Enova Reports Second Quarter 2018 Results
CHICAGO, July 26, 2018 /PRNewswire/ -- Enova International (NYSE: ENVA), a leading financial technology company offering consumer and small business loans and financing, today announced financial results for the quarter ended June 30, 2018.
"We are pleased with our strong second quarter results, driven by robust demand and stable credit across each of our six growth businesses," said David Fisher, Enova's CEO. "We've been consistent in executing our focused growth strategy, which includes the ongoing diversification of our business. These efforts have positioned us well in each of our markets to deliver sustainable and profitable long-term growth."
Second Quarter 2018 Summary
-- Total revenue of $253 million in the second quarter of 2018 increased
33% from $190 million in the second quarter of 2017.
-- Gross profit margin was 52.0% in the second quarter of 2018 compared to
57.9% in the second quarter of 2017.
-- Net income was $18 million, or $0.52 per diluted share, in the second
quarter of 2018 compared to net income of $12 million, or $0.35 per
diluted share, in the second quarter of 2017.
-- Second quarter 2018 adjusted EBITDA of $50 million, a non-GAAP measure,
increased from $42 million in the second quarter of 2017.
-- Adjusted earnings of $21 million, or $0.59 per diluted share, a non-GAAP
measure, in the second quarter of 2018 increased from adjusted earnings
of $14 million, or $0.41 per diluted share, in the second quarter of
2017.
"The second quarter marks the 11(th) consecutive quarter we have delivered financial results within or exceeding our guidance ranges, demonstrating the strength of our business model and consistency of our execution," said Steve Cunningham, CFO of Enova. "Strong receivables growth, stable credit, significant operating leverage, and balance sheet flexibility continue to drive our financial results."
Enova ended the second quarter of 2018 with unrestricted cash and cash equivalents of $47 million. As of June 30, 2018, the company had total debt outstanding of $763 million, which included $179 million outstanding under Enova's $295 million securitization facilities. During the second quarter, Enova generated $143 million of cash flow from operations. On July 23, the Company added a new 3-year, $150 million securitization facility to support growth of the NetCredit business. The new facility increases total NetCredit securitization capacity to $445 million and lowers the cost of financing.
Outlook
For the third quarter of 2018, Enova expects total revenue of $260 million to $275 million, GAAP results of $0.30 diluted earnings per share to $0.52 diluted earnings per share, adjusted EBITDA of $40 million to $50 million, and adjusted earnings per share of $0.37 to $0.58. For the full year 2018, Enova expects total revenue of $1.035 billion to $1.075 billion, GAAP diluted earnings per share of $1.78 to $2.22, adjusted EBITDA of $195 million to $215 million, and adjusted earnings per share of $2.19 to $2.63.
For information regarding the non-GAAP financial measures discussed in this release, please see "Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Financial Measures" below.
Conference Call
Enova will host a conference call to discuss its results at 4 p.m. Central Time / 5 p.m. Eastern Time today, Thursday, July 26(th). The live webcast of the call can be accessed at the Enova Investor Relations website at http://ir.enova.com, along with the company's earnings press release and supplemental financial information. The U.S. dial-in for the call is 1-855-560-2575 (1-412-542-4161 for non-U.S. callers). Please ask to be joined to the Enova International call. A replay of the conference call will be available until August 2, 2018, at 10:59 p.m. Central Time / 11:59 p.m. Eastern Time, while an archived version of the webcast will be available on the Enova Investor Relations website for 90 days. The U.S. dial-in for the conference call replay is 1-877-344-7529 (1-412-317-0088). The replay access code is 10121788.
About Enova
Enova (NYSE: ENVA) is a leading provider of online financial services to non-prime consumers and small businesses, providing access to credit powered by its advanced analytics, innovative technology, and world-class online platform and services. Enova has provided more than 5 million customers around the globe with access to more than $20 billion in loans and financing. The financial technology company has a portfolio of trusted brands serving consumers, including CashNetUSA®, NetCredit®, On Stride Financial®, Pounds to Pocket®, QuickQuid® and Simplic®; two brands serving small businesses, Headway Capital® and The Business Backer®; and offers online lending platform services to lenders. Through its Enova Decisions(TM) brand, it also delivers on-demand decision-making technology and real-time predictive analytics services to clients. You can learn more about the company and its brands at www.enova.com.
Cautionary Statement Concerning Forward Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about the business, financial condition and prospects of Enova. These forward-looking statements give current expectations or forecasts of future events and reflect the views and assumptions of Enova's senior management with respect to the business, financial condition and prospects of Enova as of the date of this release and are not guarantees of future performance. The actual results of Enova could differ materially from those indicated by such forward-looking statements because of various risks and uncertainties applicable to Enova's business, including, without limitation, those risks and uncertainties indicated in Enova's filings with the Securities and Exchange Commission ("SEC"), including our annual report on Form 10-K, quarterly reports on Forms 10-Q and current reports on Forms 8-K. These risks and uncertainties are beyond the ability of Enova to control, and, in many cases, Enova cannot predict all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this release, the words "believes," "estimates," "plans," "expects," "anticipates" and similar expressions or variations as they relate to Enova or its management are intended to identify forward-looking statements. Enova cautions you not to put undue reliance on these statements. Enova disclaims any intention or obligation to update or revise any forward-looking statements after the date of this release.
Non-GAAP Financial Measures
In addition to the financial information prepared in conformity with generally accepted accounting principles, or GAAP, Enova provides historical non-GAAP financial information. Management believes that presentation of non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of Enova's operations. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of Enova's business that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.
Management provides non-GAAP financial information for informational purposes and to enhance understanding of Enova's GAAP consolidated financial statements. Readers should consider the information in addition to, but not instead of or superior to, Enova's financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes.
Combined Loans and Finance Receivables
Enova has provided combined loans and finance receivables, which is a non-GAAP measure. Enova also reports allowances and liabilities for estimated losses on loans and finance receivables individually and on a combined basis, which are GAAP measures that are included in Enova's financial statements. Management believes these measures provide investors with important information needed to evaluate the magnitude of potential cost of revenue and the opportunity for revenue performance of the loan and finance receivables portfolio on an aggregate basis. Management believes that the comparison of the aggregate amounts from period to period is more meaningful than comparing only the residual amount on Enova's balance sheet since both revenue and the cost of revenue for loans and finance receivables are impacted by the aggregate amount of loans and finance receivables owned by Enova and those guaranteed by Enova as reflected in its financial statements.
Adjusted Earnings and Adjusted Earnings Per Share
In addition to reporting financial results in accordance with GAAP, Enova has provided adjusted earnings and adjusted earnings per share, or, collectively, the Adjusted Earnings Measures, which are non-GAAP measures. Management believes that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments and amortization methods, which provides a more complete understanding of Enova's financial performance, competitive position and prospects for the future. Management also believes that investors regularly rely on non-GAAP financial measures, such as the Adjusted Earnings Measures, to assess operating performance and that such measures may highlight trends in Enova's business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. In addition, management believes that the adjustments shown below are useful to investors in order to allow them to compare Enova's financial results during the periods shown without the effect of certain expense items.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP measure that Enova defines as earnings excluding depreciation, amortization, interest, foreign currency transaction gains or losses, taxes, stock-based compensation, loss on early extinguishment of debt and acquisition related costs, and Adjusted EBITDA margin is a non-GAAP measure that Enova defines as Adjusted EBITDA as a percentage of total revenue. Management believes Adjusted EBITDA and Adjusted EBITDA margin are used by investors to analyze operating performance and evaluate Enova's ability to incur and service debt and Enova's capacity for making capital expenditures. Adjusted EBITDA and Adjusted EBITDA margin are also useful to investors to help assess Enova's estimated enterprise value. The computation of Adjusted EBITDA and Adjusted EBITDA margin as presented below may differ from the computation of similarly-titled measures provided by other companies.
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(Unaudited)
June 30, December 31,
--------
2018 2017 2017
---- ---- ----
Assets
Cash and cash equivalents $47,414 $46,209 $68,684
Restricted cash (includes restricted cash of
consolidated VIEs of $21,744, $19,119 and $21,696 as
of June 30, 2018 and 2017 and December 31, 2017,
respectively) 28,863 26,636 29,460
Loans and finance receivables, net (includes loans of
consolidated VIEs of $257,972, $240,444 and $282,724
and allowance for losses of $21,019, $17,072 and
$22,728 as of June 30, 2018 and 2017 and December 31,
2017, respectively) 750,131 563,996 704,705
Income taxes receivable 3,006 13,410 4,092
Other receivables and prepaid expenses 25,373 22,006 23,817
Property and equipment, net 47,752 44,329 48,525
Goodwill 267,013 267,012 267,015
Intangible assets, net 3,790 4,865 4,325
Other assets 9,862 13,406 8,837
----- ------ -----
Total assets $1,183,204 $1,001,869 $1,159,460
========== ========== ==========
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $72,406 $62,799 $77,123
Deferred tax liabilities, net 14,322 25,753 12,108
Long-term debt (includes long-term debt of
consolidated VIEs of $179,059, $151,987 and $211,406
and debt issuance costs of $2,131, $1,054 and $3,271,
as of June 30, 2018 and 2017 and December 31, 2017,
respectively) 762,831 638,749 788,542
------- ------- -------
Total liabilities 849,559 727,301 877,773
------- ------- -------
Commitments and contingencies
Stockholders' equity:
Common stock, $0.00001 par value, 250,000,000 shares
authorized, 34,633,819, 33,752,662 and 33,932,673
shares issued and 34,145,146, 33,635,215 and
33,504,555 outstanding as of June 30, 2018 and 2017
and December 31, 2017, respectively - - -
Preferred stock, $0.00001 par value, 25,000,000 shares
authorized, no shares issued and outstanding - - -
Additional paid in capital 39,335 23,753 29,781
Retained earnings 312,440 261,180 264,695
Accumulated other comprehensive loss (10,905) (9,069) (7,086)
Treasury stock, at cost (488,673, 117,447 and 428,118
shares as of June 30, 2018 and 2017 and December 31,
2017, respectively) (7,225) (1,296) (5,703)
------ ------ ------
Total stockholders' equity 333,645 274,568 281,687
------- ------- -------
Total liabilities and stockholders' equity $1,183,204 $1,001,869 $1,159,460
========== ========== ==========
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
---- ---- ---- ----
Revenue $253,301 $189,904 $507,599 $382,167
Cost of Revenue 121,494 79,862 230,047 161,746
------- ------ ------- -------
Gross Profit 131,807 110,042 277,552 220,421
Expenses
Marketing 29,386 23,410 57,122 42,993
Operations and technology 27,195 21,818 52,733 45,349
General and administrative 28,295 26,245 55,216 51,941
Depreciation and amortization 3,837 3,366 7,675 6,863
----- ----- ----- -----
Total Expenses 88,713 74,839 172,746 147,146
------ ------ ------- -------
Income from Operations 43,094 35,203 104,806 73,275
Interest expense, net (19,355) (17,012) (39,028) (34,234)
Foreign currency transaction (loss)
gain (204) 62 (2,292) 289
Loss on early extinguishment of debt - - (4,710) -
--- --- ------ ---
Income before Income Taxes 23,535 18,253 58,776 39,330
Provision for income taxes 5,310 6,380 12,653 13,605
----- ----- ------ ------
Net Income $18,225 $11,873 $46,123 $25,725
======= ======= ======= =======
Earnings Per Share:
Net income per common share:
Basic $0.54 $0.35 $1.36 $0.77
Diluted $0.52 $0.35 $1.32 $0.75
Weighted average common shares
outstanding:
Basic 33,984 33,553 33,821 33,463
Diluted 35,371 34,125 34,966 34,081
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(dollars in thousands)
(Unaudited)
Six Months Ended June 30,
-------------------------
2018 2017
---- ----
Cash flows provided
by operating
activities $295,716 $186,058
Cash flows used in
investing
activities
Loans and finance
receivables (276,550) (164,731)
Property and
equipment
additions (7,065) (5,301)
Other investing
activities 42 1,482
--- -----
Total cash flows
used in investing
activities (283,573) (168,550)
Cash flows used in
financing
activities (33,599) (15,900)
------- -------
Effect of exchange
rates on cash,
cash equivalents
and restricted
cash (411) 4,997
---- -----
Net increase in
cash, cash
equivalents and
restricted cash (21,867) 6,605
Cash, cash
equivalents and
restricted cash at
beginning of year 98,144 66,240
------ ------
Cash, cash
equivalents and
restricted cash at
end of period $76,277 $72,845
======= =======
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
GEOGRAPHIC INFORMATION
(dollars in thousands)
The following table presents information on Enova's domestic and international operations for the three and six months ended June 30, 2018 and 2017.
Three Months Ended June 30,
---------------------------
2018 2017 $ Change % Change
---- ---- -------- --------
Domestic:
Revenue $213,638 $158,073 $55,565 35.2%
Cost of revenue 102,206 67,393 34,813 51.7
------- ------ ------ ----
Gross profit $111,432 $90,680 $20,752 22.9
======== ======= ======= ====
Gross profit margin 52.2% 57.4% (5.2)% (9.1)%
International:
Revenue $39,663 $31,831 $7,832 24.6%
Cost of revenue 19,288 12,469 6,819 54.7
------ ------ ----- ----
Gross profit $20,375 $19,362 $1,013 5.2
======= ======= ====== ===
Gross profit margin 51.4% 60.8% (9.4)% (15.5)%
Total:
Revenue $253,301 $189,904 $63,397 33.4%
Cost of revenue 121,494 79,862 41,632 52.1
------- ------ ------ ----
Gross profit $131,807 $110,042 $21,765 19.8
======== ======== ======= ====
Gross profit margin 52.0% 57.9% (5.9)% (10.2)%
Six Months Ended June 30,
-------------------------
2018 2017 $ Change % Change
---- ---- -------- --------
Domestic:
Revenue $426,604 $322,742 $103,862 32.2%
Cost of revenue 190,319 138,042 52,277 37.9
------- ------- ------ ----
Gross profit $236,285 $184,700 $51,585 27.9
======== ======== ======= ====
Gross profit margin 55.4% 57.2% (1.8)% (3.1)%
International:
Revenue $80,995 $59,425 $21,570 36.3%
Cost of revenue 39,728 23,704 16,024 67.6
------ ------ ------ ----
Gross profit $41,267 $35,721 $5,546 15.5
======= ======= ====== ====
Gross profit margin 51.0% 60.1% (9.1)% (15.1)%
Total:
Revenue $507,599 $382,167 $125,432 32.8%
Cost of revenue 230,047 161,746 68,301 42.2
------- ------- ------ ----
Gross profit $277,552 $220,421 $57,131 25.9
======== ======== ======= ====
Gross profit margin 54.7% 57.7% (3.0)% (5.2)%
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
LOANS AND FINANCE RECEIVABLES FINANCIAL AND OPERATING DATA
(dollars in thousands)
The following table shows loans and finance receivables and related loan loss activity, which is based on loan and finance receivable balances, for the three months ended June
30, 2018 and 2017.
Three Months Ended June
30, 2018 2017 Change
----------------------- ---- ---- ------
Cost of revenue $121,494 $79,862 $41,632
Charge-offs (net of
recoveries) 111,785 78,768 33,017
Average combined loans
and finance receivables,
gross:
Company owned(a) 840,077 619,699 220,378
Guaranteed by Enova(a)(b) 28,138 24,999 3,139
------ ------ -----
Average combined loans
and finance receivables,
gross (a)(c) $868,215 $644,698 $223,517
======== ======== ========
Ending combined loans and
finance receivables,
gross:
Company owned $871,915 $647,835 $224,080
Guaranteed by Enova(b) 28,681 28,013 668
------ ------ ---
Ending combined loans and
finance receivables,
gross (c) $900,596 $675,848 $224,748
======== ======== ========
Ending allowance and
liability for losses $123,876 $85,780 $38,096
======== ======= =======
Combined originations (d) $599,280 $512,546 $86,734
Loans and finance
receivables ratios:
--------------------
Cost of revenue as a % of
average combined loans
and finance receivables,
gross(a)(c) 14.0% 12.4% 1.6%
Charge-offs (net of
recoveries) as a % of
average combined loans
and finance receivables,
gross(a)(c) 12.9% 12.2% 0.7%
Gross profit margin 52.0% 57.9% (5.9)%
Allowance and liability
for losses as a % of
combined loans and
finance receivables,
gross(c)(e) 13.8% 12.7% 1.1%
(a) The average
combined loans and
finance
receivables,
gross, is the
average of the
month-end
balances during
the period.
(b) Represents loans
originated by
third-party
lenders through
the credit
services
organization (or
CSO) programs,
which are not
included in
Enova's financial
statements.
(c) Non-GAAP measure.
See the above
discussion for
additional
information
regarding combined
loans and finance
receivables.
(d) Represents loans
and finance
receivables
originated by
Enova and third-
party lenders
through the CSO
and includes
renewals of
existing
origination
agreements to
customers in good
standing. The
disclosure is
statistical data
that is not
included in
Enova's financial
statements.
(e) Allowance and
liability for
losses as a
percentage of
combined loans and
finance
receivables,
gross, is
determined using
period-end
balances.
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(dollars in thousands, except per share data)
Adjusted Earnings Measures
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
---- ---- ---- ----
Net Income $18,225 $11,873 $46,123 $25,725
Adjustments:
Loss on early extinguishment of debt(a) - - 4,710 -
Intangible asset amortization 268 271 535 542
Stock-based compensation expense 2,834 2,987 5,267 5,307
Foreign currency transaction loss
(gain) 204 (62) 2,292 (289)
Cumulative tax effect of adjustments (777) (1,113) (2,756) (1,923)
---- ------ ------ ------
Adjusted earnings $20,754 $13,956 $56,171 $29,362
======= ======= ======= =======
Diluted earnings per share $0.52 $0.35 $1.32 $0.75
Adjusted earnings per share $0.59 $0.41 $1.61 $0.86
===== ===== ===== =====
Adjusted EBITDA
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2018 2017 2018 2017
---- ---- ---- ----
Net Income $18,225 $11,873 $46,123 $25,725
Depreciation and amortization expenses 3,837 3,366 7,675 6,863
Interest expense, net 19,355 17,012 39,028 34,234
Foreign currency transaction loss
(gain) 204 (62) 2,292 (289)
Provision for income taxes 5,310 6,380 12,653 13,605
Stock-based compensation expense 2,834 2,987 5,267 5,307
Adjustments:
Loss on early extinguishment of debt(a) - - 4,710 -
--- --- ----- ---
Adjusted EBITDA $49,765 $41,556 $117,748 $85,445
======= ======= ======== =======
Adjusted EBITDA margin calculated as
follows:
Total Revenue $253,301 $189,904 $507,599 $382,167
Adjusted EBITDA 49,765 41,556 117,748 85,445
Adjusted EBITDA as a percentage of
total revenue 19.6% 21.9% 23.2% 22.4%
(a) In the first quarter
of 2018, the Company
recorded a $4.7
million ($3.7 million
net of tax) loss on
early extinguishment
of debt related to
the repurchase of
$50.0 million
principal amount of
senior notes.
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(dollars in thousands)
Estimated Adjusted EBITDA and Earnings Per Share For 2018
The following tables reconcile estimated Income from operations to Adjusted EBITDA, a non-GAAP measure and diluted income per share to
adjusted earnings per share, a non-GAAP measure:
Estimated Results
Three Months Ended September 30,
2018
---------------------------------
Low High
--- ----
Unaudited
Income from operations $33,100 $43,100
Depreciation and amortization 3,900 3,900
Stock-based compensation expense 3,000 3,000
----- -----
Adjusted EBITDA $40,000 $50,000
======= =======
Estimated Results
Year Ended December 31, 2018
----------------------------
Low High
--- ----
Unaudited
Income from operations $167,800 $187,800
Depreciation and amortization 15,600 15,600
Stock-based compensation expense 11,600 11,600
------ ------
Adjusted EBITDA $195,000 $215,000
======== ========
Estimated Results
Three Months Ended September 30,
2018
---------------------------------
Low High
--- ----
Unaudited
Diluted income per share $0.30 $0.52
Adjustments:
Intangible asset amortization 0.01 0.01
Stock-based compensation expense 0.08 0.08
Cumulative tax effect of adjustments (0.02) (0.03)
----- -----
Adjusted earnings per share $0.37 $0.58
===== =====
Estimated Results
Year Ended December 31, 2018
----------------------------
Low High
--- ----
Unaudited
Diluted income per share $1.78 $2.22
Adjustments:
Loss on early extinguishment of debt 0.13 0.13
Intangible asset amortization 0.03 0.03
Stock-based compensation expense 0.33 0.33
Foreign currency transaction gain 0.06 0.06
Cumulative tax effect of adjustments (0.14) (0.14)
----- -----
Adjusted earnings per share $2.19 $2.63
===== =====
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SOURCE Enova International, Inc.
