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Enova Reports Third Quarter 2017 Financial Results

- Total revenue increased 11.2% year over year to $217.9 million

- Line of credit and installment loan and receivables purchase agreement revenue grew 16.6% year over year to $68.9 million and $98.9 million, respectively

- Total loans outstanding grew 15.6% year over year led by near-prime installment loan portfolio growth of 20.1% to $344.3 million

Oct 26, 2017

CHICAGO, Oct. 26, 2017 /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, 2017.

Enova International Logo (PRNewsFoto/Enova International, Inc.)

"Our strong third quarter results were driven by healthy demand, particularly from new customers," said David Fisher, Enova's CEO.  "Our six growth businesses are performing well, which is a testament to our leading competitive position, focused growth strategy, and strong balance sheet with diversified funding. Our credit quality continues to be good and in line with our expectations, even as other consumer lenders have reported some challenges. Further, we're pleased to finally have greater clarity regarding the CFPB's final small dollar rule, and remain confident in our ability to successfully adapt to these new regulations with minimal financial impact."

Third Quarter 2017 Summary

  • Total revenue of $217.9 million in the third quarter of 2017 increased 11.2% from $195.9 million in the third quarter of 2016.
  • Gross profit margin was 50.7% in the third quarter of 2017 compared to 51.3% in the third quarter of 2016, driven by growth in the installment loan and receivables purchase agreement segment as well as a higher mix of new customers, which requires higher loan loss provisions.
  • Net loss was $3.4 million, or $0.10 per diluted share, in the third quarter of 2017 compared to net income of $7.8 million, or $0.23 per diluted share, in the third quarter of 2016. The net loss included a pre-tax charge of $14.9 million related to the early redemption of senior notes originally due in 2021.
  • Third quarter 2017 adjusted EBITDA of $34.2 million, a non-GAAP measure, was flat compared to the third quarter of 2016.
  • Third quarter 2017 adjusted earnings per share was $0.25, a non-GAAP measure, compared to $0.28 in the third quarter of 2016.

"We are very pleased with our solid financial performance in the third quarter and the progress we have made strengthening our balance sheet," said Steve Cunningham, CFO of Enova. "This year we have raised $565 million in funding from varied sources at competitive costs, including a $40 million bank-led secured revolving line of credit, $250 million of 7-year senior unsecured notes, and renewal of our $275 million securitization facility." 

Enova ended the third quarter of 2017 with unrestricted cash and cash equivalents of $110.1 million. As of September 30, 2017, the company had total debt outstanding of $765.4 million, which included $186.5 million outstanding under Enova's $295 million securitization facilities. During the third quarter, Enova generated $125.2 million of cash flow from operations.

Outlook

For the fourth quarter of 2017, Enova expects total revenue of $220 million to $240 million, GAAP results of $(0.01) diluted loss per share to $0.18 per diluted earnings per share, adjusted EBITDA of $32 million to $42 million, and adjusted earnings per share of $0.14 to $0.33. For the full year 2017, Enova expects total revenue of $820 million to $840 million, GAAP diluted earnings per share of $0.65 to $0.84, adjusted EBITDA of $151 million to $161 million, and adjusted earnings per share of $1.24 to $1.43.

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, October 26th. 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 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 1011-3131.

About Enova

Enova (NYSE: ENVA) is a leading provider of online financial services to non-prime consumers and small businesses, providing access to credit powered by its advanced analytics, innovative technology, and world-class online platform and services. Enova has provided more than 5 million customers around the globe with access to more than $20 billion in loans and financing. The financial technology company has a portfolio of trusted brands serving consumers, including CashNetUSA®, NetCredit®, On Stride Financial®, Pounds to Pocket®, QuickQuid® and Simplic®; two brands serving small businesses, Headway Capital® and The Business Backer®; and offers online lending platform services to lenders. Through its Enova Decisions™ 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 loss on early extinguishment of debt, 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,




2017



2016



2016


Assets













Cash and cash equivalents


$

110,054



$

45,681



$

39,934


Restricted cash and cash equivalents (includes restricted cash of consolidated VIEs of $22,161, $18,119 and $19,468 as of September 30, 2017 and 2016 and December 31, 2016, respectively)



29,866




39,272




26,306


Loans and finance receivables, net (includes loans of consolidated VIEs of $296,478, $191,534 and $234,497 and allowance for losses of $22,115, $15,518 and $17,731 as of September 30, 2017 and 2016 and December 31, 2016, respectively)



637,736




542,865




561,550


Income taxes receivable



9,319








Other receivables and prepaid expenses



23,796




18,649




19,524


Property and equipment, net



46,557




47,486




47,100


Goodwill



267,015




267,012




267,010


Intangible assets, net



4,593




5,675




5,404


Other assets



10,842




8,439




11,051


Total assets


$

1,139,778



$

975,079



$

977,879


Liabilities and Stockholders' Equity













Accounts payable and accrued expenses


$

78,897



$

85,433



$

71,671


Income taxes currently payable






5,149




282


Deferred tax liabilities, net



20,681




16,233




14,316


Long-term debt (includes long-term debt of consolidated VIEs of $186,533, $136,953 and $165,419 and debt issuance costs of $762, $2,416 and $1,869, as of September 30, 2017 and 2016 and December 31, 2016, respectively)



765,395




635,179




649,911


Total liabilities



864,973




741,994




736,180


Commitments and contingencies













Stockholders' equity:













Common stock, $0.00001 par value, 250,000,000 shares authorized, 33,828,668, 33,260,017 and 33,364,525 shares issued and 33,608,611, 33,214,594 and 33,293,100 outstanding as of September 30, 2017 and 2016 and December 31, 2016, respectively










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










Additional paid in capital



26,749




16,338




18,446


Retained earnings



257,812




226,741




235,455


Accumulated other comprehensive loss



(7,017)




(9,692)




(11,578)


Treasury stock, at cost (220,057, 45,423 and 71,425 shares as of September 30, 2017 and 2016 and December 31, 2016, respectively)



(2,739)




(302)




(624)


Total stockholders' equity



274,805




233,085




241,699


Total liabilities and stockholders' equity


$

1,139,778



$

975,079



$

977,879


 

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,




2017



2016



2017



2016


Revenue


$

217,878



$

195,943



$

600,045



$

543,131


Cost of Revenue



107,341




95,391




269,087




230,421


Gross Profit



110,537




100,552




330,958




312,710


Expenses

















Marketing



27,000




26,722




69,993




73,500


Operations and technology



27,163




20,637




72,512




61,706


General and administrative



25,164




21,307




77,105




76,747


Depreciation and amortization



3,533




3,789




10,396




12,004


Total Expenses



82,860




72,455




230,006




223,957


Income from Operations



27,677




28,097




100,952




88,753


Interest expense, net



(18,292)




(16,117)




(52,526)




(48,058)


Foreign currency transaction gain



65




145




354




2,184


Loss on early extinguishment of debt



(14,927)







(14,927)





(Loss) Income before Income Taxes



(5,477)




12,125




33,853




42,879


(Benefit from) provision for income taxes



(2,109)




4,288




11,496




16,991


Net (Loss) Income


$

(3,368)



$

7,837



$

22,357



$

25,888


Earnings Per Share:

















Earnings per common share:

















Basic


$

(0.10)



$

0.24



$

0.67



$

0.78


Diluted


$

(0.10)



$

0.23



$

0.66



$

0.78


Weighted average common shares outstanding:

















Basic



33,670




33,211




33,533




33,176


Diluted



33,670




33,558




34,119




33,360


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(dollars in thousands)

(Unaudited)



Nine Months Ended September 30,




2017



2016


Cash flows provided by operating activities


$

311,297



$

300,707


Cash flows used in investing activities









Loans and finance receivables



(325,859)




(335,390)


Change in restricted cash



(3,030)




(32,776)


Property and equipment additions



(10,804)




(11,466)


Other investing activities



1,798




72


Total cash flows used in investing activities



(337,895)




(379,560)


Cash flows provided by financing activities



93,101




89,922


Effect of exchange rates on cash



3,617




(7,454)


Net increase in cash and cash equivalents



70,120




3,615


Cash and cash equivalents at beginning of year



39,934




42,066


Cash and cash equivalents at end of period


$

110,054



$

45,681


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

GEOGRAPHIC INFORMATION

(dollars in thousands)


The following tables present information on Enova's domestic and international operations for the three and nine months ended September 30, 2017 and 2016.




Three Months Ended
September 30,












2017



2016



$ Change



% Change


Domestic:

















Revenue


$

181,584



$

165,330



$

16,254




9.8

%

Cost of revenue



88,419




85,862




2,557




3.0


Gross profit


$

93,165



$

79,468



$

13,697




17.2


Gross profit margin



51.3

%



48.1

%



3.2

%



6.7

%

International:

















Revenue


$

36,294



$

30,613



$

5,681




18.6

%

Cost of revenue



18,922




9,529




9,393




98.6


Gross profit


$

17,372



$

21,084



$

(3,712)




(17.6)


Gross profit margin



47.9

%



68.9

%



(21.0)

%



(30.5)

%

Total:

















Revenue


$

217,878



$

195,943



$

21,935




11.2

%

Cost of revenue



107,341




95,391




11,950




12.5


Gross profit


$

110,537



$

100,552



$

9,985




9.9


Gross profit margin



50.7

%



51.3

%



(0.6)

%



(1.2)

%





































Nine Months Ended
September 30,












2017



2016



$ Change



% Change


Domestic:

















Revenue


$

504,326



$

449,100



$

55,226




12.3

%

Cost of revenue



226,461




204,070




22,391




11.0


Gross profit


$

277,865



$

245,030



$

32,835




13.4


Gross profit margin



55.1

%



54.6

%



0.5

%



0.9

%

International:

















Revenue


$

95,719



$

94,031



$

1,688




1.8

%

Cost of revenue



42,626




26,351




16,275




61.8


Gross profit


$

53,093



$

67,680



$

(14,587)




(21.6)


Gross profit margin



55.5

%



72.0

%



(16.5)

%



(22.9)

%

Total:

















Revenue


$

600,045



$

543,131



$

56,914




10.5

%

Cost of revenue



269,087




230,421




38,666




16.8


Gross profit


$

330,958



$

312,710



$

18,248




5.8


Gross profit margin



55.2

%



57.6

%



(2.4)

%



(4.2)

%

 

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 months ended September 30, 2017 and 2016.


Three Months Ended September 30,


2017



2016



Change


Cost of revenue


$

107,341



$

95,391



$

11,950


Charge-offs (net of recoveries)



86,513




74,312




12,201


Average combined loans and finance receivables, gross:













Company owned(a)



698,783




606,357




92,426


Guaranteed by Enova(a)(b)



30,415




31,278




(863)


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


$

729,198



$

637,635



$

91,563


Ending combined loans and finance receivables, gross:













Company owned


$

742,796



$

637,612



$

105,184


Guaranteed by Enova(b)



28,943




29,700




(757)


Ending combined loans and finance receivables, gross (c)


$

771,739



$

667,312



$

104,427


Ending allowance and liability for losses


$

107,077



$

96,474



$

10,603


Combined originations (d)


$

568,208



$

581,677



$

(13,469)















Loans and finance receivables ratios:













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



14.7

%



15.0

%



(0.3)

%

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



11.9

%



11.7

%



0.2

%

Gross profit margin



50.7

%



51.3

%



(0.6)

%

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



13.9

%



14.5

%



(0.6)

%



(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



Nine Months Ended




September 30,



September 30,




2017



2016



2017



2016


Net (Loss) Income


$

(3,368)



$

7,837



$

22,357



$

25,888


Adjustments:

















Loss on early extinguishment of debt



14,927







14,927





Intangible asset amortization



269




271




811




867


Stock-based compensation expense



2,996




2,265




8,303




6,414


Foreign currency transaction gain



(65)




(145)




(354)




(2,184)


Cumulative tax effect of adjustments



(6,121)




(902)




(8,044)




(2,020)



















Adjusted earnings


$

8,638



$

9,326



$

38,000



$

28,965



















Diluted (loss) earnings per share


$

(0.10)



$

0.23



$

0.66



$

0.78



















Adjusted earnings per share


$

0.25



$

0.28



$

1.11



$

0.87




Adjusted EBITDA




Three Months Ended



Nine Months Ended




September 30,



September 30,




2017



2016



2017



2016


Net (Loss) Income


$

(3,368)



$

7,837



$

22,357



$

25,888


Depreciation and amortization expenses



3,533




3,789




10,396




12,004


Interest expense, net



18,292




16,117




52,526




48,058


Foreign currency transaction gain



(65)




(145)




(354)




(2,184)


(Benefit from) provision for income taxes



(2,109)




4,288




11,496




16,991


Stock-based compensation expense



2,996




2,265




8,303




6,414


Adjustments:

















Loss on early extinguishment of debt



14,927







14,927






















Adjusted EBITDA


$

34,206



$

34,151



$

119,651



$

107,171



















Adjusted EBITDA margin calculated as follows:

















Total Revenue


$

217,878



$

195,943



$

600,045



$

543,131


Adjusted EBITDA



34,206




34,151




119,651




107,171


Adjusted EBITDA as a percentage of total revenue



15.7

%



17.4

%



19.9

%



19.7

%

 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(dollars in thousands)


Estimated Adjusted EBITDA and Adjusted Earnings Per Share For 2017


The following tables reconcile estimated Income from operations to Adjusted EBITDA, a non-GAAP measure, and Diluted (loss) earnings per share to Adjusted earnings per share, a non-GAAP measure:




Estimated Results




Three Months Ended December 31, 2017




Low



High




Unaudited


Income from operations


$

25,000



$

35,000


Depreciation and amortization



4,000




4,000


Stock-based compensation expense



3,000




3,000


Adjusted EBITDA


$

32,000



$

42,000













Estimated Results




Year Ended December 31, 2017




Low



High




Unaudited


Income from operations


$

126,000



$

136,000


Depreciation and amortization



14,000




14,000


Stock-based compensation expense



11,000




11,000


Adjusted EBITDA


$

151,000



$

161,000













Estimated Results




Three Months Ended December 31, 2017




Low



High




Unaudited


Diluted (loss) earnings per share


$

(0.01)



$

0.18


Adjustments (net of tax):









Intangible asset amortization



0.01




0.01


Stock-based compensation expense



0.08




0.08


Loss on early extinguishment of debt



0.15




0.15


Cumulative tax effect of adjustments



(0.09)




(0.09)


Adjusted earnings per share


$

0.14



$

0.33













Estimated Results




Year Ended December 31, 2017




Low



High




Unaudited


Diluted earnings per share


$

0.65



$

0.84


Adjustments (net of tax):









Intangible asset amortization



0.04




0.04


Stock-based compensation expense



0.31




0.31


Foreign currency transaction gain



(0.01)




(0.01)


Loss on early extinguishment of debt



0.59




0.59


Cumulative tax effect of adjustments



(0.34)




(0.34)


Adjusted earnings per share


$

1.24



$

1.43


 

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 or Lindsay Savarese, Office: (212) 331-8417, Email: IR@enova.com


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