CHESTERBROOK, Pa.--(BUSINESS WIRE)-- The J.G. Wentworth Company® ("J.G. Wentworth" or the "Company") (OTCQX:JGWE) today reports financial results for the third quarter of 2017.
The following are highlights from the third quarter results:
Third Quarter 2017 Consolidated Results:
Consolidated revenues were $118.7 million, an increase of $49.9 million from the $68.8 million reported in the third quarter of 2016. The increase was due primarily to the $48.7 million increase in revenues generated by the Structured Settlement Payments segment's ("Structured Settlements") revenue driven principally by a $38.8 million favorable change in unrealized gains (losses) on securitized finance receivables, debt and derivatives, and a $1.2 million increase in our Home Lending segment's revenues.
Home Lending generated loan lock volume of $1.9 billion and closed loan volume of $1.1 billion in the third quarter of 2017. The outstanding unpaid principal balance of our mortgage servicing rights ("MSR") portfolio was $4.9 billion as of September 30, 2017. The Company's MSR portfolio had a fair value of $50.0 million as of September 30, 2017.
The Company had $4.4 billion in VIE and other finance receivables, at fair value, and $4.2 billion in VIE long-term debt issued by securitization and permanent financing trusts, at fair value, as of September 30, 2017. The debt issued by our VIE securitization and permanent financing trusts is recourse only to the respective entities that issued the debt and is non-recourse to the Company and its other subsidiaries.
Consolidated net loss was $6.5 million compared to the $38.8 million consolidated net loss in the third quarter of 2016. The $32.3 million favorable change was due to a $47.1 million decline in Structured Settlements pre-tax loss driven by the $48.7 million increase in the segment's revenue, partially offset by an increase in Home Lending's operating expenses which was driven by a $3.3 million increase in advertising expense due to the competitive environment and shifts in consumer demand and an $8.4 million goodwill impairment charge.
Third Quarter 2017 Segment Results:
Segment Adjusted EBITDA* for Home Lending was $4.1 million for the third quarter of 2017 compared to $9.4 million for the third quarter of 2016. The $5.3 million decrease in Segment Adjusted EBITDA* was primarily driven by a $3.3 million increase in advertising expense due to the competitive environment and shifts in consumer demand.
Segment Adjusted EBITDA* for Structured Settlements was $8.4 million for the third quarter of 2017 compared to $4.6 million for the third quarter of 2016. The $3.8 million increase in Segment Adjusted EBITDA* for Structured Settlements was primarily due to $1.3 million in reduced operating expenses reflecting the results to date of our previously announced cost savings initiatives coupled with a $1.8 million decrease in interest expense related to residual debt that was permanently financed in September 2016.
Subsequent Event:
As we previously disclosed in the Current Report on Form 8-K which we filed with the SEC on November 9, 2017, the Company and certain of its subsidiaries entered into a Restructuring Support Agreement with certain lenders and certain members of The J.G. Wentworth Company, LLC to support a comprehensive restructuring of the Company’s long-term debt and existing equity, which is expected to be effectuated through a pre-packaged Chapter 11 plan of reorganization.
If the restructuring contemplated by the Restructuring Support Agreement is consummated, the existing Credit Facility with a total of $449.5 million will be extinguished, a new secured revolving credit facility between $65.0 million and $70.0 million will be available to the Company, the lenders under the Credit Facility will receive at least 95.5% of new equity of the Company in exchange for the extinguishment, and all existing equity interests of the Company would be canceled without recovery.
