Enova Reports Third Quarter 2019 Results

“The third quarter continued our record of strong performance and reflects our ability to effectively manage our portfolio of businesses to deliver results,” said David Fisher, Enova’s CEO. “Our solid performance was driven by continued strong demand in our domestic products, stable credit and strong execution. We remain well positioned to deliver on our commitment of balanced growth and profitability and remain optimistic about our ability to sustain the momentum in our business through the rest of 2019 and into 2020.”

Enova also announced today it intends to exit the U.K. market in Q4. Enova anticipates it will record a one-time after-tax charge of approximately $74 million, including one-time cash charges of approximately $43 million to support cessation of U.K. lending activities.

“Over the past several months, we worked with our U.K. regulator to agree upon a sustainable solution to the elevated complaints to the U.K. Financial Ombudsman, which would enable us to continue providing access to credit for hardworking Britons,” said Fisher. “While we are disappointed that we could not ultimately find a path forward, the decision to exit the U.K. market is the right one for Enova and our shareholders. Looking ahead, we believe that our diversified product offerings provide meaningful growth as we allocate our resources where we see the greatest opportunities.”

Third Quarter 2019 Summary

• Total revenue of $330 million in the third quarter of 2019 increased 12% from $294 million in the third quarter of 2018.
• Gross profit margin was 48.0% in the third quarter of 2019, compared to 44.3% in the third quarter of 2018.
• Net income of $27 million, or $0.78 per diluted share, in the third quarter of 2019 increased from $15 million, or $0.43 per diluted share, in the third quarter of 2018.
• Third quarter 2019 adjusted EBITDA of $62 million, a non-GAAP measure, increased from $44 million in the third quarter of 2018.
• Adjusted earnings of $30 million, or $0.86 per diluted share, a non-GAAP measure, in the third quarter of 2019 increased from adjusted earnings of $16 million, or $0.46 per diluted share, in the third quarter of 2018.

“We are pleased to report another solid quarter of financial results that met or exceeded our expectations,” said Steve Cunningham, CFO of Enova. “Our strong analytics are driving stable and predictable credit performance as we continue to originate receivables from new customers at a record pace. In addition, our diversified and flexible financing is driving our cost of funds lower and leaves us well positioned to capitalize on the future growth opportunities ahead of us.”

Enova ended the third quarter of 2019 with unrestricted cash and cash equivalents of $70 million. As of September 30, 2019, the company had total debt outstanding of $874 million, which included $184 million outstanding under Enova’s $350 million securitization facilities. During the third quarter, Enova generated $191 million of cash flow from operations.

On October 22, the Board of Directors authorized a new share repurchase program totaling $75 million that expires December 31, 2020. The new program replaces the prior authorization of $50 million. Year-to-date through October 22, the company acquired 310,000 shares at a cost of $6.4 million under the previous share repurchase program.

Outlook

For the fourth quarter of 2019, excluding U.K. operations and related one-time charges as a result of the planned exit, Enova expects total revenue of $329 million to $344 million, adjusted EBITDA of $68 million to $78 million and adjusted earnings per share of $0.94 to $1.15. GAAP diluted loss per share for the fourth quarter of 2019, which includes the U.K. operations, is expected to be ($1.28) to ($1.07).

Enova’s outlook for the full year 2019 excludes U.K. operations and related one-time charges for the full year as a result of the planned exit. For comparability, the company is also providing the previous outlook for the full year 2019 total revenue, adjusted EBITDA and adjusted earnings per share excluding U.K. operations.

For the full year 2019, Enova now expects total revenue of $1.158 billion to $1.173 billion versus previous guidance of $1.145 billion to $1.185 billion; adjusted EBITDA of $278 million to $288 million versus previous guidance of $273 million to $293 million; and adjusted earnings per share of $4.13 to $4.34 versus previous guidance of $4.00 to $4.44. GAAP diluted earnings per share for the full year 2019, which includes the U.K. operations, is expected to be $1.24 to $1.45 versus previous guidance of $3.13 to $3.57.

Please see the “Supplemental Financial Information” for the third quarter 2019 on Enova’s investor relations website for additional details of the company’s historical financial results excluding U.K. operations.

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, October 24^th. 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 October 31, 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 10135835.

About Enova

Enova (NYSE: ENVA) is a leading provider of online financial services to non-prime consumers and small businesses, providing access to credit powered by its advanced analytics, innovative technology, and world-class online platform and services. Enova has provided more than 6 million customers around the globe with access to more than $20 billion in loans and financing. The financial technology company has a portfolio of trusted brands serving consumers, including CashNetUSA^®, NetCredit^®, 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.