Enova Reports Fourth Quarter and Full Year 2018 Results
CHICAGO, Jan. 31, 2019 /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 and year ended December 31, 2018.
"Our fourth quarter results capped off another terrific year for Enova, marked by stable credit, strong demand and solid execution," said David Fisher, Enova's CEO. "We delivered record revenue while effectively managing the business to drive solid bottom line results. We are pleased with the momentum entering 2019, and we expect to continue producing long-term sustainable and profitable growth."
Fourth Quarter 2018 Summary
-- Total revenue of $313 million in the fourth quarter of 2018 increased
28% from $244 million in the fourth quarter of 2017.
-- Gross profit margin was 43.3% in the fourth quarter of 2018, compared to
47.7% in the fourth quarter of 2017.
-- Net income of $8.7 million, or $0.25 per diluted share, in the fourth
quarter of 2018 increased from $6.9 million, or $0.20 per diluted share,
in the fourth quarter of 2017.
-- Fourth quarter 2018 adjusted EBITDA of $48 million, a non-GAAP measure,
increased from $38 million in the fourth quarter of 2017.
-- Adjusted earnings of $18.2 million, or $0.52 per diluted share, a
non-GAAP measure, in the fourth quarter of 2018 increased from adjusted
earnings of $8.9 million, or $0.26 per diluted share, in the fourth
quarter of 2017.
Full Year 2018 Summary
-- Total revenue of $1.114 billion in 2018 increased 32% from $844 million
in 2017.
-- Gross profit margin was 48.7% in 2018, compared to 53.0% in 2017.
-- Net income of $70 million, or $1.99 per diluted share, in 2018 increased
from $29 million, or $0.86 per diluted share, in 2017.
-- Adjusted EBITDA of $211 million, a non-GAAP measure, in 2018 increased
from $158 million in 2017.
-- Adjusted earnings of $91 million, or $2.58 per diluted share, a non-GAAP
measure, in 2018 increased from adjusted earnings of $47 million, or
$1.37 per diluted share, in 2017.
"We are pleased to report another strong quarter, with results meeting or exceeding our expectations," said Steve Cunningham, CFO of Enova. "During 2018 we saw solid growth, continued diversification, meaningful operating leverage and improvements in our liquidity position and cost of funds. Our business model and balance sheet have us well positioned for continued success in 2019."
Enova ended the fourth quarter of 2018 with unrestricted cash and cash equivalents of $53 million. As of December 31, 2018, the company had total debt outstanding of $858 million, which included $116 million outstanding under Enova's $575 million securitization facilities. During the fourth quarter, Enova generated $217 million of cash flow from operations.
Share Repurchase Program
Enova completed its previously announced $25 million share repurchase program earlier this year. During the first quarter of 2019, the company's Board of Directors authorized a new share repurchase program for up to $50 million of Enova's outstanding common stock through December 31, 2020.
Outlook
For the first quarter of 2019, Enova expects total revenue of $280 million to $300 million, GAAP diluted earnings per share of $0.78 to $0.99, adjusted EBITDA of $63 million to $73 million and adjusted earnings per share of $0.85 to $1.06. For the full year 2019, Enova expects total revenue of $1.25 billion to $1.31 billion, GAAP diluted earnings per share of $2.49 to $3.13, adjusted EBITDA of $230 million to $260 million and adjusted earnings per share of $2.76 to $3.40.
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, January 31(st). 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 February 7, 2019, 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 10127834.
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
The combined loans and finance receivables measures are non-GAAP measures that include loans and finance receivables that Enova owns or has purchased and loans that Enova guarantees. Management believes these non-GAAP measures provide investors with important information needed to evaluate the magnitude of potential receivable losses and the opportunity for revenue performance of the loans and finance receivable portfolio on an aggregate basis. Management also believes that the comparison of the aggregate amounts from period to period is more meaningful than comparing only the amounts reflected on Enova's consolidated balance sheet since both revenue and cost of revenue are impacted by the aggregate amount of receivables owned by Enova and those guaranteed by Enova as reflected in its consolidated financial statements.
Adjusted Earnings Measures
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 each of these expense items.
Adjusted EBITDA Measures
Adjusted EBITDA is a non-GAAP measure that Enova defines as earnings excluding depreciation, amortization, interest, foreign currency transaction gains or losses, taxes and stock-based compensation. In addition, management believes that the adjustments for losses on early extinguishment of debt, certain acquisition-related costs and a discrete regulatory settlement shown below are useful to investors in order to allow them to compare our financial results during the periods shown without the effect of the expense items. Adjusted EBITDA margin is a non-GAAP measure that Enova defines as Adjusted EBITDA as a percentage of total revenue. Management believes Adjusted EBITDA Measures 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 Measures are also useful to investors to help assess Enova's estimated enterprise value.
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except p
er share data)
(Unaudited)
December 31,
2018 2017
Assets
Cash and cash equivalents $
52,917 $
68,684
Restricted cash and cash equivalents 24,342 29,460
Loans and finance receivables, net 859,946 704,705
Income taxes receivable 28,914 4,092
Other receivables and prepaid expenses 29,983 23,817
Property and equipment, net 49,553 48,525
Goodwill 267,013 267,015
Intangible assets, net 3,255 4,325
Other assets 12,262 8,837
Total assets $
1,328,185 $
1,159,460
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses $
89,317 $
77,123
Deferred tax liabilities, net 33,171 12,108
Long-term debt 857,929 788,542
Total liabilities 980,417 877,773
Commitments and contingencies
Stockholders' equity:
Common stock, $0.00001 par value, 250,000,000 shares
authorized, 34,856,553 and 33,932,673 shares issued and
33,584,606 and 33,504,555 outstanding as of December
31, 2018 and 2017, respectively
Preferred stock, $0.00001 par value, 25,000,000 shares
authorized, no shares issued and outstanding
Additional paid in capital 48,175 29,781
Retained earnings 336,415 264,695
Accumulated other comprehensive loss (13,805) (7,086)
Treasury stock, at cost (1,271,947 and 428,118 shares as
of December 31, 2018 and 2017, respectively) (23,017) (5,703)
Total stockholders' equity 347,768 281,687
Total liabilities and stockholders' equity $
1,328,185 $
1,159,460
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSO
LIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2018 2017 2018 2017
Revenue $
312,596 $
243,696 $
1,114,074 $
843,741
Cost of Revenue 177,190 127,545 571,000 396,632
Gross Profit 135,406 116,151 543,074 447,109
Expenses
Marketing 32,136 31,436 125,269 101,429
Operations and technology 31,490 22,643 112,483 95,155
General and administrative 27,484 24,618 107,060 101,723
Depreciation and amortization 3,827 3,992 15,190 14,388
Total Expenses 94,937 82,689 360,002 312,695
Income from Operations 40,469 33,462 183,072 134,414
Interest expense, net (20,076) (21,477) (79,348) (74,003)
Foreign currency transaction (loss)
gain (55) 30 (2,320) 384
Loss on early extinguishment of debt (7,812) (7,968) (24,991) (22,895)
Income before Income Taxes 12,526 4,047 76,413 37,900
Provision for (benefit from) income
taxes 3,855 (2,836) 6,315 8,660
Net Income $
8,671 $
6,883 $
70,098 $
29,240
Earnings Per Share:
Earnings per common share:
Basic $
0.25 $
0.21 $
2.06 $
0.87
Diluted $
0.25 $
0.20 $
1.99 $
0.86
Weighted average common shares
outstanding:
Basic 34,158 33,494 33,993 33,523
Diluted 35,103 34,172 35,176 34,132
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
Year Ended December 31,
2018 2017
Cash flows provided by operating
activities $
684,840 $
447,173
Cash flows used in investing
activities
Loans and finance receivables (705,138) (509,845)
Property and equipment additions (16,079) (16,528)
Other investing activities 284 1,805
Total cash flows used in investing
activities (720,933) (524,568)
Cash flows provided by financing
activities 22,479 104,582
Effect of exchange rates on cash (7,271) 4,717
Net (decrease) increase in cash,
cash equivalents and restricted
cash (20,885) 31,904
Cash, cash equivalents and
restricted cash at beginning of
year 98,144 66,240
Cash, cash equivalents and
restricted cash at end of period $
77,259 $
98,144
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 twelve months ended December 31, 2018 and 2017.
Three Months Ended
December 31,
2018 2017
$ Change % Change
Domestic:
Revenue $
268,857 $
205,211 $
63,646 31.0
%
Cost of revenue 152,361 108,993 43,368 39.8
%
Gross profit $
116,496 $
96,218 $
20,278 21.1
%
Gross profit margin 43.3 46.9 (3.6) (7.7)
% % %
%
International:
Revenue $
43,739 $
38,485 $
5,254 13.7
%
Cost of revenue 24,829 18,552 6,277 33.8
%
Gross profit $
18,910 $
19,933 $
(1,023) (5.1)
%
Gross profit margin 43.2 51.8 (8.6) (16.6)
% % % %
Total:
Revenue $
312,596 $
243,696 $
68,900 28.3
%
Cost of revenue 177,190 127,545 49,645 38.9
%
Gross profit $
135,406 $
116,151 $
19,255 16.6
%
Gross profit margin 43.3 47.7 (4.4) (9.2)
% % %
%
Year Ended December 31,
2018 2017
$ Change % Change
Domestic:
Revenue $
946,515 $
709,537 $
236,978 33.4
%
Cost of revenue 485,382 335,454 149,928 44.7
%
Gross profit $
461,133 $
374,083 $
87,050 23.3
%
Gross profit margin 48.7 52.7 (4.0) (7.6)
% % %
%
International:
Revenue $
167,559 $
134,204 $
33,355 24.9
%
Cost of revenue 85,618 61,178 24,440 39.9
%
Gross profit $
81,941 $
73,026 $
8,915 12.2
%
Gross profit margin 48.9 54.4 (5.5) (10.1)
% % % %
Total:
Revenue $
1,114,074 $
843,741 $
270,333 32.0
%
Cost of revenue 571,000 396,632 174,368 44.0
%
Gross profit $
543,074 $
447,109 $
95,965 21.5
%
Gross profit margin 48.7 53.0 (4.3) (8.1)
% % %
%
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 December 31,
2018 and 2017.
Three Months Ended December
31 2018 2017 Change
---
Cost of revenue $
177,190 $
127,545 $
49,645
Charge-offs (net of
recoveries) 165,353 109,257 56,096
Average combined loans and
finance receivables,
gross:
Company owned(a) 1,008,494 783,948 224,546
Guaranteed by Enova(a)(b) 29,565 31,810 (2,245)
Average combined loans and
finance receivables,
gross(a)(c) $
1,038,059 $
815,758 $
222,301
Ending combined loans and
finance receivables,
gross:
Company owned $
1,023,254 $
827,749 $
195,505
Guaranteed by Enova(b) 29,704 34,134 (4,430)
Ending combined loans and
finance receivables,
gross(c) $
1,052,958 $
861,883 $
191,075
Ending allowance and
liability for losses $
165,474 $
125,302 $
40,172
Combined originations(d) $
688,639 $
612,757 $
75,882
Loans and finance
receivables ratios:
---
Cost of revenue as a % of
average combined loans and % % %
finance receivables,
gross(a)(c) 17.1 15.6 1.5
Charge-offs (net of
recoveries) as a % of % % %
average combined loans and
finance receivables,
gross(a)(c) 15.9 13.4 2.5
Gross profit margin 43.3 47.7 (4.4)
% % %
Allowance and liability for
losses as a % of combined % % %
loans and finance
receivables, gross(c)(e) 15.7 14.5 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),
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
Year Ended
December 31,
December 31,
2018 2017 2018 2017
Net income $
8,671 $
6,883 $
70,098 $
29,240
Adjustments:
Loss on early extinguishment of debt(a) 7,812 7,968 24,991 22,895
Acquisition-related costs(b) (2,358) (2,358)
Intangible asset amortization 267 269 1,070 1,080
Stock-based compensation expense 3,511 3,004 11,660 11,307
Foreign currency transaction loss
(gain) 55 (30) 2,320 (384)
Cumulative tax effect of adjustments (2,797) 609 (8,885) (7,435)
Discrete tax adjustments(c) (7,452) (11,237) (7,452)
Regulatory settlement(d) 633 633
Adjusted earnings $
18,152 $
8,893 $
90,650 $
46,893
Diluted earnings per share $
0.25 $
0.20 $
1.99 $
0.86
Adjusted earnings per share $
0.52 $
0.26 $
2.58 $
1.37
Adjusted EBITDA Measures
Three Months Ended
Year Ended
December 31,
December 31,
2018 2017 2018 2017
Net income $
8,671 $
6,883 $
70,098 $
29,240
Depreciation and amortization expenses 3,827 3,992 15,190 14,388
Interest expense, net 20,076 21,477 79,348 74,003
Foreign currency transaction loss
(gain) 55 (30) 2,320 (384)
Provision for (benefit from) income
taxes 3,855 (2,836) 6,315 8,660
Stock-based compensation expense 3,511 3,004 11,660 11,307
Adjustments:
Loss on early extinguishment of debt(a) 7,812 7,968 24,991 22,895
Acquisition-related costs(b) (2,358) (2,358)
Regulatory settlement(d) 633 633
Adjusted EBITDA $
48,440 $
38,100 $
210,555 $
157,751
Adjusted EBITDA margin calculated as
follows:
Total Revenue $
312,596 $
243,696 $
1,114,074 $
843,741
Adjusted EBITDA 48,440 38,100 210,555 157,751
Adjusted EBITDA as a percentage of 15.5 15.6 18.9 18.7
total revenue % % % %
(a) In the third and
fourth quarters
of 2017 and the
first, third
and fourth
quarters of
2018, the
Company
recorded losses
of $14.9
million ($9.2
million net of
tax) $8.0
million ($8.5
million net of
tax), $4.7
million ($3.7
million net of
tax), $12.5
million ($9.9
million net of
tax) and $7.8
million ($6.0
million net of
tax),
respectively,
on early
extinguishment
of debt related
to the
repurchase of
$155.0 million
principal
amount of
senior notes,
the redemption
of $160.9
million of
securitization
notes, the
repurchase of
$50.0 million
principal
amount of
senior notes,
the repurchase
of $178.5
million
principal
amount of
senior notes,
and the
repurchase of
$116.5 million
principal
amount of
senior notes,
respectively.
(b) The Company
recorded a $2.4
million ($1.8
million net of
tax) fair value
adjustment to
contingent
consideration
in the fourth
quarter of 2017
related to a
prior year
acquisition.
(c) In the fourth
quarter of
2017, the
Company
recognized a
$7.5 million
income tax
benefit from
the
remeasurement
of deferred tax
assets and
liabilities at
lower enacted
corporate tax
rates as a
result of the
U.S. Tax Cuts
and Jobs Act.
In the third
quarter of
2018, the
Company
recognized an
$11.2 million
income tax
benefit from
the
optimization of
timing of
certain income
tax deductions
for prior year
loan- and
fixed asset-
related
deferred tax
items, coupled
with the lower
enacted
corporate tax
rates as a
result of the
U.S. Tax Cuts
and Jobs Act.
(d) In the fourth
quarter of
2018, the
Company
consented to
the issuance of
a Consent Order
by the Consumer
Financial
Protection
Bureau, or the
CFPB, pursuant
to which it
agreed, without
admitting or
denying any of
the facts or
conclusions
made by the
CFPB from its
2014 review of
us, to pay a
civil money
penalty of $3.2
million, which
is
nondeductible
for tax
purposes.
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(dollars in thousands)
Estimated Adjusted EBITDA For 2019
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 March 31, 2019
Low High
Unaudited
Income from operations $
56,400 $
66,400
Depreciation and amortization 3,800 3,800
Stock-based compensation expense 2,800 2,800
Adjusted EBITDA $
63,000 $
73,000
Estimated Results
Year Ended December 31, 2019
Low High
Unaudited
Income from operations $
202,900 $
232,900
Depreciation and amortization 15,600 15,600
Stock-based compensation expense 11,500 11,500
Adjusted EBITDA $
230,000 $
260,000
Estimated Results
Three Months Ended March 31, 2019
Low High
Unaudited
Diluted income per share $
0.78 $
0.99
Adjustments (net of tax):
Intangible asset amortization 0.01 0.01
Stock-based compensation expense 0.08 0.08
Cumulative tax effect of adjustments (0.02) (0.02)
Adjusted earnings per share $
0.85 $
1.06
Estimated Results
Year Ended December 31, 2019
Low High
Unaudited
Diluted income per share $
2.49 $
3.13
Adjustments (net of tax):
Intangible asset amortization 0.03 0.03
Stock-based compensation expense 0.32 0.32
Cumulative tax effect of adjustments (0.08) (0.08)
Adjusted earnings per share $
2.76 $
3.40
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SOURCE Enova International, Inc.
