Imperial Holdings, Inc. IFT ("Imperial" or the "Company"), a specialty finance company with a focus on providing liquidity solutions to owners of illiquid financial assets, announced today its financial results for the three and nine month periods ended September 30, 2014.
Three Months Ended September 30, 2014
Total income from continuing operations was a loss of $3.6 million for the three months ended September 30, 2014 compared to total income of $14.8 million for the same period in 2013. The loss for the three months ended September 30, 2014 was primarily driven by a decrease of $6.0 million in the fair value of certain policies within the Company's portfolio of life settlements. The reduction in fair value was primarily driven by the lengthening of certain life expectancies estimates updated during the three month period and partially offset by a decrease in the weighted average discount rate. The decrease was offset by a gain of $2.4 million in the fair value of two policies acquired during the quarter. Total expenses were $2.9 million for the three months ended September 30, 2014 compared to $8.7 million for the same period in 2013. The decrease was primarily driven by a decrease in fair value of the Company's revolving credit facility of $8.4 million resulting from the lengthening of certain life insurance policies within the revolving credit facility.
The Company reported a net loss from continuing operations of $4.3 million, or ($.20) per fully diluted share, for the three months ended September 30, 2014, compared to net income of $6.1 million, or $.29 per fully diluted share, for the same period in 2013.
Nine Months Ended September 30, 2014
Total income from continuing operations was a $19.0 million for the nine months ended September 30, 2014 compared to $82.6 million for the same period in 2013. The reduction in income for the nine months ended September 30, 2014 was primarily driven by the one-time gain associated with the acquisition of 422 polices during the second quarter of 2013. Total expenses were $35.3 million for the nine months ended September 30, 2014 compared to $34.6 million for the same period in 2013.
The Company reported a net loss from continuing operations of $13.9 million, or ($.65) per fully diluted share, for the nine months ended September 30, 2014, compared to net income of $47.9 million, or $2.26 per fully diluted share, for the same period in 2013.
As of September 30, 2014, the Company had cash and cash equivalents of approximately $58.4 million and had 21,402,990 shares outstanding with a per share book value of $9.63.
Life Settlements Portfolio Highlights
At September 30, 2014, the estimated fair value of the Company's 595 life insurance policies was $350.4 million compared to $303.0 million for 612 life insurance policies at December 31, 2013. The weighted average discount rate was 18.56% at September 30, 2014 compared to 19.14% at December 31, 2013. The aggregate face value of the Company's portfolio of life insurance policies was approximately $2.9 billion at September 30, 2014. During the quarter, the Company acquired two policies for $3.5 million that added $14.4 million in face value to its portfolio.
Antony Mitchell, Chief Executive Officer of Imperial, commented: “During the third quarter, the Company began deploying the proceeds of its convertible note offering which was completed earlier this year and we have created a significant and attractive pipeline of business. We continue to focus on growth and diversification of our portfolio and plan to steadily increase our investments well into 2015. We believe there are ample opportunities in the space and we expect our future deployment to provide a meaningful return on our investment.”
Conference Call
The Company will host a conference call today at 5:00 P.M. ET. To join the call please dial US Toll Free (877) 312-5529 or from Outside of the US (253) 237-1147 and provide Conference ID 14450816 when prompted.
The conference call will also be broadcast live through a link on the Investor Relations section of the Company's website at www.imperial.com. Please visit the website at least 10 minutes prior to the call to register, download and install any necessary audio software.
About Imperial Holdings, Inc.
Imperial is a leading specialty finance company that provides customized liquidity solutions to owners of illiquid financial assets. More information about Imperial can be found at www.imperial.com.
Safe Harbor Statement
This press release may contain certain "forward-looking statements" relating to the business of Imperial Holdings, 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 Imperial 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, Imperial does not assume a duty to update these forward-looking statements.
| Imperial Holdings, Inc. and Subsidiaries | |||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| September 30, | December 31, | ||||||||||
| 2014 | 2013* | ||||||||||
| (Unaudited) | |||||||||||
| (In thousands except share data) | |||||||||||
| ASSETS | |||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 53,745 | $ | 14,722 | |||||||
| Cash and cash equivalents (VIE) | 4,647 | 7,977 | |||||||||
| Restricted cash | - | 13,506 | |||||||||
| Prepaid expenses and other assets | 1,717 | 1,331 | |||||||||
| Deposits - other | 1,353 | 1,597 | |||||||||
| Deposits on purchase of life settlements | 50 | - | |||||||||
| Structured settlement receivables, at estimated fair value | 383 | 660 | |||||||||
| Structured settlement receivables at cost, net | 599 | 797 | |||||||||
| Investment in life settlements, at estimated fair value | 54,914 | 48,442 | |||||||||
| Investment in life settlements, at estimated fair value (VIE) | 295,469 | 254,519 | |||||||||
| Receivable for maturity of life settlements (VIE) | - | 2,100 | |||||||||
| Fixed assets, net | 202 | 74 | |||||||||
| Investment in affiliates | 2,385 | 2,378 | |||||||||
| Deferred debt costs, net | 2,295 | - | |||||||||
| Total assets | $ | 417,759 | $ | 348,103 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Liabilities | |||||||||||
| Accounts payable and accrued expenses | $ | 5,209 | $ | 2,977 | |||||||
| Accounts payable and accrued expenses (VIE) | 337 | 341 | |||||||||
| Other liabilities | 1,039 | 21,221 | |||||||||
| Interest payable - senior unsecured convertible notes | 768 | - | |||||||||
| Revolving Credit Facility debt, at estimated fair value (VIE) | 142,661 | 123,847 | |||||||||
| Senior unsecured convertible notes, net of discount | 55,250 | - | |||||||||
| Income taxes payable | - | 6,295 | |||||||||
| Deferred tax liability | 6,383 | - | |||||||||
| Total liabilities | 211,647 | 154,681 | |||||||||
| Commitments and Contingencies | |||||||||||
| Stockholders' Equity | |||||||||||
| Common stock (par value $0.01 per share, 80,000,000 authorized; 21,402,990 and | |||||||||||
| 21,237,166 issued and outstanding as of September 30, 2014 and December 31, 2013, respectively) | 214 | 212 | |||||||||
| Additional paid-in-capital | 266,511 | 239,506 | |||||||||
| Accumulated deficit | (60,613 | ) | (46,296 | ) | |||||||
| Total stockholders' equity | 206,112 | 193,422 | |||||||||
| Total liabilities and stockholders' equity | $ | 417,759 | $ | 348,103 | |||||||
| * Derived from audited consolidated financial statements. | |||||||||||
| Imperial Holdings, Inc. and Subsidiaries | |||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||
| Income | (in thousands, except share and per share data) | ||||||||||||||||
| Interest income | $ | 9 | $ | - | $ | 22 | $ | 28 | |||||||||
| Interest and dividends on investment securities available for sale | - | - | - | 14 | |||||||||||||
| Loss on life settlements, net | - | (461 | ) | (426 | ) | (1,708 | ) | ||||||||||
| Change in fair value of life settlements (Notes 8 & 11) | (3,643 | ) | 15,262 | 19,313 | 81,948 | ||||||||||||
| Servicing fee income | - | - | - | 310 | |||||||||||||
| Other income | 17 | 8 | 72 | 2,015 | |||||||||||||
| Total (loss) income | (3,617 | ) | 14,809 | 18,981 | 82,607 | ||||||||||||
| Expenses | |||||||||||||||||
| Interest expense | 4,303 | 1,158 | 11,165 | 12,020 | |||||||||||||
| Loss on extinguishment of Bridge Facility | - | - | - | 3,991 | |||||||||||||
| Change in fair value of Revolving Credit Facility debt (Notes 9 & 11) | (8,375 | ) | 66 | (4,556 | ) | (5,295 | ) | ||||||||||
| Change in fair value of conversion derivative liability (Notes 10 & 11) | - | - | 6,759 | - | |||||||||||||
| Gain on loan payoffs and settlements, net | - | - | - | (65 | ) | ||||||||||||
| Amortization of deferred costs | - | - | - | 7 | |||||||||||||
| Personnel costs | 1,910 | 1,924 | 6,627 | 6,216 | |||||||||||||
| Legal fees | 2,943 | 3,271 | 9,121 | 11,254 | |||||||||||||
| Professional fees | 1,143 | 1,503 | 3,562 | 3,564 | |||||||||||||
| Insurance | 414 | 478 | 1,253 | 1,475 | |||||||||||||
| Other selling, general and administrative expenses | 544 | 303 | 1,365 | 1,476 | |||||||||||||
| Total expenses | 2,882 | 8,703 | 35,296 | 34,643 | |||||||||||||
| (Loss) income from continuing operations before income taxes | (6,499 | ) | 6,106 | (16,315 | ) | 47,964 | |||||||||||
| Benefit (provision) for income taxes | 2,235 | - | 2,452 | (40 | ) | ||||||||||||
| Net (loss) income from continuing operations | $ | (4,264 | ) | $ | 6,106 | $ | (13,863 | ) | $ | 47,924 | |||||||
| Discontinued Operations: | |||||||||||||||||
| (Loss) income from discontinued operations, net of income taxes | $ | (249 | ) | $ | 55 | $ | (454 | ) | $ | 1,627 | |||||||
| Net (loss) income | $ | (4,513 | ) | $ | 6,161 | $ | (14,317 | ) | $ | 49,551 | |||||||
| Earnings per share: | |||||||||||||||||
| Basic and diluted earnings per common share | |||||||||||||||||
| Continuing operations | $ | (0.20 | ) | $ | 0.29 | $ | (0.65 | ) | $ | 2.26 | |||||||
| Discontinued operations | $ | (0.01 | ) | - | $ | (0.02 | ) | $ | 0.08 | ||||||||
| Net (loss) income | $ | (0.21 | ) | $ | 0.29 | $ | (0.67 | ) | $ | 2.34 | |||||||
| Weighted average shares outstanding: | |||||||||||||||||
| Basic weighted average common shares outstanding | 21,361,930 | 21,219,880 | 21,352,086 | 21,215,344 | |||||||||||||
|
Diluted weighted average common shares outstanding |
21,361,930 | 21,223,027 | 21,352,086 | 21,215,392 | |||||||||||||
| Life Finance Business Center | ||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| Period Acquisitions — Policies Owned | ||||||||||||
| Number of policies acquired | 2 | 2 | 2 | 432 | ||||||||
| Average age of insured at acquisition | 84.5 | 72.7 | 84.5 | 77.7 | ||||||||
| Average life expectancy - Calculated LE (Years) | 5.6 | 15.9 | 5.6 | 12.7 | ||||||||
| Average death benefit | $ | 7,176 | $ | 6,000 | $ | 7,176 | $ | 4,749 | ||||
| Aggregate purchase price | $ | 3,488 | $ | 245 | $ | 3,488 | $ | 58,645 | ||||
| End of Period — Policies Owned | ||||||||||||
| Number of policies owned | 595 | 622 | 595 | 622 | ||||||||
| Average Life Expectancy - Calculated LE (Years) | 11.0 | 11.9 | 11.0 | 11.9 | ||||||||
| Aggregate Death Benefit | $ | 2,888,289 | $ | 2,999,040 | $ | 2,888,289 | $ | 2,999,040 | ||||
| Aggregate fair value | $ | 350,383 | $ | 292,383 | $ | 350,383 | $ | 292,383 | ||||
| Monthly premium — average per policy | $ | 7.6 | $ | 7.5 | $ | 7.6 | $ | 7.5 | ||||
Imperial Holdings, Inc.
David Sasso, 561-955-4300
Director-
Investor Relations
IR@imperial.com
www.imperial.com
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