Enova Reports Second Quarter 2019 Results
CHICAGO, July 25, 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 ended June 30, 2019.
"We are pleased to report another quarter of solid financial results that exceeded our expectations on both the top and bottom line," said David Fisher, Enova's CEO. "Our strong financial performance was driven by solid demand, stable credit, and efficient marketing spend. We continue to demonstrate our ability to produce sustainable and profitable growth and our second quarter results further validate this balanced approach. We are excited about our ability to deliver meaningful returns as we leverage our diversified product offerings, proven tech and analytics, and diversified funding model."
Second Quarter 2019 Summary
-- Total revenue of $286 million in the second quarter of 2019 increased
13% from $253 million in the second quarter of 2018.
-- Gross profit margin was 51.6% in the second quarter of 2019, compared to
52.0% in the second quarter of 2018.
-- Net income of $25 million, or $0.73 per diluted share, in the second
quarter of 2019 increased from $18 million, or $0.52 per diluted share,
in the second quarter of 2018.
-- Second quarter 2019 adjusted EBITDA of $58 million, a non-GAAP measure,
increased from $50 million in the second quarter of 2018.
-- Adjusted earnings of $28 million, or $0.81 per diluted share, a non-GAAP
measure, in the second quarter of 2019 increased from adjusted earnings
of $21 million, or $0.59 per diluted share, in the second quarter of
2018.
"Second quarter performance reflects the strength and diversification of our businesses and our ability to consistently deliver financial results that meet or exceed our expectations," said Steve Cunningham, CFO of Enova. "Our results were driven by a 19% year-over-year increase in total company combined loan and finance receivables balances, credit performance improvement, continued cost discipline, and a declining cost of funds. We are increasing our profit guidance for the full year and are optimistic about our ability to generate meaningful growth and profitability for the remainder of 2019 and beyond."
Enova ended the second quarter of 2019 with unrestricted cash and cash equivalents of $66 million. As of June 30, 2019, the company had total debt outstanding of $786 million, which included $109 million outstanding under Enova's $350 million securitization facilities. During the second quarter, Enova generated $194 million of cash flow from operations.
Outlook
For the third quarter of 2019, Enova expects total revenue of $320 million to $340 million, GAAP diluted earnings per share of $0.62 to $0.84, adjusted EBITDA of $55 million to $65 million and adjusted earnings per share of $0.70 to $0.92. For the full year 2019, Enova now expects total revenue of $1.26 billion to $1.30 billion, GAAP diluted earnings per share of $3.13 to $3.57, adjusted EBITDA of $250 million to $270 million and adjusted earnings per share of $3.50 to $3.94.
For information regarding the non-GAAP financial measures discussed in this release, please see "Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Financial Measures" below.
Conference Call
Enova will host a conference call to discuss its results at 4 p.m. Central Time / 5 p.m. Eastern Time today, Thursday, July 25(th). The live webcast of the call can be accessed at the Enova Investor Relations website at http://ir.enova.com, along with the company's earnings press release and supplemental financial information. The U.S. dial-in for the call is 1-855-560-2575 (1-412-542-4161 for non-U.S. callers). Please ask to be joined to the Enova International call. A replay of the conference call will be available until August 1, 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 10133482.
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(®), 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
In addition to reporting financial results in accordance with GAAP, Enova has provided Adjusted EBITDA and Adjusted EBITDA margin, or, collectively, the Adjusted EBITDA measures, which are non-GAAP 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 lease termination and cease-use costs and losses on early extinguishment of debt 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 per share data)
(Unaudited)
June 30, December 31,
2019 2018 2018
Assets
Cash and cash equivalents(1) $
65,503 $
47,414 $
52,917
Restricted cash(1) 22,962 28,863 24,342
Loans and finance receivables, net(1) 892,582 750,131 859,946
Income taxes receivable 12,693 3,006 28,914
Other receivables and prepaid expenses(1) 34,459 25,373 29,983
Property and equipment, net 52,878 47,752 49,553
Operating lease right-of-use assets 20,813
Goodwill 267,013 267,013 267,013
Intangible assets, net 2,720 3,790 3,255
Other assets(1) 11,844 9,862 12,262
Total assets $
1,383,467 $
1,183,204 $
1,328,185
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses(1) $
118,195 $
72,406 $
89,317
Operating lease liabilities 37,696
Deferred tax liabilities, net 35,619 14,322 33,171
Long-term debt(1) 785,504 762,831 857,929
Total liabilities 977,014 849,559 980,417
Commitments and contingencies
Stockholders' equity:
Common stock, $0.00001 par value, 250,000,000 shares
authorized, 35,671,114, 34,633,819 and 34,856,553
shares issued and 33,989,158, 34,145,146 and
33,584,606 outstanding as of June 30, 2019 and 2018
and December 31, 2018, respectively
Preferred stock, $0.00001 par value, 25,000,000 shares
authorized, no shares issued and outstanding
Additional paid in capital 56,910 39,335 48,175
Retained earnings 396,149 312,440 336,415
Accumulated other comprehensive loss (14,774) (10,905) (13,805)
Treasury stock, at cost (1,681,956, 488,673 and
1,271,947 shares as of June 30, 2019 and 2018 and
December 31, 2018, respectively) (31,832) (7,225) (23,017)
Total stockholders' equity 406,453 333,645 347,768
Total liabilities and stockholders' equity $
1,383,467 $
1,183,204 $
1,328,185
(1) Includes amounts in wholly owned,
bankruptcy-remote special purpose
subsidiaries ("VIEs") presented
separately in the table below.
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
(Unaudited)
The following table presents the aggregated assets and liabilities of consolidated VIEs, which are included in the Consolidated Balance Sheets above. The assets in the
table below may only be used to settle obligations of consolidated VIEs and are in excess of those obligations.
June 30, December 31,
2019 2018 2018
Assets of consolidated VIEs,
included in total assets above
Cash and cash equivalents $
420
$ $
210
Restricted cash 20,796 21,744 22,168
Loans and finance receivables, net
(includes allowance for losses of
$31,522, $21,019 and $27,255 as
of June 30, 2019 and 2018 and
December 31, 2018, respectively) 306,322 236,953 318,961
Other receivables and prepaid
expenses 6,671 8 2,712
Other assets 2,530 132 2,544
Total assets $
336,739 $
258,837 $
346,595
Liabilities of consolidated VIEs,
included in total liabilities
above
Accounts payable and accrued
expenses $
2,410 $
1,489 $
3,087
Long-term debt 171,931 176,928 223,368
Total liabilities $
174,341 $
178,417 $
226,455
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Revenue $
285,700 $
253,301 $
578,883 $
507,599
Cost of Revenue 138,297 121,494 277,342 230,047
Gross Profit 147,403 131,807 301,541 277,552
Expenses
Marketing 31,904 29,386 55,566 57,122
Operations and technology 32,411 27,195 62,011 52,733
General and administrative 28,876 28,295 58,449 55,216
Depreciation and amortization 3,942 3,837 8,126 7,675
Total Expenses 97,133 88,713 184,152 172,746
Income from Operations 50,270 43,094 117,389 104,806
Interest expense, net (18,115) (19,355) (37,615) (39,028)
Foreign currency transaction loss (38) (204) (181) (2,292)
Loss on early extinguishment of debt (2,321) (4,710)
Income before Income Taxes 32,117 23,535 77,272 58,776
Provision for income taxes 7,054 5,310 17,192 12,653
Net Income $
25,063 $
18,225 $
60,080 $
46,123
Earnings Per Share:
Earnings per common share:
Basic $
0.74 $
0.54 $
1.78 $
1.36
Diluted $
0.73 $
0.52 $
1.74 $
1.32
Weighted average common shares
outstanding:
Basic 33,826 33,984 33,660 33,821
Diluted 34,469 35,371 34,451 34,966
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(dollars in thousands)
(Unaudited)
Six Months Ended June 30,
2019 2018
Cash flows provided by operating
activities $
414,759 $
295,716
Cash flows used in investing
activities
Loans and finance receivables (308,231) (276,550)
Property and equipment additions (10,907) (7,065)
Other investing activities 2 42
Total cash flows used in investing
activities (319,136) (283,573)
Cash flows used in financing
activities (83,826) (33,599)
Effect of exchange rates on cash,
cash equivalents and restricted
cash (591) (411)
Net increase in cash, cash
equivalents and restricted cash 11,206 (21,867)
Cash, cash equivalents and
restricted cash at beginning of
year 77,259 98,144
Cash, cash equivalents and
restricted cash at end of period $
88,465 $
76,277
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
GEOGRAPHIC INFORMATION
(dollars in thousands)
The following table presents information on Enova's domestic and international operations for the three and six months ended June 30, 2019 and 2018.
Three Months Ended June 30,
2019 2018
$ Change % Change
Domestic:
Revenue $
254,205 $
213,638 $
40,567 19.0
%
Cost of revenue 121,369 102,206 19,163 18.7
Gross profit $
132,836 $
111,432 $
21,404 19.2
Gross profit margin 52.3 52.2 0.1 0.2
% % % %
International:
Revenue $
31,495 $
39,663 $
(8,168) (20.6)
%
Cost of revenue 16,928 19,288 (2,360) (12.2)
Gross profit $
14,567 $
20,375 $
(5,808) (28.5)
Gross profit margin 46.3 51.4 (5.1) (9.9)
% % % %
Total:
Revenue $
285,700 $
253,301 $
32,399 12.8
%
Cost of revenue 138,297 121,494 16,803 13.8
Gross profit $
147,403 $
131,807 $
15,596 11.8
Gross profit margin 51.6 52.0 (0.4) (0.8)
% % % %
Six Months Ended June 30,
2019 2018
$ Change % Change
Domestic:
Revenue $
512,193 $
426,604 $
85,589 20.1
%
Cost of revenue 235,240 190,319 44,921 23.6
Gross profit $
276,953 $
236,285 $
40,668 17.2
Gross profit margin 54.1 55.4 (1.3) (2.3)
% % % %
International:
Revenue $
66,690 $
80,995 $
(14,305) (17.7)
%
Cost of revenue 42,102 39,728 2,374 6.0
Gross profit $
24,588 $
41,267 $
(16,679) (40.4)
Gross profit margin 36.9 51.0 (14.1) (27.6)
% % % %
Total:
Revenue $
578,883 $
507,599 $
71,284 14.0
%
Cost of revenue 277,342 230,047 47,295 20.6
Gross profit $
301,541 $
277,552 $
23,989 8.6
Gross profit margin 52.1 54.7 (2.6) (4.8)
% % % %
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 June 30,
2019 and 2018.
Three Months Ended June
30, 2019 2018 Change
---
Cost of revenue $
138,297 $
121,494 $
16,803
Charge-offs (net of
recoveries) 123,684 111,785 11,899
Average combined loans and
finance receivables,
gross:
Company owned(a) 994,887 840,077 154,810
Guaranteed by Enova(a)(b) 21,486 28,138 (6,652)
Average combined loans and
finance receivables,
gross (a)(c) $
1,016,373 $
868,215 $
148,158
Ending combined loans and
finance receivables,
gross:
Company owned $
1,047,762 $
871,915 $
175,847
Guaranteed by Enova(b) 21,463 28,681 (7,218)
Ending combined loans and
finance receivables,
gross (c) $
1,069,225 $
900,596 $
168,629
Ending allowance and
liability for losses $
156,906 $
123,876 $
33,030
Combined originations (d) $
615,309 $
599,280 $
16,029
Loans and finance
receivables ratios:
---
Cost of revenue as a % of
average combined loans % % %
and finance receivables,
gross(a)(c) 13.6 14.0 (0.4)
Charge-offs (net of
recoveries) as a % of % % %
average combined loans
and finance receivables,
gross(a)(c) 12.2 12.9 (0.7)
Gross profit margin 51.6 52.0 (0.4)
% % %
Allowance and liability
for losses as a % of % % %
combined loans and
finance receivables,
gross(c)(e) 14.7 13.8 0.9
(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 Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Net Income $
25,063 $
18,225 $
60,080 $
46,123
Adjustments:
Lease termination and cease-use
costs(a) 726
Loss on early extinguishment of
debt(b) 2,321 4,710
Intangible asset amortization 267 268 535 535
Stock-based compensation expense 3,323 2,834 6,397 5,267
Foreign currency transaction loss 38 204 181 2,292
Cumulative tax effect of adjustments (843) (777) (2,362) (2,756)
Discrete tax adjustments(c) (141)
Adjusted earnings $
27,848 $
20,754 $
67,737 $
56,171
Diluted earnings per share $
0.73 $
0.52 $
1.74 $
1.32
Adjusted earnings per share $
0.81 $
0.59 $
1.97 $
1.61
Adjusted EBITDA
Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Net Income $
25,063 $
18,225 $
60,080 $
46,123
Depreciation and amortization
expenses 3,942 3,837 8,126 7,675
Interest expense, net 18,115 19,355 37,615 39,028
Foreign currency transaction loss 38 204 181 2,292
Provision for income taxes 7,054 5,310 17,192 12,653
Stock-based compensation expense 3,323 2,834 6,397 5,267
Adjustments:
Lease termination and cease-use
costs(a) 370
Loss on early extinguishment of
debt(b) 2,321 4,710
Adjusted EBITDA $
57,535 $
49,765 $
132,282 $
117,748
Adjusted EBITDA margin calculated as
follows:
Total Revenue $
285,700 $
253,301 $
578,883 $
507,599
Adjusted EBITDA 57,535 49,765 132,282 117,748
Adjusted EBITDA as a percentage of 20.1 19.6 22.9 23.2
total revenue % % % %
(a) In the first quarter of 2019,
the Company recorded impairment
charges of $0.4 million ($0.3
million net of tax) to
operating right-of-use lease
assets and $0.3 million ($0.3
million net of tax) to
leasehold improvement assets
related to its decision to
cease use and sublease a
portion of a leased office
space.
(b) In the first quarter of 2019
and the first quarter of 2018,
the Company recorded losses on
early extinguishment of debt
of $2.3 million ($1.8 million
net of tax) and $4.7 million
($3.7 million net of tax),
respectively, related to the
repurchase of $44.1 million
principal amount of
securitization notes and the
repurchase of $50.0 million
principal amount of senior
notes .
(c) In the first quarter of 2019,
the Company recognized $0.1
million of interest income on a
tax refund received as a result
of the U.S. Tax Cuts and Jobs
Act.
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES
RE
CONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(dollars in thousands)
Estimated Adjusted EBITDA and Earnings Per Share 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 September 30, 2019
Low High
Unaudited
Income from operations $
47,400 $
57,400
Depreciation and amortization 4,300 4,300
Stock-based compensation expense 3,300 3,300
Adjusted EBITDA $
55,000 $
65,000
Estimated Results
Year Ended December 31, 2019
Low High
Unaudited
Income from operations $
219,900 $
239,900
Depreciation and amortization 16,900 16,900
Stock-based compensation expense 13,200 13,200
Adjusted EBITDA $
250,000 $
270,000
Estimated Results
Three Months Ended September 30, 2019
Low High
Unaudited
Diluted income per share $
0.62 $
0.84
Adjustments:
Intangible asset amortization 0.01 0.01
Stock-based compensation expense 0.10 0.10
Cumulative tax effect of adjustments (0.03) (0.03
Adjusted earnings per share $
0.70 $
0.92
Estimated Results
Year Ended December 31, 2019
Low High
Unaudited
Diluted income per share $
3.13 $
3.57
Adjustments:
Loss on early extinguishment of debt 0.07 0.07
Intangible asset amortization 0.03 0.03
Stock-based compensation expense 0.38 0.38
Lease termination and cease-use costs 0.01 0.01
Foreign currency transaction loss 0.01 0.01
Cumulative tax effect of adjustments (0.13) (0.13)
Adjusted earnings per share $
3.50 $
3.94
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SOURCE Enova International, Inc.
