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Enova Reports Fourth Quarter and Full Year 2018 Results

- Fourth quarter 2018 revenue grew 28% compared to a year ago, reaching a record $313 million, and adjusted earnings per share and adjusted EBITDA grew 100% and 27%, respectively

- Compared to a year ago, fourth quarter 2018 line of credit revenue grew 41% to $107 million, and installment loan and receivables purchase agreement revenue grew 29% to $148 million

- Total loans and finance receivables outstanding grew 22% year-over-year to $1.053 billion at the end of the fourth quarter, driven by near-prime installment loan portfolio growth of 24% to $475 million

Jan 31, 2019

CHICAGO, Jan. 31, 2019 /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 and year ended December 31, 2018.

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

"Our fourth quarter results capped off another terrific year for Enova, marked by stable credit, strong demand and solid execution," said David Fisher, Enova's CEO. "We delivered record revenue while effectively managing the business to drive solid bottom line results. We are pleased with the momentum entering 2019, and we expect to continue producing long-term sustainable and profitable growth."

Fourth Quarter 2018 Summary

  • Total revenue of $313 million in the fourth quarter of 2018 increased 28% from $244 million in the fourth quarter of 2017.
  • Gross profit margin was 43.3% in the fourth quarter of 2018, compared to 47.7% in the fourth quarter of 2017.
  • Net income of $8.7 million, or $0.25 per diluted share, in the fourth quarter of 2018 increased from $6.9 million, or $0.20 per diluted share, in the fourth quarter of 2017.
  • Fourth quarter 2018 adjusted EBITDA of $48 million, a non-GAAP measure, increased from $38 million in the fourth quarter of 2017.
  • Adjusted earnings of $18.2 million, or $0.52 per diluted share, a non-GAAP measure, in the fourth quarter of 2018 increased from adjusted earnings of $8.9 million, or $0.26 per diluted share, in the fourth quarter of 2017.

Full Year 2018 Summary

  • Total revenue of $1.114 billion in 2018 increased 32% from $844 million in 2017.
  • Gross profit margin was 48.7% in 2018, compared to 53.0% in 2017.
  • Net income of $70 million, or $1.99 per diluted share, in 2018 increased from $29 million, or $0.86 per diluted share, in 2017.
  • Adjusted EBITDA of $211 million, a non-GAAP measure, in 2018 increased from $158 million in 2017.
  • Adjusted earnings of $91 million, or $2.58 per diluted share, a non-GAAP measure, in 2018 increased from adjusted earnings of $47 million, or $1.37 per diluted share, in 2017.

"We are pleased to report another strong quarter, with results meeting or exceeding our expectations," said Steve Cunningham, CFO of Enova. "During 2018 we saw solid growth, continued diversification, meaningful operating leverage and improvements in our liquidity position and cost of funds. Our business model and balance sheet have us well positioned for continued success in 2019."

Enova ended the fourth quarter of 2018 with unrestricted cash and cash equivalents of $53 million. As of December 31, 2018, the company had total debt outstanding of $858 million, which included $116 million outstanding under Enova's $575 million securitization facilities. During the fourth quarter, Enova generated $217 million of cash flow from operations.

Share Repurchase Program

Enova completed its previously announced $25 million share repurchase program earlier this year. During the first quarter of 2019, the company's Board of Directors authorized a new share repurchase program for up to $50 million of Enova's outstanding common stock through December 31, 2020.  

Outlook

For the first quarter of 2019, Enova expects total revenue of $280 million to $300 million, GAAP diluted earnings per share of $0.78 to $0.99, adjusted EBITDA of $63 million to $73 million and adjusted earnings per share of $0.85 to $1.06. For the full year 2019, Enova expects total revenue of $1.25 billion to $1.31 billion, GAAP diluted earnings per share of $2.49 to $3.13, adjusted EBITDA of $230 million to $260 million and adjusted earnings per share of $2.76 to $3.40.

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, January 31st. 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 7, 2019, 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 10127834.

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
The combined loans and finance receivables measures are non-GAAP measures that include loans and finance receivables that Enova owns or has purchased and loans that Enova guarantees. Management believes these non-GAAP measures provide investors with important information needed to evaluate the magnitude of potential receivable losses and the opportunity for revenue performance of the loans and finance receivable portfolio on an aggregate basis. Management also believes that the comparison of the aggregate amounts from period to period is more meaningful than comparing only the amounts reflected on Enova's consolidated balance sheet since both revenue and cost of revenue are impacted by the aggregate amount of receivables owned by Enova and those guaranteed by Enova as reflected in its consolidated financial statements.

Adjusted Earnings Measures
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 each of these expense items.

Adjusted EBITDA Measures
Adjusted EBITDA is a non-GAAP measure that Enova defines as earnings excluding depreciation, amortization, interest, foreign currency transaction gains or losses, taxes and stock-based compensation. In addition, management believes that the adjustments for losses on early extinguishment of debt, certain acquisition-related costs and a discrete regulatory settlement shown below are useful to investors in order to allow them to compare our financial results during the periods shown without the effect of the expense items. Adjusted EBITDA margin is a non-GAAP measure that Enova defines as Adjusted EBITDA as a percentage of total revenue. Management believes Adjusted EBITDA Measures 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 Measures are also useful to investors to help assess Enova's estimated enterprise value.

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(Unaudited)




December 31,



2018



2017

Assets








Cash and cash equivalents


$

52,917



$

68,684

Restricted cash and cash equivalents



24,342




29,460

Loans and finance receivables, net



859,946




704,705

Income taxes receivable



28,914




4,092

Other receivables and prepaid expenses



29,983




23,817

Property and equipment, net



49,553




48,525

Goodwill



267,013




267,015

Intangible assets, net



3,255




4,325

Other assets



12,262




8,837

Total assets


$

1,328,185



$

1,159,460

Liabilities and Stockholders' Equity








Accounts payable and accrued expenses


$

89,317



$

77,123

Deferred tax liabilities, net



33,171




12,108

Long-term debt



857,929




788,542

Total liabilities



980,417




877,773

Commitments and contingencies








Stockholders' equity:








Common stock, $0.00001 par value, 250,000,000 shares authorized, 34,856,553 and 33,932,673 shares issued and 33,584,606 and 33,504,555 outstanding as of December 31, 2018 and 2017, respectively






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






Additional paid in capital



48,175




29,781

Retained earnings



336,415




264,695

Accumulated other comprehensive loss



(13,805)




(7,086)

Treasury stock, at cost (1,271,947 and 428,118 shares as of December 31, 2018 and 2017, respectively)



(23,017)




(5,703)

Total stockholders' equity



347,768




281,687

Total liabilities and stockholders' equity


$

1,328,185



$

1,159,460

 

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,



2018



2017



2018



2017

Revenue


$

312,596



$

243,696



$

1,114,074



$

843,741

Cost of Revenue



177,190




127,545




571,000




396,632

Gross Profit



135,406




116,151




543,074




447,109

Expenses
















Marketing



32,136




31,436




125,269




101,429

Operations and technology



31,490




22,643




112,483




95,155

General and administrative



27,484




24,618




107,060




101,723

Depreciation and amortization



3,827




3,992




15,190




14,388

Total Expenses



94,937




82,689




360,002




312,695

Income from Operations



40,469




33,462




183,072




134,414

Interest expense, net



(20,076)




(21,477)




(79,348)




(74,003)

Foreign currency transaction (loss) gain



(55)




30




(2,320)




384

Loss on early extinguishment of debt



(7,812)




(7,968)




(24,991)




(22,895)

Income before Income Taxes



12,526




4,047




76,413




37,900

Provision for (benefit from) income taxes



3,855




(2,836)




6,315




8,660

Net Income


$

8,671



$

6,883



$

70,098



$

29,240

Earnings Per Share:
















Earnings per common share:
















Basic


$

0.25



$

0.21



$

2.06



$

0.87

Diluted


$

0.25



$

0.20



$

1.99



$

0.86

Weighted average common shares outstanding:
















Basic



34,158




33,494




33,993




33,523

Diluted



35,103




34,172




35,176




34,132

 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)




Year Ended December 31,



2018



2017

Cash flows provided by operating activities


$

684,840



$

447,173

Cash flows used in investing activities








Loans and finance receivables



(705,138)




(509,845)

Property and equipment additions



(16,079)




(16,528)

Other investing activities



284




1,805

Total cash flows used in investing activities



(720,933)




(524,568)

Cash flows provided by financing activities



22,479




104,582

Effect of exchange rates on cash



(7,271)




4,717

Net (decrease) increase in cash, cash equivalents and restricted cash



(20,885)




31,904

Cash, cash equivalents and restricted cash at beginning of year



98,144




66,240

Cash, cash equivalents and restricted cash at end of period


$

77,259



$

98,144

 

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, 2018 and 2017.




Three Months Ended












December 31,












2018



2017



$ Change



% Change


Domestic:

















Revenue


$

268,857



$

205,211



$

63,646




31.0

%

Cost of revenue



152,361




108,993




43,368




39.8

%

Gross profit


$

116,496



$

96,218



$

20,278




21.1

%

Gross profit margin



43.3

%



46.9

%



(3.6)

%



(7.7)

%

International:

















Revenue


$

43,739



$

38,485



$

5,254




13.7

%

Cost of revenue



24,829




18,552




6,277




33.8

%

Gross profit


$

18,910



$

19,933



$

(1,023)




(5.1)

%

Gross profit margin



43.2

%



51.8

%



(8.6)

%



(16.6)

%

Total:

















Revenue


$

312,596



$

243,696



$

68,900




28.3

%

Cost of revenue



177,190




127,545




49,645




38.9

%

Gross profit


$

135,406



$

116,151



$

19,255




16.6

%

Gross profit margin



43.3

%



47.7

%



(4.4)

%



(9.2)

%




Year Ended December 31,












2018



2017



$ Change



% Change


Domestic:

















Revenue


$

946,515



$

709,537



$

236,978




33.4

%

Cost of revenue



485,382




335,454




149,928




44.7

%

Gross profit


$

461,133



$

374,083



$

87,050




23.3

%

Gross profit margin



48.7

%



52.7

%



(4.0)

%



(7.6)

%

International:

















Revenue


$

167,559



$

134,204



$

33,355




24.9

%

Cost of revenue



85,618




61,178




24,440




39.9

%

Gross profit


$

81,941



$

73,026



$

8,915




12.2

%

Gross profit margin



48.9

%



54.4

%



(5.5)

%



(10.1)

%

Total:

















Revenue


$

1,114,074



$

843,741



$

270,333




32.0

%

Cost of revenue



571,000




396,632




174,368




44.0

%

Gross profit


$

543,074



$

447,109



$

95,965




21.5

%

Gross profit margin



48.7

%



53.0

%



(4.3)

%



(8.1)

%

 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

LOANS AND FINANCE RECEIVABLES FINANCIAL AND OPERATING DATA

(dollars in thousands)


The following table shows loans and finance receivables and related loan loss activity, which is based on loan and finance receivable balances, for the three months ended December 31, 2018 and 2017.


Three Months Ended December 31


2018



2017



Change


Cost of revenue


$

177,190



$

127,545



$

49,645


Charge-offs (net of recoveries)



165,353




109,257




56,096


Average combined loans and finance receivables, gross:













Company owned(a)



1,008,494




783,948




224,546


Guaranteed by Enova(a)(b)



29,565




31,810




(2,245)


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


$

1,038,059



$

815,758



$

222,301


Ending combined loans and finance receivables, gross:













Company owned


$

1,023,254



$

827,749



$

195,505


Guaranteed by Enova(b)



29,704




34,134




(4,430)


Ending combined loans and finance receivables, gross(c)


$

1,052,958



$

861,883



$

191,075


Ending allowance and liability for losses


$

165,474



$

125,302



$

40,172


Combined originations(d)


$

688,639



$

612,757



$

75,882















Loans and finance receivables ratios:













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



17.1

%



15.6

%



1.5

%

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



15.9

%



13.4

%



2.5

%

Gross profit margin



43.3

%



47.7

%



(4.4)

%

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



15.7

%



14.5

%



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), 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



Year Ended




December 31,



December 31,




2018



2017



2018



2017


Net income


$

8,671



$

6,883



$

70,098



$

29,240


Adjustments:

















Loss on early extinguishment of debt(a)



7,812




7,968




24,991




22,895


Acquisition-related costs(b)






(2,358)







(2,358)


Intangible asset amortization



267




269




1,070




1,080


Stock-based compensation expense



3,511




3,004




11,660




11,307


Foreign currency transaction loss (gain)



55




(30)




2,320




(384)


Cumulative tax effect of adjustments



(2,797)




609




(8,885)




(7,435)


Discrete tax adjustments(c)






(7,452)




(11,237)




(7,452)


Regulatory settlement(d)



633







633





Adjusted earnings


$

18,152



$

8,893



$

90,650



$

46,893



















Diluted earnings per share


$

0.25



$

0.20



$

1.99



$

0.86



















Adjusted earnings per share


$

0.52



$

0.26



$

2.58



$

1.37




Adjusted EBITDA Measures




Three Months Ended



Year Ended




December 31,



December 31,




2018



2017



2018



2017


Net income


$

8,671



$

6,883



$

70,098



$

29,240


Depreciation and amortization expenses



3,827




3,992




15,190




14,388


Interest expense, net



20,076




21,477




79,348




74,003


Foreign currency transaction loss (gain)



55




(30)




2,320




(384)


Provision for (benefit from) income taxes



3,855




(2,836)




6,315




8,660


Stock-based compensation expense



3,511




3,004




11,660




11,307


Adjustments:

















Loss on early extinguishment of debt(a)



7,812




7,968




24,991




22,895


Acquisition-related costs(b)






(2,358)







(2,358)


Regulatory settlement(d)



633







633





Adjusted EBITDA


$

48,440



$

38,100



$

210,555



$

157,751



















Adjusted EBITDA margin calculated as follows:

















Total Revenue


$

312,596



$

243,696



$

1,114,074



$

843,741


Adjusted EBITDA



48,440




38,100




210,555




157,751


Adjusted EBITDA as a percentage of total revenue



15.5

%



15.6

%



18.9

%



18.7

%








(a)

In the third and fourth quarters of 2017 and the first, third and fourth quarters of 2018, the Company recorded losses of $14.9 million ($9.2 million net of tax) $8.0 million ($8.5 million net of tax), $4.7 million ($3.7 million net of tax), $12.5 million ($9.9 million net of tax) and $7.8 million ($6.0 million net of tax), respectively, on early extinguishment of debt related to the repurchase of $155.0 million principal amount of senior notes, the redemption of $160.9 million of securitization notes, the repurchase of $50.0 million principal amount of senior notes, the repurchase of $178.5 million principal amount of senior notes, and the repurchase of $116.5 million principal amount of senior notes, respectively.

(b) 

The Company recorded a $2.4 million ($1.8 million net of tax) fair value adjustment to contingent consideration in the fourth quarter of 2017 related to a prior year acquisition.

(c) 

In the fourth quarter of 2017, the Company recognized a $7.5 million income tax benefit from the remeasurement of deferred tax assets and liabilities at lower enacted corporate tax rates as a result of the U.S. Tax Cuts and Jobs Act. In the third quarter of 2018, the Company recognized an $11.2 million income tax benefit from the optimization of timing of certain income tax deductions for prior year loan- and fixed asset-related deferred tax items, coupled with the lower enacted corporate tax rates as a result of the U.S. Tax Cuts and Jobs Act.

(d) 

In the fourth quarter of 2018, the Company consented to the issuance of a Consent Order by the Consumer Financial Protection Bureau, or the CFPB, pursuant to which it agreed, without admitting or denying any of the facts or conclusions made by the CFPB from its 2014 review of us, to pay a civil money penalty of $3.2 million, which is nondeductible for tax purposes.

 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(dollars in thousands)


Estimated Adjusted EBITDA For 2019


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 March 31, 2019



Low



High



Unaudited

Income from operations


$

56,400



$

66,400

Depreciation and amortization



3,800




3,800

Stock-based compensation expense



2,800




2,800

Adjusted EBITDA


$

63,000



$

73,000











Estimated Results



Year Ended December 31, 2019



Low



High



Unaudited

Income from operations


$

202,900



$

232,900

Depreciation and amortization



15,600




15,600

Stock-based compensation expense



11,500




11,500

Adjusted EBITDA


$

230,000



$

260,000











Estimated Results



Three Months Ended March 31, 2019



Low



High



Unaudited

Diluted income per share


$

0.78



$

0.99

Adjustments (net of tax):








Intangible asset amortization



0.01




0.01

Stock-based compensation expense



0.08




0.08

Cumulative tax effect of adjustments



(0.02)




(0.02)

Adjusted earnings per share


$

0.85



$

1.06











Estimated Results



Year Ended December 31, 2019



Low



High



Unaudited

Diluted income per share


$

2.49



$

3.13

Adjustments (net of tax):








Intangible asset amortization



0.03




0.03

Stock-based compensation expense



0.32




0.32

Cumulative tax effect of adjustments



(0.08)




(0.08)

Adjusted earnings per share


$

2.76



$

3.40

 

SOURCE Enova International, Inc.

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