EX-99.1 2 a21076162_2q2014pressrelea.htm EXHIBIT 99.1 Exhibit 99.1 - Earnings Release


IMH Financial Corporation Reports Second Quarter 2104 Results

* 44% Increase in EBITDA
* 75% Increase in Revenues


FOR IMMEDIATE RELEASE

SCOTTSDALE, ARIZONA, August 18, 2014 – IMH Financial Corporation (“IMH” or “the Company”) announced today that it filed its Quarterly Report on Form 10-Q for the period ended June 30, 2014 with the Securities and Exchange Commission on August 14, 2014. Following are financial and operational highlights for the quarter and six months ended June 30, 2014:

Three Month Summary Results

Top line revenue (the sum of operating property revenue, investment and other income, and mortgage loan income) increased by approximately 75%, to $8.9 million, for the three months ended June 30, 2014, as compared to $5.1 million for the three months ended June 30, 2013.

The Company recorded gains from the disposal of assets of $6.6 million during the three months ended June 30, 2014, as compared to gains from the disposal of assets of $0.7 million for the three months ended June 30, 2013.

EBITDA for the second quarter of 2014 was $4.3 million, a 44% improvement over the same period in 2013. Net loss for the second quarter of 2014, which included $1.0 million of non-cash amortization and depreciation, was $1.5 million, compared to a net loss of $2.3 million, including $623,000 of non-cash depreciation and amortization, for the three months ended June 30, 2013, representing a 38% year-over-year improvement.

Basic and diluted loss per common share for the three months ended June 30, 2014 was $0.09 compared to $0.14 for the three months ended June 30, 2013.

Six Month Summary Results

For the six months ended June 30, 2014, top line revenue increased 123%, or $8.5 million, to $15.5 million from $7.0 million for the six month period ended June 30, 2013.

During the six months ended June 30, 2014, the Company recorded gains of $12.0 million from the disposal of assets compared to gains of $0.7 million on asset disposals for the same six month period last year.
 
EBITDA for the six months ended June 30, 2014 was $7.1 million, an improvement of 188% over the corresponding period in 2013. Net loss for the six months ended June 30, 2014, including $2.0 million of non-cash depreciation and amortization, was $4.5 million, a 39% improvement from the net loss of $7.3 million for the six month period ended June 30, 2013, which included $1.1 million of non-cash depreciation and amortization.




Basic and diluted loss per common share for the six months ended June 30, 2014 was $0.27 compared to $0.43 for the six months ended June 30, 2013.

Total assets were $224.9 million as of June 30, 2014 compared to $237.4 million as of December 31, 2013.

Lawrence Bain, CEO and Chairman of IMH, said, “As markets continue to recover, we believe that we will be able to identify and fund attractive real estate-based debt and mezzanine investment opportunities in order to return to profitability and growth. We believe that the changes put in place at the Company over the past several years are beginning to be reflected in our improved financial performance.”

Mr. Bain continued, "We feel that our current portfolio of assets are favorably positioned and will be complemented by our future investment activities, which we believe will be significant. The recent changes announced in our capital structure should position us well for future earnings in the coming quarters, excluding certain anticipated one-time charges in the third quarter resulting from our debt restructuring. We anticipate the momentum to carry into the second half of 2014."

Reflecting specifically on both the Company’s quarter over quarter performance and quarterly trends, Mr. Bain added, “I am never satisfied with losses. I am pleased, however, with the progress we are making to increase our revenues and decrease our core operating expenses. We continue to be burdened by high interest expenses on our debt, which we are aggressively working to reduce. Our continued push toward improved earnings is underscored by the fact that we achieved positive EBITDA for the second straight quarter and an increase in EBITDA for the third straight quarter, both major milestones for the Company.”

Use of Non-GAAP Financial Information

EBITDA is considered a “non-GAAP financial measure” under SEC guidelines. The Company believes that this non-GAAP financial measure provides a more complete understanding of ongoing operations and enhances comparability of current results to prior periods. The Company also believes that providing investors with this non-GAAP financial information, in addition to the related GAAP measures, gives investors greater transparency to the information used by management in its financial and operational decision-making. However, because EBITDA is an incomplete measure of the Company's financial performance and involves differences from net income computed in accordance with GAAP, it should be considered along with, and not as an alternative to, the Company's net income computed in accordance with GAAP as a measure of the Company's financial performance.

A reconciliation of Company net losses, as reported, to EBITDA for the current and prior year’s quarter and respective six month periods follow.
 
Three Months Ended 
 
Six Months Ended 
 
June 30,
 
June 30,
 
2014
 
2013
 
2014
 
2013
Net Loss, as reported
$
(1,454
)
 
$
(2,348
)
 
$
(4,460
)
 
$
(7,288
)
Interest Expense
4,722

 
4,680

 
9,589

 
8,688

Depreciation and Amortization Expense
997

 
623

 
2,002

 
1,075

Earnings before Interest, Taxes, Depreciation and Amortization
$
4,265

 
$
2,955

 
$
7,131

 
$
2,475





About IMH Financial Corporation
IMH Financial Corporation is a Scottsdale, Arizona based real estate lender and investor. As a public reporting entity, ("IMH") files periodic reports with the SEC. For additional financial and other important information pertaining to IMH, individuals can visit www.sec.gov and reference CIK #1397403.

Forward-Looking Statements
Our future plans and other statements in this letter about expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts constitute forward-looking statements. In some cases, you can identify forward looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “feel,” “expect,” “intend,” “likely,” “may,” “plan,” “potential,” “should,” “see,” “hope,” “view,” and “would” or the negative of these terms or other comparable terminology. Forward-looking statements are subject to a number of risks and uncertainties, including without limitation the risk that we will be unable or otherwise decide not to make proposed future distributions and other risks and uncertainties related to the Company that can be found under the heading “Risk Factors” in the company's most recent annual report on Form 10-K and other filings with the SEC.

These forward looking statements are based on information currently available to us and actual results may differ as a result of many possible events or factors, not all of which are known to us or are within our control. If a change occurs, our business, financial condition, liquidity, and results of operations may vary materially from those expressed in our forward-looking statements. These forward-looking statements are made only as of the date hereof and we undertake no obligation, and disclaim any duty, to update or revise any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. You should not place undue reliance on these forward-looking statements.

































Supplemental Financial Statement Data

IMH FINANCIAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) 
 
 
 
 
 
 
 
June 30, 2014
 
December 31, 2013
ASSETS
 
(Unaudited)
 
 
Cash and Cash Equivalents
 
$
9,518

 
$
7,875

Restricted Cash and Cash Equivalents
 
16,559

 
5,777

Mortgage Loans Held for Sale, Net
 
12,634

 
12,541

Real Estate Acquired through Foreclosure Held for Sale
 
63,938

 
86,562

Real Estate Acquired through Foreclosure Held for Development
 
11,872

 
12,262

Operating Properties Acquired through Foreclosure
 
102,120

 
103,683

Deferred Financing Costs, Net
 
3,080

 
3,733

Other Receivables
 
1,480

 
983

Other Assets
 
2,925

 
3,159

Property and Equipment, Net
 
731

 
826

Total Assets
 
$
224,857

 
$
237,401

 
 
 
 
 
LIABILITIES
 
 
 
 
Accounts Payable and Accrued Expenses
 
$
7,303

 
$
8,400

Accrued Property Taxes
 
746

 
1,084

Accrued Interest Payable
 
3,558

 
2,974

Tenant Deposits and Funds Held for Others
 
275

 
1,016

Convertible Notes Payable and Deferred Interest, Net of Discount
 
57,639

 
54,975

Notes Payable, Net of Discount
 
42,097

 
46,043

Capital Lease Obligation
 
1,226

 
1,251

Special Assessment Obligations
 
5,097

 
5,339

Exit Fee Payable
 
10,460

 
10,448

Total Liabilities
 
128,401

 
131,530

 
 
 
 
 
Fair Value of Puttable Shares Pursuant to Legal Settlement
 

 
4,871

 
 
 
 
 
Commitments and Contingent Liabilities
 
 
 
 
 
 
 
 
 
STOCKHOLDERS' EQUITY
 
 
 
 
Common stock, $.01 par value; 200,000,000 shares authorized; 16,873,880 shares issued at June 30, 2014 and December 31, 2013; 15,563,546 and 16,832,221 shares outstanding at June 30, 2014 and December 31,2013, respectively
 
169

 
169

Preferred stock, $.01 par value; 100,000,000 shares authorized; none outstanding
 

 

Less: Treasury stock, 1,310,334 and 41,659 shares at June 30, 2014 and December 31, 2013, respectively
 
(5,399)

 
(172)

Paid-in Capital
 
725,293

 
720,150

Accumulated Deficit
 
(623,607)

 
(619,147)

Total Stockholders' Equity
 
96,456

 
101,000

 
 
 
 
 
Total Liabilities and Stockholders' Equity
 
$
224,857

 
$
237,401

 
 
 
 
 



 
 
 
 
 
 
 
 
 
IMH FINANCIAL CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended 
 
Six Months Ended 
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
REVENUE:
 
 
 
 
 
 
 
 
Operating Property Revenue
 
$
7,689

 
$
4,042

 
$
13,727

 
$
5,405

Investment and Other Income
 
553

 
857

 
890

 
1,166

Mortgage Loan Income, Net
 
650

 
197

 
870

 
384

Total Revenue
 
8,892

 
5,096

 
15,487

 
6,955

 
 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 
 
 
 
 
 
 
 
Operating Property Direct Expenses (exclusive of Interest and Depreciation)
 
6,236

 
3,388

 
11,243

 
4,498

Expenses for Non-Operating Real Estate Owned
 
593

 
444

 
1,146

 
924

Professional Fees
 
2,739

 
1,836

 
5,361

 
3,486

General and Administrative Expenses
 
1,642

 
1,344

 
3,154

 
2,722

Interest Expense
 
4,722

 
4,680

 
9,589

 
8,688

Depreciation and Amortization Expense
 
997

 
623

 
2,002

 
1,074

Settlement and Related Costs
 

 
805

 

 
1,123

Total Operating Expenses
 
16,929

 
13,120

 
32,495

 
22,515

 
 
 
 
 
 
 
 
 
RECOVERY OF CREDIT LOSSES AND GAIN ON DISPOSAL OF ASSETS:
 
 
 
 
 
 
 
 
Gain on Disposal of Assets
 
(6,583
)
 
(711
)
 
(12,000
)
 
(701
)
Recovery of Credit Losses
 

 
(4,965
)
 
(548
)
 
(7,571
)
Total Recovery of Credit Losses and Gain on Disposal
 
(6,583
)
 
(5,676
)
 
(12,548
)
 
(8,272
)
 
 
 
 
 
 
 
 
 
Total Costs and Expenses
 
10,346

 
7,444

 
19,947

 
14,243

 
 
 
 
 
 
 
 
 
Loss before Income Taxes
 
(1,454
)
 
(2,348
)
 
(4,460
)
 
(7,288
)
 
 
 
 
 
 
 
 
 
Provision for Income Taxes
 

 

 

 

 
 
 
 
 
 
 
 
 
NET LOSS
 
$
(1,454
)
 
$
(2,348
)
 
$
(4,460
)
 
$
(7,288
)
 
 
 
 
 
 
 
 
 
Basic and diluted loss per common share
 
 
 
 
 
 
 
 
Net Loss per Share
 
$
(0.09
)
 
$
(0.14
)
 
$
(0.27
)
 
$
(0.43
)
Weighted Average Common Shares Outstanding
 
15,939,966

 
16,873,880

 
16,383,629

 
16,873,880

 
 
 
 
 
 
 
 
 



IMH FINANCIAL CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 Six Months Ended June 30,
 
 
2014
 
2013
 
 
 
 
 
CASH FLOWS - OPERATING ACTIVITIES
 
 
 
 
Net Loss
 
$
(4,460
)
 
$
(7,288
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Non-cash Provision (Recovery of) Credit Losses
 

 
(6,700
)
Stock-Based Compensation and Option Amortization
 
272

 
268

Gain on Disposal of Assets
 
(12,000
)
 
(701
)
Amortization of Deferred Financing Costs
 
1,363

 
989

Depreciation and Amortization Expense
 
2,002

 
1,074

Investment Discount Amortization
 

 
(381
)
Accretion of Mortgage Income
 
(524
)
 

Accretion of Discount on Notes Payable
 
1,145

 
1,002

Increase (decrease) in cash resulting from changes in:
 
 
 
 
Accrued Interest Receivable
 
85

 
(374
)
Other Receivables
 
(497
)
 
(848
)
Other Assets
 
(505
)
 
194

Accrued Property Taxes
 
(338
)
 
(1,032
)
Accounts Payable and Accrued Expenses
 
65

 
1,569

Accrued Interest Payable
 
2,126

 
1,968

Liabilities of Assets Held for Sale
 

 
370

Tenant Deposits and Funds Held for Others
 

 
(99
)
Total adjustments, net
 
(6,806
)
 
(2,701
)
Net cash used in operating activities
 
(11,266
)
 
(9,989
)
 
 
 
 
 
CASH FLOWS - INVESTING ACTIVITIES
 
 
 
 
Proceeds from Sale/Recovery of Real Estate Owned
 
39,841

 
5,653

Purchases of Property and Equipment
 
(8
)
 
(238
)
Investment in Strategic Wealth & Income Fund LLC
 

 
24

Issuance of Other Notes Receivables
 
(2,100
)
 

Mortgage Loan Fundings and Protective Advances
 

 
(471
)
Mortgage Loan Repayments
 
5,589

 
7,762

Collection of Other Notes Receivables
 
2,100

 

Preferred Equity Investment
 

 
(15,000
)
Investment in Real Estate Owned
 
(2,529
)
 
(841
)
Capitalized Foreclosure Acquisition Costs
 

 
(2,473
)
Net cash provided by (used in) investing activities
 
42,893

 
(5,584
)



IMH FINANCIAL CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
 
 
 
 
 
 
 
 Six Months Ended June 30,
 
 
2014
 
2013
CASH FLOWS - FINANCING ACTIVITIES
 
 
 
 
Proceeds from Notes Payable
 
262

 
10,150

Proceeds from Convertible Notes Payable
 
70

 

Debt Issuance Costs Paid
 
(710
)
 
(1,072
)
(Increase) Decrease in Restricted Cash
 
(10,782
)
 
9,656

Repayments of Notes Payable
 
(17,510
)
 
(1,217
)
Purchase of Notes Payable
 
(1,289
)
 

Repayments of Capital Leases
 
(25
)
 

Dividends Paid
 

 
(800
)
Purchase of Treasury Stock
 

 

Net cash provided by (used in) financing activities
 
(29,984
)
 
16,717

 
 
 
 
 
NET INCREASE IN CASH AND CASH EQUIVALENTS
 
1,643

 
1,144

 
 
 
 
 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
 
7,875

 
3,084

 
 
 
 
 
CASH AND CASH EQUIVALENTS, END OF PERIOD
 
$
9,518

 
$
4,228

 
 
 
 
 
SUPPLEMENTAL CASH FLOW INFORMATION
 
 
 
 
Interest paid
 
$
5,543

 
$
6,919

Real Estate Acquired Through Foreclosure or Deed in Lieu of Foreclosure
 
$

 
$
91,380

Deferred Interest added to Notes Payable Principal
 
$
1,529

 
$
1,453

Seller Financing provided for Asset Sales
 
$
8,400

 
$
1,085

Accounts Payable and Accrued Liabilities Assumed in Foreclosure
 
$

 
$
3,382

Capital Lease Obligation Assumed in Foreclosure
 
$

 
$
1,279

Note Payable Assumed in Foreclosure
 
$

 
$
24,712

Reclassification of Paid in Capital to Fair Value of Puttable Shares Pursuant to Legal Settlement
 
$
4,871

 
$

Debt assumed for Asset Acquisitions
 
$
7,875

 
$

Non-cash Issuance of Exchange Offering Debt
 
$
6,389

 
$