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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 June 30, 2023

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

img111797499_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 ☒

30,787,347 of the Registrant’s common shares, $0.00001 par value, were outstanding as of July 26, 2023.

 


 

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 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;
interest rate and foreign currency exchange rate fluctuations;
changes in the capital markets, including the debt and equity markets;
the effects of macroeconomic conditions on our business, including inflation, recession and unemployment;
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 the Company’s filings with the SEC, including the risks described under “Risk Factors” contained in the Company’s Form 10-K and any updates to those risk factors contained in subsequent Forms 10-Q, 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 – June 30, 2023 and 2022 and December 31, 2022

1

Consolidated Statements of Income – Three and Six Months Ended June 30, 2023 and 2022

3

Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2023 and 2022

4

Consolidated Statements of Stockholders’ Equity – Three and Six Months Ended June 30, 2023 and 2022

5

Consolidated Statements of Cash Flows – Six Months Ended June 30, 2023 and 2022

6

Notes to Consolidated Financial Statements

7

Item 2.

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

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

39

Item 4.

Controls and Procedures

39

 

 

PART II. OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

40

Item 1A.

Risk Factors

40

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

40

Item 3.

Defaults upon Senior Securities

40

Item 4.

Mine Safety Disclosures

40

Item 5.

Other Information

40

Item 6.

Exhibits

41

 

 

SIGNATURES

42

 

 

 

 


 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

(Unaudited)

 

 

June 30,

 

 

December 31,

 

 

2023

 

 

2022

 

 

2022

 

Assets

 

 

 

 

 

 

Cash and cash equivalents(1)

 

$

100,042

 

 

$

144,090

 

 

$

100,165

 

Restricted cash(1)

 

 

161,619

 

 

 

69,664

 

 

 

78,235

 

Loans and finance receivables at fair value(1)

 

 

3,092,445

 

 

 

2,460,851

 

 

 

3,018,528

 

Income taxes receivable

 

 

32,653

 

 

 

44,597

 

 

 

43,741

 

Other receivables and prepaid expenses(1)

 

 

57,758

 

 

 

58,859

 

 

 

66,267

 

Property and equipment, net

 

 

99,073

 

 

 

88,648

 

 

 

93,228

 

Operating lease right-of-use assets

 

 

16,488

 

 

 

21,301

 

 

 

19,347

 

Goodwill

 

 

279,275

 

 

 

279,275

 

 

 

279,275

 

Intangible assets, net

 

 

23,032

 

 

 

31,417

 

 

 

27,390

 

Other assets(1)

 

 

45,522

 

 

 

54,468

 

 

 

54,713

 

Total assets

 

$

3,907,907

 

 

$

3,253,170

 

 

$

3,780,889

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Accounts payable and accrued expenses(1)

 

$

229,315

 

 

$

169,530

 

 

$

198,320

 

Operating lease liabilities

 

 

28,384

 

 

 

36,962

 

 

 

33,595

 

Deferred tax liabilities, net

 

 

103,852

 

 

 

97,932

 

 

 

104,169

 

Long-term debt(1)

 

 

2,297,026

 

 

 

1,840,665

 

 

 

2,258,660

 

Total liabilities

 

 

2,658,577

 

 

 

2,145,089

 

 

 

2,594,744

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

Common stock, $0.00001 par value, 250,000,000 shares authorized, 45,070,929, 44,165,233 and 44,326,999 shares issued and 30,869,886, 32,183,324 and 31,220,928 outstanding as of June 30, 2023 and 2022 and December 31, 2022, respectively

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Additional paid in capital

 

 

266,058

 

 

 

239,187

 

 

 

251,878

 

Retained earnings

 

 

1,412,253

 

 

 

1,210,605

 

 

 

1,313,185

 

Accumulated other comprehensive loss

 

 

(5,988

)

 

 

(7,481

)

 

 

(5,990

)

Treasury stock, at cost (14,201,043, 11,981,909 and 13,106,071 shares as of June 30, 2023 and 2022 and December 31, 2022, respectively)

 

 

(422,993

)

 

 

(334,230

)

 

 

(372,928

)

Total stockholders’ equity

 

 

1,249,330

 

 

 

1,108,081

 

 

 

1,186,145

 

Total liabilities and stockholders’ equity

 

$

3,907,907

 

 

$

3,253,170

 

 

$

3,780,889

 

 

(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.

 

 

June 30,

 

December 31,

 

 

2023

 

 

2022

 

 

2022

 

Assets of consolidated VIEs, included in total assets above

 

 

 

 

 

 

Cash and cash equivalents

 

$

316

 

 

$

420

 

 

$

420

 

Restricted cash

 

 

145,817

 

 

 

56,211

 

 

 

65,546

 

Loans and finance receivables at fair value

 

 

1,983,133

 

 

 

1,194,166

 

 

 

1,699,698

 

Other receivables and prepaid expenses

 

 

899

 

 

 

11,680

 

 

 

17,413

 

Other assets

 

 

7,057

 

 

 

2,641

 

 

 

5,597

 

Total assets

 

$

2,137,222

 

 

$

1,265,118

 

 

$

1,788,674

 

Liabilities of consolidated VIEs, included in total liabilities above

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

9,254

 

 

$

4,205

 

 

$

7,528

 

Long-term debt

 

 

1,478,619

 

 

 

952,025

 

 

 

1,329,009

 

Total liabilities

 

$

1,487,873

 

 

$

956,230

 

 

$

1,336,537

 

 

 

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

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

$

499,431

 

 

$

407,990

 

 

$

982,687

 

 

$

793,721

 

Change in Fair Value

 

 

(200,046

)

 

 

(143,418

)

 

 

(397,412

)

 

 

(260,460

)

Net Revenue

 

 

299,385

 

 

 

264,572

 

 

 

585,275

 

 

 

533,261

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Marketing

 

 

95,971

 

 

 

91,551

 

 

 

175,726

 

 

 

184,722

 

Operations and technology

 

 

46,961

 

 

 

42,262

 

 

 

96,130

 

 

 

82,992

 

General and administrative

 

 

36,228

 

 

 

33,690

 

 

 

73,386

 

 

 

68,218

 

Depreciation and amortization

 

 

8,629

 

 

 

7,584

 

 

 

19,169

 

 

 

17,098

 

Total Operating Expenses

 

 

187,789

 

 

 

175,087

 

 

 

364,411

 

 

 

353,030

 

Income from Operations

 

 

111,596

 

 

 

89,485

 

 

 

220,864

 

 

 

180,231

 

Interest expense, net

 

 

(45,584

)

 

 

(24,950

)

 

 

(88,905

)

 

 

(47,433

)

Foreign currency transaction gain (loss)

 

 

 

 

 

21

 

 

 

(171

)

 

 

(293

)

Equity method investment (loss) income

 

 

(1,119

)

 

 

6,323

 

 

 

(1,125

)

 

 

6,651

 

Other nonoperating expenses

 

 

(121

)

 

 

(1,091

)

 

 

(254

)

 

 

(1,091

)

Income before Income Taxes

 

 

64,772

 

 

 

69,788

 

 

 

130,409

 

 

 

138,065

 

Provision for income taxes

 

 

16,627

 

 

 

17,387

 

 

 

31,341

 

 

 

33,221

 

Net income

 

$

48,145

 

 

$

52,401

 

 

$

99,068

 

 

$

104,844

 

Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.55

 

 

$

1.61

 

 

$

3.17

 

 

$

3.18

 

Diluted

 

$

1.50

 

 

$

1.56

 

 

$

3.05

 

 

$

3.07

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

31,084

 

 

 

32,497

 

 

 

31,212

 

 

 

32,933

 

Diluted

 

 

32,203

 

 

 

33,484

 

 

 

32,456

 

 

 

34,181

 

 

 

See notes to consolidated financial statements.

3


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)

 

Three Months Ended

 

 

Six Months Ended

 

 

June 30,

 

 

June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income

 

$

48,145

 

 

$

52,401

 

 

$

99,068

 

 

$

104,844

 

Other comprehensive gain (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gain (loss)(1)

 

 

1,349

 

 

 

(2,570

)

 

 

2,309

 

 

 

897

 

Unrealized gain (loss) on investments, net of tax

 

 

 

 

 

162

 

 

 

(2,307

)

 

 

162

 

Total other comprehensive gain (loss), net of tax

 

 

1,349

 

 

 

(2,408

)

 

 

2

 

 

 

1,059

 

Comprehensive Income

 

$

49,494

 

 

$

49,993

 

 

$

99,070

 

 

$

105,903

 

(1) Net of tax (provision) benefit of $(426) and $843 for the three months ended June 30, 2023 and 2022, respectively, and $(731) and $(280) for the six months ended June 30, 2023 and 2022, respectively .

 

 

See notes to consolidated financial statements.

4


 

ENOVA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid in

 

 

Retained

 

 

Comprehensive

 

 

Treasury Stock, at cost

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Loss

 

 

Shares

 

 

Amount

 

 

Equity

 

Balance at March 31, 2022

 

 

44,058

 

 

$

 

 

$

233,437

 

 

$

1,158,204

 

 

$

(5,074

)

 

 

(11,227

)

 

$

(308,617

)

 

$

1,077,950

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

5,133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,133

 

Shares issued for vested RSUs

 

 

80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for stock option exercises

 

 

27

 

 

 

 

 

 

617

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

617

 

Net income

 

 

 

 

 

 

 

 

 

 

 

52,401

 

 

 

 

 

 

 

 

 

 

 

 

52,401

 

Unrealized gain on investments, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

162

 

 

 

 

 

 

 

 

 

162

 

Foreign currency translation loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,569

)

 

 

 

 

 

 

 

 

(2,569

)

Purchases of treasury shares, at cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(755

)

 

 

(25,613

)

 

 

(25,613

)

Balance at June 30, 2022

 

 

44,165

 

 

$

 

 

$

239,187

 

 

$

1,210,605

 

 

$

(7,481

)

 

 

(11,982

)

 

$

(334,230

)

 

$

1,108,081