Imperial Holdings, Inc. Announces Fourth Quarter and Year-End 2014 Results

Company Reports Book Value of $10.05 per Share

News provided by

Imperial Holdings, Inc.

Mar 05, 2015, 04:10 ET

BOCA RATON, Fla., March 5, 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 months and year ended December 31, 2014.

Three Months Ended December 31, 2014

Total income from continuing operations was $24.8 million for the three months ended December 31, 2014 compared to a total income from continuing operations of $6.5 million for the same period in 2013. The increase was primarily due to the gain associated with the purchase of 14 policies during the quarter and an improvement in the fair value of the Company's investments in life settlements. Total expenses were $13.5 million for the three months ended December 31, 2014 compared to $2.6 million for the same period in 2013. The increase was primarily due to higher interest expense and legal fees of $3.4 million and $4.1 million respectively.

The Company reported net income from continuing operations of $8.7 million, or $.32 per fully diluted share using the "if-converted" method for the additional 10,464,941 shares underlying the Company's convertible notes, for the three months ended December 31, 2014, compared to a net income of $3.9 million, or $0.18 per fully diluted share, for the same period in 2013.

Year Ended December 31, 2014

Total income from continuing operations was $43.8 million for the twelve months ended December 31, 2014, compared to $89.1 million for the same period in 2013. Total income in 2013 was driven by a $71.5 million unrealized gain in investments in life settlements associated with a one-time acquisition of 416 life insurance policies during the quarter ended June 30, 2013. Total expenses were $48.8 million for the twelve months ended December 31, 2014 compared to $37.2 million for the same period in 2013. The increase was primarily due to higher interest expense of $2.6 million and a $6.8 million conversion liability embedded in the Company's convertible notes.

The Company reported a net loss from continuing operations of ($5.2 million), or ($0.24) per fully diluted share, for the year ended December 31, 2014, compared to net income of $51.8 million or $2.44 per fully diluted share for the same period in 2013.

As of December 31, 2014, the Company had $54.9 million of cash and cash equivalents. As of December 31, 2014, the Company had 21,402,990 shares outstanding and an undiluted book value of $10.05 per share.

Life Settlements Portfolio Highlights

At December 31, 2014, the aggregate face value of the Company's portfolio of 607 life insurance policies was approximately $2.9 billion with an estimated fair value of $388.9 million. The weighted average discount rate used in the Company's fair value model was 17.77% at December 31, 2014 compared to 19.14% at December 31, 2013. During the fourth quarter the Company experienced two policy maturities totaling $14 million. To date in 2015, the Company experienced two additional policy maturities totaling $9 million. All of the policies associated with these maturities were pledged as collateral under the Company's revolving credit facility and the related policy proceeds will be used to pay down outstanding debt.

Antony Mitchell, Chief Executive Officer of Imperial, commented, "The Life Settlements market remains robust. We have been able to deploy capital to make strategic acquisitions of policies. To date, we have added policies having an aggregate face value of $143 million.  As a result, our non-financed portfolio has now grown to $751 million in face value. We believe our non-financed portfolio has reached a meaningful size allowing us to pursue various strategic opportunities going forward."

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 90948492 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.

-SELECTED FINANCIAL TABLES FOLLOW-

Imperial Holdings, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS 

December 31,



2014

2013



(In thousands except share data)

ASSETS

Assets



Cash and cash equivalents

$             51,166

$             14,722

Cash and cash equivalents (VIE)

3,751

7,977

Restricted cash

-

13,506

Prepaid expenses and other assets

1,502

1,331

Deposits - other

1,340

1,597

Deposits on purchase of life settlements

1,630

-

Structured settlement receivables, at estimated fair value

384

660

Structured settlement receivables at cost, net

597

797

Investment in life settlements, at estimated fair value

82,575

48,442

Investment in life settlements, at estimated fair value (VIE)

306,311

254,519

Receivable for maturity of life settlements (VIE)

4,000

2,100

Fixed assets, net

355

74

Investment in affiliates

2,384

2,378

Deferred debt costs, net

3,936

-

  Total assets

$           459,931

$           348,103







LIABILITIES AND STOCKHOLDERS' EQUITY


Liabilities



Accounts payable and accrued expenses

$               6,140

$               2,977

Accounts payable and accrued expenses (VIE)

423

341

Other liabilities

1,256

21,221

Interest payable - senior unsecured convertible notes 

2,272

-

Senior unsecured convertible notes, net of discount 

55,881

-

Interest payable - senior secured notes 

261

-

Senior secured notes, net of discount

24,036

-

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

145,831

123,847

Income taxes payable

-

6,295

Deferred tax liability

8,728

-

  Total liabilities

244,828

154,681

Commitments and Contingencies 



Stockholders' Equity



Common stock, $0.01 par value (80,000,000 authorized; 21,402,990 and 21,237,166 




  issued and outstanding as of December 31, 2014 and 2013, respectively)

214

212

Preferred stock, $0.01 par value (40,000,000 authorized; 0 issued and outstanding as 




  of December 31, 2014 and 2013)

-

-

Additional paid-in-capital

266,705

239,506

Accumulated deficit

(51,816)

(46,296)

  Total stockholders' equity

215,103

193,422

  Total liabilities and stockholders' equity

$           459,931

$           348,103

Imperial Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31,










2014

2013

Income

(in thousands, except share and per share data)

Interest income

29

28


Interest and dividends on investment securities available for sale

-

14


Origination fee income

-

-


Loss on life settlements, net

(426)

(1,990)


Change in fair value of life settlements 

44,128

88,686


Servicing fee income

-

310


Gain on maturities of life settlements with subrogation rights, net

-

-


Other income

85

2,030




9




  Total income

43,816

89,078









Expenses






Interest expense

16,245

13,657


Change in fair value of Revolving Credit Facility debt

(5,472)

(9,373)


Loss on extinguishment of Bridge Facility

-

3,991


Change in fair value of conversion derivative liability 

6,759

-


Provision for losses on loans receivable

-

-


Gain on loan payoffs and settlements, net

-

(65)


Amortization of deferred costs 

-

7


Personnel costs

8,763

8,177


Legal fees

13,620

11,701


Professional fees

5,254

5,281


Insurance

1,667

1,953


Other selling, general and administrative expenses

2,006

1,887


  Total expenses

48,842

37,216


  (Loss) income from continuing operations before income taxes

(5,026)

51,862


   Provision for income taxes

125

39


   Net (loss) income from continuing operations 

$                    (5,151)

$                     51,823

Discontinued Operations:






(Loss) income from discontinued operations, net of income taxes

(369)

2,198


Gain on disposal of discontinued operations, net of income taxes

-

11,311


Net (loss) income from discontinued operations

(369)

13,509


Net (loss) income 

$                    (5,520)

$                     65,332










 (Loss) earnings per share:






    Basic (loss) earnings per common share






Basic (loss) income per share from continuing operations

$                      (0.24)

$                         2.44


Basic (loss) income per share from discontinued operations

$                      (0.02)

$                         0.64


Basic (loss) income per share available to common shareholders

$                      (0.26)

$                         3.08


    Diluted (loss) earnings per common share






Diluted (loss) income per share from continuing operations

$                      (0.24)

$                         2.44


Diluted (loss) income per share from discontinued operations

$                      (0.02)

$                         0.64


Diluted (loss) income per share available to common shareholders

$                      (0.26)

$                         3.08


Weighted average shares outstanding:






    Basic

21,354,567

21,216,487


    Add: Restricted stock

-

2,451


    Diluted

21,354,567

21,218,938


Imperial Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended December 31,










2014

2013

Income

(in thousands, except share and per share data)

Interest income

7

1


Loss on life settlements, net

-

(281)


Change in fair value of life settlements 

24,815

6,737


Other income

13

15




9




  Total income

24,835

6,472









Expenses






Interest expense

5,080

1,638


Change in fair value of Revolving Credit Facility debt

(915)

(4,078)


Personnel costs

2,136

1,963


Legal fees

4,498

446


Professional fees

1,692

1,717


Insurance

414

478


Other selling, general and administrative expenses

641

410


  Total expenses

13,546

2,574


  Income from continuing operations before income taxes

11,289

3,898


   Provision (benefit) for income taxes

2,577

(1)


   Net income from continuing operations 

$                      8,712

$                       3,899

Discontinued Operations:






Income from discontinued operations, net of income taxes

85

571


Gain on disposal of discontinued operations, net of income taxes

-

11,311


Net income from discontinued operations

85

11,882


Net income 

$                      8,797

$                     15,781










 Earnings per share:






    Basic earnings per common share






Basic income per share from continuing operations

$                        0.41

$                         0.18


Basic income per share from discontinued operations

$                        0.00

$                         0.56


Basic income per share available to common shareholders

$                        0.41

$                         0.74


    Diluted earnings per common share






Net income from continuing operations

$                      8,712

$                       3,899


Add:  Interest expense associated with convertible debt, net of tax

1,448

-


Adjusted net income from continuing operations

$                    10,160

$                       3,899


Net income from discontinued operations

$                           85

$                     11,882


Diluted income per share from continuing operations

$                        0.32

$                         0.18


Diluted income per share from discontinued operations

$                        0.00

$                         0.56


Diluted income per share available to common shareholders

$                        0.32

$                         0.74


    Weighted average shares outstanding:






    Basic

21,361,930

21,219,880


    Add: Restricted stock

26,725

10,715


    Add: Convertible debt using the "if converted" method

10,464,941

-


    Diluted

31,853,596

21,230,595

Imperial Holdings, Inc.






Life Finance Business Segment

For the Three Months Ended 

For the Twelve Months Ended 

December 31,

December 31,

2014

2013

2014

2013




Period Acquisitions — Policies Owned






Number of policies acquired

14

-

16

432

Average age of insured at acquisition

85.3

-

85.2

77.7

Average life expectancy - Calculated LE (Years)

6.0

-

5.9

12.7

Average death benefit

$            4,053

$                   -

$            4,444

$           4,749

Aggregate purchase price

$          12,807

$                   -

$          16,296

$         58,645








End of Period — Policies Owned






Number of policies owned

607

612

607

612

Average Life Expectancy - Calculated LE (Years)

10.7

11.6

10.7

11.6

Aggregate Death Benefit

$     2,931,066

$    2,954,890

$     2,931,066

$    2,954,890

Aggregate fair value

$        388,886

$       302,961

$        388,886

$       302,961

Monthly premium — average per policy

$                7.8

$               7.5

$                7.8

$               7.5

SOURCE Imperial Holdings, Inc.

Related Links

http://www.imperial.com

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