FPAY - Earnings call transcript Q4 2019

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Operator

Greetings. Welcome to the FlexShopper Fourth Quarter and Full Year 2019 Earnings Call. At this time, all participants are in a listen-only mode. [Operator instructions] Please note this conference is being recorded.

I will now turn the conference over to your host, Jeremy Hellman of The Equity Group. ahead. go Please

Jeremy Hellman

everyone I have operator. IR to everyone that I remind of on forward-looking Thank X Page an would updated we of encourage and www.flexshopper.com, posted company the review investor that the the statement you, presentation. website, like to presentation section within

turn With go ahead, to over FlexShopper's the I that, like CEO, to Rich. call would Rich Please House.

Rich House

quarter and and everyone, XXXX full earnings Jeremy, to welcome, you, fourth Thank year call. our

Officer; Brad is of Russ Heiser, Financial and our Joining the me President Bernstein Chief FlexShopper. today Founder

Russ our strategy our is I And to our forward-looking operations consumer forward. Brad going results to on moving walk you of on operations. going business guidance, will in through review the finally is provide of update partnership some you conclude an and with our provide business-to-business update and an

I over So, financial Russ highlights. now to for call hand the will

Russ Heiser

quarter the press year. Thanks on detail Rich. investor both significant A deck and full provides release fourth and

level guidance. in focus metrics, FlexShopper. reflected I’ll So, improvements million and that increase year highlighted XX.X negative in with X.X XXXX million across The X.X million a Overall, the increasing EBITDA, for financials by significant versus on XXXX. great events, recent board was the XXXX few in a high new

with XXXX million improvement pre-tax XXX over finished we earnings Moreover, XXXX. and pay a $XX.X

BXB business our the and the improvements refocusing hitting or to realized continue by over the for that those target segments. speaks were period million driven in we IRRs both revenue on was were net of the that operating increase leases Given just a exceeding grow. BXC in $XX on partly significant This leverage

about prior XX%. lease the BXB new was year. XX% in the approximately quarter while So, fourth lease BXC and up dollars business The versus were originations down

The cost $XXX by origination In terms BXB these XXXX. per typically the growth $XXX to customer to acquisition lease. able our A our in our of were XXXX metrics of for for from significant $XXX average of highlight in driven time to we reduce same we average part improved year, lease value channel. from were the the $XX improvements

our ample reaffirm of In our balance which us flow our credit provide liquidity of terms I the want operate and with that the operating facility business. to combination sheet, existing cash to

on in addition approximately at under balance to sheet fact, In credit the $X cash end agreements. our of made your our availability million

recently In finished step offer, we a was tender terms which recent of a improving warrant events, our balance in first sheet.

shares million longer not our exchange no the warrants public trade in have million will warrants been for Our approximately X.XX common public X.X or interest] [short retired of We it December all in approximately overhang shares. think of be the shortly be this reduces significant and from for believe only also number we responsible currently. shares XX,XXX future, shares a of was to over but issued reduction XXX,XXX having to in in

XXXX points. onto to I Moving guidance, want make a few

that The taking is to similar a approach year. we’re first last

basing gain are will what up are and in today initiatives business the We new as on guidance seeing traction. guidance adjust we

year up especially first after our conservative As over a the EBITDA course took reminder, the of a guidance quarter. we year the moved guidance, in position last substantially

will to want in-line point revenue I revenue. now upon of bad net will gross GAAP so changed, reporting our guidance debt for Next, lease purposes out with that be financials based longer has expense be no

that the found revenue section confirm over needs net to in have be compared XXX XXXX of XXX number investors to the reached page our this income of our for revenue fact, our million XX-K MDA on guidance of million out statement, XX. In morning to on but not

metric is profit for business. remind and also revenue me primarily our listeners that trailing Let gross thus a

revenue. year's this drive year last from destinations Our

performance Finally, please note quarter-to-quarter not is that our smooth.

marketing Our fluctuations. quarterly produces significant and originations spend seasonality and

setting guidance Gross XX and million, FlexShopper.com shown XX than million, release we originations are greater greater press million, profit greater net and the of in EBITDA greater XXX investor With as gross revenue in on than follows. available adjusted that, presentation, than as million. than the XX

the go I’ll it BXB business. Now, more on Brad detail hand to to in

Brad Bernstein

Russ. all XX% year we you, was year-over-year And know, XXXX going Russ commented into of fourth growth momentum. BXB as the great a that in as on focused Thank course and we up very are quarter XXXX for continuing

and mentioned previous in at While their any that not have to own our the calls large know some retailers prospects pipeline, announced say, we’ve we want we we pilots very in large the I have do all move pace. do as

as pleased I’m strong is to our pipeline ever. feel as say we that

optimize and originations. add contributing increased all accounts to are We continue existing accounts, BXB which to

Now our we company just to to provider security and Northeast rolled another saw provide the January, their to out chain to some color home we a least product own the equipment. in be and tire with for some security in examples,

consumer's process a mobile this integrationless very point Our big win was and home works account. in well the to selling

are also originations. and organically this adding growing course We stores our existing also which accounts, BXB increases accounts, and of retail have lease retail

consumer As BXB is This that phone are channel machine retail far a the payment sales activity an we supported in is extensive his campaigning as by tire, appliance, side our addition. marketing some particularly our targets relationships, go about consumer of with excited electronics, which from very to the targets mobile of one finance solutions. are and continued finance and on recent of companies. furniture, force, He Omni includes the investments hire network prime retailers very our larger brings

over turn the Rich. call the With that, I’ll to

Rich House

with my Thanks here. me Brad. Pardon voice

return mentioned our FlexShopper of [carefully that return to on have last I does will that assets deployed] maximum and we shareholders’ business means focused I the be As valuable equity. company, call, providing of originate away on to striving run the needed forward you be conference [dilute] I will all shareholders appropriate will in not the we that was when very moving risk-adjusted our told

arena consultant around fundamental three career risk exception, of pillars: and of operator, this successful as the types appropriate and been focused liquidity, and I've roles these Without under have on investor. of founder quality for distribution effective my found assets. businesses different I writing, most companies in in a

and direct-to-consumer business-to-business Brad is marketing In earlier. between our that case, the the distribution our marketing divided discussed

underwriting, So, in with our arrival October. strategy we respect consumer direct to some made changes significant upon to my

mentioned, Russ some limited growth. of our that As

However, created improved it originated, greater value. which results substantially in we of assets the shareholder quality the

Fortunately, they us for us, compressed and [indiscernible] which create in algorithms enables originate to a that very measured quickly we new timeframe. be

several general assets auto year asset, six card For only to of as hazard as example, which in lease early credit the over can initial be may as be measured a to or within quality weeks, a compared a which own measured be would years. measured

new performing growing which will variety of the direct-to-consumer comfort a coupled and improve channel algorithms and sources, results. us to unique new our moving the to again. sophisticated consumer us techniques now rate data have created in algorithms forward, we with implemented more These still excellent grow using while begin give business enable So, approval targeting

on with Moving very are to ample we our liquidity, facility, credit existing comfortable an which capacity. had

company, are position we are this returns. better our negotiated As we much Initially assets last financial when providing facility. in a risk-adjusted better

facility funds or of have We our are we on very business existing credit [indiscernible] comfortable current renewing provider February discussed. XXXX, that other any number with either our

you channel We generally certainly to these taken lower payment partners value business-to-business is distribution Brad to channel. the us we behavior. generate has great are our originate consumers because Finally, customers better This for our and how think cost explaining through a leases. of alike. add we retail the the is and

new our consumer unlike However, is sign of pace our the which at somewhat direct business, we retail out partners control.

for optimistic and is aggressive Russ as we we we’re to that we year, about, the based he talked believe push lead our is estimate. So successful guidance over on can time. provided reasonably which an continuing will be Brad events has

obviously initial Of any course create large partner new retail growth. an would

management focus that every/or return equity on liquidity. answer the company that generate to team seems to the regarding shareholders’ and initial asked is maintaining many the conference conclusion, assets be create to raising on equity. question And this outgrowing previous calls appropriate the in In appropriate

an every return believe equity management's exceptional prevent we completed capital for from our back the growth will in are to platform looking execution We opportunity, to growth believe moving confidence position We a in come of we unless transaction favorable warrant markets on exhibits are opportunity. the having forward. the and [indiscernible] our FlexShopper approach the

take with any questions. happy to that, we’re And

Operator

first Theodore [Operator Please Ascendiant go ahead. of is The Capital. O'Neill Instructions] question from

Theodore O'Neill

Thanks. Good morning.

us type of give effect more Is color that individual, person you I’m product that? a can little the Just, on or that algorithm? underwriting are tightening about just buys the at a the of curious looking you

Rich House

strategies. individual off score did initially. of cut Basically looking the and return at at just capital by not the We the the algorithm range. look modified We on some change we’re

algorithms, level. our which us And little create and returns bit, I so, some we’ve will that approval been mentioned at new to rate to growth again adjustments And restricted increase we but it to higher again. produced that. grow able begin once portfolio to Since then made the enable as our

Theodore O'Neill

Okay.

is, accounting base give you a the is? I growth your an much sort assets, explanation in can like us increase about looks what right use entirely question pretty year-over-year other just have is an that The – the issues, of of PP&E so little

Russ Heiser

Sure.

So, teams is of into but the the building moved the last the this standard middle year, we was in purely a accounting it function change. an of lease reflects that

Theodore O'Neill

Okay. Thanks much. very

Operator

from question ahead. Please Buck FBR. Riley of is The Scott next B. go

Scott Buck

shift little in, guys. the color have expansion give that, a just little Hi, that guidance can going mix gross in you or something looks on? else baked good morning like a margin is around It you

Russ Heiser

two It’s of as in mentioned. is shift you One function a things. the mix

continues performance. said have As before, BXB we better to

BXC segment piece also. continues is Rich's that changes other to the in that methodologies to The performance earlier, from echo’s – we've important comments improve that of it made underwriting

So will point bad note is profit our based to estimates result expansion. trailing. gross upon those in One two though, debt combinations the

immediately improvement improvement. reflected, debt its to for it’s does comes this the estimate causing what way time in as is it expense, into So, work the but for that not is bad take new it

Scott Buck

Great. That’s helpful.

through be the color or Second signings can think provide size the in about? we there, terms may kind you any pace of of one, that can on customer of new pipeline, year additional

Brad Bernstein

Brad. is Hi, this Scott. Yes,

ever as again have like goes, about prospects in some pipeline that we it. there, this feel is large You We far we’re do and color know, excited robust you chains, as most the know we’ve had.

know this and on. again, this at the at relationships know of has we’re same to pace, about capitalize we You looking to this you other an new are security, vertical, that move their about head towards, very kind story, today, the excited has also that we’re extensive own been hire home of they excited ready continue we network time always

Scott Buck

Great. I color appreciate the guys.

Operator

is The Instructions] a Investor. question next [Operator from Please Private go ahead. Nova, Mark

Unidentified Analyst

Hi, everyone.

congratulations how gross the have think it you new affect to is, tightened an for this much will what excellent the rate and XXXX, the default is projected year? wanted and say new question Just with I algorithm revenue

Rich House

are we in as not necessarily combination the to looking the trying the default really rate much acquisition default We’re lower combined at accounts. of rate looking do to with a as of cost

a right. we about You time an flow us money IRR accounts simply know, book this It calculation, certain that and then to of we’ve amount measured think over as period. cash takes

what So, because in or do I we would the net or substantial we’re with and a an rate for the trying debt eye associated that to look volume like then decrease not maximize that. get is

Unidentified Analyst

thank Okay, you.

Operator

call This the remarks. over turn concludes the for question-and-answer closing CEO Rich session. to House, I now will back

Rich House

to we Okay, everyone of [indiscernible] you of well. and today. We forward conferences first maybe as joining call, some you well quarter speaking in the earnings see again thank in us with you out each for will look

thanks So, lot. a

Operator

for lines disconnect you at This participation. concludes this your time. and today's you Thank conference, may you

FlexShopper (FPAY) 3 Mar 202019 Q4 Earnings call transcript