ELEVATE CREDIT, INC.
2020 Second Quarter Net Income From Continuing Operations
Up 92% From Prior Year
Full Press Release Linked Here.
FORT WORTH, TX - August 6, 2020 - Elevate Credit, Inc. (NYSE: ELVT) ('Elevate' or the 'Company'), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced results for the second quarter ended June 30, 2020.
'I am pleased with our strong bottom line performance this quarter, which can in large part be attributed to our ability to move quickly and add consumer friendly features,' said Elevate CEO Jason Harvison. 'We also made several difficult decisions, including our exit of the UK market, and implemented our operating expense reduction plan in the U.S. While the pandemic has affected our loan and revenue growth in 2020, I am very confident in Elevate's market position and ability to drive future growth.'
The Company announced on June 29, 2020 that its UK subsidiary, Elevate Credit International Limited, ('ECIL') would cease operations in the UK. The ECIL board of directors placed ECIL in administration under the UK Insolvency Act 1986 and appointed insolvency practitioners from KPMG LLP to take control and management of the UK business. Elevate has deconsolidated ECIL as of June 29, 2020 and has presented ECIL as discontinued operations starting in the second quarter of 2020.
Second Quarter 2020 Financial Results2
• Net income: Net income for the three months ended June 30, 2020 totaled $8.6 million, up $2.8 million compared to $5.8 million in net income in the second quarter of 2019. Fully diluted earnings per share for the second quarter of 2020 totaled $0.20, an increase from $0.13 per fully diluted share a year ago. Net income from continuing operations for the second quarter of 2020 (excluding the net loss from the discontinued operations of ECIL) totaled $16.1 million, an increase of $7.7 million, or 92%, compared to $8.4 million in the second quarter of 2019.
• Adjusted earnings: Excluding an after-tax increase of $1.0 million in a non-operating loss related to a legal matter and the discontinued ECIL operations, adjusted earnings were $17.1 million for the three months ended June 30, 2020, up $8.7 million from $8.4 million in the second quarter of 2019. Adjusted diluted earnings per share for the second quarter of 2020 totaled $0.40 per fully diluted share, a 110% increase from $0.19 per fully diluted share in the second quarter of 2019. See 'Non-GAAP Financial Measures' for a reconciliation of the non-GAAP measures of adjusted earnings and adjusted diluted earnings per share.
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1 Second quarter 2020 and the first six months of 2020 results and comparable periods are presented on a continuing operations basis and exclude the results of discontinued operations in the UK. Elevate exited the UK market in the second quarter of 2020.
2Adjusted EBITDA, Adjusted EBITDA margin, combined loans receivable - principal, combined loans receivable, combined loan loss reserve, adjusted earnings and adjusted diluted earnings per share are non-GAAP financial measures. These terms are defined elsewhere in this release. Please see the schedules appearing later in this release for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures.
• Revenue: Revenues decreased during the second quarter of 2020 to $118.0 million compared to $150.4 million for the second quarter of 2019. The decrease in revenue is attributable to reductions in loan origination volume and lower effective APRs for the loan portfolio due to the economic crisis created by the COVID-19 pandemic beginning in March 2020.
• Combined loans receivable - principal: Combined loans receivable - principal totaled $413.7 million at June 30, 2020, a decrease of $140 million, or 25.3%, from $553.7 million at June 30, 2019.
• Credit quality: The combined loan loss reserve at June 30, 2020 totaled $60.6 million, or 14% of combined loans receivable compared to 12% a year ago. Combined loans receivable - principal that were past due at the end of the second quarter of 2020 totaled 5%, down from 9% a year ago.
• Adjusted EBITDA: Adjusted EBITDA totaled $45.2 million in the second quarter of 2020, up 31.2% from $34.4 million in the second quarter of 2019. The Adjusted EBITDA margin for the second quarter of 2020 was 38.3%, up from 22.9% in the prior-year quarter.
Year-to-date 2020 Financial Results2
• Net income: Net income for the six months ended June 30, 2020 totaled $3.6 million, down $15.5 million compared to $19.1 million for the first half of 2019. Fully diluted earnings per share for the first half of 2020 totaled $0.09, a decrease from $0.43 per fully diluted share for the first six months of 2019. Net income from continuing operations for the six months ended June 30, 2020 (excluding the net loss from the discontinued operations of ECIL) totaled $24.0 million, an increase of $4.7 million, or 24%, compared to $19.3 million in the first half of 2019.
• Adjusted earnings: Adjusted earnings were $28.1 million for the six months ended June 30, 2020, up $8.8 million from $19.3 million in the prior year period. Adjusted diluted earnings per share for the six months ended June 30, 2020 totaled $0.65, a 48% increase from $0.44 per fully diluted share in the first half of 2019. See 'Non-GAAP Financial Measures' for a reconciliation of the non-GAAP measures of adjusted earnings and adjusted diluted earnings per share.
• Revenue: Revenues decreased 9.7% for the six months ended June 30, 2020 totaling $280.5 million compared to $310.4 million for the six months ended June 30, 2019. The decrease in revenue is attributable to reductions in loan origination volume and lower effective APRs for the loan portfolio due to the economic crisis created by the COVID-19 pandemic beginning in March 2020.
• Adjusted EBITDA: Adjusted EBITDA totaled $80.1 million for the six months ended June 30, 2020, up 5.9% from $75.7 million in the first half of 2019. The Adjusted EBITDA margin for the six months ended June 30, 2020 was 28.6%, up from 24.4% in the prior-year period.
Impact of COVID-19 on Credit Quality
The Company and the bank originators it supports have expanded their payment flexibility programs to allow customers to extend their next payment. As of June 30, 2020, 12.5% of customers have been provided relief through a COVID-19 payment deferral program for a total of $50.7 million in loans with deferred payments. Both the Company and the bank originators are closely monitoring the performance of the payment deferral program and key credit quality indicators such as payment defaults, continued payment deferrals, and line of credit utilization. The Company and the bank originators it supports have implemented underwriting changes to address credit risk associated with loan originations during the economic crisis created by the COVID-19 pandemic and have seen
reduced loan origination applications and loan origination volume since the beginning of the pandemic in March 2020.
Operating Expense Reduction Plan Implemented
The Company implemented an operating expense reduction plan in response to the impact of the COVID-19 pandemic on the loan portfolio. The Company has completed the following actions under its operating expense reduction plan:
• Reduction of its U.S. workforce by approximately 17% effective July 8, 2020;
• Suspension of its 2020 short-term incentive plan (bonus pool) effective as of June 30, 2020;
• Reduction of executive salaries and board compensation beginning July 2020; and
• Elimination of discretionary operating expense items and renegotiated terms with key vendors.
Liquidity and Capital Resources
The Company paid down its debt facilities by approximately $87.5 million during the first half of 2020 ($103.8 million including the discontinued operations of ECIL). Although the Company deconsolidated ECIL as of June 30, 2020, it still guarantees the repayment of ECIL's outstanding
debt, which was approximately £10.2 million as of June 30, 2020. The Company believes ECIL will be able to repay their debt from the liquidation of ECIL's remaining assets.
Interest expense in the second quarter of 2020 declined to $12.2 million as compared to $16.9 million in the second quarter of 2019. This decrease resulted from a lower cost of funds related to the amendment of the debt facilities in February 2019, which decreased to approximately 10.5% in the second quarter of 2020, versus 13.8% in the second quarter of 2019, respectively.
During the second quarter of 2020, the Company purchased $3.8 million of common shares under the Company's previously approved common stock repurchase program. The Company is continuing to assess its minimum cash and liquidity requirements and implementing measures to
ensure that its strong liquidity position is maintained through the current economic cycle. As of June 30, 2020, the Company is in compliance with all debt facility covenants.
Financial Outlook
As previously announced, the Company withdrew its full-year 2020 earnings guidance due to the uncertain impact on our business and results of operations resulting from the COVID-19 pandemic.
Conference Call
The Company will host a conference call to discuss its second quarter 2020 financial results on Thursday, August 6, at 4:00pm Central Time / 5:00pm Eastern Time. Interested parties may access the conference call live over the phone by dialing 1-866-269-4260 (domestic) or 1-929-477-0591 (international) and requesting the Elevate Credit Second Quarter 2020 Earnings Conference Call. Participants are asked to dial in a few minutes prior to the call to register for the event. The conference call will also be webcast live through Elevate's website at http://www.elevate.com/investors.
An audio replay of the conference call will be available approximately three hours after the conference call until 11:59 pm ET on August 20, 2020, and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international), and providing the passcode 8266199, or by accessing Elevate's website.
About Elevate
Elevate (NYSE: ELVT), together with the banks that license its marketing and technology services, has originated $8.5 billion in non-prime credit to more than 2.5 million non-prime consumers to date and has saved its customers more than $7.3 billion versus the cost of payday loans. Its responsible, tech-enabled online credit solutions provide immediate relief to customers today and help them build a brighter financial future. The company is committed to rewarding borrowers' good financial behavior with features like interest rates that can go down over time, free financial training and free credit monitoring. Elevate's suite of groundbreaking credit products includes RISE, Elastic and Today Card. For more information, please visit http://www.elevate.com.
Investor Relations:
Solebury Trout
Sloan Bohlen, (817) 928-1646
investors@elevate.com
or
Media Inquiries:
Solebury Trout
Lisa Wolford, (917) 846-0881
lwolford@soleburytrout.com
2020 Second Quarter Net Income From Continuing Operations
Up 92% From Prior Year
Full Press Release Linked Here.
FORT WORTH, TX - August 6, 2020 - Elevate Credit, Inc. (NYSE: ELVT) ('Elevate' or the 'Company'), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced results for the second quarter ended June 30, 2020.
'I am pleased with our strong bottom line performance this quarter, which can in large part be attributed to our ability to move quickly and add consumer friendly features,' said Elevate CEO Jason Harvison. 'We also made several difficult decisions, including our exit of the UK market, and implemented our operating expense reduction plan in the U.S. While the pandemic has affected our loan and revenue growth in 2020, I am very confident in Elevate's market position and ability to drive future growth.'
The Company announced on June 29, 2020 that its UK subsidiary, Elevate Credit International Limited, ('ECIL') would cease operations in the UK. The ECIL board of directors placed ECIL in administration under the UK Insolvency Act 1986 and appointed insolvency practitioners from KPMG LLP to take control and management of the UK business. Elevate has deconsolidated ECIL as of June 29, 2020 and has presented ECIL as discontinued operations starting in the second quarter of 2020.
Second Quarter 2020 Financial Results2
• Net income: Net income for the three months ended June 30, 2020 totaled $8.6 million, up $2.8 million compared to $5.8 million in net income in the second quarter of 2019. Fully diluted earnings per share for the second quarter of 2020 totaled $0.20, an increase from $0.13 per fully diluted share a year ago. Net income from continuing operations for the second quarter of 2020 (excluding the net loss from the discontinued operations of ECIL) totaled $16.1 million, an increase of $7.7 million, or 92%, compared to $8.4 million in the second quarter of 2019.
• Adjusted earnings: Excluding an after-tax increase of $1.0 million in a non-operating loss related to a legal matter and the discontinued ECIL operations, adjusted earnings were $17.1 million for the three months ended June 30, 2020, up $8.7 million from $8.4 million in the second quarter of 2019. Adjusted diluted earnings per share for the second quarter of 2020 totaled $0.40 per fully diluted share, a 110% increase from $0.19 per fully diluted share in the second quarter of 2019. See 'Non-GAAP Financial Measures' for a reconciliation of the non-GAAP measures of adjusted earnings and adjusted diluted earnings per share.
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1 Second quarter 2020 and the first six months of 2020 results and comparable periods are presented on a continuing operations basis and exclude the results of discontinued operations in the UK. Elevate exited the UK market in the second quarter of 2020.
2Adjusted EBITDA, Adjusted EBITDA margin, combined loans receivable - principal, combined loans receivable, combined loan loss reserve, adjusted earnings and adjusted diluted earnings per share are non-GAAP financial measures. These terms are defined elsewhere in this release. Please see the schedules appearing later in this release for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures.
• Revenue: Revenues decreased during the second quarter of 2020 to $118.0 million compared to $150.4 million for the second quarter of 2019. The decrease in revenue is attributable to reductions in loan origination volume and lower effective APRs for the loan portfolio due to the economic crisis created by the COVID-19 pandemic beginning in March 2020.
• Combined loans receivable - principal: Combined loans receivable - principal totaled $413.7 million at June 30, 2020, a decrease of $140 million, or 25.3%, from $553.7 million at June 30, 2019.
• Credit quality: The combined loan loss reserve at June 30, 2020 totaled $60.6 million, or 14% of combined loans receivable compared to 12% a year ago. Combined loans receivable - principal that were past due at the end of the second quarter of 2020 totaled 5%, down from 9% a year ago.
• Adjusted EBITDA: Adjusted EBITDA totaled $45.2 million in the second quarter of 2020, up 31.2% from $34.4 million in the second quarter of 2019. The Adjusted EBITDA margin for the second quarter of 2020 was 38.3%, up from 22.9% in the prior-year quarter.
Year-to-date 2020 Financial Results2
• Net income: Net income for the six months ended June 30, 2020 totaled $3.6 million, down $15.5 million compared to $19.1 million for the first half of 2019. Fully diluted earnings per share for the first half of 2020 totaled $0.09, a decrease from $0.43 per fully diluted share for the first six months of 2019. Net income from continuing operations for the six months ended June 30, 2020 (excluding the net loss from the discontinued operations of ECIL) totaled $24.0 million, an increase of $4.7 million, or 24%, compared to $19.3 million in the first half of 2019.
• Adjusted earnings: Adjusted earnings were $28.1 million for the six months ended June 30, 2020, up $8.8 million from $19.3 million in the prior year period. Adjusted diluted earnings per share for the six months ended June 30, 2020 totaled $0.65, a 48% increase from $0.44 per fully diluted share in the first half of 2019. See 'Non-GAAP Financial Measures' for a reconciliation of the non-GAAP measures of adjusted earnings and adjusted diluted earnings per share.
• Revenue: Revenues decreased 9.7% for the six months ended June 30, 2020 totaling $280.5 million compared to $310.4 million for the six months ended June 30, 2019. The decrease in revenue is attributable to reductions in loan origination volume and lower effective APRs for the loan portfolio due to the economic crisis created by the COVID-19 pandemic beginning in March 2020.
• Adjusted EBITDA: Adjusted EBITDA totaled $80.1 million for the six months ended June 30, 2020, up 5.9% from $75.7 million in the first half of 2019. The Adjusted EBITDA margin for the six months ended June 30, 2020 was 28.6%, up from 24.4% in the prior-year period.
Impact of COVID-19 on Credit Quality
The Company and the bank originators it supports have expanded their payment flexibility programs to allow customers to extend their next payment. As of June 30, 2020, 12.5% of customers have been provided relief through a COVID-19 payment deferral program for a total of $50.7 million in loans with deferred payments. Both the Company and the bank originators are closely monitoring the performance of the payment deferral program and key credit quality indicators such as payment defaults, continued payment deferrals, and line of credit utilization. The Company and the bank originators it supports have implemented underwriting changes to address credit risk associated with loan originations during the economic crisis created by the COVID-19 pandemic and have seen
reduced loan origination applications and loan origination volume since the beginning of the pandemic in March 2020.
Operating Expense Reduction Plan Implemented
The Company implemented an operating expense reduction plan in response to the impact of the COVID-19 pandemic on the loan portfolio. The Company has completed the following actions under its operating expense reduction plan:
• Reduction of its U.S. workforce by approximately 17% effective July 8, 2020;
• Suspension of its 2020 short-term incentive plan (bonus pool) effective as of June 30, 2020;
• Reduction of executive salaries and board compensation beginning July 2020; and
• Elimination of discretionary operating expense items and renegotiated terms with key vendors.
Liquidity and Capital Resources
The Company paid down its debt facilities by approximately $87.5 million during the first half of 2020 ($103.8 million including the discontinued operations of ECIL). Although the Company deconsolidated ECIL as of June 30, 2020, it still guarantees the repayment of ECIL's outstanding
debt, which was approximately £10.2 million as of June 30, 2020. The Company believes ECIL will be able to repay their debt from the liquidation of ECIL's remaining assets.
Interest expense in the second quarter of 2020 declined to $12.2 million as compared to $16.9 million in the second quarter of 2019. This decrease resulted from a lower cost of funds related to the amendment of the debt facilities in February 2019, which decreased to approximately 10.5% in the second quarter of 2020, versus 13.8% in the second quarter of 2019, respectively.
During the second quarter of 2020, the Company purchased $3.8 million of common shares under the Company's previously approved common stock repurchase program. The Company is continuing to assess its minimum cash and liquidity requirements and implementing measures to
ensure that its strong liquidity position is maintained through the current economic cycle. As of June 30, 2020, the Company is in compliance with all debt facility covenants.
Financial Outlook
As previously announced, the Company withdrew its full-year 2020 earnings guidance due to the uncertain impact on our business and results of operations resulting from the COVID-19 pandemic.
Conference Call
The Company will host a conference call to discuss its second quarter 2020 financial results on Thursday, August 6, at 4:00pm Central Time / 5:00pm Eastern Time. Interested parties may access the conference call live over the phone by dialing 1-866-269-4260 (domestic) or 1-929-477-0591 (international) and requesting the Elevate Credit Second Quarter 2020 Earnings Conference Call. Participants are asked to dial in a few minutes prior to the call to register for the event. The conference call will also be webcast live through Elevate's website at http://www.elevate.com/investors.
An audio replay of the conference call will be available approximately three hours after the conference call until 11:59 pm ET on August 20, 2020, and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international), and providing the passcode 8266199, or by accessing Elevate's website.
About Elevate
Elevate (NYSE: ELVT), together with the banks that license its marketing and technology services, has originated $8.5 billion in non-prime credit to more than 2.5 million non-prime consumers to date and has saved its customers more than $7.3 billion versus the cost of payday loans. Its responsible, tech-enabled online credit solutions provide immediate relief to customers today and help them build a brighter financial future. The company is committed to rewarding borrowers' good financial behavior with features like interest rates that can go down over time, free financial training and free credit monitoring. Elevate's suite of groundbreaking credit products includes RISE, Elastic and Today Card. For more information, please visit http://www.elevate.com.
Investor Relations:
Solebury Trout
Sloan Bohlen, (817) 928-1646
investors@elevate.com
or
Media Inquiries:
Solebury Trout
Lisa Wolford, (917) 846-0881
lwolford@soleburytrout.com
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Disclaimer
Elevate Credit Inc. published this content on 06 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 August 2020 20:33:12 UTC
