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Enova Reports Fourth Quarter and Full Year 2019 Results[1]

- Fourth quarter 2019 revenue grew 25% compared to a year ago to $345 million and adjusted EBITDA grew 34% to $66 million

- Total combined loans and finance receivables outstanding grew 33% year-over-year to $1.3 billion at the end of the fourth quarter, driven by a 73% increase in line of credit receivables and a 29% increase in near-prime installment loan receivables

- Diluted earnings per share more than tripled to $0.87 per share compared to the year ago quarter and adjusted earnings per share grew 67% to $0.92 per share

Jan 29, 2020

CHICAGO, Jan. 29, 2020 /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, 2019.

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

"Our fourth quarter topped off another year of strong results for Enova, driven by strong demand, solid execution, and efficient marketing," said David Fisher, Enova's CEO. "The business continues to operate at a very high level, demonstrated by the substantial revenue and earnings growth we delivered in 2019. We are excited about the opportunities ahead of us and expect 2020 to be another excellent year for Enova, as we adapt to changes in the market to continue to help hardworking people get access to fast, trustworthy credit."

Fourth Quarter 2019 Summary

  • Total revenue of $345 million in the fourth quarter of 2019 increased 25% from $277 million in the fourth quarter of 2018.
  • Gross profit margin was 42.5% in the fourth quarter of 2019, compared to 43.1% in the fourth quarter of 2018.
  • Net income of $30 million, or $0.87 per diluted share, in the fourth quarter of 2019 compared to $10 million, or $0.28 per diluted share, in the fourth quarter of 2018.
  • Fourth quarter 2019 adjusted EBITDA of $66 million, a non-GAAP measure, increased from $49 million in the fourth quarter of 2018.
  • Adjusted earnings of $31 million, or $0.92 per diluted share, a non-GAAP measure, in the fourth quarter of 2019 increased from adjusted earnings of $19 million, or $0.55 per diluted share, in the fourth quarter of 2018.

Full Year 2019 Summary

  • Total revenue of $1.175 billion in 2019 increased 21% from $973 million in 2018.
  • Gross profit margin was 48.7% in 2019, compared to 48.2% in 2018.
  • Net income of $128 million, or $3.72 per diluted share, in 2019 increased from $64 million, or $1.81 per diluted share, in 2018.
  • Full year 2019 adjusted EBITDA of $276 million, a non-GAAP measure, increased from $202 million in 2018.
  • Adjusted earnings of $140 million, or $4.08 per diluted share, a non-GAAP measure, in 2019 increased from adjusted earnings of $84 million, or $2.39 per diluted share, in 2018.

"Fourth quarter financial results reflect our continued ability to leverage our diverse product offerings, solid balance sheet, operating leverage and disciplined focus on unit economics to deliver both significant growth and profitability. As shown in our outlook for 2020, we expect a continuation of these trends into the new year," said Steve Cunningham, CFO of Enova. "Our outlook also incorporates the adoption of the fair value method of accounting for our receivables portfolio to comply with new life of loan loss recognition requirements, which we feel best aligns with our operating model and the economics of our business."

Enova ended the fourth quarter of 2019 with unrestricted cash and cash equivalents of $47 million. As of December 31, 2019, the company had total debt outstanding of $991 million, which included $308 million outstanding of combined installment loan securitization facilities and $72 million outstanding under our $125 million corporate revolver. During the fourth quarter, Enova generated $249 million of cash flows from operations.

During the fourth quarter of 2019, Enova acquired 1.025 million shares at a cost of $23 million under the company's share repurchase programs. At the end of the fourth quarter, $56 million was available under the company's $75 million share repurchase program.

Outlook

Beginning January 1, 2020, Enova will adopt fair value accounting to comply with new accounting standards for life of loan loss accounting and the outlook for 2020 reflects this adoption. Please see the "Supplemental Financial Information" for the fourth quarter 2019 on Enova's investor relations website for additional details and pro forma results for comparability of the outlook to prior periods.

For the first quarter of 2020, Enova expects total revenue of $328 million to $348 million, diluted earnings per share from continuing operations of $1.27 to $1.71, adjusted EBITDA of $85 million to $105 million and adjusted earnings per share of $1.35 to $1.78. For the full year 2020, Enova expects total revenue of $1.418 billion to $1.488 billion, diluted earnings per share from continuing operations of $4.21 to $5.50, adjusted EBITDA of $305 million to $365 million and adjusted earnings per share of $4.53 to $5.82.

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, Wednesday, January 29th. 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 5, 2020, 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 10138505.

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 6 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® 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.

1Fourth quarter 2019 and full year 2019 results and comparable periods are presented on a continuing operations basis and exclude the results of discontinued operations in the U.K. unless otherwise noted. Enova exited the U.K. market in Q4 2019. The company recorded a one-time after-tax charge of $74 million, including one-time cash charges of $53 million to support cessation of U.K. lending activities.

 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(Unaudited)




December 31,




2019



2018


Assets









Cash and cash equivalents(1)


$

47,344



$

28,114


Restricted cash(1)



45,069




22,169


Loans and finance receivables, net(1)



1,062,650




780,112


Income taxes receivable



32,859




28,914


Other receivables and prepaid expenses(1)



31,643




29,549


Property and equipment, net



54,540




46,062


Operating lease right-of-use asset



19,586





Goodwill



267,013




267,013


Intangible assets, net



2,185




3,255


Other assets(1)



11,463




12,179


Assets from discontinued operations






110,818


Total assets


$

1,574,352



$

1,328,185


Liabilities and Stockholders' Equity









Accounts payable and accrued expenses(1)


$

122,163



$

81,525


Operating lease liability



35,712





Deferred tax liabilities, net



48,683




33,171


Long-term debt(1)



991,181




857,929


Liabilities from discontinued operations






7,792


Total liabilities



1,197,739




980,417


Commitments and contingencies









Stockholders' equity:









Common stock, $0.00001 par value, 250,000,000 shares authorized, 35,764,943 and 34,856,553 shares issued and 32,974,714 and 33,584,606 outstanding as of December 31, 2019 and 2018, respectively







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







Additional paid in capital



63,791




48,175


Retained earnings



372,681




336,415


Accumulated other comprehensive loss



(3,066)




(13,805)


Treasury stock, at cost (2,790,229 and 1,271,947 shares as of December 31, 2019 and 2018, respectively)



(56,793)




(23,017)


Total stockholders' equity



376,613




347,768


Total liabilities and stockholders' equity


$

1,574,352



$

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.




December 31,




2019



2018


Assets of consolidated VIEs, included in total assets above









Cash and cash equivalents


$

420



$

210


Restricted cash



42,354




22,168


Loans and finance receivables, net (includes allowance for losses of $38,540 and $27,255 as of December 31, 2019 and 2018, respectively)



420,690




318,961


Other receivables and prepaid expenses



9




2,712


Other assets



2,161




2,544


Total assets of consolidated VIEs


$

465,634



$

346,595


Liabilities of consolidated VIEs, included in total liabilities above









Accounts payable and accrued expenses


$

3,171



$

3,087


Long-term debt



304,598




223,368


Total liabilities of consolidated VIEs


$

307,769



$

226,455



 

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,




2019



2018



2019



2018


Revenue


$

345,262



$

276,706



$

1,174,757



$

972,621


Cost of Revenue



198,417




157,448




602,894




503,405


Gross Profit



146,845




119,258




571,863




469,216


Expenses

















Marketing



35,705




25,728




115,132




95,960


Operations and technology



22,909




21,701




84,262




78,367


General and administrative



24,642




27,034




109,204




105,143


Depreciation and amortization



4,007




3,562




15,055




14,200


Total Expenses



87,263




78,025




323,653




293,670


Income from Operations



59,582




41,233




248,210




175,546


Interest expense, net



(19,751)




(20,078)




(75,604)




(79,364)


Foreign currency transaction (loss) gain, net



(26)




(55)




(216)




(2,318)


Loss on early extinguishment of debt



-




(7,812)




(2,321)




(24,991)


Income before Income Taxes



39,805




13,288




170,069




68,873


Provision for income taxes



10,277




3,494




42,053




5,301


Net income from continuing operations



29,528




9,794




128,016




63,572


Net (loss) income from discontinued operations



(80,081)




(1,123)




(91,404)




6,526


Net (Loss) Income


$

(50,553)



$

8,671



$

36,612



$

70,098


Earnings (Loss) Per Share:

















Earnings (loss) per common share – basic:

















Continuing operations


$

0.88



$

0.29



$

3.80



$

1.87


Discontinued operations



(2.39)




(0.03)




(2.71)




0.19


(Loss) earnings per common share – basic


$

(1.51)



$

0.25



$

1.09



$

2.06


Earnings (loss) per common share – diluted:

















Continuing operations


$

0.87



$

0.28



$

3.72



$

1.81


Discontinued operations



(2.39)




(0.03)




(2.71)




0.19


(Loss) earnings per common share – diluted


$

(1.51)



$

0.25



$

1.06



$

1.99


Weighted average common shares outstanding:

















Basic



33,553




34,158




33,715




33,993


Diluted



34,119




35,103




34,398




35,176


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(dollars in thousands)

(Unaudited)




Year Ended December 31,




2019



2018


Cash flows provided by operating activities









Cash flows from operating activities - continuing operations


$

800,148



$

610,989


Cash flows from operating activities - discontinued operations



58,087




73,851


Cash flows provided by operating activities



858,235




684,840


Cash flows used in investing activities









Loans and finance receivables



(851,056)




(637,634)


Property and equipment additions



(17,298)




(14,656)


Other investing activities



(2,729)




251


Cash flows from investing activities - continuing operations



(871,083)




(652,039)


Cash flows from investing activities - discontinued operations



(14,674)




(68,894)


Total cash flows used in investing activities



(885,757)




(720,933)


Cash flows provided by financing activities



95,484




22,479


Effect of exchange rates on cash



(654)




(7,271)


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



67,308




(20,885)


Less: increase in cash and cash equivalents from discontinued operations



(25,178)




(1,287)


Net increase (decrease) in cash, cash equivalents and restricted cash - continuing operations



42,130




(22,172)


Cash, cash equivalents and restricted cash at beginning of year



50,283




72,455


Cash, cash equivalents and restricted cash at end of period


$

92,413



$

50,283



 

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 continuing operations for the three months ended December 31, 2019 and 2018.


Three Months Ended December 31


2019



2018



Change


Cost of revenue


$

198,417



$

157,448



$

40,969


Charge-offs (net of recoveries)



181,465




148,023




33,442


Average combined loans and finance receivables, gross:













Company owned(a)



1,168,425




908,286




260,139


Guaranteed by Enova(a)(b)



24,723




29,565




(4,842)


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


$

1,193,148



$

937,851



$

255,297


Ending combined loans and finance receivables, gross:













Company owned


$

1,239,589



$

924,326



$

315,263


Guaranteed by Enova(b)



27,560




29,704




(2,144)


Ending combined loans and finance receivables, gross(c)


$

1,267,149



$

954,030



$

313,119


Ending allowance and liability for losses


$

178,450



$

146,380



$

32,070


Combined originations(d)


$

656,025



$

556,811



$

99,214















Loans and finance receivables ratios:













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



16.6

%



16.8

%



(0.2)

%

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



15.2

%



15.8

%



(0.6)

%

Gross profit margin



42.5

%



43.1

%



(0.6)

%

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



14.1

%



15.3

%



(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,




2019



2018



2019



2018


Net income from continuing operations


$

29,528



$

9,794



$

128,016



$

63,572


Adjustments:

















Loss on early extinguishment of debt(a)






7,812




2,321




24,991


Lease termination and cease use costs









726





Intangible asset amortization



267




267




1,070




1,070


Stock-based compensation expense



2,183




3,511




11,967




11,660


Foreign currency transaction loss



26




55




216




2,318


Cumulative tax effect of adjustments



(693)




(2,797)




(3,907)




(8,885)


Discrete tax adjustments(c)









(141)




(11,237)


Regulatory settlement(d)






633







633



















Adjusted earnings


$

31,311



$

19,275



$

140,268



$

84,122



















Diluted earnings per share


$

0.87



$

0.28



$

3.72



$

1.81



















Adjusted earnings per share


$

0.92



$

0.55



$

4.08



$

2.39



Adjusted EBITDA




Three Months Ended



Year Ended




December 31,



December 31,




2019



2018



2019



2018


Net income from continuing operations


$

29,528



$

9,784



$

128,016



$

63,572


Depreciation and amortization expenses



4,007




3,562




15,055




14,200


Interest expense, net



19,751




20,078




75,604




79,364


Foreign currency transaction loss



26




55




216




2,318


Provision for income taxes



10,277




3,494




42,053




5,301


Stock-based compensation expense



2,183




3,511




11,967




11,660


Adjustments:

















Lease termination and cease use costs(b)









370





Loss on early extinguishment of debt(a)






7,812




2,321




24,991


Regulatory settlement(d)






633







633



















Adjusted EBITDA


$

65,772



$

48,929



$

275,602



$

202,039



















Adjusted EBITDA margin calculated as follows:

















Total Revenue


$

345,262



$

276,706



$

1,174,757



$

972,621


Adjusted EBITDA



65,772




48,929




275,602




202,039


Adjusted EBITDA as a percentage of total revenue



19.0

%



17.7

%



23.5

%



20.8

%














(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, third and fourth quarters of 2018, the Company recorded losses of $2.3 million ($2.2 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 redemption of $44.1 million securitization notes, $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.

(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.

(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.

 

SOURCE Enova International, Inc.

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