FlexShopper, Inc. Reports First Quarter 2022 Financial Results
Results for Quarter Ended
- Total fundings increased 1% to
$21.2 million from$21.0 million consisting of gross lease originations decreasing 22.0% to$16.3 million from$20.9 million and loan participations up ~5000% from$97 thousand to$4.9 million
- Total net lease revenues and fees decreased 15.2% to
$27.8 million from$32.8 million
- Total net loan revenues and fees increased 3,576.4% to
$1.2 million from$32 thousand
- Gross profit decreased 8.7% to
$9.4 million from$10.3 million
- Adjusted EBITDA1 decreased to
$(40.3) thousand compared to$2.4 million
- Net loss of
$2.4 million compared with net income of$1.2 thousand
- Net loss attributable to common stockholders of
$(3.0) million , or$(0.14) per diluted share, compared to net loss attributable to common stockholders of$(608) thousand , or$(0.03) per diluted share
¹Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition and reconciliation of this measure under “Non-GAAP Measures”.
First Quarter 2022 Highlights and Recent Developments
- Retail partner rollouts expanding. Finished the quarter with over 1,300 active storefronts and expected to increase by an additional 1,000 by 3Q
- Installment loan participations are growing steadily. Supplementing rent-to-own with an installment loan product has allowed expansion in a vertical with a similar customer base.
Conference Call Details
Date:
Time:
Participant Dial-In Numbers:
Domestic callers: (877) 407-2988
International callers: (412) 902-0038
Access by Webcast
The call will also be simultaneously webcast over the Internet via the “Investor” section of the Company’s website at www.flexshopper.com or by clicking on the conference call link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=TfEbUnTh. An audio replay of the call will be archived on the Company’s website.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| For the three months ended |
||||||||
| 2022 | 2021 | |||||||
| Revenues: | ||||||||
| Lease revenues and fees, net | $ | 27,766,312 | $ | 32,751,331 | ||||
| Loan revenues and fees, net of changes in fair value | 1,188,924 | 32,339 | ||||||
| Total revenues | 28,955,236 | 32,783,670 | ||||||
| Costs and expenses: | ||||||||
| Cost of lease revenues, consisting of depreciation and impairment of lease merchandise | 19,160,611 | 22,463,556 | ||||||
| Loan origination costs and fees | 425,513 | 63,397 | ||||||
| Marketing | 2,014,115 | 1,832,740 | ||||||
| Salaries and benefits | 2,964,442 | 2,909,319 | ||||||
| Operating expenses | 5,673,202 | 4,114,424 | ||||||
| Total costs and expenses | 30,237,883 | 31,383,436 | ||||||
| Operating (loss)/income | (1,282,647 | ) | 1,400,234 | |||||
| Interest expense including amortization of debt issuance costs | 1,958,068 | 1,398,997 | ||||||
| Income before income taxes | (3,240,715 | ) | 1,237 | |||||
| Income taxes | (859,780 | ) | - | |||||
| Net (loss)/income | (2,380,935 | ) | 1,237 | |||||
| Dividends on Series 2 Convertible Preferred Shares | 609,777 | 609,772 | ||||||
| Net loss attributable to common and Series 1 Convertible Preferred shareholders | $ | (2,990,712 | ) | $ | (608,535 | ) | ||
| Basic and diluted loss per common share: | ||||||||
| Basic and diluted | $ | (0.14 | ) | $ | (0.03 | ) | ||
| WEIGHTED AVERAGE COMMON SHARES: | ||||||||
| Basic and diluted | 21,547,069 | 21,369,904 | ||||||
The accompanying notes are an integral part of these condensed consolidated statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
| 2022 | 2021 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | 4,319,701 | $ | 5,094,642 | ||||
| Accounts receivable, net | 29,537,940 | 26,338,883 | ||||||
| Loans receivable | 7,137,503 | 3,560,108 | ||||||
| Prepaid expenses | 932,019 | 957,527 | ||||||
| Lease merchandise, net | 36,597,829 | 40,942,112 | ||||||
| Total current assets | 78,524,992 | 76,893,272 | ||||||
| Property and equipment, net | 8,423,894 | 7,841,206 | ||||||
| Other assets, net | 76,809 | 77,578 | ||||||
| Total assets | $ | 87,025,695 | $ | 84,812,056 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 4,816,837 | $ | 7,982,180 | ||||
| Accrued payroll and related taxes | 665,024 | 391,078 | ||||||
| Promissory notes to related parties, net of |
225,127 | 1,053,088 | ||||||
| Accrued expenses | 1,579,036 | 2,987,646 | ||||||
| Lease liability - current portion | 181,197 | 172,732 | ||||||
| Total current liabilities | 7,467,221 | 12,586,724 | ||||||
| Loan payable under credit agreement to beneficial shareholder, net of |
55,699,321 | 50,061,924 | ||||||
| Promissory notes to related parties, net of current portion | 7,750,000 | 3,750,000 | ||||||
| Deferred income tax liability | 178,160 | 495,166 | ||||||
| Lease liabilities net of current portion | 1,726,023 | 1,774,623 | ||||||
| Total liabilities | 72,820,725 | 68,668,437 | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Series 1 Convertible Preferred Stock, |
851,660 | 851,660 | ||||||
| Series 2 Convertible Preferred Stock, |
21,952,000 | 21,952,000 | ||||||
| Common stock, |
2,161 | 2,144 | ||||||
| Additional paid in capital | 39,002,386 | 38,560,117 | ||||||
| Accumulated deficit | (47,603,237 | ) | (45,222,302 | ) | ||||
| Total stockholders’ equity | 14,204,970 | 16,143,619 | ||||||
| $ | 87,025,695 | $ | 84,812,056 | |||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended
(unaudited)
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net (loss)/income | $ | (2,380,935 | ) | $ | 1,237 | |||
| Adjustments to reconcile net (loss)/income to net cash used in operating activities: | ||||||||
| Depreciation and impairment of lease merchandise | 19,160,611 | 22,463,556 | ||||||
| Other depreciation and amortization | 937,062 | 651,396 | ||||||
| Amortization of debt issuance costs | 50,603 | 91,703 | ||||||
| Compensation expense related to stock-based compensation and warrants | 305,229 | 593,186 | ||||||
| Provision for doubtful accounts | 11,831,117 | 8,833,349 | ||||||
| Interest in kind added to promissory notes balance | 170,765 | 9,098 | ||||||
| Deferred income tax | (317,006 | ) | - | |||||
| Net changes in the fair value of loans receivable | 523,424 | 16,993 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (15,030,174 | ) | (9,727,764 | ) | ||||
| Loans receivable | (4,100,819 | ) | (118,417 | ) | ||||
| Prepaid expenses and other | 25,658 | (53,683 | ) | |||||
| Lease merchandise | (14,816,328 | ) | (18,961,999 | ) | ||||
| Security deposits | - | 4,280 | ||||||
| Lease Liabilities | (2,511 | ) | (1,033 | ) | ||||
| Accounts payable | (3,165,343 | ) | (4,781,405 | ) | ||||
| Accrued payroll and related taxes | 273,946 | 208,230 | ||||||
| Accrued expenses | (1,405,958 | ) | 208,266 | |||||
| Net cash used in operating activities | (7,940,659 | ) | (563,007 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property and equipment, including capitalized software costs and data costs | (1,553,810 | ) | (734,122 | ) | ||||
| Net cash used in investing activities | (1,553,810 | ) | (734,122 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from loan payable under credit agreement | 6,800,000 | 3,500,000 | ||||||
| Repayment of loan payable under credit agreement | (1,125,000 | ) | (3,910,000 | ) | ||||
| Debt issuance related costs | (86,931 | ) | (526,565 | ) | ||||
| Proceeds from exercise of stock options | 137,057 | 12,912 | ||||||
| Proceeds from promissory notes, net of fees | 3,000,000 | - | ||||||
| Principal payment under finance lease obligation | (2,796 | ) | (1,833 | ) | ||||
| Repayment of instalment loan | (2,802 | ) | (2,802 | ) | ||||
| Net cash provided by/used in financing activities | 8,719,528 | (928,288 | ) | |||||
| DECREASE IN CASH | (774,941 | ) | (2,225,417 | ) | ||||
| CASH, beginning of period | $ | 5,094,642 | $ | 8,541,232 | ||||
| CASH, end of period | $ | 4,319,701 | $ | 6,315,815 | ||||
Non-GAAP Measures
We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.
Adjusted EBITDA represents net income before interest, stock-based compensation, taxes, depreciation (other than depreciation of leased inventory), amortization, and one-time or non-recurring items. We believe that Adjusted EBITDA provides us with an understanding of one aspect of earnings before the impact of investing and financing charges and income taxes.
Key performance metrics for the three months ended
| Three months ended |
||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||
| Adjusted EBITDA: | ||||||||||||||||
| Net (loss)/income | $ | (2,380,935 | ) | $ | 1,237 | $ | (2,382,172 | ) | (192,576.6 | ) | ||||||
| Income taxes | (859,780 | ) | - | (859,780 | ) | |||||||||||
| Amortization of debt issuance costs | 50,603 | 91,703 | (41,100 | ) | (44.8 | ) | ||||||||||
| Other amortization and depreciation | 937,062 | 651,396 | 285,666 | 43.9 | ||||||||||||
| Interest expense | 1,907,465 | 1,307,294 | 600,171 | 45.9 | ||||||||||||
| Stock-based compensation | 305,229 | 380,264 | (75,035 | ) | (19.7 | ) | ||||||||||
| Product/ infrastructure expenses | - | 10,000 | (10,000 | ) | ||||||||||||
| Adjusted EBITDA | $ | (40,356 | ) | $ | 2,441,894 | $ | (2,482,250 | ) | (101.7 | ) | ||||||
The Company refers to Adjusted EBITDA in the above table as the Company uses this measure to evaluate operating performance and to make strategic decisions about the Company. Management believes that Adjusted EBITDA provides relevant and useful information which is widely used by analysts, investors and competitors in its industry in assessing performance.
About
Forward-Looking Statements
All statements in this release that are not based on historical fact are “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. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “could,” “seek,” “intend,” “plan,” “goal,” “estimate,” “anticipate,” or other comparable terms. Examples of forward-looking statements include, among others, statements we make regarding expectations of lease originations during the holiday season, the expansion of our lease-to-own program; expectations concerning our partnerships with retail partners; investments in, and the success of, our underwriting technology and risk analytics platform; our ability to collect payments due from customers; expected future operating results and; expectations concerning our business strategy. Forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, as a result of various factors including, among others, the following: our limited operating history, limited cash and history of losses; our ability to obtain adequate financing to fund our business operations in the future; the failure to successfully manage and grow our FlexShopper.com e-commerce platform; our ability to maintain compliance with financial covenants under our credit agreement; our dependence on the success of our third-party retail partners and our continued relationships with them; our compliance with various federal, state and local laws and regulations, including those related to consumer protection; the failure to protect the integrity and security of customer and employee information; and the other risks and uncertainties described in the Risk Factors and in Management’s Discussion and Analysis of Financial Condition and Results of Operations sections of our Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q. The forward-looking statements made in this release speak only as of the date of this release, and
Contact:
Investor Relations
ir@flexshopper.com
Source: FlexShopper, Inc.