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Enova Reports Second Quarter 2019 Results

- Second quarter 2019 revenue grew 13% compared to a year ago to $286 million, and adjusted earnings per share and adjusted EBITDA grew 37% and 16%, respectively

- Compared to a year ago, second quarter 2019 line of credit revenue grew 39% to $111 million, and installment loan and receivables purchase agreement revenue grew 12% to $138 million

- Total combined loans and finance receivables outstanding grew 19% year-over-year to over $1 billion at the end of the second quarter, driven by a 46% increase in line of credit receivables and a 19% increase in near-prime installment loan receivables

CHICAGO, July 25, 2019 /PRNewswire/ -- Enova International (ENVA), a leading financial technology and analytics company offering consumer and small business loans and financing, today announced financial results for the quarter ended June 30, 2019.

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

"We are pleased to report another quarter of solid financial results that exceeded our expectations on both the top and bottom line," said David Fisher, Enova's CEO. "Our strong financial performance was driven by solid demand, stable credit, and efficient marketing spend. We continue to demonstrate our ability to produce sustainable and profitable growth and our second quarter results further validate this balanced approach. We are excited about our ability to deliver meaningful returns as we leverage our diversified product offerings, proven tech and analytics, and diversified funding model."

Second Quarter 2019 Summary

  • Total revenue of $286 million in the second quarter of 2019 increased 13% from $253 million in the second quarter of 2018.
  • Gross profit margin was 51.6% in the second quarter of 2019, compared to 52.0% in the second quarter of 2018.
  • Net income of $25 million, or $0.73 per diluted share, in the second quarter of 2019 increased from $18 million, or $0.52 per diluted share, in the second quarter of 2018.
  • Second quarter 2019 adjusted EBITDA of $58 million, a non-GAAP measure, increased from $50 million in the second quarter of 2018.
  • Adjusted earnings of $28 million, or $0.81 per diluted share, a non-GAAP measure, in the second quarter of 2019 increased from adjusted earnings of $21 million, or $0.59 per diluted share, in the second quarter of 2018.

"Second quarter performance reflects the strength and diversification of our businesses and our ability to consistently deliver financial results that meet or exceed our expectations," said Steve Cunningham, CFO of Enova. "Our results were driven by a 19% year-over-year increase in total company combined loan and finance receivables balances, credit performance improvement, continued cost discipline, and a declining cost of funds. We are increasing our profit guidance for the full year and are optimistic about our ability to generate meaningful growth and profitability for the remainder of 2019 and beyond."

Enova ended the second quarter of 2019 with unrestricted cash and cash equivalents of $66 million.  As of June 30, 2019, the company had total debt outstanding of $786 million, which included $109 million outstanding under Enova's $350 million securitization facilities. During the second quarter, Enova generated $194 million of cash flow from operations.

Outlook

For the third quarter of 2019, Enova expects total revenue of $320 million to $340 million, GAAP diluted earnings per share of $0.62 to $0.84, adjusted EBITDA of $55 million to $65 million and adjusted earnings per share of $0.70 to $0.92. For the full year 2019, Enova now expects total revenue of $1.26 billion to $1.30 billion, GAAP diluted earnings per share of $3.13 to $3.57, adjusted EBITDA of $250 million to $270 million and adjusted earnings per share of $3.50 to $3.94.

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, July 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 August 1, 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 10133482.

About Enova

Enova (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)




June 30,



December 31,




2019



2018



2018


Assets













Cash and cash equivalents(1)


$

65,503



$

47,414



$

52,917


Restricted cash(1)



22,962




28,863




24,342


Loans and finance receivables, net(1)



892,582




750,131




859,946


Income taxes receivable



12,693




3,006




28,914


Other receivables and prepaid expenses(1)



34,459




25,373




29,983


Property and equipment, net



52,878




47,752




49,553


Operating lease right-of-use assets



20,813








Goodwill



267,013




267,013




267,013


Intangible assets, net



2,720




3,790




3,255


Other assets(1)



11,844




9,862




12,262


Total assets


$

1,383,467



$

1,183,204



$

1,328,185


Liabilities and Stockholders' Equity













Accounts payable and accrued expenses(1)


$

118,195



$

72,406



$

89,317


Operating lease liabilities



37,696








Deferred tax liabilities, net



35,619




14,322




33,171


Long-term debt(1)



785,504




762,831




857,929


Total liabilities



977,014




849,559




980,417


Commitments and contingencies













Stockholders' equity:













Common stock, $0.00001 par value, 250,000,000 shares authorized, 35,671,114, 34,633,819 and 34,856,553 shares issued and 33,989,158, 34,145,146 and 33,584,606 outstanding as of June 30, 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



56,910




39,335




48,175


Retained earnings



396,149




312,440




336,415


Accumulated other comprehensive loss



(14,774)




(10,905)




(13,805)


Treasury stock, at cost (1,681,956, 488,673 and 1,271,947 shares as of June 30, 2019 and 2018 and December 31, 2018, respectively)



(31,832)




(7,225)




(23,017)


Total stockholders' equity



406,453




333,645




347,768


Total liabilities and stockholders' equity


$

1,383,467



$

1,183,204



$

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.




June 30,



December 31,




2019



2018



2018


Assets of consolidated VIEs, included in total assets above













Cash and cash equivalents


$

420



$



$

210


Restricted cash



20,796




21,744




22,168


Loans and finance receivables, net (includes allowance for losses of $31,522, $21,019 and $27,255 as of June 30, 2019 and 2018 and December 31, 2018, respectively)



306,322




236,953




318,961


Other receivables and prepaid expenses



6,671




8




2,712


Other assets



2,530




132




2,544


Total assets


$

336,739



$

258,837



$

346,595


Liabilities of consolidated VIEs, included in total liabilities above













Accounts payable and accrued expenses


$

2,410



$

1,489



$

3,087


Long-term debt



171,931




176,928




223,368


Total liabilities


$

174,341



$

178,417



$

226,455


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(Unaudited)




Three Months Ended



Six Months Ended




June 30,



June 30,




2019



2018



2019



2018


Revenue


$

285,700



$

253,301



$

578,883



$

507,599


Cost of Revenue



138,297




121,494




277,342




230,047


Gross Profit



147,403




131,807




301,541




277,552


Expenses

















Marketing



31,904




29,386




55,566




57,122


Operations and technology



32,411




27,195




62,011




52,733


General and administrative



28,876




28,295




58,449




55,216


Depreciation and amortization



3,942




3,837




8,126




7,675


Total Expenses



97,133




88,713




184,152




172,746


Income from Operations



50,270




43,094




117,389




104,806


Interest expense, net



(18,115)




(19,355)




(37,615)




(39,028)


Foreign currency transaction loss



(38)




(204)




(181)




(2,292)


Loss on early extinguishment of debt









(2,321)




(4,710)


Income before Income Taxes



32,117




23,535




77,272




58,776


Provision for income taxes



7,054




5,310




17,192




12,653


Net Income


$

25,063



$

18,225



$

60,080



$

46,123


Earnings Per Share:

















Earnings per common share:

















Basic


$

0.74



$

0.54



$

1.78



$

1.36


Diluted


$

0.73



$

0.52



$

1.74



$

1.32


Weighted average common shares outstanding:

















Basic



33,826




33,984




33,660




33,821


Diluted



34,469




35,371




34,451




34,966


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(dollars in thousands)

(Unaudited)




Six Months Ended June 30,




2019



2018


Cash flows provided by operating activities


$

414,759



$

295,716


Cash flows used in investing activities









Loans and finance receivables



(308,231)




(276,550)


Property and equipment additions



(10,907)




(7,065)


Other investing activities



2




42


Total cash flows used in investing activities



(319,136)




(283,573)


Cash flows used in financing activities



(83,826)




(33,599)


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



(591)




(411)


Net increase in cash, cash equivalents and restricted cash



11,206




(21,867)


Cash, cash equivalents and restricted cash at beginning of year



77,259




98,144


Cash, cash equivalents and restricted cash at end of period


$

88,465



$

76,277


 

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 six months ended June 30, 2019 and 2018.




Three Months Ended June 30,












2019



2018



$ Change



% Change


Domestic:

















Revenue


$

254,205



$

213,638



$

40,567




19.0

%

Cost of revenue



121,369




102,206




19,163




18.7


Gross profit


$

132,836



$

111,432



$

21,404




19.2


Gross profit margin



52.3

%



52.2

%



0.1

%



0.2

%

International:

















Revenue


$

31,495



$

39,663



$

(8,168)




(20.6)

%

Cost of revenue



16,928




19,288




(2,360)




(12.2)


Gross profit


$

14,567



$

20,375



$

(5,808)




(28.5)


Gross profit margin



46.3

%



51.4

%



(5.1)

%



(9.9)

%

Total:

















Revenue


$

285,700



$

253,301



$

32,399




12.8

%

Cost of revenue



138,297




121,494




16,803




13.8


Gross profit


$

147,403



$

131,807



$

15,596




11.8


Gross profit margin



51.6

%



52.0

%



(0.4)

%



(0.8)

%




Six Months Ended June 30,












2019



2018



$ Change



% Change


Domestic:

















Revenue


$

512,193



$

426,604



$

85,589




20.1

%

Cost of revenue



235,240




190,319




44,921




23.6


Gross profit


$

276,953



$

236,285



$

40,668




17.2


Gross profit margin



54.1

%



55.4

%



(1.3)

%



(2.3)

%

International:

















Revenue


$

66,690



$

80,995



$

(14,305)




(17.7)

%

Cost of revenue



42,102




39,728




2,374




6.0


Gross profit


$

24,588



$

41,267



$

(16,679)




(40.4)


Gross profit margin



36.9

%



51.0

%



(14.1)

%



(27.6)

%

Total:

















Revenue


$

578,883



$

507,599



$

71,284




14.0

%

Cost of revenue



277,342




230,047




47,295




20.6


Gross profit


$

301,541



$

277,552



$

23,989




8.6


Gross profit margin



52.1

%



54.7

%



(2.6)

%



(4.8)

%

 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

LOANS AND FINANCE RECEIVABLES FINANCIAL AND OPERATING DATA

(dollars in thousands)


The following table shows loans and finance receivables and related loan loss activity, which is based on loan and finance receivable balances, for the three months ended June 30, 2019 and 2018.


Three Months Ended June 30,


2019



2018



Change


Cost of revenue


$

138,297



$

121,494



$

16,803


Charge-offs (net of recoveries)



123,684




111,785




11,899


Average combined loans and finance receivables, gross:













Company owned(a)



994,887




840,077




154,810


Guaranteed by Enova(a)(b)



21,486




28,138




(6,652)


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


$

1,016,373



$

868,215



$

148,158


Ending combined loans and finance receivables, gross:













Company owned


$

1,047,762



$

871,915



$

175,847


Guaranteed by Enova(b)



21,463




28,681




(7,218)


Ending combined loans and finance receivables, gross (c)


$

1,069,225



$

900,596



$

168,629


Ending allowance and liability for losses


$

156,906



$

123,876



$

33,030


Combined originations (d)


$

615,309



$

599,280



$

16,029















Loans and finance receivables ratios:













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



13.6

%



14.0

%



(0.4)

%

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



12.2

%



12.9

%



(0.7)

%

Gross profit margin



51.6

%



52.0

%



(0.4)

%

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



14.7

%



13.8

%



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



Six Months Ended




June 30,



June 30,




2019



2018



2019



2018


Net Income


$

25,063



$

18,225



$

60,080



$

46,123


Adjustments:

















Lease termination and cease-use costs(a)









726





Loss on early extinguishment of debt(b)









2,321




4,710


Intangible asset amortization



267




268




535




535


Stock-based compensation expense



3,323




2,834




6,397




5,267


Foreign currency transaction loss



38




204




181




2,292


Cumulative tax effect of adjustments



(843)




(777)




(2,362)




(2,756)


Discrete tax adjustments(c)









(141)






















Adjusted earnings


$

27,848



$

20,754



$

67,737



$

56,171



















Diluted earnings per share


$

0.73



$

0.52



$

1.74



$

1.32



















Adjusted earnings per share


$

0.81



$

0.59



$

1.97



$

1.61



Adjusted EBITDA




Three Months Ended



Six Months Ended




June 30,



June 30,




2019



2018



2019



2018


Net Income


$

25,063



$

18,225



$

60,080



$

46,123


Depreciation and amortization expenses



3,942




3,837




8,126




7,675


Interest expense, net



18,115




19,355




37,615




39,028


Foreign currency transaction loss



38




204




181




2,292


Provision for income taxes



7,054




5,310




17,192




12,653


Stock-based compensation expense



3,323




2,834




6,397




5,267


Adjustments:

















Lease termination and cease-use costs(a)









370





Loss on early extinguishment of debt(b)









2,321




4,710



















Adjusted EBITDA


$

57,535



$

49,765



$

132,282



$

117,748



















Adjusted EBITDA margin calculated as follows:

















Total Revenue


$

285,700



$

253,301



$

578,883



$

507,599


Adjusted EBITDA



57,535




49,765




132,282




117,748


Adjusted EBITDA as a percentage of total revenue



20.1

%



19.6

%



22.9

%



23.2

%












(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

RE CONCILIATION 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 September 30, 2019



Low



High



Unaudited


Income from operations

$

47,400



$

57,400


Depreciation and amortization


4,300




4,300


Stock-based compensation expense


3,300




3,300


Adjusted EBITDA

$

55,000



$

65,000











Estimated Results



Year Ended December 31, 2019



Low



High



Unaudited


Income from operations

$

219,900



$

239,900


Depreciation and amortization


16,900




16,900


Stock-based compensation expense


13,200




13,200


Adjusted EBITDA

$

250,000



$

270,000











Estimated Results



Three Months Ended September 30, 2019



Low



High



Unaudited


Diluted income per share

$

0.62



$

0.84


Adjustments:








Intangible asset amortization


0.01




0.01


Stock-based compensation expense


0.10




0.10


Cumulative tax effect of adjustments


(0.03)




(0.03


Adjusted earnings per share

$

0.70



$

0.92











Estimated Results



Year Ended December 31, 2019



Low



High



Unaudited


Diluted income per share

$

3.13



$

3.57


Adjustments:








Loss on early extinguishment of debt


0.07




0.07


Intangible asset amortization


0.03




0.03


Stock-based compensation expense


0.38




0.38


Lease termination and cease-use costs


0.01




0.01


Foreign currency transaction loss


0.01




0.01


Cumulative tax effect of adjustments


(0.13)




(0.13)


Adjusted earnings per share

$

3.50



$

3.94


 

Cision

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