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NYSEENVA
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Enova Announces First Quarter 2015 Results
- U.S. revenue increased 9.1% to $119.1 million in 1Q15
- Adjusted EBITDA margin increased 270 basis points to 36.9% in 1Q15
CHICAGO, May 6, 2015 /PRNewswire/ -- Enova International, Inc. (NYSE: ENVA), a leading technology and analytics company focused on online lending, today announced financial results for the quarter ended March 31, 2015.
"We achieved significant improvements in both gross profit margins and Adjusted EBITDA margins in the first quarter," said David Fisher, CEO of Enova. "In addition, our diversification strategy and successful product introductions over the past several years contributed to partially offset the decline in U.K. revenue as a result of regulatory changes in that market. We believe the flexibility of our lending platform, the capabilities of our advanced analytics, including our ability to effectuate enhanced affordability-based underwriting, and our track record of growing our business profitably through changes in regulatory environments positions Enova well to adapt to expected rulemaking in the U.S. market over the coming years."
First Quarter 2015 Summary
- Total revenue of $165.7 million in the first quarter of 2015 declined 20.5% from $208.5 million in the first quarter of 2014 as a 9.1% increase in U.S. revenue was offset by a 53.1% decrease in international revenue, driven by regulatory changes in the United Kingdom.
- Gross profit margin of 76.7% in the first quarter of 2015 rose 860 basis points from the first quarter of 2014, primarily due to stricter underwriting standards in the United Kingdom as a result of new regulations, as well as continued enhancements to Enova's U.S. underwriting models.
- Adjusted EBITDA of $61.1 million, a non-GAAP measure, decreased 14.4% from the same quarter last year due to the decrease in revenue, while Adjusted EBITDA margin rose to 36.9% from 34.2%.
- Net income decreased 38.8% to $24.5 million, or $0.74 per diluted share, in the first quarter of 2015 from $40.1 million, or $1.21 per diluted share, in the first quarter of 2014.
"Our U.S. business remains solid, driven by the continued momentum of our short-term products and the strong growth of our NetCredit near-prime installment product. Our installment loan products are now the largest component of our revenue at 35% of total revenue, up from 30% for the same quarter last year. Moreover, we are beginning to see some positive momentum in U.K. loan origination volumes early in the second quarter, which suggests that the market may be beginning to stabilize," said Robert Clifton, CFO of Enova.
Outlook
For the second quarter 2015, Enova expects total revenue of $150 million to $170 million and Adjusted EBITDA of $35 million to $50 million. For the full year 2015, Enova continues to expect total revenue of $750 million to $830 million and Adjusted EBITDA of $180 million to $240 million.
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. 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 1-877-870-4263 (1-412-317-0790 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 14, 2015 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.
About Enova
Enova is a leading provider of online financial services to the large and growing number of customers who use alternative financial services because of their limited access to more traditional consumer credit. As of March 31, 2015, Enova offered or arranged loans in 34 states in the United States and in five foreign countries:
- in the United States at https://www.cashnetusa.com, https://www.netcredit.com and
https://www.headwaycapital.com, - in the United Kingdom at https://www.quickquid.co.uk, https://www.poundstopocket.co.uk and https://www.onstride.co.uk,
- in Australia at https://www.dollarsdirect.com.au,
- in Canada at https://www.dollarsdirect.ca,
- in Brazil at https://www.simplic.com.br and
- in China at https://www.youxinyi.cn.
During 2014, the company launched pilot programs in Brazil and China, as well as a line of credit product to serve the needs of small businesses in the United States. Enova uses its proprietary technology, analytics and customer service capabilities to quickly evaluate, underwrite and fund loans in order to offer customers credit when and how they want it. Headquartered in Chicago, Enova had more than 1,100 employees serving its online customers across the globe as of March 31, 2015.
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 Consumer Loans
Enova has provided combined consumer loans, which is a non-GAAP measure. Enova also reports allowances and liabilities for estimated losses on consumer loans 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 consumer loan 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 are impacted by the aggregate amount of loans 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 and stock-based compensation, 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 share data) (Unaudited) | ||||||||||||
|
March 31, |
December 31, |
|||||||||||
|
2015 |
2014 |
2014 |
||||||||||
|
Assets |
||||||||||||
|
Cash and cash equivalents |
$ |
143,444 |
$ |
56,241 |
$ |
75,106 |
||||||
|
Consumer loans, net |
279,055 |
280,186 |
323,611 |
|||||||||
|
Prepaid expenses and other assets |
15,667 |
8,692 |
16,631 |
|||||||||
|
Deferred tax assets |
19,728 |
26,757 |
25,427 |
|||||||||
|
Property and equipment, net |
40,257 |
39,027 |
33,985 |
|||||||||
|
Goodwill |
255,856 |
255,866 |
255,862 |
|||||||||
|
Intangible assets, net |
33 |
23 |
39 |
|||||||||
|
Other assets |
28,513 |
6,286 |
29,536 |
|||||||||
|
Total assets |
$ |
782,553 |
$ |
673,078 |
$ |
760,197 |
||||||
|
Liabilities and Stockholders' Equity |
||||||||||||
|
Accounts payable and accrued expenses |
$ |
54,175 |
$ |
36,396 |
$ |
57,277 |
||||||
|
Income taxes currently payable |
8,445 |
— |
6,802 |
|||||||||
|
Deferred tax liabilities |
47,766 |
46,955 |
47,953 |
|||||||||
|
Other liabilities |
— |
58 |
— |
|||||||||
|
Long-term debt |
494,347 |
376,872 |
494,181 |
|||||||||
|
Total liabilities |
604,733 |
460,281 |
606,213 |
|||||||||
|
Commitments and contingencies |
||||||||||||
|
Stockholders' equity: |
||||||||||||
|
Common stock, $0.00001 par value, 250,000,000 shares authorized, 33,000,000 shares issued and outstanding |
— |
— |
— |
|||||||||
|
Preferred stock, $0.00001 par value, 25,000,000 shares authorized, no shares issued and outstanding |
— |
— |
— |
|||||||||
|
Additional paid in capital |
2,006 |
— |
294 |
|||||||||
|
Retained earnings |
181,391 |
208,939 |
156,861 |
|||||||||
|
Accumulated other comprehensive (loss) income |
(5,577) |
3,858 |
(3,171) |
|||||||||
|
Total stockholders' equity |
177,820 |
212,797 |
153,984 |
|||||||||
|
Total liabilities and stockholders' equity |
$ |
782,553 |
$ |
673,078 |
$ |
760,197 |
||||||
|
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (Unaudited) | ||||||||
|
Three Months Ended |
||||||||
|
March 31, |
||||||||
|
2015 |
2014 |
|||||||
|
Revenue |
$ |
165,676 |
$ |
208,465 |
||||
|
Cost of Revenue |
38,570 |
66,436 |
||||||
|
Gross Profit |
127,106 |
142,029 |
||||||
|
Expenses |
||||||||
|
Marketing |
24,156 |
28,478 |
||||||
|
Operations and technology |
18,012 |
17,885 |
||||||
|
General and administrative |
25,566 |
24,427 |
||||||
|
Depreciation and amortization |
5,283 |
4,118 |
||||||
|
Total Expenses |
73,017 |
74,908 |
||||||
|
Income from Operations |
54,089 |
67,121 |
||||||
|
Interest expense, net |
(13,305) |
(4,754) |
||||||
|
Foreign currency transaction loss |
(944) |
(101) |
||||||
|
Income before Income Taxes |
39,840 |
62,266 |
||||||
|
Provision for income taxes |
15,310 |
22,211 |
||||||
|
Net Income |
$ |
24,530 |
$ |
40,055 |
||||
|
Earnings Per Share: |
||||||||
|
Earnings per common share: |
||||||||
|
Basic |
$ |
0.74 |
$ |
1.21 |
||||
|
Diluted |
$ |
0.74 |
$ |
1.21 |
||||
|
Weighted average common shares outstanding: |
||||||||
|
Basic |
33,000 |
33,000 |
||||||
|
Diluted |
33,008 |
33,000 |
||||||
|
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (dollars in thousands) (Unaudited) | ||||||||
|
Three Months Ended March 31, |
||||||||
|
2015 |
2014 |
|||||||
|
Cash flows provided by operating activities |
$ |
87,865 |
$ |
111,998 |
||||
|
Cash flows used in investing activities |
||||||||
|
Consumer loans |
(4,800) |
(47,531) |
||||||
|
Property and equipment additions |
(11,572) |
(3,676) |
||||||
|
Total cash flows used in investing activities |
(16,372) |
(51,207) |
||||||
|
Cash flows used in financing activities |
— |
(53,163) |
||||||
|
Effect of exchange rates on cash |
(3,155) |
1,133 |
||||||
|
Net increase in cash and cash equivalents |
68,338 |
8,761 |
||||||
|
Cash and cash equivalents at beginning of year |
75,106 |
47,480 |
||||||
|
Cash and cash equivalents at end of period |
$ |
143,444 |
$ |
56,241 |
||||
|
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, 2015 and 2014. | ||||||||||||||||
|
Three Months Ended |
||||||||||||||||
|
2015 |
2014 |
$ Change |
% Change |
|||||||||||||
|
Domestic: |
||||||||||||||||
|
Revenue |
$ |
119,053 |
$ |
109,087 |
$ |
9,966 |
9.1 |
% | ||||||||
|
Cost of revenue |
33,930 |
29,103 |
4,827 |
16.6 |
||||||||||||
|
Gross profit |
$ |
85,123 |
$ |
79,984 |
$ |
5,139 |
6.4 |
|||||||||
|
Gross profit margin |
71.5 |
% |
73.3 |
% |
(1.8) |
% |
(2.5) |
% | ||||||||
|
International: |
||||||||||||||||
|
Revenue |
$ |
46,623 |
$ |
99,378 |
$ |
(52,755) |
(53.1) |
% | ||||||||
|
Cost of revenue |
4,640 |
37,333 |
(32,693) |
(87.6) |
||||||||||||
|
Gross profit |
$ |
41,983 |
$ |
62,045 |
$ |
(20,062) |
(32.3) |
|||||||||
|
Gross profit margin |
90.0 |
% |
62.4 |
% |
27.6 |
% |
44.2 |
% | ||||||||
|
Total: |
||||||||||||||||
|
Revenue |
$ |
165,676 |
$ |
208,465 |
$ |
(42,789) |
(20.5) |
% | ||||||||
|
Cost of revenue |
38,570 |
66,436 |
(27,866) |
(41.9) |
||||||||||||
|
Gross profit |
$ |
127,106 |
$ |
142,029 |
$ |
(14,923) |
(10.5) |
|||||||||
|
Gross profit margin |
76.7 |
% |
68.1 |
% |
8.6 |
% |
12.6 |
% | ||||||||
|
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES CONSUMER LOAN FINANCIAL AND OPERATING DATA (dollars in thousands) | ||||||||||||
|
The following table shows consumer loans and related loan loss activity, which is based on consumer loan balances, for the three months ended March 31, 2015 and 2014. | ||||||||||||
|
Three Months Ended March 31 |
2015 |
2014 |
Change |
|||||||||
|
Cost of revenue |
$ |
38,570 |
$ |
66,436 |
$ |
(27,866) |
||||||
|
Charge-offs (net of recoveries) |
52,136 |
75,657 |
(23,521) |
|||||||||
|
Average combined consumer loan balances, gross: |
||||||||||||
|
Company owned(a) |
356,752 |
368,341 |
(11,589) |
|||||||||
|
Guaranteed by Enova(a)(b) |
28,953 |
34,321 |
(5,368) |
|||||||||
|
Average combined consumer loan balances, gross (a)(c) |
$ |
385,705 |
$ |
402,662 |
$ |
(16,957) |
||||||
|
Ending combined consumer loan balances, gross: |
||||||||||||
|
Company owned |
$ |
330,275 |
$ |
354,466 |
$ |
(24,191) |
||||||
|
Guaranteed by Enova(b) |
25,355 |
29,643 |
(4,288) |
|||||||||
|
Ending combined consumer loan balances, gross (c) |
$ |
355,630 |
$ |
384,109 |
$ |
(28,479) |
||||||
|
Ending allowance and liability for losses |
$ |
52,165 |
$ |
75,479 |
$ |
(23,314) |
||||||
|
Consumer loan ratios: |
||||||||||||
|
Cost of revenue as a % of average combined consumer loan balances, gross(a)(c) |
10.0 |
% |
16.5 |
% |
(6.5) |
% | ||||||
|
Charge-offs (net of recoveries) as a % of average combined consumer loan balances, gross(a)(c) |
13.5 |
% |
18.8 |
% |
(5.3) |
% | ||||||
|
Gross profit margin |
76.7 |
% |
68.1 |
% |
8.6 |
% | ||||||
|
Allowance and liability for losses as a % of combined consumer loan balances, gross(c)(d) |
14.7 |
% |
19.7 |
% |
(5.0) |
% | ||||||
|
(a) |
The average combined consumer loan balances, 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 consumer loans. | ||||
|
(d) |
Allowance and liability for losses as a percentage of combined consumer loan balances, 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, |
||||||||
|
2015 |
2014 |
|||||||
|
Net Income |
$ |
24,530 |
$ |
40,055 |
||||
|
Adjustments (net of tax): |
||||||||
|
Intangible asset amortization |
2 |
13 |
||||||
|
Stock-based compensation expense |
1,054 |
55 |
||||||
|
Foreign currency transaction loss |
581 |
65 |
||||||
|
Adjusted earnings |
$ |
26,167 |
$ |
40,188 |
||||
|
Diluted earnings per share |
$ |
0.74 |
$ |
1.21 |
||||
|
Adjusted earnings per share |
$ |
0.79 |
$ |
1.22 |
||||
|
Adjusted EBITDA |
||||||||
|
Three Months Ended |
||||||||
|
March 31, |
||||||||
|
2015 |
2014 |
|||||||
|
Net Income |
$ |
24,530 |
$ |
40,055 |
||||
|
Adjustments: |
||||||||
|
Depreciation and amortization expenses |
5,283 |
4,118 |
||||||
|
Interest expense, net |
13,305 |
4,754 |
||||||
|
Foreign currency transaction loss |
944 |
101 |
||||||
|
Provision for income taxes |
15,310 |
22,211 |
||||||
|
Stock-based compensation expense |
1,712 |
85 |
||||||
|
Adjusted EBITDA |
$ |
61,084 |
$ |
71,324 |
||||
|
Adjusted EBITDA margin calculated as follows: |
||||||||
|
Total Revenue |
165,676 |
208,465 |
||||||
|
Adjusted EBITDA |
61,084 |
71,324 |
||||||
|
Adjusted EBITDA as a percentage of total revenue |
36.9 |
% |
34.2 |
% | ||||
|
ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (dollars in thousands)
| ||||||||
|
Estimated Adjusted EBITDA For 2015 | ||||||||
|
The following table reconciles estimated Income from operations to Adjusted EBITDA, a non-GAAP measure: | ||||||||
|
Estimated Results |
||||||||
|
Three Months Ended June 30, 2015 |
||||||||
|
Low |
High |
|||||||
|
Unaudited |
||||||||
|
Income from operations |
$ |
28,000 |
$ |
41,000 |
||||
|
Depreciation and amortization |
5,000 |
6,000 |
||||||
|
Stock-based compensation expense |
2,000 |
3,000 |
||||||
|
Adjusted EBITDA |
$ |
35,000 |
$ |
50,000 |
||||
|
Estimated Results |
||||||||
|
Year Ended December 31, 2015 |
||||||||
|
Low |
High |
|||||||
|
Unaudited |
||||||||
|
Income from operations |
$ |
153,000 |
$ |
208,000 |
||||
|
Depreciation and amortization |
20,000 |
23,000 |
||||||
|
Stock-based compensation expense |
7,000 |
9,000 |
||||||
|
Adjusted EBITDA |
$ |
180,000 |
$ |
240,000 |
||||
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SOURCE Enova International, Inc.
For further information: Public Relations: Kirk Chartier, Email: media@enova.com, Investor Relations: Monica Gould, Office: (212) 871-3927, Email: IR@enova.com