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Enova Reports Second Quarter 2017 Financial Results
[July 27, 2017]

Enova Reports Second Quarter 2017 Financial Results


CHICAGO, July 27, 2017 /PRNewswire/ -- Enova International (NYSE: ENVA), a leading financial technology company offering consumer and small business loans and financing, today announced financial results for the quarter ended June 30, 2017.

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

"We are pleased with the progress we are seeing in each of our six growth businesses, which was driven this quarter by continued healthy demand and good credit performance," said David Fisher, Enova's CEO. "We believe our leading competitive position, built on our world class analytics and technology platform, positions us well to execute our focused growth strategy and maintain strong profitability."

Second Quarter 2017 Summary

  • Total revenue of $189.9 million in the second quarter of 2017 increased 10.1% from $172.5 million in the second quarter of 2016.
  • Gross profit margin was 57.9% in the second quarter of 2017 compared to 62.1% in the second quarter of 2016, driven by stronger growth in the U.S. installment loan and receivables purchase agreements and a higher mix of new customers, which requires higher loan loss provisions.
  • Net income of $11.9 million, or $0.35 per diluted share, in the second quarter of 2017 increased from $8.2 million, or $0.25 per diluted share, in the second quarter of 2016. Second quarter 2017 adjusted EBITDA of $41.6 million, a non-GAAP measure, increased from $35.2 million in the second quarter of 2016.
  • Second quarter 2017 adjusted earnings per share of $0.41, a non-GAAP measure, increased 46.4% from $0.28 in the second quarter of 2016.

"Our financial results demonstrate the strong operating leverage in our online business model and solid credit performance," said Steve Cunningham, CFO of Enova. "Diluted earnings per share and adjusted EBITDA came in at the high end of our guidance range, driven by efficient marketing and effective operating expense management."

Enova ended the second quarter of 2017 with unrestricted cash and cash equivalents of $46.2 million. As of June 30, 2017, the company had total debt outstanding of $638.7 million, which included $152.0 million outstanding under Enova's $295 million securitization facilities. During the second quarter, Enova generated $66.2 million of cash flow from operations.

Outlook

For the third quarter of 2017, Enova expects total revenue of $200 million to $220 million, GAAP diluted earnings per share of $0.02 to $0.21, adjusted EBITDA of $25 million to $35 million, and adjusted earnings per share of $0.07 to $0.25. For the full year 2017, Enova expects total revenue of $810 million to $860 million, GAAP diluted earnings per share of $0.88 to $1.24, adjusted EBITDA of $145 million to $165 million, and adjusted earnings per share of $1.07 to $1.43.

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 27th. 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 10, 2017, 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 1010-9454.

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 almost five million customers around the globe access to more than $20 billion in loans and financing. The financial technology company has a portfolio of trusted brands serving consumers, including CashNetUSA®, DollarsDirect®, NetCredit®, On Stride Financial®, Pounds to Pocket®, 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
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. 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)




June 30,



December 31,




2017



2016



2016


Assets













Cash and cash equivalents


$

46,209



$

39,167



$

39,934


Restricted cash and cash equivalents (includes restricted cash of consolidated VIEs of $19,119, $13,930 and $19,468 as of June 30, 2017 and 2016 and December 31, 2016, respectively)



26,636




34,601




26,306


Loans and finance receivables, net (includes loans of consolidated VIEs of $240,444, $155,313 and $234,497 and allowance for losses of $17,072, $13,024 and $17,731 as of June 30, 2017 and 2016 and December 31, 2016, respectively)



563,996




489,990




561,550


Income taxes receivable



13,410








Other receivables and prepaid expenses



22,006




18,468




19,524


Property and equipment, net



44,329




47,206




47,100


Goodwill



267,012




267,013




267,010


Intangible assets, net



4,865




5,946




5,404


Other assets



13,406




8,478




11,051


Total assets


$

1,001,869



$

910,869



$

977,879


Liabilities and Stockholders' Equity













Accounts payable and accrued expenses


$

62,799



$

75,175



$

71,671


Income taxes currently payable






2,912




282


Deferred tax liabilities, net



25,753




19,677




14,316


Long-term debt (includes long-term debt of consolidated VIEs of $151,987, $106,846 and $165,419 and debt issuance costs of $1,054, $2,948 and $1,869, as of June 30, 2017 and 2016 and December 31, 2016, respectively)



638,749




588,824




649,911


Total liabilities



727,301




686,588




736,180


Commitments and contingencies













Stockholders' equity:













Common stock, $0.00001 par value, 250,000,000 shares authorized, 33,752,662, 33,236,539 and 33,364,525 shares issued and 33,635,215, 33,197,558 and 33,293,100 outstanding as of June 30, 2017 and 2016 and December 31, 2016, respectively










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










Additional paid in capital



23,753




14,073




18,446


Retained earnings



261,180




218,904




235,455


Accumulated other comprehensive loss



(9,069)




(8,447)




(11,578)


Treasury stock, at cost (117,447, 38,981 and 71,425 shares as of June 30, 2017 and 2016 and December 31, 2016, respectively)



(1,296)




(249)




(624)


Total stockholders' equity



274,568




224,281




241,699


Total liabilities and stockholders' equity


$

1,001,869



$

910,869



$

977,879


 

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,




2017



2016



2017



2016


Revenue


$

189,904



$

172,535



$

382,167



$

347,188


Cost of Revenue



79,862




65,453




161,746




135,030


Gross Profit



110,042




107,082




220,421




212,158


Expenses

















Marketing



23,410




25,597




42,993




46,778


Operations and technology



21,818




20,935




45,349




41,069


General and administrative



26,245




27,515




51,941




55,440


Depreciation and amortization



3,366




4,228




6,863




8,215


Total Expenses



74,839




78,275




147,146




151,502


Income from Operations



35,203




28,807




73,275




60,656


Interest expense, net



(17,012)




(16,026)




(34,234)




(31,941)


Foreign currency transaction gain



62




471




289




2,039


Income before Income Taxes



18,253




13,252




39,330




30,754


Provision for income taxes



6,380




5,064




13,605




12,703


Net Income


$

11,873



$

8,188



$

25,725



$

18,051


Earnings Per Share:

















Earnings per common share:

















Basic


$

0.35



$

0.25



$

0.77



$

0.54


Diluted


$

0.35



$

0.25



$

0.75



$

0.54


Weighted average common shares outstanding:

















Basic



33,553




33,175




33,463




33,159


Diluted



34,125




33,335




34,081




33,261


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(dollars in thousands)

(Unaudited)




Six Months Ended June 30,




2017



2016


Cash flows provided by operating activities


$

186,058



$

180,507


Cash flows used in investing activities









Loans and finance receivables



(164,731)




(190,184)


Change in restricted cash



13




(27,935)


Property and equipment additions



(5,301)




(7,649)


Other investing activities



1,482




95


Total cash flows used in investing activities



(168,537)




(225,673)


Cash flows (used in) provided by financing activities



(15,900)




45,113


Effect of exchange rates on cash



4,654




(2,846)


Net increase (decrease) in cash and cash equivalents



6,275




(2,899)


Cash and cash equivalents at beginning of year



39,934




42,066


Cash and cash equivalents at end of period


$

46,209



$

39,167


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

GEOGRAPHIC INFORMATION

(dollars in thousands)


The following tables present information on Enova's domestic and international operations for the three and six months ended June 30, 2017 and 2016.




Three Months Ended
June 30,












2017



2016



$ Change



% Change


Domestic:

















Revenue


$

158,073



$

140,342



$

17,731




12.6

%

Cost of revenue



67,393




57,752




9,641




16.7


Gross profit


$

90,680



$

82,590



$

8,090




9.8


Gross profit margin



57.4

%



58.8

%



(1.4)

%



(2.4)

%

International:

















Revenue


$

31,831



$

32,193



$

(362)




(1.1)

%

Cost of revenue



12,469




7,701




4,768




61.9


Gross profit


$

19,362



$

24,492



$

(5,130)




(20.9)


Gross profit margin



60.8

%



76.1

%



(15.3)

%



(20.1)

%

Total:

















Revenue


$

189,904



$

172,535



$

17,369




10.1

%

Cost of revenue



79,862




65,453




14,409




22.0


Gross profit


$

110,042



$

107,082



$

2,960




2.8


Gross profit margin



57.9

%



62.1

%



(4.2)

%



(6.8)

%




Six Months Ended June 30,












2017



2016



$ Change



% Change


Domestic:

















Revenue


$

322,742



$

283,770



$

38,972




13.7

%

Cost of revenue



138,042




118,208




19,834




16.8


Gross profit


$

184,700



$

165,562



$

19,138




11.6


Gross profit margin



57.2

%



58.3

%



(1.1)

%



(1.9)

%

International:

















Revenue


$

59,425



$

63,418



$

(3,993)




(6.3)

%

Cost of revenue



23,704




16,822




6,882




40.9


Gross profit


$

35,721



$

46,596



$

(10,875)




(23.3)


Gross profit margin



60.1

%



73.5

%



(13.4)

%



(18.2)

%

Total:

















Revenue


$

382,167



$

347,188



$

34,979




10.1

%

Cost of revenue



161,746




135,030




26,716




19.8


Gross profit


$

220,421



$

212,158



$

8,263




3.9


Gross profit margin



57.7

%



61.1

%



(3.4)

%



(5.6)

%

 

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, 2017 and 2016.


Three Months Ended June 30,


2017



2016



Change


Cost of revenue


$

79,862



$

65,453



$

14,409


Charge-offs (net of recoveries)



78,768




58,558




20,210


Average combined loans and finance receivables, gross:













Company owned(a)



619,699




522,099




97,600


Guaranteed by Enova(a)(b)



24,999




27,537




(2,538)


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


$

644,698



$

549,636



$

95,062


Ending combined loans and finance receivables, gross:













Company owned


$

647,835



$

563,810



$

84,025


Guaranteed by Enova(b)



28,013




31,227




(3,214)


Ending combined loans and finance receivables, gross (c)


$

675,848



$

595,037



$

80,811


Ending allowance and liability for losses


$

85,780



$

75,653



$

10,127


Combined originations (d)


$

512,546



$

516,099



$

(3,553)















Loans and finance receivables ratios:













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



12.4

%



11.9

%



0.5

%

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



12.2

%



10.7

%



1.5

%

Gross profit margin



57.9

%



62.1

%



(4.2)

%

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



12.7

%



12.7

%



%

__________________

(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 (including 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



Six Months Ended




June 30,



June 30,




2017



2016



2017



2016


Net Income


$

11,873



$

8,188



$

25,725



$

18,051


Adjustments:

















Intangible asset amortization



271




276




542




596


Stock-based compensation expense



2,987




2,181




5,307




4,149


Foreign currency transaction gain



(62)




(471)




(289)




(2,039)


Cumulative tax effect of adjustments



(1,113)




(803)




(1,923)




(1,118)



















Adjusted earnings


$

13,956



$

9,371



$

29,362



$

19,639



















Diluted earnings per share


$

0.35



$

0.25



$

0.75



$

0.54



















Adjusted earnings per share


$

0.41



$

0.28



$

0.86



$

0.59




Adjusted EBITDA




Three Months Ended



Six Months Ended




June 30,



June 30,




2017



2016



2017



2016


Net Income


$

11,873



$

8,188



$

25,725



$

18,051


Depreciation and amortization expenses



3,366




4,228




6,863




8,215


Interest expense, net



17,012




16,026




34,234




31,941


Foreign currency transaction gain



(62)




(471)




(289)




(2,039)


Provision for income taxes



6,380




5,064




13,605




12,703


Stock-based compensation expense



2,987




2,181




5,307




4,149



















Adjusted EBITDA


$

41,556



$

35,216



$

85,445



$

73,020



















Adjusted EBITDA margin calculated as follows:

















Total Revenue


$

189,904



$

172,535



$

382,167



$

347,188


Adjusted EBITDA



41,556




35,216




85,445




73,020


Adjusted EBITDA as a percentage of total revenue



21.9

%



20.4

%



22.4

%



21.0

%

 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(dollars in thousands)


Estimated Adjusted EBITDA For 2017


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




Estimated Results




Three Months Ended September 30, 2017




Low



High




Unaudited


Income from operations



18,000




28,000


Depreciation and amortization



4,000




4,000


Stock-based compensation expense



3,000




3,000


Adjusted EBITDA


$

25,000



$

35,000













Estimated Results




Year Ended December 31, 2017




Low



High




Unaudited


Income from operations


$

119,000



$

139,000


Depreciation and amortization



15,000




15,000


Stock-based compensation expense



11,000




11,000


Adjusted EBITDA


$

145,000



$

165,000


 

View original content with multimedia:http://www.prnewswire.com/news-releases/enova-reports-second-quarter-2017-financial-results-300495648.html

SOURCE Enova International, Inc.


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