfolio, including through their
creation of unique systems.
- TotalAlt was developed by Beneficient’s Risk Management team as
a comprehensive portfolio management system designed to build and
maintain a risk-optimized collateral portfolio by employing and
synchronizing accepted principles of diversified portfolio
construction, alternative asset valuation, and hedging strategies
to manage the quality, makeup and risk profile of Beneficient’s
collateral portfolio.
- AltRating is an original grading system built by Beneficient’s
Underwriting and Risk Management teams to analytically review new
and existing loans and is tailored specifically to evaluate loans
collateralized with alternative assets. The system evaluates
various loan metrics using internally generated simulation models
to create a rating score reflecting the probabilistic risk of
default for each loan.
Organizational
Developments
- The Companies hired Grant Thornton
LLP as the independent registered public auditing firm for the
Companies.
- The Companies have taken the
following steps to assist management in its oversight of the
Companies’ financial reporting and controls in the collateral
portfolio supporting Beneficient’s financings:
- engaged an internationally
recognized accounting firm to prepare a quarterly valuation opinion
on the collateral that supports Beneficient’s loan portfolio;
- engaged an internationally
recognized accounting firm to consult with GWGH and Beneficient’s
internal audit department;
- engaged a nationally recognized
accounting firm to review and assist with reporting on the cost
basis and loan balances of Beneficient’s financings of alternative
assets;
- purchased a multi-year hedge with a
bulge bracket investment bank to protect Beneficient’s loan
portfolio against potential market corrections and reduce the loan
portfolio’s equity market risk exposure; and
- continued automation of middle and
back office functions, which will allow the Companies to scale the
business, and minimize cost with more accuracy.
Capital Raising Efforts
- After successfully closing its $1
billion L Bond investment offering, GWGH began selling a $2 billion
L Bond offering in summer of 2020 to a growing network of advisors
from 127 firms.
- L Bonds sales for the three months
ended September 30, 2020, totaled $114.1 million, including $42.9
million in September 2020.
- L Bond sales for the nine months
ended September 30, 2020, were 14% higher than 2019 sales over the
same period.
- On October 13, 2020, Robert A.
Stanger & Co., Inc. ranked GWG as #8 of the top alternative
investment sponsors in terms of capital formation.
- Despite the uncertainty surrounding
the novel coronavirus pandemic (COVID-19), and although a
substantial majority of the Companies’ employees continue to work
remotely, they have maintained operations at or near normal levels.
The Companies have not experienced any significant disruptions due
to operational issues, loss of communication capabilities,
technological failures, or cyberattacks. The Companies continue to
raise capital, receive interest income and insurance policy
benefits, pay interest income and dividends, and otherwise meet
their ongoing obligations.
Life insurance and
Loan
Portfolio performance
- Mortality performance in the life insurance portfolio continues
to perform consistently with the Actual-to-Expected analysis:
- Third quarter 2020 – $39.8 million actual vs. $35.1 million
expected
- Year to date 2020 – $105.2 million actual vs. $100.8 million
expected
- Beneficient’s loans continue to generate both interest and
administrative fee income consistent with their contractual rates –
$11.6 million and $4.6 million, respectively, for the three months
ended September 30, 2020
- The loan-to-value ratio for Beneficient’s collateral portfolio
was 63% as of September 30, 2020, based on $227.0 million loan
carrying value and collateral value of $361.7 million.
Third Quarter 2020 Financial and
Operating Highlights
- Reported third quarter 2020 net
loss of $68.1 million, compared to $24.6 million in the third
quarter of 2019, primarily related to increased interest expense
($12.5 million), non-cash deferred income tax expense ($22.4
million), and non-cash equity incentive compensation ($22.9
million).
- Reported total assets of $3.6
billion as of September 30, 2020, and $3.7 billion as of June
30, 2020.
- Reported continued strong life
insurance portfolio performance:
- Realized $39.8 million of face
amount of policy benefits from 21 life insurance policies during
the third quarter of 2020, compared to $27.5 million from 22 life
insurance policies during the third quarter of 2019.
- Ended the quarter with a life
insurance portfolio of $1.9 billion in face amount of policy
benefits consisting of 1,081 policies.
- Reported continued success raising
capital through the L Bond investment product with $114.1 million
of L Bond sales in the third quarter of 2020.
- Reported $22.4M of non-cash
deferred income tax expense primarily related to management’s
reassessment of GWGH’s deferred tax liabilities. GWGH reported a
material weakness in internal controls over the quarterly income
tax provision process, as reported in GWGH’s Quarterly Report on
Form 10-Q filed with the SEC on November 19, 2020. Management is
reevaluating the internal and external resources involved in the
quarterly assessment and believes these measures will enable it to
quickly remediate the material weakness.
- Total
liquidity (cash, restricted cash, policy benefits receivable and
fees receivable) decreased to $177.7 million at September 30,
2020, compared to $219.7 million at June 30, 2020. This reduction
is largely reflective of the paydowns of senior credit facilities
at Beneficient on July 15 and September 10, 2020, totaling $50
million.
“The market is responding very well to the
unique offerings we have created to deliver liquidity products and
yield to investors across the U.S.,” said Murray Holland, GWGH's
Chief Executive Officer. “The roll-out of the Beneficient products
has gone as expected and our L Bond sales remain strong. We believe
we are poised for a break-out success at a time when there has
never been a greater need for the products and services we have
created.”
1. Financial & Operating
Highlights
($ Thousands except per share information) |
|
Q3 2020 |
|
Q3 2019 |
|
YTD 2020 |
|
YTD 2019 |
Revenue |
|
$ |
28,513 |
|
|
$ |
22,211 |
|
|
$ |
130,859 |
|
|
$ |
71,439 |
|
Expenses |
|
81,963 |
|
|
43,570 |
|
|
274,733 |
|
|
127,416 |
|
Income Tax Expense
(Benefit) |
|
22,444 |
|
|
— |
|
|
(613 |
) |
|
— |
|
Income (Loss) from Equity
Method Investments |
|
(1,431 |
) |
|
956 |
|
|
(4,279 |
) |
|
(371 |
) |
Net Loss, including Income
(Loss) from Equity Method Investment |
|
(77,325 |
) |
|
(20,403 |
) |
|
(147,540 |
) |
|
(56,348 |
) |
Loss Attributable to
Noncontrolling Interests |
|
12,745 |
|
|
— |
|
|
23,106 |
|
|
— |
|
Preferred Stock Dividends |
|
3,569 |
|
|
4,232 |
|
|
11,235 |
|
|
12,806 |
|
Net Loss Attributable to
Common Shareholders |
|
(68,149 |
) |
|
(24,635 |
) |
|
(135,669 |
) |
|
(69,154 |
) |
Per Share Data: |
|
|
|
|
|
|
|
|
Net Loss1 |
|
(2.23 |
) |
|
(0.75 |
) |
|
(4.44 |
) |
|
(2.09 |
) |
Capital Raised from L
Bonds |
|
114,061 |
|
|
107,012 |
|
|
317,302 |
|
|
278,239 |
|
Liquidity2 |
|
177,745 |
|
|
91,254 |
|
|
177,745 |
|
|
91,254 |
|
Life Insurance Portfolio3 |
|
1,921,067 |
|
|
2,064,156 |
|
|
1,921,067 |
|
|
2,064,156 |
|
Life Insurance Acquired3 |
|
— |
|
|
3,155 |
|
|
— |
|
|
96,321 |
|
Face Value of Matured
Policies |
|
39,803 |
|
|
27,470 |
|
|
105,194 |
|
|
80,927 |
|
TTM Benefits / Premiums4 |
|
220.0 |
% |
|
164.9 |
% |
|
220.0 |
% |
|
164.9 |
% |
1. Per diluted common share outstanding.2.
Includes cash, restricted cash, policy benefits receivable
and fees receivable as of the end of the period
presented.3. Face amount of policy benefits as of the
end of the period presented.4. The ratio of policy
benefits realized to premiums paid on a trailing twelve-month (TTM)
basis.
2. Revenue and Expense
Discussion
Third Quarter 2020 vs. Third Quarter 2019:
- Total revenue was $28.5 million in
the current period, compared to $22.2 million in the prior period
primarily due to:
- $11.6 million
of interest income and $4.6 million of trust services revenues at
Beneficient.
- The
aforementioned increases were partially offset by:
- $3.7 million
lower net gain on life insurance policies due to no gain on policy
acquisitions, higher premiums paid, and maturities of policies with
a higher cumulative cost basis.
- $3.2 million
decrease to the fair value of Beneficient’s investment in put
options entered into on July 17, 2020, as its multi-year hedge to
protect its loan portfolio against potential market
corrections.
- Total expenses were $82.0 million
in the current period, compared to $43.6 million in the prior
period primarily due to:
- $12.5 million higher interest
expense due to higher average outstanding balances of L Bonds and
the senior credit facility, as well as the consolidation of the
Beneficient debt beginning December 31, 2019, which was paid down
by $50 million in July and September 2020.
- Higher
employee compensation and benefits ($24.6 million), legal and
professional fees ($5.2 million) and other expenses ($1.0 million)
primarily due to the consolidation of Beneficient. The increased
employee compensation and benefits expense is primarily related to
non-cash, equity-based compensation expense under Beneficient’s
equity incentive plans. These expenses are partially offset by
Beneficient’s loan loss provision recapture of $5.0 million during
the third quarter 2020.
Nine Months Ended September 30, 2020 vs. Nine
Months Ended September 30, 2019:
- Total revenue was $130.9 million in
the current period, compared to $71.4 million in the prior period
primarily due to:
- $36.3 million
of other income recognized by Beneficient in the second quarter of
2020 as a result of the forfeiture of vested equity-based
compensation related to one former director of Beneficient.
- $35.1 million
of interest income and $14.4 million of trust services revenues
added as a result of the consolidation of Beneficient.
- The
aforementioned increases were partially offset by:
- $15.9 million
lower net gain on life insurance policies due to no gain on policy
acquisitions, higher premiums paid and maturities of policies with
a higher cumulative cost basis.
- $3.2 million
decrease to the fair value of Beneficient’s investment in put
options entered into on July 17, 2020.
- Total expenses were $274.7 million
in the current period, compared to $127.4 million in the prior
period primarily due to:
- Employee compensation and benefits
increased by $102.2 million primarily due to the inclusion of
Beneficient’s operations, including the recognition of $96.3
million of non-cash, equity-based compensation expense under
Beneficient’s equity incentive plans, which includes amounts
awarded to Beneficient’s founders, directors, and certain
employees, some receiving 100% vesting at the time of grant due to
the terms of their grants or the length of their service.
- $30.1 million
higher interest expense due to higher average outstanding balances
of L Bonds, senior credit facility and Beneficient debt.
- Higher legal
and professional fees ($11.4 million), provision for loan losses
($2.9 million), and other expenses ($0.7 million) primarily due to
the consolidation of Beneficient effective as of December 31,
2019.
3. Beneficient’s
Collateral Portfolio Information
As of September 30, 2020, Beneficient’s
loan portfolio had exposure to 122 professionally managed
alternative investment funds, comprising 323 underlying
investments. Beneficient’s loan portfolio diversification to
alternative assets spans across the following industry sectors,
geographic regions and exposure types based on the underlying Net
Asset Value (NAV):
A graphic accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/a65248aa-a3e4-481e-a69e-909e994cb971
Assets in the collateral portfolio include
interests in alternative investment vehicles (also referred to as
funds) that are managed by a group of U.S. and non-U.S. based
alternative asset management firms that invest in a variety of
financial markets and utilize a variety of investment strategies.
The vintages of the funds in the collateral portfolio as of
September 30, 2020 ranged from 1993 to 2016.
4. Life Insurance
Portfolio Statistics as of and for the quarter ended
September 30, 2020
Portfolio Summary:
Total life insurance portfolio face value of policy benefits (in
thousands) |
$ |
1,921,067 |
|
Average face value per policy
(in thousands) |
$ |
1,777 |
|
Average face value per insured
life (in thousands) |
$ |
1,913 |
|
Weighted average age of
insured (years) |
|
82.9 |
|
Weighted average life
expectancy estimate (years) |
|
6.9 |
|
Total number of policies |
|
1,081 |
|
Number of unique lives |
|
1,004 |
|
Demographics |
|
74% male; 26% female |
|
Number of smokers |
|
43 |
|
Largest policy as % of total
portfolio face value |
|
0.7 |
% |
Average policy as % of total
portfolio |
|
0.1 |
% |
Average annual premium as % of
face value |
|
3.7 |
% |
|
|
|
|
Distribution of Policies and Benefits by Current
Age of Insured:
|
|
|
|
|
|
|
|
Percentage of Total |
|
Weighted |
Min Age |
|
Max Age |
|
Number of Policies |
|
Policy Benefits |
|
Number of Policies |
|
Policy Benefits |
|
Average LE (Years) |
63 |
|
69 |
|
45 |
|
$ |
50,840 |
|
|
4.2 |
% |
|
2.6 |
% |
|
10.3 |
70 |
|
74 |
|
199 |
|
230,244 |
|
|
18.4 |
% |
|
12.0 |
% |
|
10.7 |
75 |
|
79 |
|
207 |
|
364,936 |
|
|
19.1 |
% |
|
19.0 |
% |
|
9.6 |
80 |
|
84 |
|
221 |
|
392,196 |
|
|
20.5 |
% |
|
20.5 |
% |
|
7.4 |
85 |
|
89 |
|
235 |
|
547,893 |
|
|
21.7 |
% |
|
28.5 |
% |
|
4.9 |
90 |
|
94 |
|
149 |
|
284,856 |
|
|
13.8 |
% |
|
14.8 |
% |
|
3.1 |
95 |
|
100 |
|
25 |
|
50,102 |
|
|
2.3 |
% |
|
2.6 |
% |
|
2.2 |
Total |
|
|
|
1,081 |
|
$ |
1,921,067 |
|
|
100.0 |
% |
|
100.0 |
% |
|
6.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5. Additional
InformationGain (Loss) on Life Insurance Policies (in
thousands):
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Change in estimated probabilistic cash flows(1) |
|
$ |
14,723 |
|
|
$ |
17,908 |
|
|
$ |
47,923 |
|
|
$ |
52,161 |
|
Unrealized gain on acquisitions(2) |
|
— |
|
|
472 |
|
|
— |
|
|
6,775 |
|
Premiums and other annual
fees |
|
(18,235 |
) |
|
(17,219 |
) |
|
(53,060 |
) |
|
(49,055 |
) |
Face value of matured
policies |
|
39,803 |
|
|
27,470 |
|
|
105,194 |
|
|
80,927 |
|
Fair value of matured
policies |
|
(22,169 |
) |
|
(10,839 |
) |
|
(56,702 |
) |
|
(31,590 |
) |
Gain on life insurance
policies, net |
|
$ |
14,122 |
|
|
$ |
17,792 |
|
|
$ |
43,355 |
|
|
$ |
59,218 |
|
___________________________________(1) Change in
fair value of expected future cash flows relating to the investment
in life insurance policies that are not specifically attributable
to changes in life expectancy, discount rate changes or policy
maturity events.(2) Gain resulting from fair value
in excess of the purchase price for life insurance policies
acquired during the reporting period. There were no policy
acquisitions during the nine months ended September 30,
2020.
|
|
Policy Benefits
Realized and Premiums Paid (TTM): |
Quarter End Date |
Portfolio Face Amount (in thousands) |
12-MonthTrailingBenefitsRealized(in thousands) |
12-MonthTrailingPremiumsPaid(in thousands) |
12-MonthTrailing
Benefits/Premium
CoverageRatio |
September 30, 2016 |
|
1,272,078 |
|
|
35,867 |
|
|
37,055 |
|
|
96.8 |
% |
December 31, 2016 |
|
1,361,675 |
|
|
48,452 |
|
|
40,239 |
|
|
120.4 |
% |
March 31, 2017 |
|
1,447,558 |
|
|
48,189 |
|
|
42,753 |
|
|
112.7 |
% |
June 30, 2017 |
|
1,525,363 |
|
|
49,295 |
|
|
45,414 |
|
|
108.5 |
% |
September 30, 2017 |
|
1,622,627 |
|
|
53,742 |
|
|
46,559 |
|
|
115.4 |
% |
December 31, 2017 |
|
1,676,148 |
|
|
64,719 |
|
|
52,263 |
|
|
123.8 |
% |
March 31, 2018 |
|
1,758,066 |
|
|
60,248 |
|
|
53,169 |
|
|
113.3 |
% |
June 30, 2018 |
|
1,849,079 |
|
|
76,936 |
|
|
53,886 |
|
|
142.8 |
% |
September 30, 2018 |
|
1,961,598 |
|
|
75,161 |
|
|
55,365 |
|
|
135.8 |
% |
December 31, 2018 |
|
2,047,992 |
|
|
71,090 |
|
|
52,675 |
|
|
135.0 |
% |
March 31, 2019 |
|
2,098,428 |
|
|
87,045 |
|
|
56,227 |
|
|
154.8 |
% |
June 30, 2019 |
|
2,088,445 |
|
|
82,421 |
|
|
59,454 |
|
|
138.6 |
% |
September 30, 2019 |
|
2,064,156 |
|
|
101,918 |
|
|
61,805 |
|
|
164.9 |
% |
December 31, 2019 |
|
2,020,973 |
|
|
125,148 |
|
|
63,851 |
|
|
196.0 |
% |
March 31, 2020 |
|
2,000,680 |
|
|
120,191 |
|
|
65,224 |
|
|
184.3 |
% |
June 30, 2020 |
|
1,960,826 |
|
|
137,082 |
|
|
66,846 |
|
|
205.1 |
% |
September 30, 2020 |
|
1,921,067 |
|
|
149,415 |
|
|
67,931 |
|
|
220.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Webcast Details
Management will host a webcast today, Monday, November 23, 2020
at 4:30 p.m. EST to discuss financial and operating results. The
webcast will give viewers audio and access to PowerPoint slides
that illustrate points made during the presentation. To register
for the webcast, go to http://get.gwgh.com/q32020webcastinvite.
After the webcast is completed, a replay of it can be accessed
at http://get.gwgh.com/q32020webcast.
About GWG Holdings,
Inc.
GWG Holdings, Inc. (Nasdaq: GWGH) is an
innovative financial services firm based in Dallas, Texas that is a
leader in providing investments that are non-correlated to the
traded markets, and unique liquidity solutions and services for the
owners of illiquid investments. Through its subsidiaries, The
Beneficient Company Group, L.P. and GWG Life,
LLC, GWGH owns and manages a diverse portfolio of alternative
assets that, as of September 30, 2020, included $1.9 billion
in life insurance policy benefits, and exposure to a diversified
and growing loan portfolio secured by 122 professionally managed
alternative investment funds.
For more information about GWG Holdings,
email info@gwgh.com or visit www.gwgh.com. For more
information about Beneficient,
email askben@beneficient.com or
visit www.trustben.com.
Cautionary Statement Regarding
Forward-Looking Statements and Other
Disclaimers:
This press release contains forward-looking
statements that involve substantial risks and uncertainties. All
statements, other than statements of historical facts, included in
this press release regarding our strategy, future operations,
future financial position, future revenue, projected costs,
prospects, plans and objectives of management are forward-looking
statements. The words “anticipate,” “believe,” “estimate,”
“expect,” “intend,” “may,” “plan,” “would,” “target” and similar
expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these
identifying words. These forward-looking statements include, among
other things, statements about our estimates regarding future
revenue and financial performance. We may not actually achieve the
expectations disclosed in our forward-looking statements, and you
should not place undue reliance on our forward-looking statements.
Actual results or events could differ materially from the
expectations disclosed in the forward-looking statements that we
make. More information about potential factors that could affect
our business and financial results is contained in our filings with
the Securities and Exchange Commission, including our Quarterly
Report on Form 10-Q filed with the Securities and Exchange
Commission (“SEC”) on November 19, 2020, and our Annual Report
on Form 10-K filed with the SEC on March 27, 2020. Additional
information will also be set forth in our future quarterly reports
on Form 10-Q, annual reports on Form 10-K and other filings that we
make with the SEC. We do not intend, and undertake no duty, to
release publicly any updates or revisions to any forward-looking
statements contained herein.
These materials contain data concerning
interests in alternative assets. The cash flow from these interests
underlie the senior beneficial interests and beneficial interests
in trusts that comprise the collateral of Ben’s loan
portfolio. The data presented herein does not contain
information relating to non-alternative assets (such as common
stock and bonds of GWGH) and is derived from, among other things,
third-party information regarding the net asset value (NAV) of
these alternative assets and investments within these alternative
assets. Generally, Beneficient uses the most recently received NAV
report from each investment manager, which can be adjusted for
certain cash and non-cash items including capital calls,
distributions, updated material events, and currency valuation
adjustments. Beneficient is not affiliated with, and has no control
over, any portfolio investment manager, including with respect to
the timing, accuracy and completeness of their reporting of
financial and other data. Additional information regarding
Beneficient's loan portfolio is available on its website at
www.trustben.com. The information on Beneficient's website is not
part of, or incorporated by reference in, this press release.
Media Contact:Dan
CallahanDirector of CommunicationGWG Holdings, Inc.(612)
787-5744dcallahan@gwgh.com
|
|
GWG HOLDINGS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(dollars in thousands) |
|
|
September 30,2020
(unaudited) |
|
December 31,2019 |
ASSETS |
|
|
|
Cash and cash equivalents |
$ |
93,766 |
|
|
$ |
79,073 |
|
Restricted cash |
15,990 |
|
|
20,258 |
|
Investment in life insurance
policies, at fair value |
787,260 |
|
|
796,039 |
|
Life insurance policy benefits
receivable, net |
36,418 |
|
|
23,031 |
|
Loans receivable, net of
discount |
229,961 |
|
|
232,344 |
|
Allowance for loan losses |
(2,914 |
) |
|
— |
|
Loans receivable, net |
227,047 |
|
|
232,344 |
|
Fees receivable |
31,571 |
|
|
29,168 |
|
Financing receivables from
affiliates |
— |
|
|
67,153 |
|
Other assets |
53,501 |
|
|
30,135 |
|
Goodwill |
2,384,121 |
|
|
2,358,005 |
|
TOTAL ASSETS |
$ |
3,629,674 |
|
|
$ |
3,635,206 |
|
LIABILITIES & STOCKHOLDERS’ EQUITY |
|
|
|
LIABILITIES |
|
|
|
Senior credit facility with
LNV Corporation |
$ |
203,907 |
|
|
$ |
174,390 |
|
L Bonds |
1,154,519 |
|
|
926,638 |
|
Seller Trust L Bonds |
366,892 |
|
|
366,892 |
|
Other borrowings |
100,178 |
|
|
153,086 |
|
Interest and dividends
payable |
23,821 |
|
|
16,516 |
|
Deferred revenue |
35,848 |
|
|
41,444 |
|
Accounts payable and accrued
expenses |
33,235 |
|
|
27,836 |
|
Deferred tax liability,
net |
52,500 |
|
|
57,923 |
|
TOTAL LIABILITIES |
1,970,900 |
|
|
1,764,725 |
|
|
|
|
|
Redeemable noncontrolling
interests |
1,246,753 |
|
|
1,269,654 |
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
REDEEMABLE PREFERRED
STOCK |
|
|
|
(par value $0.001; shares authorized 100,000; shares outstanding
59,681 and 84,636; liquidation preference of $63,354 and $85,130 as
of September 30, 2020 and December 31, 2019,
respectively) |
49,068 |
|
|
74,023 |
|
SERIES 2 REDEEMABLE PREFERRED
STOCK |
|
|
|
(par value $0.001; shares authorized 150,000; shares outstanding
137,341 and 147,164; liquidation preference of $138,142 and
$148,023 as of September 30, 2020 and December 31, 2019,
respectively) |
118,045 |
|
|
127,868 |
|
COMMON STOCK |
|
|
|
(par value $0.001; shares authorized 210,000,000; shares issued and
outstanding 33,094,664 and 33,033,793 as of September 30, 2020
and December 31, 2019, respectively) |
33 |
|
|
33 |
|
Common stock in treasury, at
cost (2,500,000 shares as of both September 30, 2020 and
December 31, 2019) |
(24,550 |
) |
|
(24,550 |
) |
Additional paid-in
capital |
178,969 |
|
|
233,106 |
|
Accumulated deficit |
(200,935 |
) |
|
(76,501 |
) |
TOTAL GWG HOLDINGS
STOCKHOLDERS’ EQUITY |
167,406 |
|
|
333,979 |
|
Noncontrolling interests |
291,391 |
|
|
266,848 |
|
TOTAL STOCKHOLDERS’
EQUITY |
412,021 |
|
|
600,827 |
|
TOTAL LIABILITIES &
STOCKHOLDERS’ EQUITY |
$ |
3,629,674 |
|
|
$ |
3,635,206 |
|
|
|
|
|
|
|
|
|
GWG HOLDINGS, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(dollars in
thousands)(unaudited) |
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
REVENUE |
|
|
|
|
|
|
|
|
Gain on life insurance policies, net |
|
$ |
14,122 |
|
|
$ |
17,792 |
|
|
$ |
43,355 |
|
|
$ |
59,219 |
|
Interest income |
|
12,928 |
|
|
3,935 |
|
|
39,588 |
|
|
11,273 |
|
Trust services revenues |
|
4,556 |
|
|
— |
|
|
14,412 |
|
|
— |
|
Other income (loss) |
|
(3,093 |
) |
|
484 |
|
|
33,504 |
|
|
947 |
|
TOTAL REVENUE |
|
28,513 |
|
|
22,211 |
|
|
130,859 |
|
|
71,439 |
|
EXPENSES |
|
|
|
|
|
|
|
|
Interest expense |
|
40,792 |
|
|
28,290 |
|
|
113,805 |
|
|
83,752 |
|
Employee compensation and benefits |
|
33,777 |
|
|
9,137 |
|
|
123,321 |
|
|
21,085 |
|
Legal and professional fees |
|
7,830 |
|
|
2,594 |
|
|
21,636 |
|
|
10,263 |
|
(Recapture) provision for loan losses |
|
(4,986 |
) |
|
— |
|
|
2,914 |
|
|
— |
|
Other expenses |
|
4,550 |
|
|
3,549 |
|
|
13,057 |
|
|
12,316 |
|
TOTAL EXPENSES |
|
81,963 |
|
|
43,570 |
|
|
274,733 |
|
|
127,416 |
|
LOSS BEFORE INCOME TAXES |
|
(53,450 |
) |
|
(21,359 |
) |
|
(143,874 |
) |
|
(55,977 |
) |
INCOME TAX EXPENSE (BENEFIT) |
|
22,444 |
|
|
— |
|
|
(613 |
) |
|
— |
|
NET LOSS BEFORE INCOME (LOSS) FROM EQUITY METHOD INVESTMENT |
|
(75,894 |
) |
|
(21,359 |
) |
|
(143,261 |
) |
|
(55,977 |
) |
Income (loss) from equity method investment |
|
(1,431 |
) |
|
956 |
|
|
(4,279 |
) |
|
(371 |
) |
NET LOSS |
|
(77,325 |
) |
|
(20,403 |
) |
|
(147,540 |
) |
|
(56,348 |
) |
Net loss attributable to noncontrolling interests |
|
12,745 |
|
|
— |
|
|
23,106 |
|
|
— |
|
Less: Preferred stock dividends |
|
3,569 |
|
|
4,232 |
|
|
11,235 |
|
|
12,806 |
|
NET LOSS ATTRIBUTABLE TO
COMMON SHAREHOLDERS |
|
$ |
(68,149 |
) |
|
$ |
(24,635 |
) |
|
$ |
(135,669 |
) |
|
$ |
(69,154 |
) |
NET LOSS PER COMMON SHARE |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(2.23 |
) |
|
$ |
(0.75 |
) |
|
$ |
(4.44 |
) |
|
$ |
(2.09 |
) |
Diluted |
|
$ |
(2.23 |
) |
|
$ |
(0.75 |
) |
|
$ |
(4.44 |
) |
|
$ |
(2.09 |
) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
|
|
|
|
|
|
|
|
Basic |
|
30,584,719 |
|
|
33,033,420 |
|
|
30,552,233 |
|
|
33,010,100 |
|
Diluted |
|
30,584,719 |
|
|
33,033,420 |
|
|
30,552,233 |
|
|
33,010,100 |
|
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