FlexShopper, Inc. Reports 2021 Fourth Quarter and Year End Financial Results
03/30/2022 - 04:15 PM
FY 2021 Net Revenues Up 22.9% to $125.4 million ; Net Income of $3.3 million
BOCA RATON, Fla., March 30, 2022 (GLOBE NEWSWIRE) -- FlexShopper, Inc. (Nasdaq:FPAY) (“FlexShopper”), a leading national online lease-to-own (“LTO”) retailer and LTO payment solution provider, today announced its financial results for the quarter and fiscal year ended December 31, 2021, highlighted by increase in revenue and net income.
Results for Quarter Ended December 31, 2021 vs. Quarter Ended December 31, 2020:
Total net revenues and fees increased 10.5% to $31.1 million from $28.1 million Originated 51,071 gross leases, down 28.4% from 71,350; average origination value increased by 13.6% to $527 Net income of $633 thousand compared with net loss of $(419) thousand Net income attributable to common stockholders of $23 thousand , or $0.00 per diluted share, compared to net loss of $(1.0) million , or $(0.05) per diluted share Gross profit increased 10.3% to $12.2 million from $11.1 million Adjusted EBITDA1 decreased to $2.0 million compared to $2.6 million Results for Twelve Months Ended December 31, 2021 vs. Twelve Months Ended December 31, 2020:
Total net revenues and fees increased 22.9% to $125.4 million from $102.1 million Originated 159,217 gross leases, down 15.5% from 188,468; average origination value increased by 12.0% to $524 Net income of $3.3 million compared with net loss of $(340) thousand Net income attributable to common stockholders of $0.8 million , or $0.04 per diluted share, compared to $(3.5) million , or $(0.17) per diluted share in the prior year. Gross profit increased 30.8% to $46.2 million from $35.4 million Adjusted EBITDA1 improved to $11.4 million from $8.7 million 1 Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition and reconciliation of this measure under “Non-GAAP Measures”.
Fourth Quarter 2021 Highlights and Recent Developments
Retail partner rollouts resuming as pandemic impacts recede. FlexShopper currently expects to add over 500 partner store locations during the first half of the year as new and existing pilot programs expand.Expanded borrowing capacity provides capital to support expected growth. The Company recently announced an expansion of its credit facility from $52 million to $82.5 million . The additional capacity is expected to support continued growth of the business.Company expects Adjusted EBITDA growth rate to continue or accelerate. FlexShopper expects demand for alternative finance solutions among subprime customers to continue normalizing in 2022 and, as a result, expects 2022 Adjusted EBITDA to grow at or above the rate in 2021.Rich House, CEO, stated, “2021 was a challenging year across our industry as subprime consumers benefitted from a range of government stimulus programs which, in turn, reduced their demand for alternative financing products and solutions. This negatively impacted our new lease originations for the full year. Despite the headwind for much of the year, we were able to grow our bottom line. For the year, we reported net income of $0.8 million after accounting for non-cash preferred dividend accrual, compared with a loss of $3.5 million in the prior year, with Adjusted EBITDA growing 31% to $11.4 million . Importantly, we achieved this improved profitability without compromising our underwriting. Across our industry we saw many participants do the opposite to maintain volume in the face of reduced demand for alternative financing solutions resulting from massive government stimulus. Those competitors now appear to be reversing course, which is a positive for FlexShopper.”
Mr. House continued, “As the recent COVID surge has receded, we have seen our industry steadily returning to normal. Notably, we have seen existing and new retail partners eager to resume rolling out our lease to own solution. We currently expect to add over 500 stores over the first half of the year, consisting of new pilot programs and other full roll outs. We have also recently introduced a consumer lending product to further support our retail partners. Lease to own contracts are limited to durable goods, leaving a gap for our tire store partners when subprime customers need service work such as wheel alignments. Our new lending product addresses this need, providing a value-added solution for our partners and their customers. Initial interest in this product has been positive and we expect to see continued growth through the year, eventually creating a material impact on our financial results.”
Additionally, Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition of this measure under “Non-GAAP Measures.”
Conference Call Details
Date: Thursday, March 31, 2022
Participant Dial-In Numbers:
Domestic callers: (877) 407-3944
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://themediaframe.com/mediaframe/webcast.html?webcastid=5vm0GSlj . An audio replay of the call will be archived on the Company’s website.
FLEXSHOPPER, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended For the twelve months ended December 31, December 31, 2021 2020 2021 2020 Revenues: Lease revenues and fees, net 29,479,017 26,950,434 118,355,184 96,939,767 Lease merchandise sold 1,614,581 1,191,139 7,071,572 5,144,747 Total revenues 31,093,598 28,141,573 125,426,756 102,084,514 Costs and expenses: Cost of lease revenues, consisting of depreciation and impairment of lease merchandise 17,614,938 16,326,208 73,616,293 63,308,210 Cost of lease merchandise sold 1,261,369 739,281 5,561,593 3,424,880 Marketing 3,557,825 2,260,152 9,129,062 5,880,063 Salaries and benefits 3,160,020 3,116,073 11,489,208 10,440,693 Operating expenses 4,611,743 4,367,210 18,265,781 14,404,953 Total costs and expenses 30,205,895 26,808,924 118,061,937 97,458,799 Operating income 887,703 1,332,649 7,364,819 4,625,715 Gain on extinguishment of debt - - 1,931,825 - Interest expense including amortization of debt issuance costs (1,383,546 ) 1,088,478 (5,238,560 ) (4,302,561 ) Income/(loss) before income taxes (495,843 ) 244,171 4,058,084 323,154 Provision for income taxes 1,129,163 (663,050 ) (785,310 ) (663,050 ) Net income/(loss) 633,320 (418,879 ) 3,272,774 (339,896 ) Deemed dividend from exchange offer of warrants - - - 713,212 Dividends on Series 2 Convertible Preferred Shares 609,777 609,771 2,439,099 2,438,988 Net income/(loss) attributable to common shareholders $ 23,543 $ (1,028,650 ) $ 833,675 $ (3,492,096 ) Basic and diluted income/(loss) per common share: Basic $ - $ (0.05 ) $ 0.04 $ (0.17 ) Diluted $ - $ (0.05 ) $ 0.04 $ (0.17 ) WEIGHTED AVERAGE COMMON SHARES: Basic 20,712,772 21,359,912 21,387,960 20,995,349 Diluted 22,455,815 21,359,912 23,227,964 20,995,349
FLEXSHOPPER, INC. CONSOLIDATED BALANCE SHEETS
December 31, December 31, 2021 2020 ASSETS CURRENT ASSETS: Cash $ 5,094,642 $ 8,541,232 Accounts receivable, net 29,898,991 10,032,714 Prepaid expenses 957,527 869,081 Lease merchandise, net 40,942,112 42,822,340 Total current assets 76,893,272 62,265,367 PROPERTY AND EQUIPMENT, net 7,841,206 5,911,696 OTHER ASSETS, net 77,578 72,316 Total assets $ 84,812,056 $ 68,249,379 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 7,982,180 $ 7,907,619 Accrued payroll and related taxes 391,078 352,102 Current portion of promissory notes to related parties, net of $1,247 at 2021 and $8,276 at 2020 of unamortized issuance costs, including accrued interest 1,053,088 4,815,546 Current portion of promissory note – Paycheck Protection Program - 1,184,952 Accrued expenses 2,987,646 2,646,800 Lease liability - current portion 172,732 160,726 Total current liabilities 12,586,724 17,067,745 Loan payable under credit agreement to beneficial shareholder, net of $1,274 at 2021 and $61,617 at 2020 of unamortized issuance costs and current portion 50,061,924 37,134,009 Promissory notes to related parties, net of current portion 3,750,000 - Promissory note – Paycheck Protection Program, net of current portion - 741,787 Accrued payroll and related taxes net of current portion - 204,437 Deferred income tax liability 495,166 - Lease liabilities less current portion 1,774,623 1,947,355 Total liabilities 68,668,437 57,095,333 STOCKHOLDERS’ EQUITY Series 1 Convertible Preferred Stock, $0.00 1 par value - authorized 250,000 shares, issued and outstanding 170,332 shares at $5.00 stated value 851,660 851,660 Series 2 Convertible Preferred Stock, $0.00 1 par value - authorized 25,000 shares, issued and outstanding 21,952 shares at $1,000 stated value 21,952,000 21,952,000 Common stock, $0.00 01 par value- authorized 40,000,000 shares, issued and outstanding 21,442,278 shares at 2021 and 21,359,945 shares at 2020 2,144 2,136 Additional paid in capital 38,560,117 36,843,326 Accumulated deficit (45,222,302 ) (48,495,076 ) Total stockholders’ equity 16,143,619 11,154,046 $ 84,812,056 $ 68,249,379
FLEXSHOPPER, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2021 and 2020
2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net income/ (loss) $ 3,272,774 $ (339,896 ) Adjustments to reconcile net income/ (loss) to net cash used in operating activities: Depreciation and impairment of lease merchandise 73,616,293 63,308,210 Other depreciation and amortization 2,871,541 2,577,084 Amortization of debt issuance cost 220,816 305,797 Compensation expense related to issuance of stock options and warrants 1,648,627 1,388,755 Provision for doubtful accounts 40,489,540 31,930,714 Interest in kind added to promissory notes balance 9,460 13,388 Write off of capitalized software costs 4,361 - Deferred income tax 495,166 - Gain on debt extinguishment (1,931,825 ) - Changes in operating assets and liabilities: Accounts receivable (60,355,817 ) (33,691,096 ) Prepaid expenses and other (87,394 ) (195,104 ) Lease merchandise (71,736,065 ) (75,067,446 ) Security deposits (8,338 ) 2,943 Accounts payable 74,561 3,339,730 Lease liabilities (5,811 ) 198,528 Accrued payroll and related taxes (165,461 ) 43,271 Accrued expenses 331,541 1,283,372 Net cash used in operating activities (11,256,031 ) (5,207,547 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment, including capitalized software costs (4,949,544 ) (3,098,194 ) Net cash used in investing activities (4,949,544 ) (3,098,194 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from loan payable under credit agreement 19,850,000 15,033,000 Repayment of loan payable under credit agreement (6,575,000 ) (7,023,250 ) Proceeds from promissory notes- Paycheck Protection Program, net of fees - 1,914,100 Principal payment under finance lease obligation (7,707 ) (6,664 ) Proceeds from exercise of warrants - 131,250 Proceeds from exercise of stock options 68,172 5,662 Repayment of installment loan (11,207 ) (11,207 ) Debt issuance related costs (565,273 ) (64,390 ) Net cash provided by financing activities 12,758,985 9,978,501 (DECREASE)/ INCREASE IN CASH (3,446,590 ) 1,672,760 CASH, beginning of period 8,541,232 6,868,472 CASH, end of period $ 5,094,642 $ 8,541,232
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 and twelve months ended December 31, 2021 and 2020 were as follows:
Three months ended December 31, 2021 2020 $ Change % Change Adjusted EBITDA: Net income/ (loss) 633,320 (418,879 ) 1,052,199 251.2 Provision for income taxes (1,129,163 ) 663,050 (1,792,213 ) (270.3 ) Amortization of debt costs 43,169 71,514 (28,345 ) (39.6 ) Other amortization and depreciation 867,497 615,881 251,616 40.9 Interest expense, excluding amortization of debt costs 1,340,377 1,016,964 323,413 31.8 Stock compensation 230,927 188,020 42,907 22.8 Product/infrastructure expense - 17,457 (17,457 ) - Executive separation agreement - 396,090 (396,090 ) - Adjusted EBITDA $ 1,986,127 $ 2,550,097 $ (563,970 ) (22.1 )
Twelve months ended December 31, 2021 2020 $ Change % Change Adjusted EBITDA: Net income/ (loss) 3,272,774 (339,896 ) 3,612,670 1,062.9 Provision for income taxes 785,310 663,050 122,260 18.4 Amortization of debt costs 220,816 305,797 (84,981 ) (27.8 ) Other amortization and depreciation 2,875,902 2,271,287 604,615 26.6 Interest expense 5,017,744 3,996,764 1,020,980 25.5 Stock compensation 1,125,819 981,261 144,558 14.7 Product/infrastructure expense 10,000 299,287 (289,287 ) (96.7 ) Warrants compensation-consulting agreement - 139,480 (139,480 ) - Executive separation agreement - 396,090 (396,090 ) - Gain on debt extinguishment (1,931,825 ) - (1,931,825 ) - Adjusted EBITDA $ 11,376,540 $ 8,713,120 $ 2,663,420 30.6
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 FlexShopper
FlexShopper, LLC, a wholly owned subsidiary of FlexShopper, Inc. (FPAY), is a financial and technology company that provides brand name electronics, home furnishings and other durable goods to consumers on a lease-to-own (LTO) basis through its e-commerce marketplace (www.FlexShopper.com) as well as its patented and patent pending systems. FlexShopper also provides LTO technology platforms to retailers and e-retailers to facilitate transactions with consumers that want to acquire their products, but do not have sufficient cash or credit. FlexShopper approves consumers utilizing its proprietary consumer screening model, collects from consumers under an LTO contract and funds the LTO transactions by paying merchants for the goods.
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 FlexShopper assumes no obligation to update any such forward-looking statements to reflect actual results or changes in expectations, except as otherwise required by law.
Contact:
Jeremy Hellman
FlexShopper, Inc.
FlexShopper, Inc.
