JGW announced their 2016 First Quarter results yesterday. JGW lost $35 million in the last three months alone, and it now appears that JGW no longer has enough cash on hand to pay its obligations when due, its stock price dropped 35% in one day. They had given notice from the NY Stock Exchange that it is about to be delisted as a company. As a result of this, many customers of JGW are becoming very nervous that they may not be able to complete their sale annuity transactions with them and may not get paid when they were due to be paid or at all.
Financial experts have weighed in on this latest difficulty for JGW by rating the stock an overall “sell” outlook. Speculation on the Street is that JGW’s Structured Settlement, Annuity and Lottery purchasing divisions, the largest of their kind in the US may shut down completely.
The key figures listed in their 2016 First Quarter Results are:
* Consolidated Revenues decreased by $20.2 million, due mainly to a substantial decline in Structured Settlement Payments Revenue by $42.1 million.
* Consolidated Net Loss had climbed by $30.1 million, a much bigger loss compared to the same quarter last year when the loss posted at $5.5 million.
* As of March 31, 2016, their cash reserves were at just $26.5 million. This is much smaller than the $35.1 million Loss and nowhere near the $203.7 million in promises to purchase Structured Settlement, Annuity and Lottery payments they made for the first quarter of 2016.
* These figures add up to technical insolvency and point to an inability to pay out obligations made to their Structured Settlement, Annuity and Lottery customers.
The economic sector has already reacted to JG Wentworth’s disappointing results.
* JGW’s 2016 First quarter results demonstrate consistent underperformance in the stock market, and that the company continues to miss investors’ expectations. The latest figures add up to a Loss Per Share of $1.08
* Financial research firms are now advising investors and other interested parties to lower their expectations on JGW’s future performance. A significant number of companies are even encouraging investors to get rid of their shares with a “sell” rating.
* Even more troubling is that JGW is aware that they will soon receive notice from the New York Stock Exchange that they are below the NYSE’s standards. JGW responded by assuring the public it is trying to work out an agreement to restructure their business to address the issue.
The possibility of closing up shop in their Structured Settlement branch of operations looks much closer to becoming a reality with important changes that JGW has recently made to restructure the business:
* Such moves include removing the Peachtree brand by altering their corporate name from JGWPT to officially adopt the much simpler “The JG Wentworth Company” name.
* With the significant decrease in operating expenses by $9.0 million that they reported, it is safe to conclude that JG Wentworth is proceeding to shrink its Structured Settlement, Annuities and Lotteries purchasing division. The downsizing suggests less resources, expertise and personnel to handle customers that wish to sell their payment streams.
* They have also recently publicized the actions they’ve taken to move away from Structured Settlement, Annuities and Lottery Purchasing activities by acquiring Weststar Mortgage, Fidelity National and other businesses.
* These recent events hint at the imminent shutdown of their SS divisions, including their sister company Peachtree Settlement Funding.
Overall indications are hard to ignore. JGW is becoming an increasingly risky proposition for both investors and customers looking to liquidate their structured settlement, annuity and lottery payment streams for three reasons. They do not have sufficient liquid cash to fulfill these sales transactions; they are consistently underperforming in the stock market and consequently are a source of concern to their investors and the NYSE, and they appear to be winding down their Structured Settlement operations.
The J.G. Wentworth Company ®
Erik Hartwell, 866-386-3853
VP, Investor Relations
Stock Ticker: NYSE: JGW