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Enova Announces Fourth Quarter and Full Year 2015 Results

- Total 4Q15 combined originations rose 5.3% year over year to $546.4 million

- Installment loan and receivables purchase agreement revenue rose 28.0% year over year to $78.9 million

- Near-prime installment loan portfolio balances increased 84% year over year

- Granted full authorization from the U.K. regulator following a new review process for all consumer lenders to ensure they were meeting the rigorous standards set forth by the agency

- Recently completed first asset-backed securitization with a $175 million facility for the NetCredit installment loan portfolio

Feb 4, 2016

CHICAGO, Feb. 4, 2016 /PRNewswire/ -- Enova International (NYSE: ENVA), a technology and analytics driven online lender, today announced financial results for the quarter and year ended December 31, 2015.

Enova International, Inc., a leading online lending company, today announced financial results for the quarter and year ended December 31, 2014.

"We are pleased with the improved results in our business during the fourth quarter," said David Fisher, CEO of Enova. "Our new initiatives continue to perform very well, reflecting the success of our strategy to diversify our business to prepare for anticipated regulatory changes in the United States. Leading these efforts is our NetCredit near-prime offering, which has progressed to solid profitability. Given the strong growth of this product, we successfully completed our inaugural securitization early in the first quarter of 2016. This transaction is a significant milestone for Enova and provides a strong validation of our underlying NetCredit portfolio and advanced analytics platform. Moreover, the offering lowers our cost of capital and provides a significant source of funding to sustain the anticipated growth of our near-prime business."

Fourth Quarter 2015 Summary

  • Total revenue of $175.4 million in the fourth quarter of 2015 declined 9.9% from $194.7 million in the fourth quarter of 2014 as a 10.2% increase in U.S. revenue was offset by a 51.1% decrease in international revenue, primarily due to regulatory changes in the United Kingdom.
  • Gross profit margin of 59.4% in the fourth quarter of 2015 declined from 68.9% in the fourth quarter of 2014, driven by stronger growth in the U.S. installment loan portfolio and a higher mix of new customers, which require higher loan loss provisions. The higher gross profit margin in the fourth quarter of 2014 was heavily influenced by the regulatory changes in the United Kingdom and the resulting decline in loan portfolios in that market.
  • Adjusted EBITDA of $28.3 million, a non-GAAP measure, compared to $54.8 million in the fourth quarter of 2014.
  • Net income decreased to $4.2 million, or $0.13 per diluted share, in the fourth quarter of 2015 from $22.5 million, or $0.68 per diluted share in the fourth quarter of 2014.

Full Year 2015 Summary

  • Total revenue of $652.6 million in 2015 decreased from $809.8 million in 2014, as a 7.5% increase in U.S. revenue was offset by a 57.5% decline in international revenue.
  • Gross profit margin of 66.8% in 2015 compared to 67.1% in 2014.
  • Adjusted EBITDA of $155.7 million in 2015 compared to $235.8 million in 2014.
  • Net income of $44.0 million, or $1.33 per diluted share, in 2015 compared to $111.7 million, or $3.38 per diluted share, in 2014.
  • Adjusted earnings, a non-GAAP measure, of $53.0 million, or $1.60 per diluted share, in 2015 compared to $113.0 million, or $3.42 per diluted share, in 2014.

"Total originations rose sequentially in each of the last three quarters and we achieved our second consecutive quarter of year over year growth in originations since regulatory changes were implemented in the United Kingdom during 2014. This growth was led by our installment loan products, most notably our U.S. near-prime offering. Overall, installment loan products have grown to represent the largest portion of our revenue mix, accounting for 66% of our loan balances and 45% of total revenue in the fourth quarter," said Robert Clifton, CFO of Enova.

Enova ended the fourth quarter of 2015 with cash and cash equivalents of $42.1 million before issuing a term note for $107.4 million in January 2016, under its $175 million securitization facility. As of December 31, 2015, the company had combined loans and finance receivables of $536.1 million, an increase of 26.2% over the prior year period, and outstanding debt of $553.3 million. During the fourth quarter, Enova generated $78.4 million of cash flow from operations.

Outlook

For the first quarter 2016, Enova expects total revenue of $150 million to $165 million and Adjusted EBITDA of $25 million to $35 million. For the full year 2016, Enova expects total revenue of $675 million to $725 million and Adjusted EBITDA of $120 million to $140 million.

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 on February 4, 2016. 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 12, 2016, 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 10078909.

About Enova

Enova is a leading provider of online financial services to the large and growing number of customers who use alternative financial services because of their limited access to more traditional credit. Enova offers or arranges loans for consumers and/or financing for small businesses in all 50 states and Washington D.C. in the United States and in five foreign countries:

Enova, through its trusted brands, uses its proprietary technology, analytics, and customer service capabilities to quickly evaluate, underwrite, and fund loans or provide financing to customers when and how they want it. Headquartered in Chicago, Enova has more than 1,100 employees serving its online customers across the globe.

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, and stock-based compensation, 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. In addition, management believes that the adjustment for lease termination and relocation costs shown below is useful to investors in order to allow them to compare Enova's financial results during the periods shown without the effect of the expense item. 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)




December 31,




2015



2014


Assets









Cash and cash equivalents


$

42,066



$

75,106


Loans and finance receivables, net



434,633




323,611


Income taxes receivable



5,503





Other receivables and prepaid expenses



20,049




16,631


Deferred tax assets



28,975




25,427


Property and equipment, net



48,055




33,985


Goodwill



267,008




255,862


Intangible assets, net



6,540




39


Other assets



28,041




29,536


Total assets


$

880,870



$

760,197


Liabilities and Stockholders' Equity









Accounts payable and accrued expenses


$

72,141



$

57,277


Income taxes currently payable






6,802


Deferred tax liabilities



49,494




47,953


Long-term debt



553,267




494,181


Total liabilities



674,902




606,213


Commitments and contingencies









Stockholders' equity:









Common stock, $0.00001 par value, 250,000,000 shares authorized, 33,151,088 and 33,000,000 shares issued and 33,121,594 and 33,000,000 shares outstanding at December 31, 2015 and 2014, respectively







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







Additional paid in capital



9,924




294


Retained earnings



200,853




156,861


Accumulated other comprehensive loss



(4,622)




(3,171)


Treasury stock, at cost (29,494 shares as of December 31, 2015)



(187)





Total stockholders' equity



205,968




153,984


Total liabilities and stockholders' equity


$

880,870



$

760,197


 

 

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,




2015



2014



2015



2014


Revenue


$

175,417



$

194,722



$

652,600



$

809,837


Cost of Revenue



71,138




60,592




216,858




266,787


Gross Profit



104,279




134,130




435,742




543,050


Expenses

















Marketing



32,451




35,163




116,882




127,862


Operations and technology



19,856




19,203




74,012




73,573


General and administrative



26,791




25,350




102,073




107,875


Depreciation and amortization



4,190




4,960




18,388




18,732


Total Expenses



83,288




84,676




311,355




328,042


Income from Operations



20,991




49,454




124,387




215,008


Interest expense, net



(13,382)




(13,273)




(52,883)




(38,474)


Foreign currency transaction gain (loss)



202




520




(985)




(35)


Income before Income Taxes



7,811




36,701




70,519




176,499


Provision for income taxes



3,630




14,199




26,527




64,828


Net Income


$

4,181



$

22,502



$

43,992



$

111,671


Earnings Per Share:

















Earnings per common share:

















Basic


$

0.13



$

0.68



$

1.33



$

3.38


Diluted


$

0.13



$

0.68



$

1.33



$

3.38


Weighted average common shares outstanding:

















Basic



33,024




33,000




33,006




33,000


Diluted



33,061




33,031




33,026




33,008


 

 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(dollars in thousands)

(Unaudited)




Year Ended December 31,




2015



2014


Cash flows provided by operating activities


$

283,921



$

429,935


Cash flows used in investing activities









Loans and finance receivables



(322,811)




(291,246)


Acquisitions



(17,735)





Property and equipment additions



(32,241)




(13,284)


Restricted cash deposit






(7,868)


Other investing activities



618




(699)


Total cash flows used in investing activities



(372,169)




(313,097)


Cash flows provided by (used in) financing activities



56,617




(79,039)


Effect of exchange rates on cash



(1,409)




(10,173)


Net increase in cash and cash equivalents



(33,040)




27,626


Cash and cash equivalents at beginning of year



75,106




47,480


Cash and cash equivalents at end of period


$

42,066



$

75,106


 

 

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, 2015 and 2014.




Three Months Ended












December 31,












2015



2014



$ Change



% Change


Domestic:

















Revenue


$

144,108



$

130,712



$

13,396




10.2

%

Cost of revenue



63,828




48,906




14,922




30.5

%

Gross profit


$

80,280



$

81,806



$

(1,526)




(1.9)

%

Gross profit margin



55.7

%



62.6

%



(6.9)

%



(11.0)

%

International:

















Revenue


$

31,309



$

64,010



$

(32,701)




(51.1)

%

Cost of revenue



7,310




11,686




(4,376)




(37.4)

%

Gross profit


$

23,999



$

52,324



$

(28,325)




(54.1)

%

Gross profit margin



76.7

%



81.7

%



(5.0)

%



(6.1)

%

Total:

















Revenue


$

175,417



$

194,722



$

(19,305)




(9.9)

%

Cost of revenue



71,138




60,592




10,546




17.4

%

Gross profit


$

104,279



$

134,130



$

(29,851)




(22.3)

%

Gross profit margin



59.4

%



68.9

%



(9.5)

%



(13.8)

%
































Year Ended December 31,












2015



2014



$ Change



% Change


Domestic:

















Revenue


$

510,242



$

474,715



$

35,527




7.5

%

Cost of revenue



196,963




171,798




25,165




14.6

%

Gross profit


$

313,279



$

302,917



$

10,362




3.4

%

Gross profit margin



61.4

%



63.8

%



(2.4)

%



(3.8)

%

International:

















Revenue


$

142,358



$

335,122



$

(192,764)




(57.5)

%

Cost of revenue



19,895




94,989




(75,094)




(79.1)

%

Gross profit


$

122,463



$

240,133



$

(117,670)




(49.0)

%

Gross profit margin



86.0

%



71.7

%



14.3

%



19.9

%

Total:

















Revenue


$

652,600



$

809,837



$

(157,237)




(19.4)

%

Cost of revenue



216,858




266,787




(49,929)




(18.7)

%

Gross profit


$

435,742



$

543,050



$

(107,308)




(19.8)

%

Gross profit margin



66.8

%



67.1

%



(0.3)

%



(0.4)

%

 

 


ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

LOANS AND FINANCE RECEIVABLES FINANCIAL AND OPERATING DATA

(dollars in thousands)


Three Months Ended December 31


2015



2014



Change


Cost of revenue


$

71,138



$

60,592



$

10,546


Charge-offs (net of recoveries)



68,557




64,693




3,864


Average combined loans and finance receivables, gross:













Company owned(a)



472,230




372,832




99,398


Guaranteed by Enova(a)(b)



34,881




34,483




398


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


$

507,111



$

407,315



$

99,796


Ending combined loans and finance receivables, gross:













Company owned


$

501,955



$

388,559



$

113,396


Guaranteed by Enova(b)



34,123




36,270




(2,147)


Ending combined loans and finance receivables, gross (c)


$

536,078



$

424,829



$

111,249


Ending allowance and liability for losses


$

69,078



$

66,524



$

2,554


Combined originations(d)


$

546,352



$

519,057



$

27,295















Loans and finance receivables ratios:













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



14.0

%



14.9

%



(0.9)

%

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



13.5

%



15.9

%



(2.4)

%

Gross profit margin



59.4

%



68.9

%



(9.5)

%

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



12.9

%



15.7

%



(2.8)%

%



(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 programs 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,




2015



2014



2015



2014


Net income(a)


$

4,181



$

22,502



$

43,992



$

111,671


Adjustments (net of tax):

















Lease termination and relocation costs(b)









2,076




906


Intangible asset amortization



301




5




308




28


Stock-based compensation expense



1,856




256




6,008




420


Foreign currency transaction (gain) loss



(140)




(332)




614




22



















Adjusted earnings(a)


$

6,198



$

22,431



$

52,998



$

113,047



















Diluted earnings per share(a)


$

0.13



$

0.68



$

1.33



$

3.38


Adjustments (net of tax):

















Lease termination and relocation costs(b)









0.06




0.03


Intangible asset amortization



0.01







0.01





Stock-based compensation expense



0.06




0.01




0.18




0.01


Foreign currency transaction (gain) loss



(0.01)




(0.01)




0.02




-



















Adjusted earnings per share(a)


$

0.19



$

0.68



$

1.60



$

3.42


 


Adjusted EBITDA




Three Months Ended



Year Ended




December 31,



December 31,




2015



2014



2015



2014


Net income(a)


$

4,181



$

22,502



$

43,992



$

111,671


Depreciation and amortization expenses



4,190




4,960




18,388




18,732


Interest expense, net



13,382




13,273




52,883




38,474


Foreign currency transaction (gain) loss



(202)




(520)




985




35


Provision for income taxes



3,630




14,199




26,527




64,828


Stock-based compensation expense



3,089




407




9,630




664


Adjustments:

















Lease termination and relocation costs(b)









3,270




1,415



















Adjusted EBITDA(a)


$

28,270



$

54,821



$

155,675



$

235,819



















Adjusted EBITDA margin calculated as follows:

















Total Revenue(a)


$

175,417



$

194,722



$

652,600



$

809,837


Adjusted EBITDA(a)



28,270




54,821




155,675




235,819


Adjusted EBITDA as a percentage of total revenue



16.1

%



28.2

%



23.9

%



29.1

%



(a) 

Includes an out-of-period adjustment to correct the Company's revenue recognition policy in order to recognize line of credit draw fees over the period the draw is outstanding. The Company recorded a $2.5 million reduction to revenue ($1.6 million net of tax or $0.05 per diluted share) during the fourth quarter of 2015.

(b) 

In May 2015, the Company relocated its headquarters and as a result incurred $3.3 million of facility cease-use charges ($2.1 million net of tax) consisting of remaining lease obligations and disposal costs on its prior headquarters.

 

 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(dollars in thousands)


Estimated Adjusted EBITDA For 2016


The following table reconciles estimated Income from operations to Adjusted EBITDA, a non-GAAP measure:




Estimated Results




Three Months Ended March 31, 2016




Low



High




Unaudited


Income from operations


$

19,000



$

29,000


Depreciation and amortization



4,000




4,000


Stock-based compensation expense



2,000




2,000


Adjusted EBITDA


$

25,000



$

35,000













Estimated Results




Year Ended December 31, 2016




Low



High




Unaudited


Income from operations


$

92,000



$

112,000


Depreciation and amortization



18,000




18,000


Stock-based compensation expense



10,000




10,000


Adjusted EBITDA


$

120,000



$

140,000


 

Logo - http://photos.prnewswire.com/prnh/20150202/173006LOGO

 

SOURCE Enova International, Inc.

For further information: Public Relations Contact: Caroline Vasquez, Email: media@enova.com; or Investor Relations Contact: Monica Gould, Office: (212) 871-3927, Email: IR@enova.com