Enova Reports First Quarter 2018 Results
Enova Reports First Quarter 2018 Results
- First quarter 2018 revenue grew 32% compared to a year ago, reaching a record $254 million and adjusted EBITDA grew 55% to $68 million
- First quarter 2018 installment loan and receivables purchase agreement revenue grew 44% to $122 million and line of credit revenue grew 32% to $78 million
- Total loans outstanding grew 36% year over year during the first quarter, driven by near-prime installment loan portfolio growth of 39% to $387 million
- Net income and diluted earnings per share doubled year-over-year to $28 million and $0.81, respectively
CHICAGO, April 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 March 31, 2018.
"We saw strong demand and stable credit in each of our six growth businesses during the first quarter, resulting in both revenue and earnings exceeding our expectations," said David Fisher, Enova's CEO. "Our good start to the year reinforces our commitment to our focused growth strategy. We're confident our diversified revenue streams, talented employees, best-in-class technology and strong competitive position set us up very well for the remainder of 2018 and beyond."
First Quarter 2018 Summary
-- Total revenue of $254 million in the first quarter of 2018 increased 32%
from $192 million in the first quarter of 2017.
-- Gross profit margin was flat compared to the year ago quarter at 57.3%.
-- Net income was $28 million, or $0.81 per diluted share, in the first
quarter of 2018 compared to net income of $14 million, or $0.41 per
diluted share, in the first quarter of 2017.
-- First quarter 2018 adjusted EBITDA of $68 million, a non-GAAP measure,
increased from $44 million in the first quarter of 2017.
-- Adjusted earnings of $35 million, or $1.02 per diluted share, a non-GAAP
measure, in the first quarter of 2018 increased from adjusted earnings
of $15 million, or $0.45 per diluted share, in the first quarter of
2017.
"Our first quarter performance exceeded our expectations, and we are raising our full year guidance," said Steve Cunningham, CFO of Enova. "Strong year-over-year originations and receivables growth, meaningful operating leverage inherent in our online model, stable margins and a lower effective tax rate drove our strong performance. In addition, the business generated record operating cash flow during the quarter, and we continue to demonstrate market access to support our growth."
Enova ended the first quarter of 2018 with unrestricted cash and cash equivalents of $70 million. As of March 31, 2018, the company had total debt outstanding of $755 million, which included $217 million outstanding under Enova's $295 million securitization facilities. During the first quarter, Enova generated $153 million of cash flow from operations. On April 13, the Company's bank-led, secured revolving line of credit was amended to increase borrowing capacity from $40 million to $75 million.
Outlook
For the second quarter of 2018, Enova expects total revenue of $230 million to $245 million, GAAP results of $0.34 diluted earnings per share to $0.56 diluted earnings per share, adjusted EBITDA of $42 million to $52 million, and adjusted earnings per share of $0.41 to $0.62. For the full year 2018, Enova expects total revenue of $980 million to $1.04 billion, GAAP diluted earnings per share of $1.69 to $2.25, adjusted EBITDA of $190 million to $215 million, and adjusted earnings per share of $2.10 to $2.66.
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, April 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 May 3, 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 1011-9269.
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)
March 31, December 31,
---------
2018 2017 2017
---- ---- ----
Assets
Cash and cash equivalents $69,900 $97,030 $68,684
Restricted cash (includes restricted cash of consolidated
VIEs of $26,746, $17,815 and $21,696 as of March 31,
2018 and 2017 and December 31, 2017, respectively) 34,765 25,610 29,460
Loans and finance receivables, net (includes loans of
consolidated VIEs of $302,743, $225,473 and $282,724 and
allowance for losses of $24,471, $17,879 and $22,728 as
of March 31, 2018 and 2017 and December 31, 2017,
respectively) 703,076 515,463 704,705
Income taxes receivable - 3,004 4,092
Other receivables and prepaid expenses 22,164 18,059 23,817
Property and equipment, net 47,698 44,279 48,525
Goodwill 267,013 267,011 267,015
Intangible assets, net 4,058 5,136 4,325
Other assets 9,526 9,821 8,837
----- ----- -----
Total assets $1,158,200 $985,413 $1,159,460
========== ======== ==========
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $70,473 $70,485 $77,123
Income taxes currently payable 257 - -
Deferred tax liabilities, net 17,087 25,338 12,108
Long-term debt (includes long-term debt of consolidated
VIEs of $217,125, $145,449 and $211,406 and debt
issuance costs of $2,666, $1,419 and $3,271, as of March
31, 2018 and 2017 and December 31, 2017, respectively) 754,650 631,117 788,542
------- ------- -------
Total liabilities 842,467 726,940 877,773
------- ------- -------
Commitments and contingencies
Stockholders' equity:
Common stock, $0.00001 par value, 250,000,000 shares
authorized, 34,340,242, 33,596,007 and 33,932,673 shares
issued and 33,862,388, 33,488,159 and 33,504,555
outstanding as of March 31, 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 32,671 20,766 29,781
Retained earnings 294,215 249,307 264,695
Accumulated other comprehensive loss (4,322) (10,440) (7,086)
Treasury stock, at cost (477,854, 107,848 and 428,118
shares as of March 31, 2018 and 2017 and December 31,
2017, respectively) (6,831) (1,160) (5,703)
------ ------ ------
Total stockholders' equity 315,733 258,473 281,687
------- ------- -------
Total liabilities and stockholders' equity $1,158,200 $985,413 $1,159,460
========== ======== ==========
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
---------
2018 2017
---- ----
Revenue $254,298 $192,263
Cost of Revenue 108,553 81,884
------- ------
Gross Profit 145,745 110,379
Expenses
Marketing 27,736 19,583
Operations and
technology 25,538 23,531
General and
administrative 26,921 25,696
Depreciation and
amortization 3,838 3,497
----- -----
Total Expenses 84,033 72,307
------ ------
Income from Operations 61,712 38,072
Interest expense, net (19,673) (17,222)
Foreign currency
transaction (loss) gain (2,088) 227
Loss on early
extinguishment of debt (4,710) -
------ ---
Income before Income
Taxes 35,241 21,077
Provision for income
taxes 7,343 7,225
----- -----
Net Income $27,898 $13,852
======= =======
Earnings Per Share:
Net income per common
share:
Basic $0.83 $0.42
Diluted $0.81 $0.41
Weighted average common
shares outstanding:
Basic 33,669 33,372
Diluted 34,572 34,036
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(dollars in thousands)
(Unaudited)
Three Months Ended March 31,
----------------------------
2018 2017
---- ----
Cash flows
provided by
operating
activities $153,002 $119,865
Cash flows used in
investing
activities
Loans and finance
receivables (108,081) (45,802)
Property and
equipment
additions (3,349) (2,156)
Other investing
activities 24 2,367
--- -----
Total cash flows
used in investing
activities (111,406) (45,591)
Cash flows used in
financing
activities (40,608) (20,506)
------- -------
Effect of exchange
rates on cash,
cash equivalents
and restricted
cash 5,533 2,632
----- -----
Net increase in
cash, cash
equivalents and
restricted cash 6,521 56,400
Cash, cash
equivalents and
restricted cash
at beginning of
year 98,144 66,240
------ ------
Cash, cash
equivalents and
restricted cash
at end of period $104,665 $122,640
======== ========
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 months ended March 31, 2018 and 2017.
Three Months Ended March 31,
----------------------------
2018 2017 $ Change % Change
---- ---- -------- --------
Domestic:
Revenue $212,966 $164,669 $48,297 29.3%
Cost of revenue 88,113 70,649 17,464 24.7
------ ------ ------ ----
Gross profit $124,853 $94,020 $30,833 32.8
======== ======= ======= ====
Gross profit margin 58.6% 57.1% 1.5% 2.6%
International:
Revenue $41,332 $27,594 $13,738 49.8%
Cost of revenue 20,440 11,235 9,205 81.9
------ ------ ----- ----
Gross profit $20,892 $16,359 $4,533 27.7
======= ======= ====== ====
Gross profit margin 50.5% 59.3% (8.8)% (14.8)%
Total:
Revenue $254,298 $192,263 $62,035 32.3%
Cost of revenue 108,553 81,884 26,669 32.6
------- ------ ------ ----
Gross profit $145,745 $110,379 $35,366 32.0
======== ======== ======= ====
Gross profit margin 57.3% 57.4% (0.1)% (0.2)%
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 March 31,
2018 and 2017.
Three Months Ended March
31, 2018 2017 Change
------------------------ ---- ---- ------
Cost of revenue $108,553 $81,884 $26,669
Charge-offs (net of
recoveries) 118,705 98,814 19,891
Average combined loans and
finance receivables,
gross:
Company owned(a) 831,299 635,236 196,063
Guaranteed by Enova(a)(b) 32,143 28,027 4,116
------ ------ -----
Average combined loans and
finance receivables, gross
(a)(c) $863,442 $663,263 $200,179
======== ======== ========
Ending combined loans and
finance receivables,
gross:
Company owned $817,359 $598,717 $218,642
Guaranteed by Enova(b) 26,594 22,546 4,048
------ ------ -----
Ending combined loans and
finance receivables, gross
(c) $843,953 $621,263 $222,690
======== ======== ========
Ending allowance and
liability for losses $115,693 $84,441 $31,252
======== ======= =======
Combined originations (d) $557,424 $447,536 $109,888
Loans and finance
receivables ratios:
--------------------
Cost of revenue as a % of
average combined loans and
finance receivables,
gross(a)(c) 12.6% 12.3% 0.3%
Charge-offs (net of
recoveries) as a % of
average combined loans and
finance receivables,
gross(a)(c) 13.7% 14.9% (1.2)%
Gross profit margin 57.3% 57.4% (0.1)%
Allowance and liability for
losses as a % of combined
loans and finance
receivables, gross(c)(e) 13.7% 13.6% 0.1%
(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), 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
March 31,
---------
2018 2017
---- ----
Net Income $27,898 $13,852
Adjustments:
Loss on early
extinguishment of
debt(a) 4,710 -
Intangible asset
amortization 267 271
Stock-based
compensation
expense 2,433 2,320
Foreign currency
transaction loss
(gain) 2,088 (227)
Cumulative tax
effect of
adjustments (1,979) (810)
------ ----
Adjusted earnings $35,417 $15,406
======= =======
Diluted earnings per
share $0.81 $0.41
Adjusted earnings
per share $1.02 $0.45
===== =====
Adjusted EBITDA
Three Months Ended
March 31,
---------
2018 2017
---- ----
Net Income $27,898 $13,852
Depreciation and
amortization
expenses 3,838 3,497
Interest expense,
net 19,673 17,222
Foreign currency
transaction loss
(gain) 2,088 (227)
Provision for income
taxes 7,343 7,225
Stock-based
compensation
expense 2,433 2,320
Adjustments:
Loss on early
extinguishment of
debt(a) 4,710 -
----- ---
Adjusted EBITDA $67,983 $43,889
======= =======
Adjusted EBITDA
margin calculated
as follows:
Total Revenue $254,298 $192,263
Adjusted EBITDA 67,983 43,889
Adjusted EBITDA as a
percentage of total
revenue 26.7% 22.8%
(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 June 30, 2018
--------------------------------
Low High
--- ----
Unaudited
Income from operations $35,100 $45,100
Depreciation and amortization 3,900 3,900
Stock-based compensation expense 3,000 3,000
----- -----
Adjusted EBITDA $42,000 $52,000
======= =======
Estimated Results
Year Ended December 31, 2018
----------------------------
Low High
--- ----
Unaudited
Income from operations $162,600 $187,600
Depreciation and amortization 15,800 15,800
Stock-based compensation expense 11,600 11,600
------ ------
Adjusted EBITDA $190,000 $215,000
======== ========
Estimated Results
Three Months Ended June 30, 2018
--------------------------------
Low High
--- ----
Unaudited
Diluted income per share $0.34 $0.56
Adjustments:
Intangible asset amortization 0.01 0.01
Stock-based compensation expense 0.09 0.08
Cumulative tax effect of adjustments (0.03) (0.03)
----- -----
Adjusted earnings per share $0.41 $0.62
===== =====
Estimated Results
Year Ended December 31, 2018
----------------------------
Low High
--- ----
Unaudited
Diluted income per share $1.69 $2.25
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 $2.10 $2.66
===== =====
CONTACT: Public Relations, Caroline Vasquez, Email: media@enova.com; Investor Relations, Monica Gould, Office: (212) 871-3927, Email: IR@enova.com or Lindsay Savarese, Office: (212) 331-8417, Email: IR@enova.com
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SOURCE Enova International, Inc.
