FlexShopper, Inc. Reports Second Quarter 2022 Financial Results
08/10/2022 - 04:30 PM
BOCA RATON, Fla., Aug. 10, 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 ended June 30, 2022.
Results for Quarter Ended June 30, 2022 vs. Quarter Ended June 30, 2021:
Total fundings increased 64.5% to $32.8 million from $19.9 million consisting of gross lease originations with no change of $19.9 million and loan participations up ~16,490% from $78 thousand to $12.9 million Total net lease revenues and fees decreased 0.6% to $30.5 million from $30.7 million Total net loan revenues and fees increased 23,209% to $6.1 million from $26 thousand Gross profit increased 58.2% to $17.5 million from $11.1 million Adjusted EBITDA1 increased to $6.4 million compared to $2.1 million Net income of $14.4 million compared with net income of $942 thousand Net income attributable to common stockholders of $13.8 million , or $0.51 per diluted share, compared to net income attributable to common stockholders of $332 thousand , or $0.01 per diluted share Results for Six Months Ended June 30, 2022 vs. Six Months Ended June 30, 2021:
Total fundings increased 31.9% to $54.0 million from $40.9 million consisting of gross lease originations decreasing from $40.8 t o $36.1 million and loan participations up ~10,090% from $175 thousand to $17.9 million Total net lease revenues and fees decreased 8.2% to $58.2 million from $63.4 million Total net loan revenues and fees increased 12,342% to $7.3 million from $58 thousand Gross profit increased 26.1% to $26.9 million from $21.3 million Adjusted EBITDA1 increased to $6.3 million compared to $4.6 million Net income of $12.0 million compared with net income of $943 thousand Net income attributable to common stockholders of $10.8 million , or $0.42 per diluted share, compared to net loss attributable to common stockholders of $(276) thousand , or $(0.01) per diluted share ¹Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition and reconciliation of this measure under “Non-GAAP Measures”.
“We are pleased with this quarter’s results in the face of significant economic headwinds. The Company’s historical omni-channel lease capabilities matched more recently with a complementary loan product have enabled us to continue to grow revenues while tightening underwriting standards. The diversity of our platform coupled with new sales initiatives will allow us to continue to grow in the current environment,” said Richard House, CEO of FlexShopper.
FlexShopper CEO, Richard House, FlexShopper CFO, Russ Heiser and FlexShopper COO, John Davis will discuss the Company’s recent quarter, including financial and operating results, and strategic outlook on the Company’s earnings conference call and webcast.
Conference Call and Webcast Details
Conference call
Date: Thursday, August 11, 2022
Participant Dial-In Numbers:
Domestic callers: (877) 407-2988
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=qo9OFRdT
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 June 30, For the six months ended June 30, 2022 2021 2022 2021 Revenues: Lease revenues and fees, net $ 30,468,476 $ 30,662,470 $ 58,234,788 $ 63,413,801 Loan revenues and fees, net of changes in fair value 6,079,675 26,083 7,268,599 58,422 Total revenues 36,548,151 30,688,553 65,503,387 63,472,223 Costs and expenses: Cost of lease revenues and merchandise sold 18,207,305 19,490,864 37,367,916 41,954,420 Loan origination costs and fees 804,228 111,787 1,229,741 175,184 Marketing 3,770,820 1,914,095 5,784,935 3,746,835 Salaries and benefits 3,014,920 2,747,005 5,979,362 5,656,324 Operating expenses 5,748,286 5,213,789 11,421,488 9,328,213 Total costs and expenses 31,545,559 29,477,540 61,783,442 60,860,976 Operating income 5,002,592 1,211,013 3,719,945 2,611,247 Gain on extinguishment of debt - 1,931,825 - 1,931,825 Interest expense including amortization of debt issuance costs (2,347,838 ) (1,222,400 ) (4,305,906 ) (2,621,397 ) Income /(loss) before income taxes 2,654,754 1,920,438 (585,961 ) 1,921,675 Benefit /(expense) from income taxes 11,734,467 (978,244 ) 12,594,247 (978,244 ) Net income 14,389,221 942,194 12,008,286 943,431 Dividends on Series 2 Convertible Preferred Shares (609,777 ) (609,773 ) (1,219,554 ) (1,219,545 ) Net income/(loss) attributable to common and Series 1 Convertible Preferred shareholders $ 13,779,444 332,421 10,788,732 (276,114 ) Basic and diluted income/(loss) per common share: Basic $ 0.63 0.02 0.49 (0.01 ) Diluted 0.51 $ 0.01 0.42 (0.01 ) WEIGHTED AVERAGE COMMON SHARES: Basic 21,605,234 21,605,461 21,576,312 21,375,096 Diluted 27,898,824 23,603,477 28,193,268 21,375,096
FLEXSHOPPER, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31, 2022 2021 (unaudited) ASSETS CURRENT ASSETS: Cash $ 4,988,308 $ 4,986,559 Restricted cash 461,649 108,083 Accounts receivable, net 33,050,840 26,338,883 Loans receivable at fair value 22,534,033 3,560,108 Prepaid expenses 1,113,554 957,527 Lease merchandise, net 36,136,995 40,942,112 Total current assets 98,285,379 76,893,272 Property and equipment, net 9,399,753 7,841,206 Other assets, net 76,040 77,578 Deferred tax asset, net 12,244,068 - Total assets $ 120,005,240 $ 84,812,056 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 5,242,163 $ 7,982,180 Accrued payroll and related taxes 416,734 391,078 Promissory notes to related parties, net of $0 at 2022 and $1,274 at 2021 of unamortized issuance costs, including accrued interest 1,167,871 1,053,088 Accrued expenses 4,777,278 2,987,646 Lease liability - current portion 189,804 172,732 Total current liabilities 11,793,850 12,586,724 Loan payable under credit agreement to beneficial shareholder, net of $394,396 at 2022 and $413,076 at 2021 of unamortized issuance costs 66,755,604 50,061,924 Promissory notes to related parties, net of current portion 10,750,000 3,750,000 Deferred income tax liability 178,160 495,166 Lease liabilities net of current portion 1,675,959 1,774,623 Total liabilities 91,153,573 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 21,605,234 shares at June 30, 2022 and 21,442,278 shares at December 31, 2021 2,161 2,144 Additional paid in capital 39,259,862 38,560,117 Accumulated deficit (33,214,016 ) (45,222,302 ) Total stockholders’ equity 28,851,667 16,143,619 $ 120,005,240 $ 84,812,056
FLEXSHOPPER, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the six months ended June 30, 2022 and 2021 (unaudited)
2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 12,008,286 $ 943,431 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and impairment of lease merchandise 37,367,916 39,064,981 Other depreciation and amortization 2,059,323 1,324,049 Amortization of debt issuance costs 106,886 134,580 Compensation expense related to stock-based compensation and warrants 562,705 1,034,334 Provision for doubtful accounts 27,563,993 18,778,392 Proceeds from sale of lease receivables 6,604,507 - Interest in kind added to promissory notes balance 113,509 9,461 Deferred income tax (12,561,074 ) 378,859 Gain on debt extinguishment - (1,931,825 ) Net changes in the fair value of loans receivable at fair value (2,457,851 ) 58,575 Changes in operating assets and liabilities: Accounts receivable (40,880,457 ) (21,775,777 ) Loans receivable at fair value (16,516,074 ) (179,141 ) Prepaid expenses and other (155,773 ) (174,222 ) Lease merchandise (32,562,799 ) (33,875,960 ) Security deposits - 4,280 Lease liabilities (5,091 ) (2,598 ) Accounts payable (2,740,017 ) (4,105,547 ) Accrued payroll and related taxes 25,656 438,010 Accrued expenses 1,794,983 (158,248 ) Net cash used in operating activities (19,671,372 ) (34,366 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment, including capitalized software costs and data costs (3,687,241 ) (1,367,154 ) Net cash used in investing activities (3,687,241 ) (1,367,154 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from loan payable under credit agreement 17,800,000 3,500,000 Repayment of loan payable under credit agreement (1,125,000 ) (4,975,000 ) Debt issuance related costs (86,932 ) (526,565 ) Proceeds from exercise of stock options 137,057 17,126 Proceeds from promissory notes, net of fees 7,000,000 - Principal payment under finance lease obligation (5,592 ) (2,457 ) Repayment of installment loan (5,605 ) (5,603 ) Net cash provided by/(used in) financing activities 23,713,928 (1,992,499 ) INCREASE / (DECREASE) IN CASH and RESTRICTED CASH 355,315 (3,394,019 ) CASH and RESTRICTED CASH, beginning of period 5,094,642 8,541,232 CASH and RESTRICTED CASH, end of period $ 5,449,957 $ 5,147,213 Supplemental cash flow information: Interest paid $ 3,953,765 $ 2,506,589
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 six months ended June 30, 2022 and 2021 were as follows:
Three months ended June 30, 2022 2021 $ Change % Change Adjusted EBITDA: Net income $ 14,389,221 $ 942,194 $ 13,447,027 1,427.2 Income taxes (11,734,467 ) 978,244 (12,712,711 ) (1,299.5 ) Amortization of debt issuance costs 56,283 42,877 13,406 31.3 Other amortization and depreciation 1,122,263 672,656 449,607 66.8 Interest expense 2,291,555 1,179,523 1,112,032 94.3 Stock-based compensation 257,476 249,222 8,254 3.3 Gain on debt extinguishment - (1,931,825 ) 1,931,825 - Adjusted EBITDA $ 6,382,331 $ 2,132,891 $ 4,249,440 199.2
Six months ended June 30, 2022 2021 $ Change % Change Adjusted EBITDA: Net income $ 12,008,286 $ 943,431 $ 11,064,855 1,172.8 Income taxes (12,594,247 ) 978,244 (13,572,491 ) (1,387.4 ) Amortization of debt issuance costs 106,886 134,580 (27,694 ) (20.6 ) Other amortization and depreciation 2,059,323 1,324,049 735,274 55.5 Interest expense 4,199,020 2,486,817 1,712,203 68.9 Stock-based compensation 562,705 629,486 (66,781 ) (10.6 ) Product/ infrastructure expenses - 10,000 (10,000 ) Gain on debt extinguishment - (1,931,825 ) 1,931,825 - Adjusted EBITDA $ 6,341,973 $ 4,574,782 $ 1,767,191 38.6
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 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:
FlexShopper, Inc.
FlexShopper, Inc.
