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Enova Reports First Quarter 2018 Results

- First quarter 2018 revenue grew 32% compared to a year ago, reaching a record $254 million and adjusted EBITDA grew 55% to $68 million

- First quarter 2018 installment loan and receivables purchase agreement revenue grew 44% to $122 million and line of credit revenue grew 32% to $78 million

- Total loans outstanding grew 36% year over year during the first quarter, driven by near-prime installment loan portfolio growth of 39% to $387 million

- Net income and diluted earnings per share doubled year-over-year to $28 million and $0.81, respectively

Apr 26, 2018

CHICAGO, April 26, 2018 /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 March 31, 2018.

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

"We saw strong demand and stable credit in each of our six growth businesses during the first quarter, resulting in both revenue and earnings exceeding our expectations," said David Fisher, Enova's CEO. "Our good start to the year reinforces our commitment to our focused growth strategy. We're confident our diversified revenue streams, talented employees, best-in-class technology and strong competitive position set us up very well for the remainder of 2018 and beyond." 

First Quarter 2018 Summary

  • Total revenue of $254 million in the first quarter of 2018 increased 32% from $192 million in the first quarter of 2017.
  • Gross profit margin was flat compared to the year ago quarter at 57.3%.
  • Net income was $28 million, or $0.81 per diluted share, in the first quarter of 2018 compared to net income of $14 million, or $0.41 per diluted share, in the first quarter of 2017.
  • First quarter 2018 adjusted EBITDA of $68 million, a non-GAAP measure, increased from $44 million in the first quarter of 2017.
  • Adjusted earnings of $35 million, or $1.02 per diluted share, a non-GAAP measure, in the first quarter of 2018 increased from adjusted earnings of $15 million, or $0.45 per diluted share, in the first quarter of 2017.

"Our first quarter performance exceeded our expectations, and we are raising our full year guidance," said Steve Cunningham, CFO of Enova. "Strong year-over-year originations and receivables growth, meaningful operating leverage inherent in our online model, stable margins and a lower effective tax rate drove our strong performance. In addition, the business generated record operating cash flow during the quarter, and we continue to demonstrate market access to support our growth."

Enova ended the first quarter of 2018 with unrestricted cash and cash equivalents of $70 million. As of March 31, 2018, the company had total debt outstanding of $755 million, which included $217 million outstanding under Enova's $295 million securitization facilities. During the first quarter, Enova generated $153 million of cash flow from operations. On April 13, the Company's bank-led, secured revolving line of credit was amended to increase borrowing capacity from $40 million to $75 million

Outlook

For the second quarter of 2018, Enova expects total revenue of $230 million to $245 million, GAAP results of $0.34 diluted earnings per share to $0.56 diluted earnings per share, adjusted EBITDA of $42 million to $52 million, and adjusted earnings per share of $0.41 to $0.62. For the full year 2018, Enova expects total revenue of $980 million to $1.04 billion, GAAP diluted earnings per share of $1.69 to $2.25, adjusted EBITDA of $190 million to $215 million, and adjusted earnings per share of $2.10 to $2.66.

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, April 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 May 3, 2018, 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 1011-9269.

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, loss on early extinguishment of debt and acquisition related 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)






March 31,



December 31,



2018



2017



2017

Assets












Cash and cash equivalents


$

69,900



$

97,030



$

68,684

Restricted cash (includes restricted cash of consolidated VIEs of $26,746, $17,815 and $21,696 as of March 31, 2018 and 2017 and December 31, 2017, respectively)



34,765




25,610




29,460

Loans and finance receivables, net (includes loans of consolidated VIEs of $302,743, $225,473 and $282,724 and allowance for losses of $24,471, $17,879 and $22,728 as of March 31, 2018 and 2017 and December 31, 2017, respectively)



703,076




515,463




704,705

Income taxes receivable






3,004




4,092

Other receivables and prepaid expenses



22,164




18,059




23,817

Property and equipment, net



47,698




44,279




48,525

Goodwill



267,013




267,011




267,015

Intangible assets, net



4,058




5,136




4,325

Other assets



9,526




9,821




8,837

Total assets


$

1,158,200



$

985,413



$

1,159,460

Liabilities and Stockholders' Equity












Accounts payable and accrued expenses


$

70,473



$

70,485



$

77,123

Income taxes currently payable



257







Deferred tax liabilities, net



17,087




25,338




12,108

Long-term debt (includes long-term debt of consolidated VIEs of $217,125, $145,449 and $211,406 and debt issuance costs of $2,666, $1,419 and $3,271, as of March 31, 2018 and 2017 and December 31, 2017, respectively)



754,650




631,117




788,542

Total liabilities



842,467




726,940




877,773

Commitments and contingencies












Stockholders' equity:












Common stock, $0.00001 par value, 250,000,000 shares authorized, 34,340,242, 33,596,007 and 33,932,673 shares issued and 33,862,388, 33,488,159 and 33,504,555 outstanding as of March 31, 2018 and 2017 and December 31, 2017, respectively









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









Additional paid in capital



32,671




20,766




29,781

Retained earnings



294,215




249,307




264,695

Accumulated other comprehensive loss



(4,322)




(10,440)




(7,086)

Treasury stock, at cost (477,854, 107,848 and 428,118 shares as of March 31, 2018 and 2017 and December 31, 2017, respectively)



(6,831)




(1,160)




(5,703)

Total stockholders' equity



315,733




258,473




281,687

Total liabilities and stockholders' equity


$

1,158,200



$

985,413



$

1,159,460


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(Unaudited)




Three Months Ended



March 31,



2018



2017

Revenue


$

254,298



$

192,263

Cost of Revenue



108,553




81,884

Gross Profit



145,745




110,379

Expenses








Marketing



27,736




19,583

Operations and technology



25,538




23,531

General and administrative



26,921




25,696

Depreciation and amortization



3,838




3,497

Total Expenses



84,033




72,307

Income from Operations



61,712




38,072

Interest expense, net



(19,673)




(17,222)

Foreign currency transaction (loss) gain



(2,088)




227

Loss on early extinguishment of debt



(4,710)




Income before Income Taxes



35,241




21,077

Provision for income taxes



7,343




7,225

Net Income


$

27,898



$

13,852

Earnings Per Share:








Net income per common share:








Basic


$

0.83



$

0.42

Diluted


$

0.81



$

0.41

Weighted average common shares outstanding:








Basic



33,669




33,372

Diluted



34,572




34,036

 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(dollars in thousands)

(Unaudited)




Three Months Ended March 31,



2018



2017

Cash flows provided by operating activities


$

153,002



$

119,865

Cash flows used in investing activities








Loans and finance receivables



(108,081)




(45,802)

Property and equipment additions



(3,349)




(2,156)

Other investing activities



24




2,367

Total cash flows used in investing activities



(111,406)




(45,591)

Cash flows used in financing activities



(40,608)




(20,506)

Effect of exchange rates on cash, cash equivalents and restricted cash



5,533




2,632

Net increase in cash, cash equivalents and restricted cash



6,521




56,400

Cash, cash equivalents and restricted cash at beginning of year



98,144




66,240

Cash, cash equivalents and restricted cash at end of period


$

104,665



$

122,640


 

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, 2018 and 2017.



Three Months Ended March 31,












2018



2017



$ Change



% Change


Domestic:

















Revenue


$

212,966



$

164,669



$

48,297




29.3

%

Cost of revenue



88,113




70,649




17,464




24.7


Gross profit


$

124,853



$

94,020



$

30,833




32.8


Gross profit margin



58.6

%



57.1

%



1.5

%



2.6

%

International:

















Revenue


$

41,332



$

27,594



$

13,738




49.8

%

Cost of revenue



20,440




11,235




9,205




81.9


Gross profit


$

20,892



$

16,359



$

4,533




27.7


Gross profit margin



50.5

%



59.3

%



(8.8)

%



(14.8)

%

Total:

















Revenue


$

254,298



$

192,263



$

62,035




32.3

%

Cost of revenue



108,553




81,884




26,669




32.6


Gross profit


$

145,745



$

110,379



$

35,366




32.0


Gross profit margin



57.3

%



57.4

%



(0.1)

%



(0.2)

%


 

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 March 31, 2018 and 2017.


Three Months Ended March 31,


2018



2017



Change


Cost of revenue


$

108,553



$

81,884



$

26,669


Charge-offs (net of recoveries)



118,705




98,814




19,891


Average combined loans and finance receivables, gross:













Company owned(a)



831,299




635,236




196,063


Guaranteed by Enova(a)(b)



32,143




28,027




4,116


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


$

863,442



$

663,263



$

200,179


Ending combined loans and finance receivables, gross:













Company owned


$

817,359



$

598,717



$

218,642


Guaranteed by Enova(b)



26,594




22,546




4,048


Ending combined loans and finance receivables, gross (c)


$

843,953



$

621,263



$

222,690


Ending allowance and liability for losses


$

115,693



$

84,441



$

31,252


Combined originations (d)


$

557,424



$

447,536



$

109,888















Loans and finance receivables ratios:













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



12.6

%



12.3

%



0.3

%

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



13.7

%



14.9

%



(1.2)

%

Gross profit margin



57.3

%



57.4

%



(0.1)

%

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



13.7

%



13.6

%



0.1

%













(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




March 31,




2018



2017


Net Income


$

27,898



$

13,852


Adjustments:









Loss on early extinguishment of debt(a)



4,710





Intangible asset amortization



267




271


Stock-based compensation expense



2,433




2,320


Foreign currency transaction loss (gain)



2,088




(227)


Cumulative tax effect of adjustments



(1,979)




(810)











Adjusted earnings


$

35,417



$

15,406











Diluted earnings per share


$

0.81



$

0.41











Adjusted earnings per share


$

1.02



$

0.45






Adjusted EBITDA










Three Months Ended




March 31,




2018



2017


Net Income


$

27,898



$

13,852


Depreciation and amortization expenses



3,838




3,497


Interest expense, net



19,673




17,222


Foreign currency transaction loss (gain)



2,088




(227)


Provision for income taxes



7,343




7,225


Stock-based compensation expense



2,433




2,320


Adjustments:









Loss on early extinguishment of debt(a)



4,710














Adjusted EBITDA


$

67,983



$

43,889











Adjusted EBITDA margin calculated as follows:









Total Revenue


$

254,298



$

192,263


Adjusted EBITDA



67,983




43,889


Adjusted EBITDA as a percentage of total revenue



26.7

%



22.8

%













(a)

In the first quarter of 2018, the Company recorded a $4.7 million ($3.7 million net of tax) loss on early extinguishment of debt related to the repurchase of $50.0 million principal amount of senior notes.


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(dollars in thousands)


Estimated Adjusted EBITDA and Earnings per Share For 2018


The following tables reconcile estimated Income from operations to Adjusted EBITDA, a non-GAAP measure and diluted income per share to adjusted earnings per share, a non-GAAP measure:




Estimated Results






Three Months Ended June 30, 2018



Low



High



Unaudited

Income from operations


$

35,100



$

45,100

Depreciation and amortization



3,900




3,900

Stock-based compensation expense



3,000




3,000

Adjusted EBITDA


$

42,000



$

52,000











Estimated Results



Year Ended December 31, 2018



Low



High



Unaudited

Income from operations


$

162,600



$

187,600

Depreciation and amortization



15,800




15,800

Stock-based compensation expense



11,600




11,600

Adjusted EBITDA


$

190,000



$

215,000











Estimated Results



Three Months Ended June 30, 2018



Low



High



Unaudited

Diluted income per share


$

0.34



$

0.56

Adjustments:








Intangible asset amortization



0.01




0.01

Stock-based compensation expense



0.09




0.08

Cumulative tax effect of adjustments



(0.03)




(0.03)

Adjusted earnings per share


$

0.41



$

0.62











Estimated Results



Year Ended December 31, 2018



Low



High



Unaudited

Diluted income per share


$

1.69



$

2.25

Adjustments:








Loss on early extinguishment of debt



0.13




0.13

Intangible asset amortization



0.03




0.03

Stock-based compensation expense



0.33




0.33

Foreign currency transaction gain



0.06




0.06

Cumulative tax effect of adjustments



(0.14)




(0.14)

Adjusted earnings per share


$

2.10



$

2.66

 

SOURCE Enova International, Inc.

For further information: Public Relations, Caroline Vasquez, Email: media@enova.com; Investor Relations, 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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