Imperial Holdings, Inc. Announces Second Quarter 2015 Results

Company Reports Book Value of $8.90 per Share

Quarterly Maturities Total $36.6 million

Aug 04, 2015, 16:10 ET from Imperial Holdings, Inc.

BOCA RATON, Fla., Aug. 4, 2015 /PRNewswire/ -- Imperial Holdings, Inc. (NYSE: 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 six month periods ended June 30, 2015.

Three Months Ended June 30, 2015

Total income from continuing operations was $28.0 million for the three months ended June 30, 2015 compared to total income from continuing operations of $9.0 million for the same period in 2014. This increase was primarily from the realized gains of seven life settlement policies during the period.

The following table provides a summary of the components of income from the changes in fair value of life settlements.

 

For the Three

Months Ended

June 30, 2015

For the Three

Months Ended

June 30, 2014

Change in present value of probabilistic cash flows

19,624,181

18,029,760

Premiums paid during period

(15,889,078)

(13,622,205)

Change in life expectancy evaluation

(3,350,156)

4,592,542

Change in discount rates

507,832

-

Unrealized gain on acquisitions

974,857

-

Realized gain on maturities

26,134,366

-

Change in fair value of life settlements

28,002,002

9,000,098

Total expenses were $27.4 million for the three months ended June 30, 2015 compared to $19.5 million for the same period in 2014. The increase was primarily driven by a non-cash change in the fair value (liability) of the Company's revolving credit facility of $13.6 million due to projected early repayment of the Revolving Credit Facility given earlier than projected maturities during the second quarter and increased borrowings.

The Company reported net income from continuing operations of $966,000, or $.04 per fully diluted share, for the three months ended June 30, 2015, compared to a net loss of $6.3 million, or ($.29) per fully diluted share, for the same period in 2014. The fully diluted share count includes approximately 6.69 million shares issued in the second quarter of 2015 as part of the Company's equity rights offering.

Six Months Ended June 30, 2015

Total income from continuing operations was $41.0 million for the six months ended June 30, 2015 compared to total income from continuing operations of $22.6 million for the same period in 2014. The increase was primarily due to realized gains of 12 life settlement policies totaling $37.8 million which occurred during the first half of 2015.

The following table provides a summary of the components of income from the changes in fair value of life settlements.

 

For the Six

Months Ended

June 30, 2015

For the Six

Months Ended

June 30, 2014

Change in estimated probabilistic cash flows

40,717,779

35,747,610

Premiums paid during period

(31,417,233)

(26,886,477)

Change in life expectancy evaluation

(14,442,245)

3,526,527

Change in discount rates

3,840,503

-

Unrealized gain on acquisitions

4,395,751

-

Realized gain on maturities

37,819,749

10,609,292

Change in fair value of life settlements

40,914,304

22,956,982

Total expenses were $46.5 million for the six months ended June 30, 2015 compared to $32.4 million for the same period in 2014. The increase was primarily due to an increase in the fair value (liability) of the Company's revolving credit facility of $13.9 million and higher interest expense of $6.0 million.

The Company reported a net loss from continuing operations of $3.2 million, or ($.15) per fully diluted share, for the six months ended June 30, 2015, compared to a net loss of $9.6 million, or ($.45) per fully diluted share, for the same period in 2014.

As of June 30, 2015, the Company had cash and cash equivalents of approximately $55.6 million.  The Company had 28,130,508 shares outstanding at June 30, 2015 and a book value of $8.90 per share.

Life Settlements Portfolio Highlights

At June 30, 2015, the estimated fair value of the Company's 633 life insurance policies was $439.0 million compared to $388.9 million for 607 life insurance policies at December 31, 2014. The weighted average discount rate was 17.13% at June 30, 2015 compared to 17.77% at December 31, 2014. The aggregate face value of the Company's portfolio of life insurance policies was approximately $3.0 billion at June 30, 2015. During the quarter, seven life settlement policies matured totaling $36.6 million. For the first six months of 2015, 12 life settlement policies matured totaling $49.8 million.

Antony Mitchell, Chief Executive Officer of Imperial, commented: "Income in the second quarter was strong with $36.6 million in maturities, bringing first half maturities to $49.8 million. To put this in perspective, maturities in the first half of 2015 exceeded all of 2013 and 2014 combined." Mr. Mitchell concluded, "We are also very pleased to have recently closed a second revolving credit facility on favorable terms allowing us to meaningfully reduce our cash outlay and lock in the value of virtually our entire balance sheet."

Conference Call

The Company will host a conference call today at 5:00 P.M ET. To join the call please dial Toll Free (877) 870-4263 or from Outside of the US (412) 317-0790.

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.

-SELECTED FINANCIAL TABLES FOLLOW-

 

Imperial Holdings, Inc. and Subsidiary Companies

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Three Months Ended 

For the Six Months Ended 

June 30,

June 30,

2015

2014

2015

2014

Income

(in thousands, except share and per share data)

Interest income

$                      4

$                11

$                  10

$                   13

Loss on life settlements, net

-

(67)

-

(426)

Change in fair value of life settlements

28,002

9,000

40,914

22,956

Other income

28

52

91

55

  Total income

28,034

8,996

41,015

22,598

Expenses

Interest expense

6,600

4,061

12,877

6,862

Change in fair value of Revolving Credit Facility debt 

13,552

2,689

17,692

3,818

Change in fair value of conversion derivative liability 

-

4,697

-

6,759

Personnel costs

1,752

2,548

3,480

4,716

Legal fees

3,214

3,335

6,975

6,179

Professional fees

1,382

1,248

3,705

2,420

Insurance

312

416

658

839

Other selling, general and administrative expenses

578

476

1,086

822

  Total expenses

27,390

19,470

46,473

32,415

 Income (loss) from continuing operations before income taxes

644

(10,474)

(5,458)

(9,817)

  Benefit for income taxes

322

4,193

2,260

217

Net income (loss) from continuing operations

$                  966

$         (6,281)

$            (3,198)

$             (9,600)

Discontinued Operations:

Loss from discontinued operations

(236)

(185)

(492)

(204)

   Benefit for income taxes

91

-

190

-

Net loss from discontinued operations

$                (145)

$            (185)

$               (302)

$                (204)

Net income (loss)

$                  821

$         (6,466)

$            (3,500)

$             (9,804)

Basic and diluted income (loss) per share:

Continuing operations

$                 0.04

$           (0.29)

$              (0.15)

$               (0.45)

Discontinued operations

$                       -

$           (0.01)

$              (0.01)

$               (0.01)

Net income (loss) from continuing operations

$                 0.04

$           (0.30)

$              (0.16)

$               (0.46)

Weighted average shares outstanding:

    Basic 

21,961,034

21,350,200

21,663,137

21,347,173

    Diluted

21,964,904

21,350,200

21,663,137

21,347,173

 

Imperial Holdings, Inc. and Subsidiary Companies

CONSOLIDATED BALANCE SHEETS 

June 30,

December 31,

2015

2014*

(Unaudited)

(In thousands except share data)

ASSETS

Assets

Cash and cash equivalents

$             52,478

$             51,166

Cash and cash equivalents (VIE)

3,172

3,751

Prepaid expenses and other assets

1,776

1,502

Deposits - other

1,993

1,340

Deposits on purchases of life settlements

808

1,630

Structured settlement receivables, at estimated fair value

377

384

Structured settlement receivables at cost, net

576

597

Life settlements, at estimated fair value

122,471

82,575

Life settlements, at estimated fair value (VIE)

316,515

306,311

Receivable for maturity of life settlements (VIE)

34,668

4,000

Fixed assets, net

321

355

Investment in affiliates

2,384

2,384

Deferred debt costs, net

3,724

3,936

  Total assets

$           541,263

$           459,931

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities

Accounts payable and accrued expenses

$               4,813

$               6,140

Accounts payable and accrued expenses (VIE)

441

423

Other liabilities

433

1,256

Interest payable - senior unsecured convertible notes 

2,272

2,272

Senior unsecured convertible notes, net of discount 

57,156

55,881

Interest payable - senior secured notes 

404

261

Senior secured notes, net of discount 

48,300

24,036

Revolving Credit Facility debt, at estimated fair value (VIE)

170,858

145,831

Deferred tax liability

6,279

8,728

  Total liabilities

290,956

244,828

Stockholders' Equity

Common stock (par value $0.01 per share, 80,000,000 authorized; 28,130,508 and  21,402,990

 issued and outstanding as of June 30, 2015 and December 31, 2014, respectively)

281

214

Preferred stock (par value $0.01 per share, 40,000,000 authorized; 0 issued and 

 outstanding as of June 30, 2015 and December 31, 2014)

-

-

Additional paid-in-capital

305,342

266,705

Accumulated deficit

(55,316)

(51,816)

  Total stockholders' equity

250,307

215,103

  Total liabilities and stockholders' equity

$           541,263

$           459,931

* Derived from audited consolidated financial statements.

 

Life Finance Segment Data

Selected Operating Data (dollars in thousands):

For the Three Months Ended 

For the Six Months Ended 

June 30,

June 30,

2015

2014

2015

2014

Period Acquisitions — Policies Owned

Number of policies acquired

8

-

38

-

Average age of insured at acquisition

79.7

-

85.0

-

Average life expectancy - Calculated LE (Years)

7.2

-

5.4

-

Average death benefit

$             2,105

$                 -

$          2,652

$                   -

Aggregate purchase price

$             2,125

$                 -

$        27,535

$                   -

End of Period — Policies Owned

Number of policies owned

633

593

633

593

Average Life Expectancy - Calculated LE (Years)

10.2

11.1

10.2

11.1

Aggregate Death Benefit

$      2,982,416

$   2,873,899

$   2,982,416

$    2,873,899

Aggregate fair value

$         438,986

$      336,846

$      438,986

$       336,846

Monthly premium — average per policy

$                 8.4

$              7.6

$              8.4

$               7.6

 

SOURCE Imperial Holdings, Inc.



RELATED LINKS

http://www.imperial.com