First Quarter Earnings Call May 10, 2016
SAFE HARBOR Certain statements in this presentation constitute “forward-looking statements.” All statements, other than statements of historical fact, are forward-looking statements. You can identify such statements because they contain words such as “plans,” “expects,” or “does expect,” “budget,” “forecasts,” “anticipates,” or “does not anticipate,” “believes,” “intends,” and similar expressions or statements that certain actions, events or results “may,” “could,” “would,” “might,” or “will,” be taken, occur or be achieved. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements. Forward-looking statements necessarily involve significant known and unknown risks, assumptions and uncertainties that may cause our actual results, performance and achievements in future periods to differ materially from those expressed or implied by such forward-looking statements. Although we have attempted to identify important risk factors that could cause actual actions, events or results to differ materially from those described in or implied by our forward-looking statements, a number of factors could cause actual results, performance or achievements to differ materially from the results expressed or implied in the forward-looking statements. We cannot assure you that forward-looking statements will prove to be accurate, as actual actions, results and future events could differ materially from those anticipated or implied by such statements. These factors should be considered carefully and readers should not place undue reliance on forward-looking statements. You should, however, review the factors and risks we describe in the reports we file from time to time with the Securities and Exchange Commission after the date of this presentation. These risks and uncertainties include, among other things: our ability to execute on our business strategy; our ability to successfully compete in the industries in which we operate; our dependence on the effectiveness of direct response marketing; our ability to retain and attract qualified senior management; any improper use of or failure to protect the personally identifiable information of past, current and prospective customers to which we have access; our ability to upgrade and integrate our operational and financial information systems, maintain uninterrupted access to such systems and adapt to technological changes in the industries in which we operate; our dependence on third parties, including our ability to maintain relationships with such third parties and our potential exposure to liability for the actions of such third parties; damage to our reputation and increased regulation of our industries which could result from unfavorable press reports about our business model; the accuracy of the estimates and assumptions of our financial models; infringement of our trademarks or service marks; our ability to maintain our state licenses or obtain new licenses in new markets; changes in, and our ability to comply with, federal, state and local laws and regulations governing us; our business model being susceptible to litigation; our ability to continue to purchase structured settlement payments and other financial assets; the public disclosure of the identities of structured settlement holders maintained in our proprietary database; our dependence on the opinions of certain credit rating agencies of the credit quality of our securitizations; our ability to complete future securitizations, other financings or sales on favorable terms; the insolvency of a material number of structured settlement issuers; adverse changes in the residential mortgage lending and real estate markets, including any increases in defaults or delinquencies, especially in geographic areas where our loans are concentrated; our ability to grow our loan origination volume, acquire MSRs and recapture loans that are refinanced; changes in the guidelines of government- sponsored entities, or GSEs, or any discontinuation of, or significant reduction in, the operation of GSEs; potential misrepresentations by borrowers, counterparties and other third-parties; changes in prevailing interest rates and our ability to mitigate interest rate risk through hedging strategies; our ability to obtain sufficient working capital at attractive rates or obtain sufficient capital to meet the financing requirements of our business; our ability to remain in compliance with the terms of our substantial indebtedness; and our ability to meet the continued listing requirements of the New York Stock Exchange. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to publicly revise any forward- looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law. 2
OVERVIEW First quarter 2016 highlights: Adjusted EBITDA of $8.0 million Consolidated Adjusted Revenues $57.1 million On track to achieve $25 - $30 million in savings Key Priorities: Stabilize Structured Settlement Payments Grow Home Lending Maintain adequate liquidity and funding sources Consolidated Results Q4 2015 Q1 2016 Adjusted Revenues $52.2M $57.1M Adjusted EBITDA $3.0M $8.0M 3
STRUCTURED SETTLEMENT PAYMENTS Optimize marketing execution and maintain lead performance Drive operational efficiency through specialization Reduce operating expenses Daily monitoring of key metrics Number of contacts Conversion rates Unit economics 4
HOME LENDING Home Lending business currently being scaled Q1 Locked Loan volume of $1.1 billion Q1 Closed Loan volume of $568 million Improving back-office capabilities to support scale $500,000,000 Locked Amount Closed Amount $450,000,000 $409,311,655 $372,786,604* $400,000,000 Acquired Home Lending business $395,431,162 $350,000,000 $300,000,000 $272,353,960 $250,000,000 $200,000,000 $250,951,455 $224,397,211* $150,000,000 $189,836,533 $100,000,000 $127,513,784 $50,000,000 $- 5 *Unaudited results for time periods prior to acquisition closing date of 7/31/2015.
CONSOLIDATED RESULTS Q1 2016 Consolidated Adjusted Revenues* Adjusted EBITDA* $8.0M $57.1M $3.0M $52.2M Q4 2015 Q1 2016 Q4 2015 Q1 2016 Overall revenue increased by $4.9 million in the first quarter led Adjusted EBITDA grew by $5 million in the first quarter by Home Lending’s increase of $7.2 million compared to the fourth quarter driven primarily by the $5.5 million increase Home Lending * Non-GAAP measures, which as calculated by the Company are not necessarily comparable to similarly titled measures reported by other companies. 6 6
CASH & LIQUIDITY Main sources of cash generated for Structured Settlement Payments business are permanent financing, securitizations, and asset sales February 18 th , 2016 closed the 2016-A Initial Close Asset Sale April 21 st , 2016 closed 2016-A Prefunding Asset Sale Company plans to utilize the most cost effective funding sources going forward Cash 2016-1 Cash 2016-1 Balance Initial Close Balance Prefunding Loan is 12/31/2015 2/18/2016 3/31/2016 4/21/2016 Purchased Home Lending $5,746 $8,305 Structured Settlement $51,576 $26,975 $18,160 $21,645 Total Cash Balance $57,322 $26,465 Cash used for working capital requirements including debt service and expenses between fundings Cash balances vary based on timing of inflows and outflows; anticipated to remain at historical ranges 7
Questions & Answers 8
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