FlexShopper, Inc. Reports First Quarter 2023 Financial Results
05/11/2023 - 04:30 PM
BOCA RATON, Fla., May 11, 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 ended March 31, 2023.
Results for Quarter Ended March 31, 2023 vs. Quarter Ended March 31, 2022:
● Total fundings increased 29.2% to $27.4 million from $21.2 million consisting of gross lease originations decreasing from $16.3 t o $13.2 million , loan participations decreased ~96.2% from $4.9 million to $0.2 million , and loan originations increasing from $0 t o $14.0 million ● Total net lease and loan revenues and fees increased 6.3% to $30.8 million from $28.9 million ● Gross profit increased 45.2% to $13.6 million from $9.4 million ● Adjusted EBITDA1 increased to $6.4 million compared to $(40.3) thousand ● Net loss of $230.2 thousand compared with net loss of $2.4 million ● Net loss attributable to common stockholders of $(1.2) million , or $(0.06) per diluted share, compared to net loss attributable to common stockholders of $(3.0) million , or $(0.14) 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”.
Conference Call and Webcast Details
Conference call
Date: Monday, May 15, 2023
Participant Dial-In Numbers:
Domestic callers: (877) 407-2988
Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=G5YRTvWe
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=G5YRTvWe
An audio replay of the call will be archived on the Company’s website.
FLEXSHOPPER, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
For the three months ended March 31, 2023 2022 Revenues: Lease revenues and fees, net $ 24,714,158 $ 27,766,312 Loan revenues and fees, net of changes in fair value 6,071,617 1,188,924 Total revenues 30,785,775 28,955,236 Costs and expenses: Depreciation and impairment of lease merchandise 15,345,788 19,160,611 Loan origination costs and fees 1,833,627 425,513 Marketing 1,099,189 2,014,115 Salaries and benefits 2,726,890 2,964,442 Operating expenses 5,627,708 5,673,202 Total costs and expenses 26,633,202 30,237,883 Operating income/ (loss) 4,152,573 (1,282,647 ) Interest expense including amortization of debt issuance costs 4,531,327 1,958,068 Loss before income taxes (378,754 ) (3,240,715 ) Benefit from income taxes 148,539 859,780 Net loss (230,215 ) (2,380,935 ) Dividends on Series 2 Convertible Preferred Shares 972,233 609,777 Net loss attributable to common and Series 1 Convertible Preferred shareholders $ (1,202,448 ) $ (2,990,712 ) Basic and diluted loss per common share: Basic $ (0.06 ) $ (0.14 ) Diluted $ (0.06 ) $ (0.14 ) WEIGHTED AVERAGE COMMON SHARES: Basic 21,751,304 21,547,069 Diluted 21,751,304 21,547,069
FLEXSHOPPER, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
March 31, December 31, 2023 2022 ASSETS CURRENT ASSETS: Cash $ 9,861,646 $ 6,051,713 Restricted cash 7,881 121,636 Lease receivables, net 37,153,935 35,540,043 Loan receivables at fair value 29,317,948 32,932,504 Prepaid expenses and other assets 2,912,447 3,489,136 Lease merchandise, net 26,908,105 31,550,441 Total current assets 106,161,962 109,685,473 Property and equipment, net 8,677,314 8,086,862 Right of use asset, net 1,366,235 1,406,270 Intangible assets, net 14,719,290 15,162,349 Other assets, net 1,884,060 1,934,728 Deferred tax asset, net 12,162,368 12,013,828 Total assets $ 144,971,229 $ 148,289,510 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 3,843,178 $ 6,511,943 Accrued payroll and related taxes 565,370 310,820 Promissory notes to related parties, including accrued interest 1,210,806 1,209,455 Accrued expenses 2,647,608 3,988,093 Lease liability - current portion 217,862 208,001 Total current liabilities 8,484,824 12,228,312 Loan payable under credit agreement to beneficial shareholder, net of $281,884 at 2023 and $352,252 at 2022 of unamortized issuance costs 81,093,116 80,847,748 Promissory notes to related parties, net of current portion 10,750,000 10,750,000 Promissory note related to acquisition, net of discount of $1,105,789 at 2023 and $1,165,027 at 2022 3,063,771 3,158,471 Purchase consideration payable related to acquisition 8,844,959 8,703,684 Lease liabilities net of current portion 1,508,168 1,566,622 Total liabilities 113,744,838 117,254,837 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 21,752,304 shares at March 31, 2023 and 21,750,804 shares at December 31, 2022 2,176 2,176 Additional paid in capital 40,241,353 39,819,420 Accumulated deficit (31,820,798 ) (31,590,583 ) Total stockholders’ equity 31,226,391 31,034,673 $ 144,971,229 $ 148,289,510
FLEXSHOPPER, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, 2023 and 2022 (unaudited)
2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (230,215 ) $ (2,380,935 ) Adjustments to reconcile net loss to net cash provided by/ (used in) operating activities: Depreciation and impairment of lease merchandise 15,345,788 19,160,611 Other depreciation and amortization 1,826,157 937,062 Amortization of debt issuance costs 70,367 50,603 Amortization of discount on the promissory note related to acquisition 59,239 - Compensation expense related to stock-based compensation 420,748 305,229 Provision for doubtful accounts 11,238,415 11,831,117 Interest in kind added to promissory notes balance 1,351 170,765 Deferred income tax (148,539 ) (317,006 ) Net changes in the fair value of loans receivables at fair value (984,652 ) 523,424 Changes in operating assets and liabilities: Lease receivables (12,852,307 ) (15,655,280 ) Loans receivables at fair value 4,599,208 (4,100,819 ) Prepaid expenses and other assets 576,689 650,764 Lease merchandise (10,703,452 ) (14,816,328 ) Purchase consideration payable related to acquisition 141,275 - Lease liabilities (6,032 ) (2,511 ) Accounts payable (2,668,765 ) (3,165,343 ) Accrued payroll and related taxes 254,550 273,946 Accrued expenses (1,340,486 ) (1,405,958 ) Net cash provided by/ (used in) operating activities 5,599,339 (7,940,659 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment, including capitalized software costs (1,753,800 ) (1,260,755 ) Purchases of data costs (169,082 ) (293,055 ) Net cash used in investing activities (1,922,882 ) (1,553,810 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from loan payable under credit agreement 2,750,000 6,800,000 Repayment of loan payable under credit agreement (2,575,000 ) (1,125,000 ) Debt issuance related costs - (86,931 ) Proceeds from exercise of stock options 1,185 137,057 Proceeds from promissory notes to related parties - 3,000,000 Principal payment under finance lease obligation (2,526 ) (2,796 ) Repayment of purchase consideration payable related to acquisition (153,938 ) - Repayment of installment loan - (2,802 ) Net cash provided by financing activities 19,721 8,719,528 INCREASE / (DECREASE) IN CASH and RESTRICTED CASH 3,696,178 (774,941 ) CASH and RESTRICTED CASH, beginning of period 6,173,349 5,094,642 CASH and RESTRICTED CASH, end of period $ 9,869,527 $ 4,319,701 Supplemental cash flow information: Interest paid $ 3,867,982 $ 1,679,296
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 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 three months ended March 31, 2023 and 2022 are as follows:
Three months ended March 31, 2023 2022 $ Change % Change Gross Profit: Gross lease billings and fees $ 34,255,083 $ 39,597,429 $ (5,342,346 ) (13.5 ) Provision for doubtful accounts (11,238,415 ) (11,831,117 ) 592,702 (5.0 ) Gain on sale of lease receivables 1,697,490 - 1,697,490 Net lease billing and fees $ 24,714,158 $ 27,766,312 $ (3,052,154 ) (11.0 ) Loan revenues and fees 5,086,965 1,712,348 3,374,617 197.1 Net changes in the fair value of loans receivable 984,652 (523,424 ) 1,508,076 (288.1 ) Net loan revenues $ 6,071,617 $ 1,188,924 $ 4,882,693 410.7 Total revenues $ 30,785,775 $ 28,955,236 $ 1,830,539 6.3 Depreciation and impairment of lease merchandise (15,345,788 ) (19,160,611 ) 3,814,823 (19.9 ) Loans origination costs and fees (1,833,627 ) (425,513 ) (1,408,114 ) 330.9 Gross profit $ 13,606,360 $ 9,369,112 $ 4,237,248 45.2 Gross profit margin 44 % 32 %
Three months ended March 31, 2023 2022 $ Change % Change Adjusted EBITDA: Net loss $ (230,215 ) $ (2,380,935 ) $ 2,150,720 (90.3 ) Income taxes (148,539 ) (859,780 ) 711,241 (82.7 ) Amortization of debt issuance costs 70,367 50,603 19,764 39.1 Amortization of discount on the promissory note related to acquisition 59,239 - 59,239 Other amortization and depreciation 1,826,157 937,062 889,095 94.9 Interest expense 4,401,721 1,907,465 2,494,256 130.8 Stock-based compensation 420,748 305,229 115,519 37.8 Adjusted EBITDA $ 6,399,478 $ (40,356 ) $ 6,439,834 (15,957.6 )
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, 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.
FlexShopper, Inc.
