Enova Reports Third Quarter 2017 Financial Results
CHICAGO, Oct. 26, 2017 /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 September 30, 2017.
"Our strong third quarter results were driven by healthy demand, particularly from new customers," said David Fisher, Enova's CEO. "Our six growth businesses are performing well, which is a testament to our leading competitive position, focused growth strategy, and strong balance sheet with diversified funding. Our credit quality continues to be good and in line with our expectations, even as other consumer lenders have reported some challenges. Further, we're pleased to finally have greater clarity regarding the CFPB's final small dollar rule, and remain confident in our ability to successfully adapt to these new regulations with minimal financial impact."
Third Quarter 2017 Summary
-- Total revenue of $217.9 million in the third quarter of 2017 increased
11.2% from $195.9 million in the third quarter of 2016.
-- Gross profit margin was 50.7% in the third quarter of 2017 compared to
51.3% in the third quarter of 2016, driven by growth in the installment
loan and receivables purchase agreement segment as well as a higher mix
of new customers, which requires higher loan loss provisions.
-- Net loss was $3.4 million, or $0.10 per diluted share, in the third
quarter of 2017 compared to net income of $7.8 million, or $0.23 per
diluted share, in the third quarter of 2016. The net loss included a
pre-tax charge of $14.9 million related to the early redemption of
senior notes originally due in 2021.
-- Third quarter 2017 adjusted EBITDA of $34.2 million, a non-GAAP measure,
was flat compared to the third quarter of 2016.
-- Third quarter 2017 adjusted earnings per share was $0.25, a non-GAAP
measure, compared to $0.28 in the third quarter of 2016.
"We are very pleased with our solid financial performance in the third quarter and the progress we have made strengthening our balance sheet," said Steve Cunningham, CFO of Enova. "This year we have raised $565 million in funding from varied sources at competitive costs, including a $40 million bank-led secured revolving line of credit, $250 million of 7-year senior unsecured notes, and renewal of our $275 million securitization facility."
Enova ended the third quarter of 2017 with unrestricted cash and cash equivalents of $110.1 million. As of September 30, 2017, the company had total debt outstanding of $765.4 million, which included $186.5 million outstanding under Enova's $295 million securitization facilities. During the third quarter, Enova generated $125.2 million of cash flow from operations.
Outlook
For the fourth quarter of 2017, Enova expects total revenue of $220 million to $240 million, GAAP results of $(0.01) diluted loss per share to $0.18 per diluted earnings per share, adjusted EBITDA of $32 million to $42 million, and adjusted earnings per share of $0.14 to $0.33. For the full year 2017, Enova expects total revenue of $820 million to $840 million, GAAP diluted earnings per share of $0.65 to $0.84, adjusted EBITDA of $151 million to $161 million, and adjusted earnings per share of $1.24 to $1.43.
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, October 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 November 9, 2017, 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 1011-3131.
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, and loss on early extinguishment of debt, 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)
September 30, December 31,
-------------
2017 2016 2016
---- ---- ----
Assets
Cash and cash equivalents $110,054 $45,681 $39,934
Restricted cash and cash equivalents (includes restricted
cash of consolidated VIEs of $22,161, $18,119 and
$19,468 as of September 30, 2017 and 2016 and December
31, 2016, respectively) 29,866 39,272 26,306
Loans and finance receivables, net (includes loans of
consolidated VIEs of $296,478, $191,534 and $234,497 and
allowance for losses of $22,115, $15,518 and $17,731 as
of September 30, 2017 and 2016 and December 31, 2016,
respectively) 637,736 542,865 561,550
Income taxes receivable 9,319 - -
Other receivables and prepaid expenses 23,796 18,649 19,524
Property and equipment, net 46,557 47,486 47,100
Goodwill 267,015 267,012 267,010
Intangible assets, net 4,593 5,675 5,404
Other assets 10,842 8,439 11,051
------ ----- ------
Total assets $1,139,778 $975,079 $977,879
========== ======== ========
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $78,897 $85,433 $71,671
Income taxes currently payable - 5,149 282
Deferred tax liabilities, net 20,681 16,233 14,316
Long-term debt (includes long-term debt of consolidated
VIEs of $186,533, $136,953 and $165,419 and debt
issuance costs of $762, $2,416 and $1,869, as of
September 30, 2017 and 2016 and December 31, 2016,
respectively) 765,395 635,179 649,911
------- ------- -------
Total liabilities 864,973 741,994 736,180
------- ------- -------
Commitments and contingencies
Stockholders' equity:
Common stock, $0.00001 par value, 250,000,000 shares
authorized, 33,828,668, 33,260,017 and 33,364,525 shares
issued and 33,608,611, 33,214,594 and 33,293,100
outstanding as of September 30, 2017 and 2016 and
December 31, 2016, respectively - - -
Preferred stock, $0.00001 par value, 25,000,000 shares
authorized, no shares issued and outstanding - - -
Additional paid in capital 26,749 16,338 18,446
Retained earnings 257,812 226,741 235,455
Accumulated other comprehensive loss (7,017) (9,692) (11,578)
Treasury stock, at cost (220,057, 45,423 and 71,425
shares as of September 30, 2017 and 2016 and December
31, 2016, respectively) (2,739) (302) (624)
------ ---- ----
Total stockholders' equity 274,805 233,085 241,699
------- ------- -------
Total liabilities and stockholders' equity $1,139,778 $975,079 $977,879
========== ======== ========
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Revenue $217,878 $195,943 $600,045 $543,131
Cost of Revenue 107,341 95,391 269,087 230,421
------- ------ ------- -------
Gross Profit 110,537 100,552 330,958 312,710
Expenses
Marketing 27,000 26,722 69,993 73,500
Operations and technology 27,163 20,637 72,512 61,706
General and administrative 25,164 21,307 77,105 76,747
Depreciation and amortization 3,533 3,789 10,396 12,004
----- ----- ------ ------
Total Expenses 82,860 72,455 230,006 223,957
------ ------ ------- -------
Income from Operations 27,677 28,097 100,952 88,753
Interest expense, net (18,292) (16,117) (52,526) (48,058)
Foreign currency transaction gain 65 145 354 2,184
Loss on early extinguishment of debt (14,927) - (14,927) -
------- --- ------- ---
(Loss) Income before Income Taxes (5,477) 12,125 33,853 42,879
(Benefit from) provision for income
taxes (2,109) 4,288 11,496 16,991
------ ----- ------ ------
Net (Loss) Income $(3,368) $7,837 $22,357 $25,888
======= ====== ======= =======
Earnings Per Share:
Earnings per common share:
Basic $(0.10) $0.24 $0.67 $0.78
Diluted $(0.10) $0.23 $0.66 $0.78
Weighted average common shares
outstanding:
Basic 33,670 33,211 33,533 33,176
Diluted 33,670 33,558 34,119 33,360
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(dollars in thousands)
(Unaudited)
Nine Months Ended September 30,
-------------------------------
2017 2016
---- ----
Cash flows
provided by
operating
activities $311,297 $300,707
Cash flows used
in investing
activities
Loans and
finance
receivables (325,859) (335,390)
Change in
restricted cash (3,030) (32,776)
Property and
equipment
additions (10,804) (11,466)
Other investing
activities 1,798 72
----- ---
Total cash flows
used in
investing
activities (337,895) (379,560)
Cash flows
provided by
financing
activities 93,101 89,922
------ ------
Effect of
exchange rates
on cash 3,617 (7,454)
----- ------
Net increase in
cash and cash
equivalents 70,120 3,615
Cash and cash
equivalents at
beginning of
year 39,934 42,066
------ ------
Cash and cash
equivalents at
end of period $110,054 $45,681
======== =======
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
GEOGRAPHIC INFORMATION
(dollars in thousands)
The following tables present information on Enova's domestic and international operations for the three and nine months ended September 30, 2017 and 2016.
Three Months Ended
September 30,
-------------
2017 2016 $ Change % Change
---- ---- -------- --------
Domestic:
Revenue $181,584 $165,330 $16,254 9.8%
Cost of revenue 88,419 85,862 2,557 3.0
------ ------ ----- ---
Gross profit $93,165 $79,468 $13,697 17.2
======= ======= ======= ====
Gross profit margin 51.3% 48.1% 3.2% 6.7%
International:
Revenue $36,294 $30,613 $5,681 18.6%
Cost of revenue 18,922 9,529 9,393 98.6
------ ----- ----- ----
Gross profit $17,372 $21,084 $(3,712) (17.6)
======= ======= ======= =====
Gross profit margin 47.9% 68.9% (21.0)% (30.5)%
Total:
Revenue $217,878 $195,943 $21,935 11.2%
Cost of revenue 107,341 95,391 11,950 12.5
------- ------ ------ ----
Gross profit $110,537 $100,552 $9,985 9.9
======== ======== ====== ===
Gross profit margin 50.7% 51.3% (0.6)% (1.2)%
Nine Months Ended
September 30,
-------------
2017 2016 $ Change % Change
---- ---- -------- --------
Domestic:
Revenue $504,326 $449,100 $55,226 12.3%
Cost of revenue 226,461 204,070 22,391 11.0
------- ------- ------ ----
Gross profit $277,865 $245,030 $32,835 13.4
======== ======== ======= ====
Gross profit margin 55.1% 54.6% 0.5% 0.9%
International:
Revenue $95,719 $94,031 $1,688 1.8%
Cost of revenue 42,626 26,351 16,275 61.8
------ ------ ------ ----
Gross profit $53,093 $67,680 $(14,587) (21.6)
======= ======= ======== =====
Gross profit margin 55.5% 72.0% (16.5)% (22.9)%
Total:
Revenue $600,045 $543,131 $56,914 10.5%
Cost of revenue 269,087 230,421 38,666 16.8
------- ------- ------ ----
Gross profit $330,958 $312,710 $18,248 5.8
======== ======== ======= ===
Gross profit margin 55.2% 57.6% (2.4)% (4.2)%
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 September 30,
2017 and 2016.
Three Months Ended September 30, 2017 2016 Change
-------------------------------- ---- ---- ------
Cost of revenue $107,341 $95,391 $11,950
Charge-offs (net of recoveries) 86,513 74,312 12,201
Average combined loans and
finance receivables, gross:
Company owned(a) 698,783 606,357 92,426
Guaranteed by Enova(a)(b) 30,415 31,278 (863)
------ ------ ----
Average combined loans and
finance receivables, gross
(a)(c) $729,198 $637,635 $91,563
======== ======== =======
Ending combined loans and
finance receivables, gross:
Company owned $742,796 $637,612 $105,184
Guaranteed by Enova(b) 28,943 29,700 (757)
------ ------ ----
Ending combined loans and
finance receivables, gross (c) $771,739 $667,312 $104,427
======== ======== ========
Ending allowance and liability
for losses $107,077 $96,474 $10,603
======== ======= =======
Combined originations (d) $568,208 $581,677 $(13,469)
Loans and finance receivables
ratios:
-----------------------------
Cost of revenue as a % of
average combined loans and
finance receivables,
gross(a)(c) 14.7% 15.0% (0.3)%
Charge-offs (net of recoveries)
as a % of average combined
loans and finance receivables,
gross(a)(c) 11.9% 11.7% 0.2%
Gross profit margin 50.7% 51.3% (0.6)%
Allowance and liability for
losses as a % of combined loans
and finance receivables,
gross(c)(e) 13.9% 14.5% (0.6)%
(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), 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 Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Net (Loss) Income $(3,368) $7,837 $22,357 $25,888
Adjustments:
Loss on early extinguishment of debt 14,927 - 14,927 -
Intangible asset amortization 269 271 811 867
Stock-based compensation expense 2,996 2,265 8,303 6,414
Foreign currency transaction gain (65) (145) (354) (2,184)
Cumulative tax effect of adjustments (6,121) (902) (8,044) (2,020)
------ ---- ------ ------
Adjusted earnings $8,638 $9,326 $38,000 $28,965
====== ====== ======= =======
Diluted (loss) earnings per share $(0.10) $0.23 $0.66 $0.78
Adjusted earnings per share $0.25 $0.28 $1.11 $0.87
===== ===== ===== =====
Adjusted EBITDA
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
Net (Loss) Income $(3,368) $7,837 $22,357 $25,888
Depreciation and amortization expenses 3,533 3,789 10,396 12,004
Interest expense, net 18,292 16,117 52,526 48,058
Foreign currency transaction gain (65) (145) (354) (2,184)
(Benefit from) provision for income
taxes (2,109) 4,288 11,496 16,991
Stock-based compensation expense 2,996 2,265 8,303 6,414
Adjustments:
Loss on early extinguishment of debt 14,927 - 14,927 -
------ --- ------ ---
Adjusted EBITDA $34,206 $34,151 $119,651 $107,171
======= ======= ======== ========
Adjusted EBITDA margin calculated as
follows:
Total Revenue $217,878 $195,943 $600,045 $543,131
Adjusted EBITDA 34,206 34,151 119,651 107,171
Adjusted EBITDA as a percentage of
total revenue 15.7% 17.4% 19.9% 19.7%
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(dollars in thousands)
Estimated Adjusted EBITDA and Adjusted Earnings Per Share For 2017
The following tables reconcile estimated Income from operations to Adjusted EBITDA, a non-GAAP measure, and Diluted (loss) earnings per
share to Adjusted earnings per share, a non-GAAP measure:
Estimated Results
Three Months Ended December 31,
2017
--------------------------------
Low High
--- ----
Unaudited
Income from operations $25,000 $35,000
Depreciation and amortization 4,000 4,000
Stock-based compensation expense 3,000 3,000
----- -----
Adjusted EBITDA $32,000 $42,000
======= =======
Estimated Results
Year Ended December 31, 2017
----------------------------
Low High
--- ----
Unaudited
Income from operations $126,000 $136,000
Depreciation and amortization 14,000 14,000
Stock-based compensation expense 11,000 11,000
------ ------
Adjusted EBITDA $151,000 $161,000
======== ========
Estimated Results
Three Months Ended December 31,
2017
--------------------------------
Low High
--- ----
Unaudited
Diluted (loss) earnings per share $(0.01) $0.18
Adjustments (net of tax):
Intangible asset amortization 0.01 0.01
Stock-based compensation expense 0.08 0.08
Loss on early extinguishment of debt 0.15 0.15
Cumulative tax effect of adjustments (0.09) (0.09)
----- -----
Adjusted earnings per share $0.14 $0.33
===== =====
Estimated Results
Year Ended December 31, 2017
----------------------------
Low High
--- ----
Unaudited
Diluted earnings per share $0.65 $0.84
Adjustments (net of tax):
Intangible asset amortization 0.04 0.04
Stock-based compensation expense 0.31 0.31
Foreign currency transaction gain (0.01) (0.01)
Loss on early extinguishment of debt 0.59 0.59
Cumulative tax effect of adjustments (0.34) (0.34)
----- -----
Adjusted earnings per share $1.24 $1.43
===== =====
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SOURCE Enova International, Inc.
