Enova Reports Third Quarter 2018 Results
CHICAGO, Oct. 25, 2018 /PRNewswire/ -- Enova International (NYSE: ENVA), a leading financial technology and analytics company offering consumer and small business loans and financing, today announced financial results for the quarter ended September 30, 2018.
"We are pleased to deliver another quarter of robust growth. We continued to see strong demand and stable credit across our six growth businesses," said David Fisher, Enova's CEO. "Our focused growth strategy, scalable online model, diversified product offering and efficient marketing position us well to achieve sustainable and profitable growth. Based on the strong tailwinds in our business, we are raising our full year guidance and anticipate the considerable momentum we are seeing will continue in 2019."
Third Quarter 2018 Summary
-- Total revenue of $294 million in the third quarter of 2018 increased 35%
from $218 million in the third quarter of 2017.
-- Gross profit margin was 44.3% in the third quarter of 2018, compared to
50.7% in the third quarter of 2017.
-- Net income was $15 million, or $0.43 per diluted share, in the third
quarter of 2018, compared to a net loss of $3 million, or a loss of
$0.10 per diluted share, in the third quarter of 2017.
-- Third quarter 2018 adjusted EBITDA of $44 million, a non-GAAP measure,
increased from $34 million in the third quarter of 2017.
-- Adjusted earnings of $16 million, or $0.46 per diluted share, a non-GAAP
measure, in the third quarter of 2018 increased from adjusted earnings
of $9 million, or $0.25 per diluted share, in the third quarter of 2017.
"Our business model and execution allow us to continue to meet demand that exceeds our expectations while delivering strong top and bottom line results that are within or exceed our guidance ranges," said Steve Cunningham, CFO of Enova. "Our results were further enhanced by the strengthening of our balance sheet during the third quarter. This year we have raised $885 million in funding from diverse sources at competitive costs, resulting in our lowest public company quarterly cost of funds ever, despite increases in market rates. Our solid balance sheet gives us the financial flexibility to execute on our strategic growth plans and further support our competitive position."
Enova ended the third quarter of 2018 with unrestricted cash and cash equivalents of $164 million. As of September 30, 2018, the company had total debt outstanding of $951 million, which included $226 million outstanding under Enova's $445 million securitization facilities. During the third quarter, Enova generated $172 million of cash flow from operations.
Outlook
For the fourth quarter of 2018, Enova expects total revenue of $290 million to $310 million, GAAP results of $0.17 diluted earnings per share to $0.38 diluted earnings per share, adjusted EBITDA of $43 million to $53 million, and adjusted earnings per share of $0.40 to $0.61. For the full year 2018, Enova now expects total revenue of $1.091 billion to $1.111 billion, GAAP diluted earnings per share of $1.92 to $2.13, adjusted EBITDA of $205 million to $215 million, and adjusted earnings per share of $2.46 to $2.67.
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 25th. 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 1, 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 10125289.
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)
September 30, December 31,
2018 2017 2017
Assets
Cash and cash equivalents $
164,122 $
110,054 $
68,684
Restricted cash (includes restricted cash of
consolidated VIEs of $18,678, $22,161 and $21,696 as of
September 30, 2018 and 2017 and December 31, 2017,
respectively) 20,897 29,866 29,460
Loans and finance receivables, net (includes loans of
consolidated VIEs of $319,769, $296,478 and $282,724
and allowance for losses of $28,096, $22,115 and
$22,728 as of September 30, 2018 and 2017 and December
31, 2017, respectively) 838,783 637,736 704,705
Income taxes receivable 45,639 9,319 4,092
Other receivables and prepaid expenses 25,699 23,796 23,817
Property and equipment, net 48,514 46,557 48,525
Goodwill 267,013 267,015 267,015
Intangible assets, net 3,523 4,593 4,325
Other assets 12,078 10,842 8,837
Total assets $
1,426,268 $
1,139,778 $
1,159,460
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $
76,188 $
78,897 $
77,123
Deferred tax liabilities, net 46,321 20,681 12,108
Long-term debt (includes long-term debt of
consolidated VIEs of $226,218, $186,533 and $211,406
and debt issuance costs of $1,659, $762 and $3,271, as
of September 30, 2018 and 2017 and December 31, 2017,
respectively) 951,091 765,395 788,542
Total liabilities 1,073,600 864,973 877,773
Commitments and contingencies
Stockholders' equity:
Common stock, $0.00001 par value, 250,000,000 shares
authorized, 34,764,648, 33,828,668 and 33,932,673
shares issued and 34,274,785, 33,608,611 and 33,504,555
outstanding as of September 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 44,657 26,749 29,781
Retained earnings 327,744 257,812 264,695
Accumulated other comprehensive loss (12,468) (7,017) (7,086)
Treasury stock, at cost (489,863, 220,057 and 428,118
shares as of September 30, 2018 and 2017 and December
31, 2017, respectively) (7,265) (2,739) (5,703)
Total stockholders' equity 352,668 274,805 281,687
Total liabilities and stockholders' equity $
1,426,268 $
1,139,778 $
1,159,460
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,
2018 2017 2018 2017
Revenue $
293,879 $
217,878 $
801,478 $
600,045
Cost of Revenue 163,763 107,341 393,810 269,087
Gross Profit 130,116 110,537 407,668 330,958
Expenses
Marketing 36,011 27,000 93,133 69,993
Operations and technology 28,260 27,163 80,993 72,512
General and administrative 24,360 25,164 79,576 77,105
Depreciation and amortization 3,688 3,533 11,363 10,396
Total Expenses 92,319 82,860 265,065 230,006
Income from Operations 37,797 27,677 142,603 100,952
Interest expense, net (20,244) (18,292) (59,272) (52,526)
Foreign currency transaction gain
(loss) 27 65 (2,265) 354
Loss on early extinguishment of debt (12,469) (14,927) (17,179) (14,927)
Income (Loss) before Income Taxes 5,111 (5,477) 63,887 33,853
(Benefit from) provision for income
taxes (10,193) (2,109) 2,460 11,496
Net Income (Loss) $
15,304 $
(3,368) $
61,427 $
22,357
Earnings Per Share:
Net income (loss) per common share:
Basic $
0.45 $
(0.10) $
1.81 $
0.67
Diluted $
0.43 $
(0.10) $
1.75 $
0.66
Weighted average common shares
outstanding:
Basic 34,168 33,670 33,938 33,533
Diluted 35,665 33,670 35,200 34,119
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(dollars in thousands)
(Unaudited)
Nine Months Ended September 30,
2018 2017
Cash flows provided by operating
activities $
468,160 $
311,297
Cash flows used in investing
activities
Loans and finance receivables (505,938) (325,859)
Property and equipment additions (11,303) (10,804)
Other investing activities 93 1,798
Total cash flows used in investing
activities (517,148) (334,865)
Cash flows provided by financing
activities 141,234 93,101
Effect of exchange rates on cash,
cash equivalents and restricted
cash (5,371) 4,147
Net increase in cash, cash
equivalents and restricted cash 86,875 73,680
Cash, cash equivalents and
restricted cash at beginning of
year 98,144 66,240
Cash, cash equivalents and
restricted cash at end of period $
185,019 $
139,920
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 nine months ended September 30, 2018 and 2017.
Three Months Ended
September 30,
2018 2017
$ Change % Change
Domestic:
Revenue $
251,054 $
181,584 $
69,470 38.3
%
Cost of revenue 142,702 88,419 54,283 61.4
Gross profit $
108,352 $
93,165 $
15,187 16.3
Gross profit margin 43.2 51.3 (8.1) (15.8)
% % % %
International:
Revenue $
42,825 $
36,294 $
6,531 18.0
%
Cost of revenue 21,061 18,922 2,139 11.3
Gross profit $
21,764 $
17,372 $
4,392 25.3
Gross profit margin 50.8 47.9 2.9 6.1
% % % %
Total:
Revenue $
293,879 $
217,878 $
76,001 34.9
%
Cost of revenue 163,763 107,341 56,422 52.6
Gross profit $
130,116 $
110,537 $
19,579 17.7
Gross profit margin 44.3 50.7 (6.4) (12.6)
% % % %
Nine Months Ended
September 30,
2018 2017
$ Change % Change
Domestic:
Revenue $
677,658 $
504,326 $
173,332 34.4
%
Cost of revenue 333,021 226,461 106,560 47.1
Gross profit $
344,637 $
277,865 $
66,772 24.0
Gross profit margin 50.9 55.1 (4.2) (7.6)
% % % %
International:
Revenue $
123,820 $
95,719 $
28,101 29.4
%
Cost of revenue 60,789 42,626 18,163 42.6
Gross profit $
63,031 $
53,093 $
9,938 18.7
Gross profit margin 50.9 55.5 (4.6) (8.3)
% % % %
Total:
Revenue $
801,478 $
600,045 $
201,433 33.6
%
Cost of revenue 393,810 269,087 124,723 46.4
Gross profit $
407,668 $
330,958 $
76,710 23.2
Gross profit margin 50.9 55.2 (4.3) (7.8)
% % % %
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,
2018 and 2017.
Three Months Ended September
30, 2018 2017 Change
---
Cost of revenue $
163,763 $
107,341 $
56,422
Charge-offs (net of
recoveries) 133,417 86,513 46,904
Average combined loans and
finance receivables, gross:
Company owned(a) 937,573 698,783 238,790
Guaranteed by Enova(a)(b) 30,238 30,415 (177)
Average combined loans and
finance receivables, gross
(a)(c) $
967,811 $
729,198 $
238,613
Ending combined loans and
finance receivables, gross:
Company owned $
990,368 $
742,796 $
247,572
Guaranteed by Enova(b) 30,106 28,943 1,163
Ending combined loans and
finance receivables, gross
(c) $
1,020,474 $
771,739 $
248,735
Ending allowance and liability
for losses $
153,829 $
107,077 $
46,752
Combined originations (d) $
697,690 $
568,208 $
129,482
Loans and finance receivables
ratios:
---
Cost of revenue as a % of
average combined loans and % % %
finance receivables,
gross(a)(c) 16.9 14.7 2.2
Charge-offs (net of
recoveries) as a % of average % % %
combined loans and finance
receivables, gross(a)(c) 13.8 11.9 1.9
Gross profit margin 44.3 50.7 (6.4)
% % %
Allowance and liability for
losses as a % of combined % % %
loans and finance
receivables, gross(c)(e) 15.1 13.9 1.2
(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 Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Net Income (Loss) $
15,304 $
(3,368) $
61,427 $
22,357
Adjustments:
Loss on early extinguishment of
debt(a) 12,469 14,927 17,179 14,927
Intangible asset amortization 268 269 803 811
Stock-based compensation expense 2,882 2,996 8,149 8,303
Foreign currency transaction (gain)
loss (27) (65) 2,265 (354)
Cumulative tax effect of adjustments (3,332) (6,121) (6,088) (8,044)
Discrete tax adjustments(b) (11,237) (11,237)
Adjusted earnings $
16,327 $
8,638 $
72,498 $
38,000
Diluted earnings per share $
0.43 $
(0.10) $
1.75 $
0.66
Adjusted earnings per share $
0.46 $
0.25 $
2.06 $
1.11
Adjusted EBITDA
Three Months Ended Nine Months Ended
September 30, September
30,
2018 2017 2018 2017
Net Income (Loss) $
15,304 $
(3,368) $
61,427 $
22,357
Depreciation and amortization
expenses 3,688 3,533 11,363 10,396
Interest expense, net 20,244 18,292 59,272 52,526
Foreign currency transaction (gain)
loss (27) (65) 2,265 (354)
(Benefit from) provision for income
taxes (10,193) (2,109) 2,460 11,496
Stock-based compensation expense 2,882 2,996 8,149 8,303
Adjustments:
Loss on early extinguishment of
debt(a) 12,469 14,927 17,179 14,927
Adjusted EBITDA $
44,367 $
34,206 $
162,115 $
119,651
Adjusted EBITDA margin calculated as
follows:
Total Revenue $
293,879 $
217,878 $
801,478 $
600,045
Adjusted EBITDA 44,367 34,206 162,115 119,651
Adjusted EBITDA as a percentage of 15.1 15.7 20.2 19.9
total revenue % % % %
(a) In the first and third quarters of
2018, the Company recorded $4.7
million ($3.7 million net of tax) and
$12.5 million ($9.9 million net of
tax) losses on early extinguishment
of debt related to the repurchase of
$50.0 million and $178.5 million,
respectively, principal amount of
senior notes.
(b) In the third quarter of 2018, the
Company recorded a one-time $11.2
million income tax benefit resulting
from various income tax deductions.
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 December 31, 2018
Low High
Unaudited
Income from operations $
36,300 $
46,300
Depreciation and amortization 3,700 3,700
Stock-based compensation expense 3,000 3,000
Adjusted EBITDA $
43,000 $
53,000
Estimated Results
Year Ended December 31, 2018
Low High
Unaudited
Income from operations $
176,600 $
186,600
Depreciation and amortization 15,100 15,100
Stock-based compensation expense 11,100 11,100
Foreign currency transaction loss 2,300 2,300
Adjusted EBITDA $
205,100 $
215,100
Estimated Results
Three Months Ended December 31, 2018
Low High
Unaudited
Diluted income per share $
0.17 $
0.38
Adjustments:
Loss on early extinguishment of debt 0.21 0.21
Intangible asset amortization 0.01 0.01
Stock-based compensation expense 0.08 0.08
Cumulative tax effect of adjustments (0.07) (0.07)
Adjusted earnings per share $
0.40 $
0.61
Estimated Results
Year Ended December 31, 2018
Low High
Unaudited
Diluted income per share $
1.92 $
2.13
Adjustments:
Loss on early extinguishment of debt 0.71 0.71
Intangible asset amortization 0.03 0.03
Stock-based compensation expense 0.33 0.33
Foreign currency transaction loss 0.06 0.06
Cumulative tax effect of adjustments (0.28) (0.28)
Discrete tax adjustments(a) (0.31) (0.31)
Adjusted earnings per share $
2.46 $
2.67
(a) In the third quarter of
2018, the Company
recorded a one-time
$11.2 million income tax
benefit resulting from
various income tax
deductions.
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SOURCE Enova International, Inc.
