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Enova Announces Fourth Quarter and Full Year 2016 Results

- Compared to a year ago, fourth quarter revenue grew 15.4% to $202.4 million, diluted earnings per share doubled to $0.26, and adjusted EBITDA grew 24% to $35.1 million

- Total loans outstanding grew 29.2% year over year during the fourth quarter, with near-prime installment loan portfolio balances increasing 39.6% year over year to $290.8 million

- Completed the expansion and extension of the company's securitization facilities

Feb 2, 2017

CHICAGO, Feb. 2, 2017 /PRNewswire/ -- Enova International (NYSE: ENVA), a technology and analytics driven online lender, today announced financial results for the quarter and year ended December 31, 2016.

Enova International Logo

"A solid fourth quarter, driven by strong demand and solid credit performance across all of our businesses, capped off a very good year for Enova," said Enova's CEO David Fisher. "Our six businesses, which include U.S. Subprime, U.S. Near-Prime, U.K. Consumer, U.S. Small Business, Brazil and Enova Decisions, continue to perform well. We see considerable opportunity to further expand our reach and grow our market share in each. The strength of Enova's proprietary analytics, extensive experience and high customer satisfaction give us confidence about our ability to continue our growth well into the future."

Fourth Quarter 2016 Summary

  • Total revenue of $202.4 million in the fourth quarter of 2016 increased 15.4% from $175.4 million in the fourth quarter of 2015.
  • Gross profit margin was 51.8% in the fourth quarter of 2016 compared to 59.4% in the fourth 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 $8.7 million, or $0.26 per diluted share, in the fourth quarter of 2016 increased from $4.2 million, or $0.13 per diluted share, in the fourth quarter of 2015.
  • Fourth quarter 2016 adjusted EBITDA of $35.1 million, a non-GAAP measure, increased from $28.3 million in the fourth quarter of 2015.

Full Year 2016 Summary

  • Total revenue of $745.6 million in 2016 increased from $652.6 million in 2015.
  • Gross profit margin was 56.0% in 2016 compared to 66.8% in 2015.
  • Net income was $34.6 million, or $1.03 per diluted share, in 2016 compared to $44.0 million, or $1.33 per diluted share, in 2015.
  • Adjusted EBITDA was $142.3 million in 2016 compared to $155.7 million in 2015.

"We are very pleased with the company's performance in the fourth quarter and our financial position. Total revenue and adjusted EBITDA during the quarter were both at the high end of our guidance range. The business continues to generate strong operating cash flow, and we enhanced our liquidity in the quarter with the closing of an additional installment loan securitization facility," said Steve Cunningham, CFO of Enova. 

Enova ended the fourth quarter of 2016 with unrestricted cash and cash equivalents of $39.9 million. As of December 31, 2016, the company had total debt outstanding of $649.9 million, which included $165 million outstanding under Enova's $295 million securitization facilities. During the fourth quarter, Enova generated $92.7 million of cash flow from operations.

Outlook
For the first quarter of 2017, Enova expects total revenue of $180 million to $200 million and Adjusted EBITDA of $35 million to $45 million. For the full year 2017, Enova expects total revenue of $810 million to $880 million and Adjusted EBITDA of $145 million to $175 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, February 2, 2017. 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 9, 2017, 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 10098929.

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®, NetCredit™, On Stride Financial®, Pounds to Pocket®, QuickQuid® and Simplic®; has two brands serving small businesses, Headway Capital® and The Business Backer™; and offers online lending platform services, on-demand decision-making technology and real-time predictive analytics services through Enova Decisions®. You can learn more about the company 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, acquisition-related costs, 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)




December 31,




2016



2015


Assets









Cash and cash equivalents


$

39,934



$

42,066


Restricted cash and cash equivalents (includes restricted cash of consolidated VIEs of $19,468 as of December 31, 2016)



26,306




7,379


Loans and finance receivables, net (includes loans and allowance for losses of consolidated VIEs of $234,497 and $17,731, respectively, as of December 31, 2016)



561,550




434,633


Income taxes receivable






5,503


Other receivables and prepaid expenses



19,524




20,049


Property and equipment, net



47,100




48,055


Goodwill



267,010




267,008


Intangible assets, net



5,404




6,540


Other assets



11,051




9,304


Total assets


$

977,879



$

840,537


Liabilities and Stockholders' Equity









Accounts payable and accrued expenses


$

71,671



$

72,141


Income taxes currently payable



282





Deferred tax liabilities, net



14,316




20,519


Long-term debt (includes long-term debt and debt issuance costs of consolidated VIEs of $165,419 and $1,869, respectively, as of December 31, 2016)



649,911




541,909


Total liabilities



736,180




634,569


Commitments and contingencies









Stockholders' equity:









Common stock, $0.00001 par value, 250,000,000 shares authorized, 33,364,525 and 33,151,088 shares issued and 33,293,100 and 33,121,594 outstanding as of December 31, 2016 and 2015, respectively







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







Additional paid in capital



18,446




9,924


Retained earnings



235,455




200,853


Accumulated other comprehensive loss



(11,578)




(4,622)


Treasury stock, at cost (71,425 and 29,494 shares as of December 31, 2016 and 2015, respectively)



(624)




(187)


Total stockholders' equity



241,699




205,968


Total liabilities and stockholders' equity


$

977,879



$

840,537


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(Unaudited)










Three Months Ended



Year Ended




December 31,



December 31,




2016



2015



2016



2015


Revenue


$

202,438



$

175,417



$

745,569



$

652,600


Cost of Revenue



97,545




71,138




327,966




216,858


Gross Profit



104,893




104,279




417,603




435,742


Expenses

















Marketing



23,904




32,451




97,404




116,882


Operations and technology



23,496




19,856




85,202




74,012


General and administrative



21,209




26,791




97,956




102,073


Depreciation and amortization



3,560




4,190




15,564




18,388


Total Expenses



72,169




83,288




296,126




311,355


Income from Operations



32,724




20,991




121,477




124,387


Interest expense, net



(17,545)




(13,382)




(65,603)




(52,883)


Foreign currency transaction (loss) gain



(622)




202




1,562




(985)


Income before Income Taxes



14,557




7,811




57,436




70,519


Provision for income taxes



5,843




3,630




22,834




26,527


Net Income


$

8,714



$

4,181



$

34,602



$

43,992


Earnings Per Share:

















Earnings per common share:

















Basic


$

0.26



$

0.13



$

1.04



$

1.33


Diluted


$

0.26



$

0.13



$

1.03



$

1.33


Weighted average common shares outstanding:

















Basic



33,237




33,024




33,192




33,006


Diluted



33,767




33,061




33,462




33,026


 


ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(dollars in thousands)

(Unaudited)







Year Ended December 31,




2016



2015


Cash flows provided by operating activities


$

393,373



$

283,921


Cash flows used in investing activities









Loans and finance receivables



(450,149)




(322,811)


Change in restricted cash



(20,126)





Acquisitions






(17,735)


Property and equipment additions



(14,396)




(32,241)


Other investing activities



95




618


Total cash flows used in investing activities



(484,576)




(372,169)


Cash flows provided by financing activities



99,880




56,617


Effect of exchange rates on cash



(10,809)




(1,409)


Net decrease in cash and cash equivalents



(2,132)




(33,040)


Cash and cash equivalents at beginning of year



42,066




75,106


Cash and cash equivalents at end of period


$

39,934



$

42,066


 


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, 2016 and 2015.




Three Months Ended












December 31,












2016



2015



$ Change



%Change


Domestic:

















Revenue


$

173,891



$

144,108



$

29,783




20.7

%

Cost of revenue



87,194




63,828




23,366




36.6

%

Gross profit


$

86,697



$

80,280



$

6,417




8.0

%

Gross profit margin



49.9

%



55.7

%



(5.8)

%



(10.4)

%

International:

















Revenue


$

28,547



$

31,309



$

(2,762)




(8.8)

 

%

Cost of revenue



10,351




7,310




3,041




41.6

%

Gross profit


$

18,196



$

23,999



$

(5,803)




(24.2)

%

Gross profit margin



63.7

%



76.7

%



(13.0)

%



(16.9)

%

Total:

















Revenue


$

202,438



$

175,417



$

27,021




15.4

%

Cost of revenue



97,545




71,138




26,407




37.1

%

Gross profit


$

104,893



$

104,279



$

614




0.6

%

Gross profit margin



51.8

%



59.4

%



(7.6)

%



(12.8)

%




















Year Ended December 31,












2016



2015



$ Change



%Change


Domestic:

















Revenue


$

622,991



$

510,242



$

112,749




22.1

%

Cost of revenue



291,264




196,963




94,301




47.9

%

Gross profit


$

331,727



$

313,279



$

18,448




5.9

%

Gross profit margin



53.2

%



61.4

%



(8.2)

%



(13.4)

%

International:

















Revenue


$

122,578



$

142,358



$

(19,780)




(13.9)

%

Cost of revenue



36,702




19,895




16,807




84.5

%

Gross profit


$

85,876



$

122,463



$

(36,587)




(29.9)

%

Gross profit margin



70.1

%



86.0

%



(15.9)

%



(18.5)

%

Total:

















Revenue


$

745,569



$

652,600



$

92,969




14.2

%

Cost of revenue



327,966




216,858




111,108




51.2

%

Gross profit


$

417,603



$

435,742



$

(18,139)




(4.2)

%

Gross profit margin



56.0

%



66.8

%



(10.8)

%



(16.2)

%

 


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 and twelve months ended December 31, 2016 and 2015.


Three Months Ended December 31


2016



2015



Change


Cost of revenue


$

97,545



$

71,138



$

26,407


Charge-offs (net of recoveries)



92,661




68,557




24,104


Average combined loans and finance receivables, gross:













Company owned(a)



633,089




472,230




160,859


Guaranteed by Enova(a)(b)



30,802




34,882




(4,080)


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


$

663,891



$

507,112



$

156,779


Ending combined loans and finance receivables, gross:













Company owned


$

660,495



$

501,955



$

158,540


Guaranteed by Enova(b)



32,199




34,123




(1,924)


Ending combined loans and finance receivables, gross(c)


$

692,694



$

536,078



$

156,616


Ending allowance and liability for losses


$

100,941



$

69,078



$

31,863


Combined originations(d)


$

512,910



$

546,352



$

(33,442)















Loans and finance receivables ratios:













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



14.7

%



14.0

%



0.7

%

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



14.0

%



13.5

%



0.5

%

Gross profit margin



51.8

%



59.4

%



(7.6)

%

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



14.6

%



12.9

%



1.7

%

___________________













(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



Year Ended




December 31,



December 31,




2016



2015



2016



2015


Net income(a)


$

8,714



$

4,181



$

34,602



$

43,992


Adjustments:

















Acquisition related costs(b)



(3,300)







(3,300)





Lease termination and relocation costs(c)












3,270


Intangible asset amortization



270




484




1,137




494


Stock-based compensation expense



2,108




3,089




8,522




9,630


Foreign currency transaction loss (gain)



622




(202)




(1,562)




985


Cumulative tax effect of adjustments



113




(1,354)




(1,907)




(5,373)



















Adjusted earnings(a)


$

8,527



$

6,198



$

37,492



$

52,998



















Diluted earnings per share(a)


$

0.26



$

0.13



$

1.03



$

1.33



















Adjusted earnings per share(a)


$

0.25



$

0.19



$

1.12



$

1.60



Adjusted EBITDA










Three Months Ended



Year Ended




December 31,



December 31,




2016



2015



2016



2015


Net income(a)


$

8,714



$

4,181



$

34,602



$

43,992


Depreciation and amortization expenses



3,560




4,190




15,564




18,388


Interest expense, net



17,545




13,382




65,603




52,883


Foreign currency transaction loss (gain)



622




(202)




(1,562)




985


Provision for income taxes



5,843




3,630




22,834




26,527


Stock-based compensation expense



2,108




3,089




8,522




9,630


Adjustments:

















Acquisition related costs(b)



(3,300)







(3,300)





Lease termination and relocation costs(c)












3,270



















Adjusted EBITDA(a)


$

35,092



$

28,270



$

142,263



$

155,675



















Adjusted EBITDA margin calculated as follows:

















Total Revenue(a)


$

202,438



$

175,417



$

745,569



$

652,600


Adjusted EBITDA(a)



35,092




28,270




142,263




155,675


Adjusted EBITDA as a percentage of total revenue



17.3

%



16.1

%



19.1

%



23.9

%

___________________

(a)

Includes an out-of-period adjustment to correct the Company's revenue recognition policy in order to recognize line of credit draw fees over the period the draw is outstanding. The Company recorded a $2.5 million reduction to revenue ($1.6 million net of tax or $0.05 per diluted share) during the fourth quarter of 2015.

(b)

In the fourth quarter of 2016, the Company recorded a $3.3 million fair value adjustment ($2.0 million net of tax) to contingent consideration related to a prior year acquisition.

(c)

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 2017


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




Estimated Results




Three Months Ended March 31, 2017




Low



High




Unaudited


Income from operations



28,000




38,000


Depreciation and amortization



4,000




4,000


Stock-based compensation expense



3,000




3,000


Adjusted EBITDA


$

35,000



$

45,000













Estimated Results




Year Ended December 31, 2017




Low



High




Unaudited


Income from operations



118,000




148,000


Depreciation and amortization



17,000




17,000


Stock-based compensation expense



10,000




10,000


Adjusted EBITDA


$

145,000



$

175,000


 

 

SOURCE Enova International

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


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