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Enova Reports First Quarter 2019 Results

- First quarter 2019 revenue grew 15% compared to a year ago to $293 million, and adjusted earnings per share and adjusted EBITDA grew 14% and 10%, respectively

- Compared to a year ago, first quarter 2019 line of credit revenue grew 33% to $104 million, and installment loan and receivables purchase agreement revenue grew 16% to $142 million

- Total loans and finance receivables outstanding grew 16% year-over-year to $980 million at the end of the first quarter, driven by a 36% increase in line of credit receivables and an 18% increase in near-prime installment loan receivables

Apr 25, 2019

CHICAGO, April 25, 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 ended March 31, 2019.

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

"Our first quarter results demonstrate our continued ability to deliver meaningful growth with efficient marketing while leveraging our sophisticated analytics, flexible online operating model and quality balance sheet to deliver strong bottom line results that exceeded expectations," said David Fisher, Enova's CEO. "We believe our focused growth strategy, ongoing diversification and scalable online model coupled with prudent management of the business will ensure long-term, sustainable and profitable growth."

First Quarter 2019 Summary

  • Total revenue of $293 million in the first quarter of 2019 increased 15% from $254 million in the first quarter of 2018.
  • Gross profit margin was 52.6% in the first quarter of 2019, compared to 57.3% in the first quarter of 2018.
  • Net income of $35 million, or $1.02 per diluted share, in the first quarter of 2019 increased from $28 million, or $0.81 per diluted share, in the first quarter of 2018.
  • First quarter 2019 adjusted EBITDA of $75 million, a non-GAAP measure, increased from $68 million in the first quarter of 2018.
  • Adjusted earnings of $40 million, or $1.16 per diluted share, a non-GAAP measure, in the first quarter of 2019 increased from adjusted earnings of $35 million, or $1.02 per diluted share, in the first quarter of 2018.

"We are pleased to report another quarter of financial results that either met or exceeded our expectations," said Steve Cunningham, CFO of Enova. "The solid growth in the first quarter was combined with continued stable credit performance, which is reflected in our strong gross margins, leading to record first quarter profitability. The fundamentals of our operating model and balance sheet flexibility leave us well positioned to continue this momentum as we execute on the opportunities ahead of us."

Enova ended the first quarter of 2019 with unrestricted cash and cash equivalents of $93 million. As of March 31, 2019, the company had total debt outstanding of $792 million, which included $99 million outstanding under Enova's $350 million securitization facilities. During the first quarter, Enova generated $221 million of cash flow from operations.

Outlook

For the second quarter of 2019, Enova expects total revenue of $265 million to $285 million, GAAP diluted earnings per share of $0.41 to $0.63, adjusted EBITDA of $45 million to $55 million and adjusted earnings per share of $0.48 to $0.70. For the full year 2019, Enova expects total revenue of $1.25 billion to $1.31 billion, GAAP diluted earnings per share of $2.83 to $3.48, adjusted EBITDA of $237 million to $267 million and adjusted earnings per share of $3.17 to $3.82.

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 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 May 2, 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 10130025.

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®, 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
In addition to reporting financial results in accordance with GAAP, Enova has provided Adjusted EBITDA and Adjusted EBITDA margin, or, collectively, the Adjusted EBITDA measures, which are non-GAAP 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 lease termination and cease-use costs and losses on early extinguishment of debt 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)




March 31,



December 31,




2019



2018



2018


Assets













Cash and cash equivalents(1)


$

92,829



$

69,900



$

52,917


Restricted cash(1)



25,391




34,765




24,342


Loans and finance receivables, net(1)



815,856




703,076




859,946


Income taxes receivable



20,672







28,914


Other receivables and prepaid expenses(1)



29,354




22,164




29,983


Property and equipment, net



50,522




47,698




49,553


Operating lease right-of-use assets



21,453








Goodwill



267,013




267,013




267,013


Intangible assets, net



2,987




4,058




3,255


Other assets(1)



12,342




9,526




12,262


Total assets


$

1,338,419



$

1,158,200



$

1,328,185


Liabilities and Stockholders' Equity













Accounts payable and accrued expenses(1)


$

87,434



$

70,473



$

89,317


Operating lease liabilities



38,731








Income taxes currently payable






257





Deferred tax liabilities, net



41,132




17,087




33,171


Long-term debt(1)



791,908




754,650




857,929


Total liabilities



959,205




842,467




980,417


Commitments and contingencies













Stockholders' equity:













Common stock, $0.00001 par value, 250,000,000 shares authorized, 35,339,678, 34,340,242 and 34,856,553 shares issued and 33,683,763, 33,862,388 and 33,584,606 outstanding as of March 31, 2019 and 2018 and December 31, 2018, respectively










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










Additional paid in capital



51,638




32,671




48,175


Retained earnings



371,086




294,215




336,415


Accumulated other comprehensive loss



(12,251)




(4,322)




(13,805)


Treasury stock, at cost (1,655,915, 477,854 and 1,271,947 shares as of March 31, 2019 and 2018 and December 31, 2018, respectively)



(31,259)




(6,831)




(23,017)


Total stockholders' equity



379,214




315,733




347,768


Total liabilities and stockholders' equity


$

1,338,419



$

1,158,200



$

1,328,185








(1)

Includes amounts in wholly owned, bankruptcy-remote special purpose subsidiaries ("VIEs") presented separately in the table below.

 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(Unaudited)


The following table presents the aggregated assets and liabilities of consolidated VIEs, which are included in the Consolidated Balance Sheets above. The assets in the table below may only be used to settle obligations of consolidated VIEs and are in excess of those obligations.




March 31,



December 31,




2019



2018



2018


Assets of consolidated VIEs, included in total assets above













Cash and cash equivalents


$

420



$



$

210


Restricted cash



23,167




26,746




22,168


Loans and finance receivables, net (includes allowance for losses of $27,227, $24,471 and $27,255 as of March 31, 2019 and 2018 and December 31, 2018, respectively)



280,711




278,272




318,961


Other receivables and prepaid expenses



5,914




1




2,712


Other assets



2,737




155




2,544


Total assets


$

312,949



$

305,174



$

346,595


Liabilities of consolidated VIEs, included in total liabilities above













Accounts payable and accrued expenses


$

2,711



$

1,677



$

3,087


Long-term debt



178,841




214,459




223,368


Total liabilities


$

181,552



$

216,136



$

226,455



 


ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(Unaudited)




Three Months Ended




March 31,




2019



2018


Revenue


$

293,183



$

254,298


Cost of Revenue



139,045




108,553


Gross Profit



154,138




145,745


Expenses









Marketing



23,662




27,736


Operations and technology



29,600




25,538


General and administrative



29,573




26,921


Depreciation and amortization



4,184




3,838


Total Expenses



87,019




84,033


Income from Operations



67,119




61,712


Interest expense, net



(19,500)




(19,673)


Foreign currency transaction loss



(143)




(2,088)


Loss on early extinguishment of debt



(2,321)




(4,710)


Income before Income Taxes



45,155




35,241


Provision for income taxes



10,138




7,343


Net Income


$

35,017



$

27,898


Earnings Per Share:









Net income per common share:









Basic


$

1.05



$

0.83


Diluted


$

1.02



$

0.81


Weighted average common shares outstanding:









Basic



33,481




33,669


Diluted



34,421




34,572


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(dollars in thousands)

(Unaudited)




Three Months Ended March 31,




2019



2018


Cash flows provided by operating activities


$

221,080



$

153,002


Cash flows used in investing activities









Loans and finance receivables



(99,271)




(108,081)


Property and equipment additions



(4,884)




(3,349)


Other investing activities






24


Total cash flows used in investing activities



(104,155)




(111,406)


Cash flows used in financing activities



(77,913)




(40,608)


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



1,949




5,533


Net increase in cash, cash equivalents and restricted cash



40,961




6,521


Cash, cash equivalents and restricted cash at beginning of year



77,259




98,144


Cash, cash equivalents and restricted cash at end of period


$

118,220



$

104,665



 

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, 2019 and 2018.




Three Months Ended
March 31,












2019



2018



$ Change



% Change


Domestic:

















Revenue


$

257,988



$

212,966



$

45,022




21.1

%

Cost of revenue



113,871




88,113




25,758




29.2


Gross profit


$

144,117



$

124,853



$

19,264




15.4


Gross profit margin



55.9

%



58.6

%



(2.7)

%



(4.6)

%

International:

















Revenue


$

35,195



$

41,332



$

(6,137)




(14.8)

%

Cost of revenue



25,174




20,440




4,734




23.2


Gross profit


$

10,021



$

20,892



$

(10,871)




(52.0)


Gross profit margin



28.5

%



50.5

%



(22.0)

%



(43.6)

%

Total:

















Revenue


$

293,183



$

254,298



$

38,885




15.3

%

Cost of revenue



139,045




108,553




30,492




28.1


Gross profit


$

154,138



$

145,745



$

8,393




5.8


Gross profit margin



52.6

%



57.3

%



(4.7)

%



(8.2)

%


 

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, 2019 and 2018.


Three Months Ended March 31,


2019



2018



Change


Cost of revenue


$

139,045



$

108,553



$

30,492


Charge-offs (net of recoveries)



162,250




118,705




43,545


Average combined loans and finance receivables, gross:













Company owned(a)



998,662




831,299




167,363


Guaranteed by Enova(a)(b)



26,855




32,143




(5,288)


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


$

1,025,517



$

863,442



$

162,075


Ending combined loans and finance receivables, gross:













Company owned


$

957,257



$

817,359



$

139,898


Guaranteed by Enova(b)



22,296




26,594




(4,298)


Ending combined loans and finance receivables, gross(c)


$

979,553



$

843,953



$

135,600


Ending allowance and liability for losses


$

142,665



$

115,693



$

26,972


Combined originations(d)


$

542,256



$

557,424



$

(15,168)















Loans and finance receivables ratios:













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



13.6

%



12.6

%



1.0

%

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



15.8

%



13.7

%



2.1

%

Gross profit margin



52.6

%



57.3

%



(4.7)

%

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



14.6

%



13.7

%



0.9

%







(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,




2019



2018


Net Income


$

35,017



$

27,898


Adjustments:









Lease termination and cease-use costs(a)



726





Loss on early extinguishment of debt(b)



2,321




4,710


Intangible asset amortization



268




267


Stock-based compensation expense



3,074




2,433


Foreign currency transaction loss



143




2,088


Cumulative tax effect of adjustments



(1,519)




(1,979)


Discrete tax adjustments(c)



(141)














Adjusted earnings


$

39,889



$

35,417











Diluted earnings per share


$

1.02



$

0.81











Adjusted earnings per share


$

1.16



$

1.02



Adjusted EBITDA




Three Months Ended




March 31,




2019



2018


Net Income


$

35,017



$

27,898


Depreciation and amortization expenses



4,184




3,838


Interest expense, net



19,500




19,673


Foreign currency transaction loss



143




2,088


Provision for income taxes



10,138




7,343


Stock-based compensation expense



3,074




2,433


Adjustments:









Lease termination and cease-use costs(a)



370





Loss on early extinguishment of debt(b)



2,321




4,710











Adjusted EBITDA


$

74,747



$

67,983











Adjusted EBITDA margin calculated as follows:









Total Revenue


$

293,183



$

254,298


Adjusted EBITDA



74,747




67,983


Adjusted EBITDA as a percentage of total revenue



25.5

%



26.7

%







(a)

In the first quarter of 2019, the Company recorded impairment charges of $0.4 million($0.3 million net of tax) to operating right-of-use lease assets and $0.3 million ($0.3 million net of tax) to leasehold improvement assets related to its decision to cease use and sublease a portion of a leased office space.

(b) 

In the first quarter of 2019 and the first quarter of 2018, the Company recorded losses on early extinguishment of debt of $2.3 million ($1.8 million net of tax) and $4.7 million ($3.7 million net of tax), respectively, related to the repurchase of $44.1 million principal amount of securitization notes and the repurchase of $50.0 million principal amount of senior notes .

(c) 

In the first quarter of 2019, the Company recognized $0.1 million of interest income on a tax refund received as a result of the U.S. Tax Cuts and Jobs Act.


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(dollars in thousands)


Estimated Adjusted EBITDA and Earnings Per Share 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 June 30, 2019




Low



High




Unaudited


Income from operations


$

37,900



$

47,900


Depreciation and amortization



4,300




4,300


Stock-based compensation expense



2,800




2,800


Adjusted EBITDA


$

45,000



$

55,000













Estimated Results




Year Ended December 31, 2019




Low



High




Unaudited


Income from operations


$

208,150



$

238,150


Depreciation and amortization



17,350




17,350


Stock-based compensation expense



11,500




11,500


Adjusted EBITDA


$

237,000



$

267,000













Estimated Results




Three Months Ended June 30, 2019




Low



High




Unaudited


Diluted income per share


$

0.41



$

0.63


Adjustments:









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


$

0.48



$

0.70













Estimated Results




Year Ended December 31, 2019




Low



High




Unaudited


Diluted income per share


$

2.83



$

3.48


Adjustments:









Loss on early extinguishment of debt



0.07




0.07


Intangible asset amortization



0.03




0.03


Stock-based compensation expense



0.33




0.33


Lease termination and cease-use costs



0.02




0.02


Cumulative tax effect of adjustments



(0.11)




(0.11)


Adjusted earnings per share


$

3.17



$

3.82


 

SOURCE Enova International, Inc.

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