10-Q 1 enva-20220331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-35503

 

img110871096_0.jpg 

Enova International, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

45-3190813

(State or other jurisdiction of

Incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

175 West Jackson Blvd.

Chicago, Illinois

 

60604

(Address of principal executive offices)

 

(Zip Code)

(312) 568-4200

(Registrant’s telephone number, including area code)

NONE

(Former name, former address and former fiscal year, if changed since last report)

Securities Registered Pursuant to Section 12(b) of the Act:

 

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $.00001 par value per share

ENVA

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

32,560,838 of the Registrant’s common shares, $0.00001 par value, were outstanding as of April 29, 2022.

 

 

 


 

CAUTIONARY NOTE CONCERNING FACTORS THAT MAY AFFECT FUTURE RESULTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. These forward-looking statements give current expectations or forecasts of future events and reflect the views and assumptions of senior management with respect to the business, financial condition, operations and prospects of Enova International, Inc. and its subsidiaries (collectively, the “Company”). When used in this report, terms such as “believes,” “estimates,” “should,” “could,” “would,” “plans,” “expects,” “intends,” “anticipates,” “may,” “forecast,” “project” and similar expressions or variations as they relate to the Company or its management are intended to identify forward-looking statements. Forward-looking statements address matters that involve risks and uncertainties that are beyond the ability of the Company to control and, in some cases, predict. Accordingly, there are or will be important factors that could cause the Company’s actual results to differ materially from those indicated in these statements. Key factors that could cause the Company’s actual financial results, performance or condition to differ from the expectations expressed or implied in such forward-looking statements include, but are not limited to, the following:

the effect of the COVID-19 pandemic on our operations;
the effect of laws and regulations targeting our industry that directly or indirectly regulate or prohibit our operations or render them unprofitable or impractical;
the effect of and compliance with domestic and international consumer credit, tax and other laws and government rules and regulations applicable to our business, including changes in such laws, rules and regulations, or changes in the interpretation or enforcement thereof, and the regulatory and examination authority of the Consumer Financial Protection Bureau with respect to providers of consumer financial products and services in the United States;
the effect of and compliance with enforcement actions, orders and agreements issued by applicable regulators, such as the January 2019 Consent Order issued by the Consumer Financial Protection Bureau;
changes in federal or state laws or regulations, or judicial decisions involving licensing or supervision of commercial lenders, interest rate limitations, the enforceability of choice of law provisions in loan agreements, the validity of bank sponsor partnerships, the use of brokers or other significant changes;
our ability to process or collect loans and finance receivables through the Automated Clearing House system;
the deterioration of the political, regulatory or economic environment in countries where we operate or in the future may operate;
the actions of third parties who provide, acquire or offer products and services to, from or for us;
public and regulatory perception of the consumer loan business, small business financing and our business practices;
the effect of any current or future litigation proceedings and any judicial decisions or rulemaking that affects us, our products or the legality or enforceability of our arbitration agreements;
changes in demand for our services, changes in competition and the continued acceptance of the online channel by our customers;
changes in our ability to satisfy our debt obligations or to refinance existing debt obligations or obtain new capital to finance growth;
a prolonged interruption in the operations of our facilities, systems and business functions, including our information technology and other business systems;
compliance with laws and regulations applicable to our international operations, including anti-corruption laws such as the Foreign Corrupt Practices Act and international anti-money laundering, trade and economic sanctions laws;
our ability to attract and retain qualified officers;
cyber-attacks or security breaches;
acts of God, war or terrorism, pandemics and other events;
the ability to successfully integrate newly acquired businesses into our operations;
interest rate and foreign currency exchange rate fluctuations;
changes in the capital markets, including the debt and equity markets;
the effect of any of the above changes on our business or the markets in which we operate;
the risk that the Company will not successfully integrate acquired companies or that costs associated with integration are higher than anticipated;

 


 

the risk that the cost savings, synergies, growth and cash flows from acquisitions will not be fully realized or will take longer to realize than expected;
litigation risk related to acquisitions; and
other risks and uncertainties described herein.

The foregoing list of factors is not exhaustive and new factors may emerge or changes to these factors may occur that would impact the Company’s business and cause actual results to differ materially from those expressed in any of our forward-looking statements. Additional information regarding these and other factors may be contained in the Company’s filings with the Securities and Exchange Commission (the “SEC”). Readers of this report are encouraged to review all of the Risk Factors contained in the Company’s filings with the SEC to obtain more detail about the Company’s risks and uncertainties. All forward-looking statements involve risks, assumptions and uncertainties. The occurrence of the events described, and the achievement of the expected results, depends on many events, some or all of which are not predictable or within the Company’s control. If one or more events related to these or other risks or uncertainties materialize, or if management’s underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. The forward-looking statements in this report are made as of the date of this report, and the Company disclaims any intention or obligation to update or revise any forward-looking statements to reflect events or circumstances occurring after the date of this report. All forward-looking statements in this report are expressly qualified in their entirety by the foregoing cautionary statements.

 

 


 

ENOVA INTERNATIONAL, INC.

INDEX TO FORM 10-Q

 

 

 

 

 

Page

PART I. FINANCIAL INFORMATION

 

 

 

Item 1.

 

Financial Statements (Unaudited)

 

 

 

 

Consolidated Balance Sheets – March 31, 2022 and 2021 and December 31, 2021

 

1

 

 

Consolidated Statements of Income – Three Months Ended March 31, 2022 and 2021

 

3

 

 

Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2022 and 2021

 

4

 

 

Consolidated Statements of Stockholders’ Equity – Three Months Ended March 31, 2022 and 2021

 

5

 

 

Consolidated Statements of Cash Flows – Three Months Ended March 31, 2022 and 2021

 

6

 

 

Notes to Consolidated Financial Statements

 

7

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

19

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

33

Item 4.

 

Controls and Procedures

 

33

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

35

Item 1A.

 

Risk Factors

 

35

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

35

Item 3.

 

Defaults upon Senior Securities

 

35

Item 4.

 

Mine Safety Disclosures

 

35

Item 5.

 

Other Information

 

35

Item 6.

 

Exhibits

 

36

 

 

SIGNATURES

 

37

 

 

 

 


 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(Unaudited)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

2021

 

Assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents(1)

 

$

131,692

 

 

$

324,328

 

 

$

165,477

 

Restricted cash(1)

 

 

96,150

 

 

 

49,879

 

 

 

60,406

 

Loans and finance receivables at fair value(1)

 

 

2,231,884

 

 

 

1,230,711

 

 

 

1,964,690

 

Income taxes receivable

 

 

56,572

 

 

 

 

 

 

51,104

 

Other receivables and prepaid expenses(1)

 

 

60,151

 

 

 

41,630

 

 

 

52,274

 

Property and equipment, net

 

 

81,031

 

 

 

78,899

 

 

 

78,402

 

Operating lease right-of-use assets

 

 

22,507

 

 

 

39,159

 

 

 

23,101

 

Goodwill

 

 

279,275

 

 

 

279,275

 

 

 

279,275

 

Intangible assets, net

 

 

33,431

 

 

 

41,155

 

 

 

35,444

 

Other assets(1)

 

 

54,451

 

 

 

48,606

 

 

 

51,310

 

Total assets

 

$

3,047,144

 

 

$

2,133,642

 

 

$

2,761,483

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses(1)

 

$

136,944

 

 

$

108,982

 

 

$

156,102

 

Operating lease liabilities

 

 

39,085

 

 

 

66,090

 

 

 

40,987

 

Income taxes currently payable

 

 

 

 

 

17,378

 

 

 

 

Deferred tax liabilities, net

 

 

96,414

 

 

 

61,070

 

 

 

86,943

 

Long-term debt(1)

 

 

1,696,751

 

 

 

874,514

 

 

 

1,384,399

 

Total liabilities

 

 

1,969,194

 

 

 

1,128,034

 

 

 

1,668,431

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

Common stock, $0.00001 par value, 250,000,000 shares authorized, 44,057,935, 42,862,788 and 43,423,572 shares issued and 32,830,838, 36,598,693 and 34,144,012 outstanding as of March 31, 2022 and 2021 and December 31, 2021, respectively

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Additional paid in capital

 

 

233,437

 

 

 

203,765

 

 

 

225,689

 

Retained earnings

 

 

1,158,204

 

 

 

925,386

 

 

 

1,105,761

 

Accumulated other comprehensive loss

 

 

(5,074

)

 

 

(8,498

)

 

 

(8,540

)

Treasury stock, at cost (11,227,097, 6,264,095 and 9,279,560 shares as of March 31, 2022 and 2021 and December 31, 2021, respectively)

 

 

(308,617

)

 

 

(115,787

)

 

 

(229,858

)

Total Enova International, Inc. stockholders’ equity

 

 

1,077,950

 

 

 

1,004,866

 

 

 

1,093,052

 

Noncontrolling interest

 

 

 

 

 

742

 

 

 

 

Total stockholders’ equity

 

 

1,077,950

 

 

 

1,005,608

 

 

 

1,093,052

 

Total liabilities and stockholders’ equity

 

$

3,047,144

 

 

$

2,133,642

 

 

$

2,761,483

 

 

(1) Includes amounts in wholly owned, bankruptcy-remote special purpose subsidiaries (“VIEs”) presented separately in the table below.

 

1


 

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. See Note 1 for additional information.

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

2021

 

Assets of consolidated VIEs, included in total assets above

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

419

 

 

$

1,484

 

 

$

420

 

Restricted cash

 

 

81,911

 

 

 

40,254

 

 

 

45,706

 

Loans and finance receivables at fair value

 

 

1,100,426

 

 

 

348,402

 

 

 

745,246

 

Other receivables and prepaid expenses

 

 

13,888

 

 

 

5,458

 

 

 

6,378

 

Other assets

 

 

2,844

 

 

 

1,062

 

 

 

2,082

 

Total assets

 

$

1,199,488

 

 

$

396,660

 

 

$

799,832

 

Liabilities of consolidated VIEs, included in total liabilities above

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

3,835

 

 

$

2,448

 

 

$

2,061

 

Affiliate note payable

 

 

 

 

 

3,708

 

 

 

 

Long-term debt

 

 

873,625

 

 

 

154,608

 

 

 

565,770

 

Total liabilities

 

$

877,460

 

 

$

160,764

 

 

$

567,831

 

 

 

See notes to consolidated financial statements.

2


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Revenue

 

$

385,731

 

 

$

259,444

 

Change in Fair Value

 

 

(117,042

)

 

 

(21,078

)

Net Revenue

 

 

268,689

 

 

 

238,366

 

Operating Expenses

 

 

 

 

 

 

Marketing

 

 

93,171

 

 

 

28,568

 

Operations and technology

 

 

40,730

 

 

 

35,627

 

General and administrative

 

 

34,528

 

 

 

44,089

 

Depreciation and amortization

 

 

9,514

 

 

 

6,627

 

Total Operating Expenses

 

 

177,943

 

 

 

114,911

 

Income from Operations

 

 

90,746

 

 

 

123,455

 

Interest expense, net

 

 

(22,483

)

 

 

(19,914

)

Foreign currency transaction loss

 

 

(314

)

 

 

(34

)

Equity method investment income

 

 

328

 

 

 

558

 

Other nonoperating expenses

 

 

 

 

 

(378

)

Income before Income Taxes

 

 

68,277

 

 

 

103,687

 

Provision for income taxes

 

 

15,834

 

 

 

27,716

 

Net income before noncontrolling interest

 

 

52,443

 

 

 

75,971

 

Less: Net income attributable to noncontrolling interest

 

 

 

 

 

51

 

Net income attributable to Enova International, Inc.

 

$

52,443

 

 

$

75,920

 

Earnings Per Share attributable to Enova International, Inc.:

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

Basic

 

$

1.57

 

 

$

2.10

 

Diluted

 

$

1.50

 

 

$

2.03

 

Weighted average common shares outstanding:

 

 

 

 

 

 

Basic

 

 

33,374

 

 

 

36,109

 

Diluted

 

 

34,882

 

 

 

37,487

 

 

 

See notes to consolidated financial statements.

3


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Net income before noncontrolling interest

 

$

52,443

 

 

$

75,971

 

Other comprehensive loss, net of tax:

 

 

 

 

 

 

Foreign currency translation gain (loss)(1)

 

 

3,466

 

 

 

(1,330

)

Ownership change in noncontrolling interest

 

 

 

 

 

(270

)

Total other comprehensive gain (loss), net of tax

 

 

3,466

 

 

 

(1,600

)

Comprehensive Income

 

 

55,909

 

 

 

74,371

 

Net income attributable to noncontrolling interest

 

 

 

 

 

(51

)

Foreign currency translation loss attributable to noncontrolling interests

 

 

 

 

 

(7

)

Ownership change in noncontrolling interest

 

 

 

 

 

802

 

Comprehensive income attributable to the noncontrolling interest

 

 

 

 

 

744

 

Comprehensive income attributable to Enova International, Inc.

 

$

55,909

 

 

$

75,115

 

 

(1) Net of tax benefit of $(1,123) and $525 for the three months ended March 31, 2022 and 2021, respectively.

 

 

See notes to consolidated financial statements.

4


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Enova

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

International,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

Inc.

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid in

 

 

Retained

 

 

Comprehensive

 

 

Treasury Stock, at cost

 

 

Stockholders’

 

 

Noncontrolling

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Shares

 

 

Amount

 

 

Equity

 

 

Interest

 

 

Equity

 

Balance at December 31, 2020

 

 

41,937

 

 

$

 

 

$

187,981

 

 

$

849,466

 

 

$

(6,898

)

 

 

(6,174

)

 

$

(113,201

)

 

$

917,348

 

 

$

1,486

 

 

$

918,834

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

5,804

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,804

 

 

 

 

 

 

5,804

 

Shares issued for vested RSUs

 

 

534

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for stock option exercises

 

 

392

 

 

 

 

 

 

8,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,908

 

 

 

 

 

 

8,908

 

Net income attributable to Enova International, Inc.

 

 

 

 

 

 

 

 

 

 

 

75,920

 

 

 

 

 

 

 

 

 

 

 

 

75,920

 

 

 

 

 

 

75,920

 

Foreign currency translation loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,330

)

 

 

 

 

 

 

 

 

(1,330

)

 

 

7

 

 

 

(1,323

)

Purchases of treasury shares, at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(90

)

 

 

(2,586

)

 

 

(2,586

)

 

 

 

 

 

(2,586

)

Ownership change in noncontrolling interest

 

 

 

 

 

 

 

 

1,072

 

 

 

 

 

 

(270

)

 

 

 

 

 

 

 

 

802

 

 

 

(802

)

 

 

 

Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51

 

 

 

51

 

Balance at March 31, 2021

 

 

42,863

 

 

$

 

 

$

203,765

 

 

$

925,386

 

 

$

(8,498

)

 

 

(6,264

)

 

$

(115,787

)

 

$

1,004,866

 

 

$

742

 

 

$

1,005,608

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

43,424

 

 

$

 

 

$

225,689

 

 

$

1,105,761

 

 

$

(8,540

)

 

 

(9,280

)

 

$

(229,858

)

 

$

1,093,052

 

 

$

 

 

$

1,093,052

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

5,367

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,367

 

 

 

 

 

 

5,367

 

Shares issued for vested RSUs

 

 

524