Emergent Capital, Inc. Announces First Quarter 2016 Results

News provided by

Emergent Capital, Inc.

May 09, 2016, 04:05 ET

BOCA RATON, Fla., May 9, 2016 /PRNewswire/ -- Emergent Capital, Inc. (NYSE: EMG) ("Emergent" or the "Company"), today announced its financial results for the three month period ended March 31, 2016.

Three Months Ended March 31, 2016
Total income from continuing operations was $8.5 million for the three month period ended March 31, 2016 compared to income from continuing operations of $13.0 million for the same period in 2015.   This decrease was primarily due to a $3.4 million reduction in realized gains from policy maturities.

The following table provides a summary of the components of income from the Company's life settlements.

Three Months Ended
March 31, 2016

Three Months Ended
March 31, 2015

Change in estimated probabilistic cash flows

$

18,828,990

$

21,093,601

Premiums paid during period

(16,653,465)

(15,528,155)

Change in life expectancy evaluation

(2,066,712)

(11,092,090)

Change in discount rates

—

3,332,671

Unrealized gain on acquisitions

—

3,420,895

Realized gain on maturities

8,278,763

11,685,383

Change in fair value of life settlements

$

8,387,576

$

12,912,305





Total expenses from continuing operations were $15.9 million for the three month period ended March 31, 2016 compared to $19.1 million for the same period in 2015. The decrease was primarily related to a reduction of $1.9 million in legal expenses and $680,000 in professional fees.  The decrease in legal fees was primarily related to the USAO Investigation that concluded on December 31, 2015.

The Company reported a net loss from continuing operations of $7.4 million, or $(0.27) per diluted share for the three month period ended March 31, 2016, compared to a net loss of $4.2 million, or $(0.19) per diluted share for the same period in 2015. The net loss for the three month period ended March 31, 2015 includes an income tax benefit of approximately $1.9 million.  There was no tax benefit included in the net loss for the three month period ended March 31, 2016.


Life Settlements Portfolio Highlights
On March 31, 2016, the estimated fair value of the Company's 626 life insurance policies was $475.4 million compared to $461.9 million for 632 life insurance policies on December 31, 2015. The weighted average discount rate was 16.92% on March 31, 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 March 31, 2016. During the quarter, six life insurance policies that served as collateral under the revolving credit facilities matured totaling $13.0 million.

Antony Mitchell, Chief Executive Officer of Emergent, commented: "We remain keenly focused on reducing our cash expenses going forward. In the first quarter we benefited from lower operating expenses, excluding interest and other related financing costs, which resulted in a $2.9 million, or 34%, reduction year over year." Mr. Mitchell continued, "Looking ahead, we expect cash costs to decline further while we look for opportunities to maximize value from our maturing portfolio."

As of March 31, 2016 the Company had cash and cash equivalents of $47.9 million and a Book Value per share of $7.74.

Conference Call
The Company will be hosting a conference call today at 4:30pm 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 Capital (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
March 31,

2016

2015

(in thousands, except share and per
share data)

Income

Change in fair value of life settlements

8,388

12,912




Other income

66

68

Total income (loss)

8,454

12,980

Expenses


Interest expense

6,050

6,278

Change in fair value of Revolving Credit Facilities

4,097

4,139

Personnel costs

1,557

1,728

Legal fees

1,818

3,761

Professional fees

1,643

2,323

Insurance

244

346

Other selling, general and administrative expenses

490

507

Total expenses

15,899

19,082

Income (loss) from continuing operations before income taxes

(7,445)

(6,102)

Benefit for income taxes

—

1,937

Net income (loss) from continuing operations

$

(7,445)

$

(4,165)

Discontinued Operations:


Income (loss) from discontinued operations

(68)

(256)

Benefit for income taxes

—

99

Net income (loss) from discontinued operations

(68)

(157)

Net income (loss)

$

(7,513)

$

(4,322)

Basic and diluted income (loss) per share:


Continuing operations

$

(0.27)

$

(0.19)

Discontinued operations

$

—

$

(0.01)

Net income (loss) from continuing operations

$

(0.27)

$

(0.20)

Weighted average shares outstanding:


Basic and Diluted

27,481,249

21,361,930

Emergent Capital, Inc.

CONSOLIDATED BALANCE SHEETS


March 31,
 2016

December 31,
 2015*

(Unaudited)


(In thousands except share data)

ASSETS


Assets


Cash and cash equivalents

$

32,450

$

12,946

Cash and cash equivalents (VIE)

15,446

7,395

Certificate of deposit

2,502

2,501

Prepaid expenses and other assets

1,687

1,017

Deposits - other

1,347

1,347

Deposits - other (VIE)

150

—

Deposits on purchases of life settlements

31

—

Life settlements, at estimated fair value

14,490

11,946

Life settlements, at estimated fair value (VIE)

460,870

449,979

Receivable for maturity of life settlements (VIE)

15,588

18,223

Fixed assets, net

302

322

Investment in affiliates

2,384

2,384

Total assets

$

547,247

$

508,060

LIABILITIES AND STOCKHOLDERS' EQUITY


Liabilities


Accounts payable and accrued expenses

$

4,479

$

3,051

Accounts payable and accrued expenses (VIE)

436

419

Other liabilities

1,732

360

Interest payable - Convertible Notes

768

2,272

Convertible Notes, net of discount and deferred debt costs

57,673

56,812

Interest payable - Senior Secured Notes

215

—

Senior Secured Notes, net of discount and deferred debt costs

29,069

—

White Eagle Revolving Credit Facility, at estimated fair value (VIE)

182,311

169,131

Red Falcon Revolving Credit Facility, at estimated fair value (VIE)

57,660

55,658

Total liabilities

334,343

287,703

Commitments and Contingencies


Stockholders' Equity


Common stock (par value $0.01 per share, 80,000,000 authorized; 28,130,508 issued
and 27,522,508 outstanding as of March 31, 2016 and December 31, 2015)

281

281




Preferred stock (par value $0.01 per share, 40,000,000 authorized; 0 issued and
outstanding as of March 31, 2016 and December 31, 2015)

—

—

Treasury Stock, net of cost (608,000 shares as of March 31, 2016 and December 31,
2015)

(2,534)

(2,534)

Additional paid-in-capital

305,510

305,450

Accumulated deficit

(90,353)

(82,840)

Total stockholders' equity

212,904

220,357

Total liabilities and stockholders' equity

$

547,247

$

508,060

 *      Derived from audited consolidated financial statements.

Selected Operating Data (dollars in thousands):



Three Months Ended March
31,


2016

2015

Period Acquisitions — Policies Owned




Number of policies acquired

—

30

Average age of insured at acquisition

—

86.0

Average life expectancy — Calculated LE (Years)

—

5.0

Average death benefit

$

—

$

2,798

Aggregate purchase price

$

—

$

25,411

End of Period — Policies Owned




Number of policies owned

626

632

Average Life Expectancy — Calculated LE (Years)

9.7

10.4

Aggregate Death Benefit

$

2,969,670

$

3,001,987

Aggregate fair value

$

475,360

$

429,550

Monthly premium — average per policy

$

9.6

$

8.2

Period Maturities




Number of policies matured

6

5

Average age of insured at maturity

85

83

Average life expectancy - Calculated LE (Years)

5.5

9.8

Aggregate death benefit

$

12,980

$

13,188

Gains on maturity

$

8,279

$

11,685

Proceeds collected

$

15,480

$

13,000

Logo - http://photos.prnewswire.com/prnh/20150902/263203LOGO

SOURCE Emergent Capital, Inc.

Related Links

http://www.emergentcapital.com

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