Enova International, Inc. · NYSE:ENVA
Enova International — Investor Presentation (June 2020)
45 slides from Enova International's investor presentation, Jun 24, 2020
Slide 1: Investor Presentation May 2020
Investor Presentation May 2020 Exhibit 99.1
Slide 2: Safe Harbor Statement
Safe Harbor Statement Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Results This presentation 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.
Slide 3: Our Mission
From the Federal Reserve Board1: Our Mission 39% of Americans said they didn’t have sufficient savings to cover an emergency of $400 1 May 2019 Federal Reserve Board Survey
Slide 4: Our Business
Our Business Focus on Non – Prime Borrowers – a Large, Expanding Market Segment Proven Tech and Analytics Drive Superior Results and Create Competitive Moat 15+ Year History of Profitably Lending Through Various Credit Cycles Multiple Growth Businesses that Deliver Industry Leading Returns History o
Slide 5: Strong Financial Position and Execution of Our Strategic Initiatives
Strong Financial Position and Execution of Our Strategic Initiatives $371M Cash and Open Committed Facilities Disciplined focus on unit economics resulting in strong returns and earnings capacity LTM Revenue of $1.27B Strong liquidity position to navigate impacts of COVID-19 Meeting consumer prefere
Slide 6: Near Term Focus is on the COVID-19 Response and Recovery Strategy
Near Term Focus is on the COVID-19 Response and Recovery Strategy Customer First Approach Ensuring payment and collection policies are beneficial and adapted to customer needs Increased repayment flexibility Temporary cessation of late fees assessment Continue to work with customers on due date adju
Slide 7: Second Quarter 2020 Update
Second Quarter 2020 Update Portfolio Performance Originations Financial Results Portfolio performance has continued to stabilize since the April earnings call Payment rates, including loans under modified plans, have returned to pre-COVID levels Delinquency rates have declined steadily from mid-Apri
Slide 8: Proven Track Record in FinTech Industry
Proven Track Record in FinTech Industry 1 From inception through March 31, 2020 for Enova and OnDeck, and from inception through December 31, 2019 for Elevate and Lending Club. Enova includes originations from discontinued products. 2 From inception through March 31, 2020 for Enova and OnDeck, and f
Slide 9: High Quality Products to Close the Credit Gap
High Quality Products to Close the Credit Gap Small Business US Non – Prime1 $41k Avg. Income 42 Avg. Age 32% Homeowners US Near–Prime1 $58k Avg. Income 45 Avg. Age 46% Homeowners LOCs1 Avg. 7 Yrs. old & $473k revenue Sub-Prime Single Pay Loans or Advances, Installment Loans, and Lines of Credit Siz
Slide 10: Enova's US Consumer Lending Footprint
Enova’s US Consumer Lending Footprint Enova offers various loan products to non-prime consumers in 39 states + D.C. Enova has been successful in delivering growth through multiple state lending law changes.
Slide 11: Enova's SMB Lending Footprint
Enova’s SMB Lending Footprint Enova’s SMB Lending operates nationwide, helping small and medium enterprises get access to fast and trustworthy credit
Slide 12: Highly Flexible Online-Only Business Model
Highly Flexible Online-Only Business Model Requires travel to physical location, standing in line to apply for funds in public, storage of records in multiple locations and customer re-visits for account management Costly and difficult supervision and training for multiple locations Limited Ability
Slide 13: Successful Product Diversification Efforts
Successful Product Diversification Efforts FY 2009 Revenue Diversification by Product Type1,2 FY 2009 Marketing Diversification by Channel Gross AR Diversification by Product Type2 FY 2009 Q1 2020 Q1 2020 Q1 2020 1 Excludes revenue from Enova Decisions. 2 Numbers representative of continuing operati
Slide 14: Enova is Well Positioned to Manage Through an Economic Slowdown
Enova is Well Positioned to React Quickly and Manage Through an Economic Slowdown Formal Recession Monitoring and Response Process Proven Analytics and Technology Highly Flexible Online Only Business Model Track Record of Consistent Profitability Balance Sheet Resiliency Experienced Management Team
Slide 15: Proven Proprietary Real-Time Analytics and Technology Support Our COVID-19 Response
Proven Proprietary Real-Time Analytics and Technology Support Our COVID-19 Response Predictive models Pattern recognition Machine learning 500K transactions / hour 1,000+ variables for underwriting 100+ algorithms running Models built in SAS®, R, and PythonTM The ColossusTM Analytics Engine creates
Slide 16: Enova's RealView Underwriting Outperforms Competitors
Enova’s RealView™ Underwriting Outperforms Competitors 1 ROC Curves - Receiver Operating Characteristic Curves (True Positives versus False Positives at various levels). This graph should not be considered to be an indicator of future performance. Depiction of Enova study using a random sample from
Slide 17: Formal Recession Monitoring and Response Processes
Several Years of Developing Formal Recession Monitoring and Response Processes Have Prepared Us to Adapt to Adverse Economic Conditions Risk Monitoring Response Planning Formal monthly (at least) risk ratings and reporting for all brands Playbooks in place for each business and critical functions Cl
Slide 18: Monitoring Activities Focus on Taking Informed and Timely Action
Monitoring Activities Focus on Taking Informed and Timely Action Internal Portfolio Metrics External Economic Factors Alert Level Examples of Internal Portfolio Metrics Initial defaults Portfolio hazard rate Delinquency roll rates ACH return rates Utilization Examples of External Economic Factors Jo
Slide 19: Alert Response System Focuses on Targeted Risk Mitigation
Alert Response System Focuses on Targeted and Appropriate Risk Mitigation Through Recovery ALERT LEVEL RISK MITIGATION IMPACT ASSESSMENT/ MONITORING RECOVERY/ RETURN TO NORMAL Each business function has clearly defined roles and responsibilities that will be followed from the first warning signs of
Slide 20: Nonprime Consumer Credit Losses Have Shown Less Volatility in a Downturn
Nonprime Consumer Credit Losses Have Shown Less Volatility in an Economic Downturn 3.00x Super-Prime > 770 0% 30% 0.2% 0.6% Prime 710 – 770 0% 30% 1.5% 3.9% Near-Prime 650 – 710 0% 30% 5.6% 9.8% Risk Score FICO score 2004 – 2006 normalized loss rate1 compared to 2009 peak loss rate 2008 – 2009 reces
Slide 21: Financial Resiliency of Nonprime Lenders in a Downturn
Financial Resiliency of Nonprime Lenders in a Downturn Should Benefit from Higher Margins and Lower Credit Volatility 1 Net Revenue Margin is total revenue less interest expense divided by average earning assets Source: Consumer Lending Specialty Banks and Credit Card Specialty Banks as reported in
Slide 22: Enova's Earnings Capacity Provides a Strong First Line of Defense
Enova’s Earnings Capacity Provides a Strong First Line of Defense to Absorb an Increase in Credit Losses Caused by the Current Crisis 1 ROE is based on trailing twelve months Adjusted Net Income. 2 Enova elected the Fair Value Option effective January 1st, 2020. Pre-2020 Financials are reflective of
Slide 23: Strong Liquidity Position and Significant Committed Financing Capacity
Securitization Facilities $142.0 Secured Revolver $18.8 Strong Liquidity Position and Significant Committed Financing Capacity As of March 31, 2020, cash and marketable securities totaled $214M, including $171M unrestricted, and available capacity on committed facilities where eligible collateral is
Slide 24: Thoughtful Laddering of Debt Maturities
Thoughtful Laddering of Debt Maturities 1 As of 3/31/2020. Dollar amounts reflect face value of debt outstanding, which is net of unamortized closing costs and fees
Slide 25: Continuing Our Success
Continuing OurSuccess... Helping hardworking people get access to fast, trustworthy credit [| FOCUSED | GR WITH
Slide 26: Multiple Growth Businesses
Multiple Growth Businesses Large markets with LARGE opportunities US Subprime Brazil US Near Prime Small Business Enova Decisions
Slide 27: Large Markets with Large Non-Prime Lending Opportunities
Large Markets with Large Non-Prime Lending Opportunities NOTE: Consumer estimates refer to Non-Prime portion of unsecured personal loans and SMB refers to small business standby line of credit below $100k 1 “The State of Short-Term Credit Amid Ambiguity, Evolution and Innovation (2016),” John Hecht,
Slide 28: US Consumer Subprime: Manage Portfolio and Position for Growth
US Consumer Subprime: Manage Portfolio and Position for Growth Receivables Balance by Product Type Consumer Unsecured Short Term, Installment, and Line of Credit Loans Make smart underwriting decisions to serve customers in need and be responsible in originations volume Minimize portfolio loss rates
Slide 29: US Near Prime: Manage Performance and Prepare for Re-Entry
US Near Prime: Manage Performance and Prepare for Re-Entry Work with customers facing hardship Manage effective collections programs to maximize recoveries Prepare for increased lending by developing strategies to address new credit and market dynamics Near-Prime consumers that are improving their a
Slide 30: Illustrative NetCredit Unit Economics
Illustrative NetCredit Unit Economics 1 Loans depicted above are weighted average for NC portfolio. The average customer takes out more than one loan. Customer behavior, such as default performance, prepayment rates, and retention rates are based on NetCredit loan data accrued over time. Customer ac
Slide 31: Brazil: Position for Growth
Brazil: Position for Growth Consumer Unsecured Installment Loans Gross Accounts Receivable2,3 ($ in Millions) Adapt customer service and collection policies in response to temporary income loss to maximize customer payment success and recoveries Implement updated regulatory guidance for opt-in and A
Slide 32: US Small Business: Faster, Easier, and Stable
US Small Business: Faster, Easier, and Stable Improve collections capacity, add tools, and shift tactics to accommodate increased defaulted accounts as a result of COVID crisis Implement tailored process for that maximizing successful re-payment and customer engagement Unsecured Receivables Purchase
Slide 33: Enova Decisions: Real-Time Analytics for Data Driven Decisions
Enova Decisions: Real-Time Analytics for Data Driven Decisions with Customizable Scores and Decisions Financial services Telecommunications For-profit education Insurance Real estate Enova Decisions Smart Credit™ Smart ACH™ Enova Decisions Smart Offers™ Smart Retention™ Smart Collections™ Enova Deci
Slide 34: Proactive Global Compliance Capabilities
Proactive Global Compliance Capabilities Licensed where required; reduces regulatory risk and is a barrier to entry Central team led by professional bank compliance officer reporting to Board of Directors Regulatory framework built into technology platform and the business model Rapidly update produ
Slide 35: History of Revenue and Profit Growth
($ in Millions) Adjusted EBITDA and Margin3,4 Margin 12.2% 20.8% 18.4% Established Brands include: CashNetUSA and NetCredit (starting FY 2019). Newer Brands include: NetCredit (prior to FY 2019), Headway Capital, The Business Backer, and Simplic. From continuing operations using incurred method of a
Slide 36: Demonstrated Operating Leverage
171% 125% 34% ($ in Millions) Demonstrated Operating Leverage 1 Gross loan and finance receivables balances outstanding include loan arrangements extended by unrelated third parties 2 From continuing operations using incurred method of accounting in effect through December, 2019. Enova elected the f
Slide 37: Proven Ability to Lower Cost of Capital
Proven Ability to Lower Cost of Capital Enova continues to access new markets in larger capacity and expand investor base while further driving cost of debt facilities down Lower cost of funds contributed to ~$2.4 million in additional pretax income in Q1 2020 compared to Q1 2019 1 Debt facilities i
Slide 38: Accounting for Receivables Using Fair Value Began January 1, 2020
Accounting for Receivables Using Fair Value Began January 1, 2020 COMPLIANCE DECISION KEY CHANGES FASB required adoption of life of loan loss accounting on January 1, 2020 for public companies with a public float of greater than $250M In May 2019, FASB included fair value accounting as an option for
Slide 39: Key Changes to Financial Reporting Under Fair Value
(-) Realized Value on Existing Receivables Key Changes to Financial Reporting Under Fair Value Income Statement (+) (-) Change in FV Assumptions Balance Sheet (+) Day 1 Gain on Originations (-) Net Charge Offs (+) Higher originated principal (at consistent mix) (+) Lower credit losses and loss expec
Slide 40: Appendix
Appendix 40 — June 23, 2020 © Enova International, Inc. id enova.
Slide 41: Consolidated Income Statements
Consolidated Income Statements
Slide 42: Consolidated Balance Sheets
Consolidated Balance Sheets
Slide 43: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures
Slide 44: ‘GEG enova.
‘GEG enova.
Slide 45: Thank You
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