Enova Announces Second Quarter 2015 Results

-- U.S. revenue increased 4.3% year over year to $113.4 million in 2Q15

-- U.S. installment loan and finance receivables revenue rose 39.8% year over year to $43.7 million in 2Q15

-- U.K. loan originations rose 19% sequentially in 2Q15

Aug 05, 2015, 07:00 ET from Enova International, Inc.

CHICAGO, Aug. 5, 2015 /PRNewswire/ -- Enova International (NYSE: ENVA), a technology and analytics driven online lender, today announced financial results for the quarter ended June 30, 2015.

"Our diversification strategy and recent product introductions continue to outperform our expectations and are transforming the makeup of Enova," said David Fisher, CEO of Enova. "This strong performance has provided a partial offset to the decline in our U.K. revenue resulting from regulatory changes, however, we are very encouraged by the sequential improvement in U.K. loan originations during the quarter and believe that our strong regulatory compliance positions us well for future success in the U.K. Moreover, we remain very optimistic about the continued progress and the market potential of our new initiatives in Brazil and China, as well as our near-prime offering in the U.K. and our growing small business products."

Second Quarter 2015 Summary

  • Total revenue of $146.3 million in the second quarter of 2015 declined 27.4% from $201.5 million in the second quarter of 2014 as a 4.3% increase in U.S. revenue was offset by a 64.6% decrease in international revenue, primarily due to regulatory changes in the United Kingdom.
  • Gross profit margin of 71.6% in the second quarter of 2015 rose 480 basis points from the second quarter of 2014, driven by stricter underwriting standards in the United Kingdom as well as continued enhancements to Enova's U.S. underwriting models.
  • Adjusted EBITDA of $41.1 million, a non-GAAP measure, decreased 32.9% from the same quarter last year due to the decrease in revenue, while Adjusted EBITDA margin decreased to 28.1% from 30.4%.
  • Net income decreased 64.5% to $10.9 million, or $0.33 per diluted share, in the second quarter of 2015 from $30.6 million, or $0.93 per diluted share, in the second quarter of 2014.

"We are pleased by the continued momentum of our U.S. installment products, driven by the success of our NetCredit near-prime offering along with our expansion into additional states. Our installment loan products continue to represent an increasing portion of our revenue mix, accounting for 39% of total revenue in the second quarter, up from 30% of total revenue for the same quarter last year. In addition, cash flow provided by operating activities during the second quarter of 2015 was $47 million, which we continue to invest back into the business to grow our loan portfolio and support our new initiatives," said Robert Clifton, CFO of Enova.       

Outlook

For the third quarter 2015, Enova expects total revenue of $165 million to $185 million and Adjusted EBITDA of $35 million to $45 million. For the full year 2015, Enova now expects total revenue of $650 million to $700 million and Adjusted EBITDA of $170 million to $200 million. The company's full year revenue outlook reflects a slower improvement in the U.K. market than originally anticipated.

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 7 a.m. Central Time/ 8 a.m. Eastern Time on August 5, 2015. 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 1-877-870-4263 (1-412-317-0790 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 12, 2015 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 10069111.

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. As of June 30, 2015, Enova offered or arranged 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 uses its proprietary technology, analytics and customer service capabilities to quickly evaluate, underwrite and fund loans in order to offer customers credit when and how they want it. Headquartered in Chicago, Enova had more than 1,100 employees serving its online customers across the globe as of June 30, 2015.

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 receivable 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 share data)

(Unaudited)

June 30,

December 31,

2015

2014

2014

Assets

Cash and cash equivalents

$

96,237

$

79,785

$

75,106

Loans and finance receivables, net

317,454

291,966

323,611

Other receivables and prepaid expenses

15,381

13,797

16,631

Deferred tax assets

21,646

25,841

25,427

Property and equipment, net

50,549

38,000

33,985

Goodwill

270,246

255,869

255,862

Intangible assets, net

3,705

14

39

Other assets

28,340

22,341

29,536

Total assets

$

803,558

$

727,613

$

760,197

Liabilities and Stockholders' Equity

Accounts payable and accrued expenses

$

70,735

$

51,110

$

57,277

Related party payable, net

11,451

Income taxes currently payable

713

6,802

Deferred tax liabilities

42,508

48,757

47,953

Long-term debt

494,516

493,863

494,181

Total liabilities

608,472

605,181

606,213

Commitments and contingencies (Note 8)

Stockholders' equity:

Common stock, $0.00001 par value, 250,000,000 shares authorized, 33,000,000 shares issued and outstanding

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

Additional paid in capital

4,210

294

Retained earnings

192,255

116,266

156,861

Accumulated other comprehensive (loss) income

(1,379)

6,166

(3,171)

Total stockholders' equity

195,086

122,432

153,984

Total liabilities and stockholders' equity

$

803,558

$

727,613

$

760,197

 

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,

2015

2014

2015

2014

Revenue

$

146,280

$

201,482

$

311,956

$

409,947

Cost of Revenue

41,536

66,840

80,106

133,276

Gross Profit

104,744

134,642

231,850

276,671

Expenses

Marketing

24,707

30,828

48,863

59,306

Operations and technology

17,554

17,123

35,566

35,008

General and administrative

27,089

26,931

52,655

51,358

Depreciation and amortization

5,033

4,316

10,316

8,434

Total Expenses

74,383

79,198

147,400

154,106

Income from Operations

30,361

55,444

84,450

122,565

Interest expense, net

(12,904)

(7,311)

(26,209)

(12,065)

Foreign currency transaction loss

(31)

(299)

(975)

(400)

Income before Income Taxes

17,426

47,834

57,266

110,100

Provision for income taxes

6,562

17,205

21,872

39,416

Net Income

$

10,864

$

30,629

$

35,394

$

70,684

Earnings Per Share:

Earnings per common share:

Basic

$

0.33

$

0.93

$

1.07

$

2.14

Diluted

$

0.33

$

0.93

$

1.07

$

2.14

Weighted average common shares outstanding:

Basic

33,000

33,000

33,000

33,000

Diluted

33,015

33,000

33,012

33,000

 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(dollars in thousands)

(Unaudited)

Six Months Ended June 30,

2015

2014

Cash flows provided by operating activities

$

134,922

$

237,896

Cash flows used in investing activities

Loans and finance receivables

(72,511)

(124,403)

Acquisitions

(17,735)

Property and equipment additions

(26,502)

(6,828)

Other investing activities

15

Total cash flows used in investing activities

(116,733)

(131,231)

Cash flows used in financing activities

(78,810)

Effect of exchange rates on cash

2,942

4,450

Net increase in cash and cash equivalents

21,131

32,305

Cash and cash equivalents at beginning of year

75,106

47,480

Cash and cash equivalents at end of period

$

96,237

$

79,785

 

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, 2015 and 2014.

Three Months Ended June 30,

2015

2014

$ Change

% Change

Domestic:

Revenue

$

113,420

$

108,786

$

4,634

4.3

%

Cost of revenue

40,149

38,731

1,418

3.7

Gross profit

$

73,271

$

70,055

$

3,216

4.6

Gross profit margin

64.6

%

64.4

%

0.2

%

0.3

%

International:

Revenue

$

32,860

$

92,696

$

(59,836)

(64.6)%

Cost of revenue

1,387

28,109

(26,722)

(95.1)

Gross profit

$

31,473

$

64,587

$

(33,114)

(51.3)

Gross profit margin

95.8

%

69.7

%

26.1

%

37.5

%

Total:

Revenue

$

146,280

$

201,482

$

(55,202)

(27.4)%

Cost of revenue

41,536

66,840

(25,304)

(37.9)

Gross profit

$

104,744

$

134,642

$

(29,898)

(22.2)

Gross profit margin

71.6

%

66.8

%

4.8

%

7.2

%

Six Months Ended June 30,

2015

2014

$ Change

% Change

Domestic:

Revenue

$

232,473

$

217,873

$

14,600

6.7

%

Cost of revenue

74,079

67,834

6,245

9.2

Gross profit

$

158,394

$

150,039

$

8,355

5.6

Gross profit margin

68.1

%

68.9

%

(0.8)%

(1.1)%

International:

Revenue

$

79,483

$

192,074

$

(112,591)

(58.6)%

Cost of revenue

6,027

65,442

(59,415)

(90.8)

Gross profit

$

73,456

$

126,632

$

(53,176)

(42.0)

Gross profit margin

92.4

%

65.9

%

26.5

%

40.2

%

Total:

Revenue

$

311,956

$

409,947

$

(97,991)

(23.9)%

Cost of revenue

80,106

133,276

(53,170)

(39.9)

Gross profit

$

231,850

$

276,671

$

(44,821)

(16.2)

Gross profit margin

74.3

%

67.5

%

6.8

%

10.1

%

 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

LOANS AND FINANCE RECEIVABLES FINANCIAL AND OPERATING DATA

(dollars in thousands)

The following table shows loans and finance receivables and related loan loss activity, which is based on loan and finance receivable balances, for the three months ended June 30, 2015 and 2014.

Three Months Ended June 30

2015

2014

Change

Cost of revenue

$

41,536

$

66,840

$

(25,304)

Charge-offs (net of recoveries)

41,541

73,784

(32,243)

Average combined loans and finance receivables, gross:

Company owned(a)

342,382

353,675

(11,293)

Guaranteed by Enova(a)(b)

27,980

32,022

(4,042)

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

$

370,362

$

385,697

$

(15,335)

Ending combined loans and finance receivables, gross:

Company owned

$

368,715

$

359,760

$

8,955

Guaranteed by Enova(b)

31,539

34,915

(3,376)

Ending combined loans and finance receivables, gross (c)

$

400,254

$

394,675

$

5,579

Ending allowance and liability for losses

$

52,689

$

69,375

$

(16,686)

Loans and finance receivables ratios:

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

11.2

%

17.3

%

(6.1)

%

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

11.2

%

19.1

%

(7.9)

%

Gross profit margin

71.6

%

66.8

%

4.8

%

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

13.2

%

17.6

%

(4.4)

%

(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)

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,

2015

2014

2015

2014

Net Income

$

10,864

$

30,629

$

35,394

$

70,684

Adjustments (net of tax):

Lease termination and relocation costs(a)

2,170

906

2,170

906

Intangible asset amortization

2

6

4

19

Stock-based compensation expense

1,373

54

2,427

109

Foreign currency transaction loss

19

192

600

257

Adjusted earnings

$

14,428

$

31,787

$

40,595

$

71,975

Diluted earnings per share

$

0.33

$

0.93

$

1.07

$

2.14

Adjusted earnings per share

$

0.44

$

0.96

$

1.23

$

2.18

 

Adjusted EBITDA

Three Months Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Net Income

$

10,864

$

30,629

$

35,394

$

70,684

Depreciation and amortization expenses

5,033

4,316

10,316

8,434

Interest expense, net

12,904

7,311

26,209

12,065

Foreign currency transaction loss

31

299

975

400

Provision for income taxes

6,562

17,205

21,872

39,416

Stock-based compensation expense

2,204

85

3,916

170

Adjustments:

Lease termination and relocation costs(a)

3,480

1,415

3,480

1,415

Adjusted EBITDA

$

41,078

$

61,260

$

102,162

$

132,584

Adjusted EBITDA margin calculated as follows:

Total Revenue

$

146,280

$

201,482

$

311,956

$

409,947

Adjusted EBITDA

41,078

61,260

102,162

132,584

Adjusted EBITDA as a percentage of total revenue

28.1

%

30.4

%

32.7

%

32.3

%

(a)

In May 2015, the Company relocated its headquarters and as a result incurred $3.5 million of facility cease-use charges ($2.2 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 2015

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

Estimated Results

Three Months Ended September 30, 2015

Low

High

Unaudited

Income from operations

$

28,000

$

36,000

Depreciation and amortization

5,000

6,000

Stock-based compensation expense

2,000

3,000

Adjusted EBITDA

$

35,000

$

45,000

Estimated Results

Year Ended December 31, 2015

Low

High

Unaudited

Income from operations

$

136,520

$

162,585

Lease termination and relocation costs(a)

3,480

1,415

Depreciation and amortization

22,000

25,000

Stock-based compensation expense

8,000

11,000

Adjusted EBITDA

$

170,000

$

200,000

(a)

In May 2015, the Company relocated its headquarters and as a result incurred $3.5 million of facility cease-use charges ($2.2 million net of tax) consisting of remaining lease obligations and disposal costs on its prior headquarters.

 

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SOURCE Enova International, Inc.



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