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Enova Reports Third Quarter 2018 Results

- Third quarter 2018 revenue grew 35% compared to a year ago, reaching a record $294 million, and adjusted EBITDA grew 30% to $44 million

- Compared to a year ago, third quarter 2018 line of credit revenue grew 43% to $99 million, and installment loan and receivables purchase agreement revenue grew 39% to $137 million

- Total loans and finance receivables outstanding grew 32% year-over-year to $1.020 billion during the third quarter, driven by near-prime installment loan portfolio growth of 33% to $459 million

- Adjusted earnings per share grew 84% year-over-year to $0.46 per share

Oct 25, 2018

CHICAGO, Oct. 25, 2018 /PRNewswire/ -- Enova International (NYSE: ENVA), a leading financial technology and analytics company offering consumer and small business loans and financing, today announced financial results for the quarter ended September 30, 2018.

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

"We are pleased to deliver another quarter of robust growth. We continued to see strong demand and stable credit across our six growth businesses," said David Fisher, Enova's CEO. "Our focused growth strategy, scalable online model, diversified product offering and efficient marketing position us well to achieve sustainable and profitable growth. Based on the strong tailwinds in our business, we are raising our full year guidance and anticipate the considerable momentum we are seeing will continue in 2019."

Third Quarter 2018 Summary

  • Total revenue of $294 million in the third quarter of 2018 increased 35% from $218 million in the third quarter of 2017.
  • Gross profit margin was 44.3% in the third quarter of 2018, compared to 50.7% in the third quarter of 2017.
  • Net income was $15 million, or $0.43 per diluted share, in the third quarter of 2018, compared to a net loss of $3 million, or a loss of $0.10 per diluted share, in the third quarter of 2017.
  • Third quarter 2018 adjusted EBITDA of $44 million, a non-GAAP measure, increased from $34 million in the third quarter of 2017.
  • Adjusted earnings of $16 million, or $0.46 per diluted share, a non-GAAP measure, in the third quarter of 2018 increased from adjusted earnings of $9 million, or $0.25 per diluted share, in the third quarter of 2017.

"Our business model and execution allow us to continue to meet demand that exceeds our expectations while delivering strong top and bottom line results that are within or exceed our guidance ranges," said Steve Cunningham, CFO of Enova. "Our results were further enhanced by the strengthening of our balance sheet during the third quarter. This year we have raised $885 million in funding from diverse sources at competitive costs, resulting in our lowest public company quarterly cost of funds ever, despite increases in market rates. Our solid balance sheet gives us the financial flexibility to execute on our strategic growth plans and further support our competitive position."

Enova ended the third quarter of 2018 with unrestricted cash and cash equivalents of $164 million. As of September 30, 2018, the company had total debt outstanding of $951 million, which included $226 million outstanding under Enova's $445 million securitization facilities. During the third quarter, Enova generated $172 million of cash flow from operations.

Outlook

For the fourth quarter of 2018, Enova expects total revenue of $290 million to $310 million, GAAP results of $0.17 diluted earnings per share to $0.38 diluted earnings per share, adjusted EBITDA of $43 million to $53 million, and adjusted earnings per share of $0.40 to $0.61. For the full year 2018, Enova now expects total revenue of $1.091 billion to $1.111 billion, GAAP diluted earnings per share of $1.92 to $2.13, adjusted EBITDA of $205 million to $215 million, and adjusted earnings per share of $2.46 to $2.67.

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 25th. 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 1, 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 10125289.

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)




September 30,



December 31,




2018



2017



2017


Assets













Cash and cash equivalents


$

164,122



$

110,054



$

68,684


Restricted cash (includes restricted cash of consolidated VIEs of $18,678, $22,161 and $21,696 as of September 30, 2018 and 2017 and December 31, 2017, respectively)



20,897




29,866




29,460


Loans and finance receivables, net (includes loans of consolidated VIEs of $319,769, $296,478 and $282,724 and allowance for losses of $28,096, $22,115 and $22,728 as of September 30, 2018 and 2017 and December 31, 2017, respectively)



838,783




637,736




704,705


Income taxes receivable



45,639




9,319




4,092


Other receivables and prepaid expenses



25,699




23,796




23,817


Property and equipment, net



48,514




46,557




48,525


Goodwill



267,013




267,015




267,015


Intangible assets, net



3,523




4,593




4,325


Other assets



12,078




10,842




8,837


Total assets


$

1,426,268



$

1,139,778



$

1,159,460


Liabilities and Stockholders' Equity













Accounts payable and accrued expenses


$

76,188



$

78,897



$

77,123


Deferred tax liabilities, net



46,321




20,681




12,108


Long-term debt (includes long-term debt of consolidated VIEs of $226,218, $186,533 and $211,406 and debt issuance costs of $1,659, $762 and $3,271, as of September 30, 2018 and 2017 and December 31, 2017, respectively)



951,091




765,395




788,542


Total liabilities



1,073,600




864,973




877,773


Commitments and contingencies













Stockholders' equity:













Common stock, $0.00001 par value, 250,000,000 shares authorized, 34,764,648, 33,828,668 and 33,932,673 shares issued and 34,274,785, 33,608,611 and 33,504,555 outstanding as of September 30, 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



44,657




26,749




29,781


Retained earnings



327,744




257,812




264,695


Accumulated other comprehensive loss



(12,468)




(7,017)




(7,086)


Treasury stock, at cost (489,863, 220,057 and 428,118 shares as of September 30, 2018 and 2017 and December 31, 2017, respectively)



(7,265)




(2,739)




(5,703)


Total stockholders' equity



352,668




274,805




281,687


Total liabilities and stockholders' equity


$

1,426,268



$

1,139,778



$

1,159,460


 

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,




2018



2017



2018



2017


Revenue


$

293,879



$

217,878



$

801,478



$

600,045


Cost of Revenue



163,763




107,341




393,810




269,087


Gross Profit



130,116




110,537




407,668




330,958


Expenses

















Marketing



36,011




27,000




93,133




69,993


Operations and technology



28,260




27,163




80,993




72,512


General and administrative



24,360




25,164




79,576




77,105


Depreciation and amortization



3,688




3,533




11,363




10,396


Total Expenses



92,319




82,860




265,065




230,006


Income from Operations



37,797




27,677




142,603




100,952


Interest expense, net



(20,244)




(18,292)




(59,272)




(52,526)


Foreign currency transaction gain (loss)



27




65




(2,265)




354


Loss on early extinguishment of debt



(12,469)




(14,927)




(17,179)




(14,927)


Income (Loss) before Income Taxes



5,111




(5,477)




63,887




33,853


(Benefit from) provision for income taxes



(10,193)




(2,109)




2,460




11,496


Net Income (Loss)


$

15,304



$

(3,368)



$

61,427



$

22,357


Earnings Per Share:

















Net income (loss) per common share:

















Basic


$

0.45



$

(0.10)



$

1.81



$

0.67


Diluted


$

0.43



$

(0.10)



$

1.75



$

0.66


Weighted average common shares outstanding:

















Basic



34,168




33,670




33,938




33,533


Diluted



35,665




33,670




35,200




34,119


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(dollars in thousands)

(Unaudited)




Nine Months Ended September 30,




2018



2017


Cash flows provided by operating activities


$

468,160



$

311,297


Cash flows used in investing activities









Loans and finance receivables



(505,938)




(325,859)


Property and equipment additions



(11,303)




(10,804)


Other investing activities



93




1,798


Total cash flows used in investing activities



(517,148)




(334,865)


Cash flows provided by financing activities



141,234




93,101


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



(5,371)




4,147


Net increase in cash, cash equivalents and restricted cash



86,875




73,680


Cash, cash equivalents and restricted cash at beginning of year



98,144




66,240


Cash, cash equivalents and restricted cash at end of period


$

185,019



$

139,920


 

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, 2018 and 2017.




Three Months Ended
September 30,












2018



2017



$ Change



% Change


Domestic:

















Revenue


$

251,054



$

181,584



$

69,470




38.3

%

Cost of revenue



142,702




88,419




54,283




61.4


Gross profit


$

108,352



$

93,165



$

15,187




16.3


Gross profit margin



43.2

%



51.3

%



(8.1)

%



(15.8)

%

International:

















Revenue


$

42,825



$

36,294



$

6,531




18.0

%

Cost of revenue



21,061




18,922




2,139




11.3


Gross profit


$

21,764



$

17,372



$

4,392




25.3


Gross profit margin



50.8

%



47.9

%



2.9

%



6.1

%

Total:

















Revenue


$

293,879



$

217,878



$

76,001




34.9

%

Cost of revenue



163,763




107,341




56,422




52.6


Gross profit


$

130,116



$

110,537



$

19,579




17.7


Gross profit margin



44.3

%



50.7

%



(6.4)

%



(12.6)

%




Nine Months Ended
September 30,












2018



2017



$ Change



% Change


Domestic:

















Revenue


$

677,658



$

504,326



$

173,332




34.4

%

Cost of revenue



333,021




226,461




106,560




47.1


Gross profit


$

344,637



$

277,865



$

66,772




24.0


Gross profit margin



50.9

%



55.1

%



(4.2)

%



(7.6)

%

International:

















Revenue


$

123,820



$

95,719



$

28,101




29.4

%

Cost of revenue



60,789




42,626




18,163




42.6


Gross profit


$

63,031



$

53,093



$

9,938




18.7


Gross profit margin



50.9

%



55.5

%



(4.6)

%



(8.3)

%

Total:

















Revenue


$

801,478



$

600,045



$

201,433




33.6

%

Cost of revenue



393,810




269,087




124,723




46.4


Gross profit


$

407,668



$

330,958



$

76,710




23.2


Gross profit margin



50.9

%



55.2

%



(4.3)

%



(7.8)

%

 

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, 2018 and 2017.


Three Months Ended September 30,


2018



2017



Change


Cost of revenue


$

163,763



$

107,341



$

56,422


Charge-offs (net of recoveries)



133,417




86,513




46,904


Average combined loans and finance receivables, gross:













Company owned(a)



937,573




698,783




238,790


Guaranteed by Enova(a)(b)



30,238




30,415




(177)


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


$

967,811



$

729,198



$

238,613


Ending combined loans and finance receivables, gross:













Company owned


$

990,368



$

742,796



$

247,572


Guaranteed by Enova(b)



30,106




28,943




1,163


Ending combined loans and finance receivables, gross (c)


$

1,020,474



$

771,739



$

248,735


Ending allowance and liability for losses


$

153,829



$

107,077



$

46,752


Combined originations (d)


$

697,690



$

568,208



$

129,482















Loans and finance receivables ratios:













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



16.9

%



14.7

%



2.2

%

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



13.8

%



11.9

%



1.9

%

Gross profit margin



44.3

%



50.7

%



(6.4)

%

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



15.1

%



13.9

%



1.2

%










(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 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,




2018



2017



2018



2017


Net Income (Loss)


$

15,304



$

(3,368)



$

61,427



$

22,357


Adjustments:

















Loss on early extinguishment of debt(a)



12,469




14,927




17,179




14,927


Intangible asset amortization



268




269




803




811


Stock-based compensation expense



2,882




2,996




8,149




8,303


Foreign currency transaction (gain) loss



(27)




(65)




2,265




(354)


Cumulative tax effect of adjustments



(3,332)




(6,121)




(6,088)




(8,044)


Discrete tax adjustments(b)



(11,237)







(11,237)






















Adjusted earnings


$

16,327



$

8,638



$

72,498



$

38,000



















Diluted earnings per share


$

0.43



$

(0.10)



$

1.75



$

0.66



















Adjusted earnings per share


$

0.46



$

0.25



$

2.06



$

1.11



Adjusted EBITDA




Three Months Ended



Nine Months Ended




September 30,



September 30,




2018



2017



2018



2017


Net Income (Loss)


$

15,304



$

(3,368)



$

61,427



$

22,357


Depreciation and amortization expenses



3,688




3,533




11,363




10,396


Interest expense, net



20,244




18,292




59,272




52,526


Foreign currency transaction (gain) loss



(27)




(65)




2,265




(354)


(Benefit from) provision for income taxes



(10,193)




(2,109)




2,460




11,496


Stock-based compensation expense



2,882




2,996




8,149




8,303


Adjustments:

















Loss on early extinguishment of debt(a)



12,469




14,927




17,179




14,927



















Adjusted EBITDA


$

44,367



$

34,206



$

162,115



$

119,651



















Adjusted EBITDA margin calculated as follows:

















Total Revenue


$

293,879



$

217,878



$

801,478



$

600,045


Adjusted EBITDA



44,367




34,206




162,115




119,651


Adjusted EBITDA as a percentage of total revenue



15.1

%



15.7

%



20.2

%



19.9

%
















(a)

In the first and third quarters of 2018, the Company recorded $4.7 million ($3.7 million net of tax) and $12.5 million ($9.9 million net of tax) losses on early extinguishment of debt related to the repurchase of $50.0 million and $178.5 million, respectively, principal amount of senior notes.

(b)

In the third quarter of 2018, the Company recorded a one-time $11.2 million income tax benefit resulting from various income tax deductions.

 

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 December 31, 2018




Low



High




Unaudited


Income from operations


$

36,300



$

46,300


Depreciation and amortization



3,700




3,700


Stock-based compensation expense



3,000




3,000


Adjusted EBITDA


$

43,000



$

53,000













Estimated Results




Year Ended December 31, 2018




Low



High




Unaudited


Income from operations


$

176,600



$

186,600


Depreciation and amortization



15,100




15,100


Stock-based compensation expense



11,100




11,100


Foreign currency transaction loss



2,300




2,300


Adjusted EBITDA


$

205,100



$

215,100













Estimated Results




Three Months Ended December 31, 2018




Low



High




Unaudited


Diluted income per share


$

0.17



$

0.38


Adjustments:









Loss on early extinguishment of debt



0.21




0.21


Intangible asset amortization



0.01




0.01


Stock-based compensation expense



0.08




0.08


Cumulative tax effect of adjustments



(0.07)




(0.07)


Adjusted earnings per share


$

0.40



$

0.61













Estimated Results




Year Ended December 31, 2018




Low



High




Unaudited


Diluted income per share


$

1.92



$

2.13


Adjustments:









Loss on early extinguishment of debt



0.71




0.71


Intangible asset amortization



0.03




0.03


Stock-based compensation expense



0.33




0.33


Foreign currency transaction loss



0.06




0.06


Cumulative tax effect of adjustments



(0.28)




(0.28)


Discrete tax adjustments(a)



(0.31)




(0.31)


Adjusted earnings per share


$

2.46



$

2.67












(a)

In the third quarter of 2018, the Company recorded a one-time $11.2 million income tax benefit resulting from various income tax deductions.

 

 

SOURCE Enova International, Inc.

For further information: For further information: Public Relations Contact: Kaitlin Lowey, Email: media@enova.com; Investor Relations Contact: Monica Gould, Office: (212) 871-3927, Email: IR@enova.com; Lindsay Savarese, Office: (212) 331-8417, Email: IR@enova.com


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