FlexShopper, Inc. Reports 2022 Fourth Quarter and Year End Financial Results
04/24/2023 - 06:24 PM
BOCA RATON, Fla., April 24, 2023 (GLOBE NEWSWIRE) -- FlexShopper, Inc. (Nasdaq:FPAY) (“FlexShopper”), a leading national online lease-to-own (“LTO”) retailer and payment solution provider for underserved consumers, today announced its financial results for the quarter and fiscal year ended December 31, 2022.
Results for Quarter Ended December 31, 2022 vs. Quarter Ended December 31, 2021:
Total fundings increased 11.3% to $33.1 million from $29.7 million consisting of gross lease originations decreasing from $26.9 t o $23.2 million , loan participations increasing ~52.5% from $2.9 million to $4.4 million , and loan originations increasing from $0 t o $5.5 million Total net lease and loan revenues, including the changes in fair value of loan receivables, decreased 31.1% to $21.4 million from $31.1 million Gross profit decreased 68.5% to $3.8 million from $12.2 million Adjusted EBITDA1 decreased to $(4.0) million compared to $2.0 million Net income of $7.9 million compared with net income of $633 thousand . Net income for the quarter ended December 31, 2022 includes a gain on bargain purchase for $14.5 million and a benefit from income taxes for $2.7 million Net income attributable to common and Series 1 Convertible Preferred shareholders of $6.0 million , or $0.27 per diluted share, compared to $23.5 thousand , or $0.00 per diluted share Results for Twelve Months Ended December 31, 2022, vs. Twelve Months Ended December 31, 2021:
Total fundings increased 28.9% to $111.8 million from $86.7 million consisting of gross lease originations decreasing from $83.4 t o $75.1 million , loan participations increasing from $3.3 million to $31.2 million and loan originations increasing from $0 t o $5.5 million Total net lease and loan revenues, including the changes in fair value of loan receivables, decreased 9.9% to $113.1 million from $125.4 million Gross profit decreased 19.7% to $37.1 million from $46.2 million Adjusted EBITDA1 decreased to $(0.5) million compared to $11.4 million Net income increased to $13.6 million compared with net income of $3.3 million . Net income for the year ended December 31, 2022 includes a gain on bargain purchase for $14.5 million and a benefit from income taxes for $16.6 million Net income attributable to common and Series 1 Convertible Preferred shareholders increased to $9.9 million , or $0.44 per diluted share, compared to $0.8 million , or $0.04 per diluted share 1 Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition and reconciliation of this measure under “Non-GAAP Measures”.
Operational Highlight:
In December, FlexShopper purchased the assets of Revolution Financial, Inc. The purchase facilitated the launch of a brick and mortar, direct origination model for loans to underserved consumers in 11 states. There are currently 100 locations with plans to expand, via revenue share agreements, to additional locations. Conference Call and Webcast Details
Conference call
Date: Tuesday. April 25, 2023
Participant Dial-In Numbers:
Domestic callers: (877) 407-2988
Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=CqIR0Ahy
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=CqIR0Ahy
An audio replay of the call will be archived on the Company’s website.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 2022 2021 Revenues: Lease revenues and fees, net $ 105,936,072 $ 124,505,432 Loan revenues and fees, net of changes in fair value 7,120,101 921,324 Total revenues 113,056,173 125,426,756 Costs and expenses: Depreciation and impairment of lease merchandise 72,556,431 78,669,393 Loan origination costs and fees 3,384,013 508,493 Marketing 11,031,695 9,129,062 Salaries and benefits 10,991,477 11,489,208 Operating expenses 21,395,767 18,265,781 Total costs and expenses 119,359,383 118,061,937 Operating (loss)/ income (6,303,210 ) 7,364,819 Gain on extinguishment of debt - 1,931,825 Gain on bargain purchase 14,461,274 - Interest expense including amortization of debt issuance costs (11,161,396 ) (5,238,560 ) (Loss)/income before income taxes (3,003,332 ) 4,058,084 Benefit /(expense) from income taxes 16,635,051 (785,310 ) Net income 13,631,719 3,272,774 Dividends on Series 2 Convertible Preferred Shares 3,730,580 2,439,099 Net income attributable to common and Series 1 Convertible Preferred shareholders $ 9,901,139 $ 833,675 Basic and diluted income per common share: Basic $ 0.45 $ 0.04 Diluted $ 0.44 $ 0.04 WEIGHTED AVERAGE COMMON SHARES: Basic 21,646,896 21,387,960 Diluted 22,425,354 23,227,964
CONSOLIDATED BALANCE SHEETS
December 31, December 31, 2022 2021 ASSETS CURRENT ASSETS: Cash $ 6,051,713 $ 4,986,559 Restricted cash 121,636 108,083 Lease receivables, net 35,540,043 25,473,154 Loan receivables at fair value 32,932,504 3,560,108 Prepaid expenses and other assets 3,489,136 1,823,256 Lease merchandise, net 31,550,441 40,942,112 Total current assets 109,685,473 76,893,272 Property and equipment, net 8,086,862 5,490,434 Right of use asset, net 1,406,270 1,553,330 Intangible assets, net 15,162,349 4,960 Other assets, net 1,934,728 870,060 Deferred tax asset, net 12,013,828 - Total assets $ 148,289,510 $ 84,812,056 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 6,511,943 $ 7,982,180 Accrued payroll and related taxes 310,820 391,078 Promissory notes to related parties, net of $0 at 2022 and $1,274 at 2021 of unamortized issuance costs, including accrued interest 1,209,455 1,053,088 Accrued expenses 3,988,093 2,987,646 Lease liability - current portion 208,001 172,732 Total current liabilities 12,228,312 12,586,724 Loan payable under credit agreement to beneficial shareholder, net of $352,252 at 2022 and $413,076 at 2021 of unamortized issuance costs 80,847,748 50,061,924 Promissory notes to related parties, net of current portion 10,750,000 3,750,000 Promissory note related to acquisition, net of $1,165,027 discount at 2022 3,158,471 - Purchase consideration payable related to acquisition 8,703,684 - Deferred income tax liability - 495,166 Lease liabilities net of current portion 1,566,622 1,774,623 Total liabilities 117,254,837 68,668,437 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 21,750,804 shares at December 31, 2022 and 21,442,278 shares at December 31, 2021 2,176 2,144 Additional paid in capital 39,819,420 38,560,117 Accumulated deficit (31,590,583 ) (45,222,302 ) Total stockholders’ equity 31,034,673 16,143,619 $ 148,289,510 $ 84,812,056
CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2022 and 2021
2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 13,631,719 $ 3,272,774 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and impairment of lease merchandise 72,556,431 78,669,393 Other depreciation and amortization 4,769,614 2,875,902 Amortization of debt issuance costs 228,843 220,816 Amortization of discount on the promissory note related to acquisition 19,747 - Compensation expense related to stock-based compensation and warrants 997,830 1,648,627 Provision for doubtful accounts 57,420,480 40,342,618 Gain on sale of lease receivables 8,821,106 - Interest in kind added to promissory notes balance 155,093 9,460 Deferred income tax (17,282,364 ) 495,166 Gain on debt extinguishment - (1,931,825 ) Gain on bargain purchase (14,461,274 ) - Net changes in the fair value of loan receivables at fair value 9,559,979 (248,984 ) Changes in operating assets and liabilities, net of effects of acquisition: Lease receivables (76,308,475 ) (56,738,233 ) Loan receivables at fair value (25,612,049 ) (3,221,679 ) Prepaid expenses and other assets (1,665,880 ) (87,394 ) Lease merchandise (63,164,760 ) (76,789,165 ) Security deposits (4,956 ) (8,338 ) Purchase consideration payable related to acquisition 164,102 - Lease liabilities (14,488 ) (5,811 ) Accounts payable (1,976,844 ) 74,561 Accrued payroll and related taxes (80,258 ) (165,461 ) Accrued expenses 1,009,468 331,542 Net cash used in operating activities (31,236,936 ) (11,256,031 ) CASH FLOWS FROM INVESTING ACTIVITIES Cash acquired in business combination 2,938,355 - Purchases of property and equipment, including capitalized software costs (6,498,115 ) (4,065,384 ) Purchases of data costs (1,640,885 ) (884,160 ) Net cash used in investing activities (5,200,645 ) (4,949,544 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from loan payable under credit agreement 36,455,000 19,850,000 Repayment of loan payable under credit agreement (5,730,000 ) (6,575,000 ) Debt issuance related costs (166,745 ) (565,273 ) Proceeds from exercise of stock options 261,505 68,172 Proceeds from promissory notes to related parties 7,000,000 - Principal payment under finance lease obligation (11,184 ) (7,707 ) Repayment of purchase consideration payable related to acquisition (283,266 ) - Repayment of installment loan (9,022 ) (11,207 ) Net cash provided by financing activities 37,516,288 12,758,985 INCREASE / (DECREASE) IN CASH and RESTRICTED CASH 1,078,707 (3,446,590 ) CASH and RESTRICTED CASH, beginning of period 5,094,642 8,541,232 CASH and RESTRICTED CASH, end of period $ 6,173,349 $ 5,094,642 Supplemental cash flow information: Interest paid $ 10,289,334 $ 4,945,690 Noncash investing and financing activities Acquisition of loan receivables at fair value $ 13,320,326 $ - Acquisition of property and equipment 136,249 - Acquisition of intangible assets 15,307,894 - Acquisition of purchase consideration payable related to acquisition 8,539,582 - Acquisition of accounts payable 506,607 - Acquisition of deferred tax liability 4,773,370 - Issuance of promissory note related to acquisition 3,421,991 -
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 merchandise), 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 years ended December 31, 2022 and 2021 were as follows:
2022 2021 $ Change % Change Adjusted EBITDA: Net income $ 13,631,719 $ 3,272,774 $ 10,358,945 316.5 Income taxes (16,635,051 ) 785,310 (17,420,361 ) (2,218.3 ) Amortization of debt issuance costs 228,843 220,816 8,027 3.6 Other amortization and depreciation 4,769,614 2,875,902 1,893,712 65.8 Interest expense 10,932,553 5,017,744 5,914,809 117.9 Stock-based compensation 997,830 1,125,819 (127,989 ) (11.4 ) Product/infrastructure expenses - 10,000 (10,000 ) Gain on debt extinguishment - (1,931,825 ) 1,931,825 Gain on bargain purchase (14,461,274 ) - (14,461,274 ) Adjusted EBITDA $ (535,766 ) $ 11,376,540 $ (11,912,306 ) (104.7 )
About FlexShopper
FlexShopper, Inc. (FPAY) is a financial technology company that provides electronics, home furnishings and other durable goods to underserved consumers on a lease-to-own (LTO) basis through its patented e-commerce marketplace (www.FlexShopper.com). FlexShopper also provides LTO and loan technology platforms to a growing number of retailers and e-retailers to facilitate transactions with consumers without access to traditional financing.
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, 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 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:
FlexShopper, Inc.
