Business & Finance
Business and Finance
Business and Finance
Fri, August 12, 2011
Thu, August 11, 2011 Imperial Holdings, Inc. Announces Second Quarter 2011 Results
BOCA RATON, Fla.--([ BUSINESS WIRE ])--[ Imperial Holdings, Inc. ] (NYSE: IFT) (aImperiala), a specialty finance company providing liquidity solutions with a focus on individual life insurance policies and purchasing structured settlement payments, today announced financial results for its second quarter and six months ended June 30, 2011.
"Overall, we are excited with the increased business activity since the IPO and are encouraged by the opportunities we see in the third quarter."
During the second quarter of 2011, Imperial reported total revenue of $29.2 million, compared to second quarter 2010 revenue of $20.6 million. In the Life Finance segment, revenues increased by $9.1 million primarily driven by an increase in fair value of life settlements. Agency fee income, interest income and origination fees on premium finance loans totaled $5.9 million during the second quarter of 2011, compared to $13.9 million for the same period in 2010.
Income before taxes was $13.8 million in the second quarter compared to a loss of $2.1 million during the same period last year. Net gain after tax for the second quarter of 2011 was $12.6 million as compared to a net loss of $2.1million for the same period in 2010. Fully diluted earnings per share for the second quarter were $0.59 compared to an earnings loss per share of $(0.58) for the same time last year.
For the first six months of 2011, Imperial reported total revenue of $54.1 million, compared to revenue of $40.4 million for the first six months of 2010. Income before taxes was $21.2 million for the first six months of 2011 compared to a loss of $9.6 million during the same period last year. Net gain after tax for the first six months of 2011 was $12.0 million as compared to a net loss of $9.6million for the same period in 2010.
The Company had cash, cash equivalents and investment securities available for sale of approximately $131.4 million at June 30, 2011 compared to $165.9 million at the end of the first quarter 2011.
Antony Mitchell, Chairman and Chief Executive Officer, commented, aWe continue to witness strong customer demand for liquidity across both of our key business segments. During the second quarter we were able to acquire policies and make loans all within our target parameters. Our visibility through the third quarter of 2011 is very good as the pipeline for Life Finance opportunities continue to grow.a
Mr. Mitchell continued, aOur Structured Settlements business segment delivered exceptionally strong transaction growth during the quarter originating 245 transactions, a 73% increase over the second quarter of 2010 and 51% over the first quarter of 2011. Our repeat business grew 283% over the second quarter of 2010 with 38% of all transactions now coming from existing customers.a Mr. Mitchell concluded, aOverall, we are excited with the increased business activity since the IPO and are encouraged by the opportunities we see in the third quarter.a
Conference Call Information
Imperial will host a conference call today, August 11, 2011, at 5:00 p.m. ET to discuss its second quarter 2011 results. To listen to the live call, please dial (888) 504-7962 or log on to the investor relations page of the companya™s website at [ www.imperial.com ]. In addition, an audio replay of the call will be available two hours after its conclusion and archived through August 25, 2011. This archived call may be accessed by dialing (877) 870-5176; replay pin number a2431981a.
About Imperial Holdings, Inc.
Imperial is a leading specialty finance company that, through its operating subsidiaries, provides customized liquidity solutions to owners of illiquid financial assets. Imperiala™s primary operating units are Life Finance and Structured Settlements. In its Life Finance unit, Imperial provides premium finance loans to policyholders for the payment of premiums and purchases life insurance policies. In its Structured Settlements unit, Imperial purchases from individuals long-term annuity payments issued by highly rated U.S. domestic insurance companies. 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. Imperial's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Imperial's periodic reports that are filed with the Securities and Exchange Commission and available on its website at [ www.sec.gov ]. All forward-looking statements attributable to Imperial or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, Imperial does not assume a duty to update these forward-looking statements.
-SELECTED FINANCIAL TABLES FOLLOW-
Notes:
*Type 1: Loans collateralized by life insurance policies in force less than 2 years
*Type 2: Loans collateralized by life insurance policies in force greater than 2 years
| Imperial Holdings, Inc. and Subsidiaries | |||||||||||||
| CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||||||||
| (In thousands, except share and per share data) | |||||||||||||
| For the Three Months Ended | For the Six Months Ended | ||||||||||||
| June 30, | June 30, | ||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||
| Agency fee income | $ | 1,569 | $ | 2,439 | $ | 5,627 | $ | 7,717 | |||||
| Interest income | 2,722 | 5,958 | 4,742 | 11,541 | |||||||||
| Origination fee income | 1,824 | 5,592 | 4,105 | 12,891 | |||||||||
| Realized gain on sale of structured settlements | 2,049 | 3,263 | 3,217 | 3,263 | |||||||||
| Realized gain on sale of life settlements | 5 | 474 | 5 | 474 | |||||||||
| Gain on forgiveness of debt | 2,139 | 2,768 | 4,682 | 4,533 | |||||||||
| Unrealized change in fair value of life settlements | 17,687 | 1 | 28,885 | (201 | ) | ||||||||
| Unrealized change in fair value of structured settlements | 375 | - | 1,217 | - | |||||||||
| Servicing fee income | 567 | - | 1,071 | - | |||||||||
| Other income | 274 | 130 | 520 | 153 | |||||||||
| Total income | 29,211 | 20,625 | 54,071 | 40,371 | |||||||||
| Interest expense | 2,542 | 6,061 | 5,481 | 13,043 | |||||||||
| Interest expense a" related parties | - | 2,365 | 290 | 4,352 | |||||||||
| Provision for losses on loans receivable | 21 | (257 | ) | 129 | 3,019 | ||||||||
| Loss on loan payoffs and settlements, net | 1,095 | 1,844 | 3,666 | 3,313 | |||||||||
| Amortization of deferred costs | 1,597 | 5,786 | 3,504 | 11,633 | |||||||||
| Selling, general and administrative expenses | 10,168 | 6,700 | 19,701 | 14,159 | |||||||||
| Selling, general and administrative a" related parties | - | 221 | 86 | 434 | |||||||||
| Total expenses | 15,423 | 22,720 | 32,857 | 49,953 | |||||||||
| Income (loss) before income taxes | 13,788 | (2,095 | ) | 21,214 | (9,582 | ) | |||||||
| Provision for income taxes | 1,183 | - | 9,179 | - | |||||||||
| Net income (loss) | $ | 12,605 | $ | (2,095 | ) | $ | 12,035 | $ | (9,582 | ) | |||
| Earnings (loss) per share: | |||||||||||||
| Basic | $ | 0.59 | $ | (0.58 | ) | $ | 0.69 | $ | (2.66 | ) | |||
| Diluted | $ | 0.59 | $ | (0.58 | ) | $ | 0.69 | $ | (2.66 | ) | |||
| Weighted average shares outstanding: | |||||||||||||
| Basic | 21,202,614 | 3,600,000 | 17,373,589 | 3,600,000 | |||||||||
| Diluted | 21,206,121 | 3,600,000 | 17,377,096 | 3,600,000 | |||||||||
| Imperial Holdings, Inc. and Subsidiaries | ||||||||
| CONSOLIDATED AND COMBINED BALANCE SHEETS (UNAUDITED) | ||||||||
| (In thousands except share data) | ||||||||
| June 30, | December 31. | |||||||
| 2011 | 2010 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 18,667 | $ | 14,224 | ||||
| Restricted cash | 691 | 691 | ||||||
| Certificate of deposit - restricted | 885 | 880 | ||||||
| Investment securities available for sale, at estimated fair value | 112,756 | - | ||||||
| Agency fees receivable, net of allowance for doubtful accounts | 266 | 561 | ||||||
| Deferred costs, net | 4,447 | 10,706 | ||||||
| Prepaid expenses and other assets | 2,304 | 1,868 | ||||||
| Deposits on purchases of life settlements (life insurance policies) | 4,048 | - | ||||||
| Deposits - other | 643 | 692 | ||||||
| Interest receivable on investment securities available for sale | 714 | - | ||||||
| Interest receivable on loans, net | 8,158 | 13,140 | ||||||
| Loans receivable, net | 58,135 | 90,026 | ||||||
| Structured settlement receivables, net | 4,144 | 2,536 | ||||||
| Investment in life settlements, at estimated fair value | 74,678 | 17,138 | ||||||
| Fixed assets, net | 737 | 876 | ||||||
| Investments in affiliates | 896 | 79 | ||||||
| Total assets | $ | 292,169 | $ | 153,417 | ||||
| LIABILITIES AND STOCKHOLDERS'/MEMBERS' EQUITY | ||||||||
| Accounts payable and accrued expenses | $ | 3,667 | $ | 3,425 | ||||
| Accrued expenses - related parties | - | 71 | ||||||
| Payable for purchase of structured settlements | - | 224 | ||||||
| Other liabilities | 2,908 | 7,913 | ||||||
| Lender protection insurance claims received in advance | 1,060 | 31,154 | ||||||
| Interest payable | 10,292 | 13,765 | ||||||
| Interest payable - related parties | - | 55 | ||||||
| Notes payable and debenture payable , net of discount | 37,345 | 89,207 | ||||||
| Notes payable - related parties | - | 2,402 | ||||||
| Income taxes payable | 6,295 | - | ||||||
| Deferred tax liability | 9,201 | - | ||||||
| Total liabilities | 70,768 | 148,216 | ||||||
| Member units - preferred (zero and 500,000 authorized in the aggregate as of | ||||||||
| June 30, 2011 and December 31, 2010, respectively) | ||||||||
| Member units a" Series A preferred (zero and 90,796 issued and outstanding | ||||||||
| as of June 30, 2011 and December 31, 2010, respectively) | - | 4,035 | ||||||
| Member units a" Series B preferred (zero and 25,000 issued and outstanding | ||||||||
| as of June 30, 2011 and December 31, 2010, respectively) | - | 2,500 | ||||||
| Member units a" Series C preferred (zero and 70,000 issued and outstanding | ||||||||
| as of June 30, 2011 and December 31, 2010, respectively) | - | 7,000 | ||||||
| Member units a" Series D preferred (zero and 7,000 issued and outstanding | ||||||||
| as of June 30, 2011 and December 31, 2010, respectively) | - | 700 | ||||||
| Member units a" Series E preferred (zero and 73,000 issued and outstanding | ||||||||
| as of June 30, 2011 and December 31, 2010, respectively) | - | 7,300 | ||||||
| Member units a" common (zero and 500,000 authorized; zero and 337,500 issued and | ||||||||
| outstanding as of June 30, 2011 and December 31, 2010, respectively) | - | 11,462 | ||||||
| Common stock (80,000,000 and zero authorized; 21,202,614 and zero issued and | ||||||||
| outstanding as of June 30, 2011 and December 31, 2010, respectively) | 212 | - | ||||||
| Additional paid-in-capital | 236,914 | - | ||||||
| Accumulated other comprehensive income | 36 | - | ||||||
| Accumulated deficit | (15,761 | ) | (27,796 | ) | ||||
| Total stockholders'/members' equity | 221,401 | 5,201 | ||||||
| Total liabilities and stockholders'/members' equity | $ | 292,169 | $ | 153,417 | ||||
Structured Settlement Segment Data | ||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Period Originations: | ||||||||||||||||
| Number of transactions | 245 | 142 | 407 | 247 | ||||||||||||
| Number of transactions from repeat customers | 92 | 24 | 140 | 48 | ||||||||||||
| Weighted average purchase discount rate | 18.3 | % | 19.9 | % | 18.3 | % | 18.9 | % | ||||||||
| Face value of undiscounted future payments purchased | $ | 25,180 | $ | 12,958 | $ | 41,716 | $ | 20,255 | ||||||||
| Amount paid for settlements purchased | $ | 5,438 | $ | 3,566 | $ | 8,651 | $ | 6,140 | ||||||||
| Marketing costs | $ | 1,201 | $ | 1,374 | $ | 2,459 | $ | 2,422 | ||||||||
| Selling, general and administrative (excluding marketing costs) | $ | 3,133 | $ | 1,727 | $ | 5,875 | $ | 3,308 | ||||||||
| Average Per Origination During Period: | ||||||||||||||||
Face value of undiscounted future payments purchased | $ | 102.8 | $ | 91.3 | $ | 102.5 | $ | 82.0 | ||||||||
| Amount paid for settlement purchased | $ | 22.2 | $ | 25.1 | $ | 21.3 | $ | 24.9 | ||||||||
| Time from funding to maturity (months) | 149 | 129 | 154 | 127 | ||||||||||||
| Marketing cost per transaction | $ | 4.9 | $ | 9.7 | $ | 6.0 | $ | 9.8 | ||||||||
| Segment selling, general and administrative (excluding marketing costs) per transaction | $ | 12.8 | $ | 12.2 | $ | 14.4 | $ | 13.4 | ||||||||
| Period Sales: | ||||||||||||||||
| Number of transactions originated and sold | 199 | 219 | 408 | 219 | ||||||||||||
| Realized gain on sale of structured settlements | $ | 2,049 | $ | 3,263 | $ | 3,217 | $ | 3,263 | ||||||||
| Average sale discount rate | 11.6 | % | 8.9 | % | 10.1 | % | 8.9 | % | ||||||||
| The following table highlights certain selected operating data in our life finance segment for the periods indicated (in thousands): | ||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Period Originations: | ||||||||||||||||
| Number of loans originated (by type): | ||||||||||||||||
| Type 1* | 12 | 19 | 38 | 70 | ||||||||||||
| Type 2** | 3 | - | 9 | 1 | ||||||||||||
| Principal balance of loans originated | $ | 4,147 | $ | 4,896 | $ | 15,836 | $ | 15,457 | ||||||||
| Aggregate death benefit of policies underlying loans originated | $ | 78,500 | $ | 102,375 | $ | 273,850 | $ | 354,775 | ||||||||
| Selling general and administrative expenses | $ | 2,571 | $ | 2,096 | $ | 5,157 | $ | 4,739 | ||||||||
| Average Per Origination During Period: | ||||||||||||||||
| Age of insured at origination | 76.3 | 73.6 | 75.6 | 73.8 | ||||||||||||
| Life expectancy of insured (years) | 13.5 | 13.7 | 14.6 | 14.1 | ||||||||||||
| Monthly premium (year after origination) | $ | 11.7 | $ | 15.6 | $ | 11.8 | $ | 14.0 | ||||||||
| Death benefit of policies underlying loans originated | $ | 5,233.3 | $ | 5,388.2 | $ | 5,477.0 | $ | 4,996.8 | ||||||||
| Principal balance of the loan | $ | 276.5 | $ | 257.7 | $ | 336.9 | $ | 217.7 | ||||||||
| Interest rate charged | 14.0 | % | 11.6 | % | 14.0 | % | 11.6 | % | ||||||||
| Agency fee | $ | 104.6 | $ | 128.4 | $ | 117.7 | $ | 108.7 | ||||||||
| Agency fee as % of principal balance | ||||||||||||||||
| Type 1* | 37.9 | % | 48.0 | % | 38.8 | % | 50.1 | % | ||||||||
| Type 2** | 21.1 | % | - | 20.8 | % | 18.5 | % | |||||||||
| Origination fee | $ | 64.9 | $ | 112.0 | $ | 79.5 | $ | 91.1 | ||||||||
| Annualized origination fee as % of principal balance | 24.3 | % | 43.4 | % | 25.2 | % | 41.8 | % | ||||||||
| End of Period Loan Portfolio | ||||||||||||||||
| Loans receivable, net | $ | 58,135 | $ | 174,267 | $ | 58,135 | $ | 174,267 | ||||||||
| Number of policies underlying loans receivable | 209 | 550 | 209 | 550 | ||||||||||||
| Aggregate death benefit of policies underlying loans receivable | $ | 1,027,252 | $ | 2,782,303 | $ | 1,027,252 | $ | 2,782,303 | ||||||||
| Number of loans with insurance protection | 156 | 552 | 156 | 552 | ||||||||||||
| Loans receivable, net (insured loans only) | $ | 40,391 | $ | 140,794 | $ | 40,391 | $ | 140,794 | ||||||||
| Average Per Loan: | ||||||||||||||||
| Age of insured in loans receivable | 75.3 | 75.5 | 75.3 | 75.5 | ||||||||||||
| Life expectancy of insured (years) | 14.7 | 13.3 | 14.7 | 13.3 | ||||||||||||
| Monthly premium | $ | 6.3 | $ | 6.7 | $ | 6.3 | $ | 6.7 | ||||||||
| Loan receivable, net | $ | 278.2 | $ | 316.8 | $ | 278.2 | $ | 316.8 | ||||||||
| Interest rate | 11.9 | % | 11.3 | % | 11.9 | % | 11.3 | % | ||||||||
| Period Acquisitions a" Policies Owned | ||||||||||||||||
| Number of policies acquired | 60 | - | 79 | - | ||||||||||||
| Average age of insured at acquisition | 78.6 | - | 78.1 | - | ||||||||||||
| Average life expectancy - Calculated LE (Years) | 10.0 | - | 10.2 | - | ||||||||||||
| Average death benefit | $ | 4,782 | - | $ | 4,733 | - | ||||||||||
| Aggregate purchase price | $ | 21,796 | - | $ | 25,705 | - | ||||||||||
| Aggregate fair value at acquisition | $ | 36,084 | - | $ | 48,329 | - | ||||||||||
| Policies acquired, Percent of fair value paid | 60.4 | % | - | 53.5 | % | - | ||||||||||
| End of Period a" Policies Owned | ||||||||||||||||
| Number of policies owned | 118 | 22 | 118 | 22 | ||||||||||||
| Average Life Expectancy - Calculated LE (Years) | 10.5 | 14.4 | 10.5 | 14 | ||||||||||||
| Aggregate Death Benefit | $ | 565,046 | $ | 56,895 | $ | 565,046 | $ | 56,895 | ||||||||
| Aggregate fair value | $ | 74,678 | $ | 2,299 | $ | 74,678 | $ | 2,299 | ||||||||
| Monthly premium a" average per policy | $ | 10.5 | $ | 3.6 | $ | 10.5 | $ | 3.6 | ||||||||
