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Enova Announces Third Quarter 2016 Results

- Total revenue increased 18.6% year over year to $195.9 million

- Total combined originations increased 7.6% year over year to $581.7 million

- Installment loan and receivables purchase agreement revenue rose 27.7% year over year to $84.8 million

- Near-prime installment loan portfolio balances increased 58.6% year over year to $286.6 million

Oct 27, 2016

CHICAGO, Oct. 27, 2016 /PRNewswire/ -- Enova International (NYSE: ENVA), a leading financial technology company offering consumer and small business loans and financing, today announced financial results for the quarter ended September 30, 2016.

Enova International Logo

"We achieved strong third quarter performance driven by robust demand across all of our products and solid credit performance," said Enova's CEO David Fisher. "These results continue to demonstrate that we are benefitting from our focused growth strategy, strong competitive position, and solid balance sheet with diversified funding. Our success reinforces our confidence that our proprietary analytics and deep experience in navigating regulatory changes will enable us to adapt to the forthcoming regulatory changes in the U.S., as we have in the U.K."

Third Quarter 2016 Summary

  • Total revenue of $195.9 million in the third quarter of 2016 increased 18.6% from $165.2 million in the third quarter of 2015, as we saw good growth across almost all of our products.
  • Gross profit margin of 51.3% in the third quarter of 2016 compared to 60.3% in the third quarter of 2015, driven by stronger growth in the U.S. installment loan and receivables purchase agreements, and a higher mix of new customers, which requires higher loan loss provisions.  This higher provision due to strong growth and new customer volume was partially offset by good credit performance resulting in a lower net charge off rate on the total portfolio.
  • Net income of $7.8 million, or $0.23 per diluted share, in the third quarter of 2016 increased from $4.4 million, or $0.13 per diluted share, in the third quarter of 2015.
  • Third quarter 2016 adjusted EBITDA of $34.2 million, a non-GAAP measure, increased from $25.2 million in the third quarter of 2015.

"Our third quarter results reflect solid execution across our core US and UK products, continued growth of new initiatives, and our focus on producing strong profitability as we continue to grow the business," said Enova's CFO Steve Cunningham. "Our consistent operating cash flows and the recent extension and upsizing of our installment loan securitization facility gives us the financial flexibility to execute on our strategic growth plans and further strengthen our competitive position."

Enova ended the third quarter of 2016 with unrestricted cash and cash equivalents of $45.7 million. As of September 30, 2016, the company had total debt outstanding of $635.2 million, which included $137 million outstanding under Enova's $275 million securitization facility. During the third quarter, Enova generated $120.2 million of cash flow from operations.

Outlook
For the fourth quarter of 2016, Enova expects total revenue of $185 million to $205 million and Adjusted EBITDA of $32 million to $37 million. For the full year 2016, Enova expects total revenue of $728 million to $748 million and Adjusted EBITDA of $139 million to $144 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, October 27, 2016. 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 10, 2016, 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 for non-U.S. callers). The replay access code is 10094224.

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 over four million customers around the globe access to more than $18 billion in loans and financing. The financial technology company has a portfolio of trusted brands serving consumers, including CashNetUSA®, DollarsDirect®, NetCredit, On Stride Financial®, Pounds to Pocket®, QuickQuid® and Simplic®; has two brands serving small businesses, Headway Capital® and The Business BackerTM; and offers online lending platform services to lenders. Through its Enova Decisions® 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, and lease termination and relocation 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,




2016



2015



2015


Assets













Cash and cash equivalents


$

45,681



$

34,310



$

42,066


Restricted cash and cash equivalents (includes restricted cash of consolidated VIEs of $18,119 as of September 30, 2016)



39,272




7,586




7,379


Loans and finance receivables, net (includes loans and allowance for losses of consolidated VIEs of $191,534 and $15,518, respectively, as of September 30, 2016)



542,865




380,805




434,633


Income taxes receivable






5,683




5,503


Other receivables and prepaid expenses



18,649




19,778




20,049


Property and equipment, net



47,486




48,814




48,055


Goodwill



267,012




271,568




267,008


Intangible assets, net



5,675




3,698




6,540


Other assets



8,439




7,930




9,304


Total assets


$

975,079



$

780,172



$

840,537


Liabilities and Stockholders' Equity













Accounts payable and accrued expenses


$

85,433



$

79,081



$

72,141


Income taxes currently payable



5,149








Deferred tax liabilities, net



16,233




19,007




20,519


Long-term debt (includes long-term debt and debt issuance costs of consolidated VIEs of $136,953 and $2,416, respectively, as of September 30, 2016)



635,179




482,808




541,909


Total liabilities



741,994




580,896




634,569


Commitments and contingencies













Stockholders' equity:













Common stock, $0.00001 par value, 250,000,000 shares authorized, 33,260,017, 33,000,000 and 33,151,088 shares issued and 33,214,594, 33,000,000 and 33,121,594 outstanding as of September 30, 2016 and 2015 and December 31, 2015, respectively










Preferred stock, $0.00001 par value, 25,000,000 shares authorized, no shares issued and outstanding










Additional paid in capital



16,338




6,835




9,924


Retained earnings



226,741




196,672




200,853


Accumulated other comprehensive loss



(9,692)




(4,231)




(4,622)


Treasury stock, at cost (45,423 and 29,494 shares as of September 30, 2016 and December 31, 2015, respectively)



(302)







(187)


Total stockholders' equity



233,085




199,276




205,968


Total liabilities and stockholders' equity


$

975,079



$

780,172



$

840,537


 

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,




2016



2015



2016



2015


Revenue


$

195,943



$

165,227



$

543,131



$

477,183


Cost of Revenue



95,391




65,614




230,421




145,720


Gross Profit



100,552




99,613




312,710




331,463


Expenses

















Marketing



26,722




35,568




73,500




84,431


Operations and technology



20,637




18,590




61,706




54,156


General and administrative



21,307




22,627




76,747




75,282


Depreciation and amortization



3,789




3,882




12,004




14,198


Total Expenses



72,455




80,667




223,957




228,067


Income from Operations



28,097




18,946




88,753




103,396


Interest expense, net



(16,117)




(13,292)




(48,058)




(39,501)


Foreign currency transaction gain (loss)



145




(212)




2,184




(1,187)


Income before Income Taxes



12,125




5,442




42,879




62,708


Provision for income taxes



4,288




1,025




16,991




22,897


Net Income


$

7,837



$

4,417



$

25,888



$

39,811


Earnings Per Share:

















Earnings per common share:

















Basic


$

0.24



$

0.13



$

0.78



$

1.21


Diluted


$

0.23



$

0.13



$

0.78



$

1.21


Weighted average common shares outstanding:

















Basic



33,211




33,000




33,176




33,000


Diluted



33,558




33,022




33,360




33,015


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(dollars in thousands)

(Unaudited)




Nine Months Ended September 30,




2016



2015


Cash flows provided by operating activities


$

300,707



$

205,541


Cash flows used in investing activities









Loans and finance receivables



(335,390)




(198,684)


Change in restricted cash



(32,776)





Acquisitions






(17,735)


Property and equipment additions



(11,466)




(28,684)


Other investing activities



72




10


Total cash flows used in investing activities



(379,560)




(245,093)


Cash flows provided by financing activities



89,922





Effect of exchange rates on cash



(7,454)




(1,244)


Net increase in cash and cash equivalents



3,615




(40,796)


Cash and cash equivalents at beginning of year



42,066




75,106


Cash and cash equivalents at end of period


$

45,681



$

34,310


 

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, 2016 and 2015.




Three Months Ended
September 30,












2016



2015



$ Change



% Change


Domestic:

















Revenue


$

165,330



$

133,661



$

31,669




23.7

%

Cost of revenue



85,862




59,056




26,806




45.4


Gross profit


$

79,468



$

74,605



$

4,863




6.5


Gross profit margin



48.1

%



55.8

%



(7.7)

%



(13.8)

%

International:

















Revenue


$

30,613



$

31,566



$

(953)




(3.0)

%

Cost of revenue



9,529




6,558




2,971




45.3


Gross profit


$

21,084



$

25,008



$

(3,924)




(15.7)


Gross profit margin



68.9

%



79.2

%



(10.3)

%



(13.0)

%

Total:

















Revenue


$

195,943



$

165,227



$

30,716




18.6

%

Cost of revenue



95,391




65,614




29,777




45.4


Gross profit


$

100,552



$

99,613



$

939




0.9


Gross profit margin



51.3

%



60.3

%



(9.0)

%



(14.9)

%




Nine Months Ended
September 30,












2016



2015



$ Change



% Change


Domestic:

















Revenue


$

449,100



$

366,134



$

82,966




22.7

%

Cost of revenue



204,070




133,135




70,935




53.3


Gross profit


$

245,030



$

232,999



$

12,031




5.2


Gross profit margin



54.6

%



63.6

%



(9.0)

%



(14.2)

%

International:

















Revenue


$

94,031



$

111,049



$

(17,018)




(15.3)

%

Cost of revenue



26,351




12,585




13,766




109.4


Gross profit


$

67,680



$

98,464



$

(30,784)




(31.3)


Gross profit margin



72.0

%



88.7

%



(16.7)

%



(18.8)

%

Total:

















Revenue


$

543,131



$

477,183



$

65,948




13.8

%

Cost of revenue



230,421




145,720




84,701




58.1


Gross profit


$

312,710



$

331,463



$

(18,753)




(5.7)


Gross profit margin



57.6

%



69.5

%



(11.9)

%



(17.1)

%

 

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 September 30, 2016 and 2015.


Three Months Ended September 30,


2016



2015



Change


Cost of revenue


$

95,391



$

65,614



$

29,777


Charge-offs (net of recoveries)



74,312




51,041




23,271


Average combined loans and finance receivables, gross:













Company owned(a)



606,357




407,163




199,194


Guaranteed by Enova(a)(b)



31,278




34,583




(3,305)


Average combined loans and finance receivables, gross (a)(c)


$

637,635



$

441,746



$

195,889


Ending combined loans and finance receivables, gross:













Company owned


$

637,612



$

445,547



$

192,065


Guaranteed by Enova(b)



29,700




36,684




(6,984)


Ending combined loans and finance receivables, gross (c)


$

667,312



$

482,231



$

185,081


Ending allowance and liability for losses


$

96,474



$

66,718



$

29,756


Combined originations (d)


$

581,677



$

540,807



$

40,870















Loans and finance receivables ratios:













Cost of revenue as a % of average combined loans and finance receivables, gross(a)(c)



15.0

%



14.9

%



0.1

%

Charge-offs (net of recoveries) as a % of average combined loans and finance receivables, gross(a)(c)



11.7

%



11.6

%



0.1

%

Gross profit margin



51.3

%



60.3

%



(9.0)

%

Allowance and liability for losses as a % of combined loans and finance receivables, gross(c)(e)



14.5

%



13.8

%



0.7

%














(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 programs 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,




2016



2015



2016



2015


Net Income


$

7,837



$

4,417



$

25,888



$

39,811


Adjustments:

















Lease termination and relocation costs(a)






(210)







3,270


Intangible asset amortization



271




3




867




10


Stock-based compensation expense



2,265




2,625




6,414




6,541


Foreign currency transaction (gain) loss



(145)




212




(2,184)




1,187


Cumulative tax effect of adjustments



(902)




(842)




(2,020)




(4,019)



















Adjusted earnings


$

9,326



$

6,205



$

28,965



$

46,800



















Diluted earnings per share


$

0.23



$

0.13



$

0.78



$

1.21



















Adjusted earnings per share


$

0.28



$

0.19



$

0.87



$

1.42



Adjusted EBITDA




Three Months Ended



Nine Months Ended




September 30,



September 30,




2016



2015



2016



2015


Net Income


$

7,837



$

4,417



$

25,888



$

39,811


Depreciation and amortization expenses



3,789




3,882




12,004




14,198


Interest expense, net



16,117




13,292




48,058




39,501


Foreign currency transaction (gain) loss



(145)




212




(2,184)




1,187


Provision for income taxes



4,288




1,025




16,991




22,897


Stock-based compensation expense



2,265




2,625




6,414




6,541


Adjustments:

















Lease termination and relocation costs(a)






(210)







3,270



















Adjusted EBITDA


$

34,151



$

25,243



$

107,171



$

127,405



















Adjusted EBITDA margin calculated as follows:

















Total Revenue


$

195,943



$

165,227



$

543,131



$

477,183


Adjusted EBITDA



34,151




25,243




107,171




127,405


Adjusted EBITDA as a percentage of total revenue



17.4

%



15.3

%



19.7

%



26.7

%


















(a)

In May 2015, the Company relocated its headquarters and as a result incurred $3.5 million of facility cease-use charges ($2.2 million net of tax) consisting of remaining lease obligations and disposal costs on its prior headquarters. During the third quarter of 2015, the Company made adjustments to its lease termination costs.

 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(dollars in thousands)


Estimated Adjusted EBITDA For 2016


The following table reconciles estimated Income from operations to Adjusted EBITDA, a non-GAAP measure:




Estimated Results




Three Months Ended December 31, 2016




Low



High




Unaudited


Income from operations


$

26,000



$

31,000


Depreciation and amortization



4,000




4,000


Stock-based compensation expense



2,000




2,000


Adjusted EBITDA


$

32,000



$

37,000













Estimated Results




Year Ended December 31, 2016




Low



High




Unaudited


Income from operations


$

115,000



$

120,000


Depreciation and amortization



16,000




16,000


Stock-based compensation expense



8,000




8,000


Adjusted EBITDA


$

139,000



$

144,000


 

Logo - http://photos.prnewswire.com/prnh/20150202/173006LOGO

 

SOURCE Enova International, Inc.

For further information: Public Relations Contact: Caroline Vasquez, Email: media@enova.com, Investor Relations Contact: Monica Gould, Office: (212) 871-3927, Email: IR@enova.com


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