Marlin Business Services (MRLN) Tops Q2 EPS by 1c; Offers FY18 EPS Outlook

Marlin Business Services (NASDAQ: MRLN) reported Q2 EPS of $0.52, $0.01 better than the analyst estimate of $0.51.

Second Quarter Summary:

• Net income of $6.5 million, or $0.52 per diluted share
• Net interest and fee income of $24.1 million for the quarter, compared with $22.7 million for the second quarter last year
• ROE of 13.9% compared with ROE of 11.2% in the second quarter last year
• Net Investment in loans and leases totaled $963.1 million, up 12% from a year ago and total managed assets ended the second quarter at $1.1 billion, up 18% from a year ago
• Total origination volume (excluding leases and loans originated but referred to third parties) of $172.2 million, up 11% year-over-year
• Direct origination volume of $36.3 million, up 54% year-over-year
• Total direct and indirect origination yield of 12.24%, down 20 basis points from the prior quarter and up 3 basis points year-over-year
• 30+ and 60+ day delinquencies on total finance receivables decreased modestly from prior quarter to 96 basis points and 55 basis points, respectively
• Annualized net charge-offs of 1.84%, compared with 1.68% in the prior quarter and 1.65% in the second quarter last year
• Provision for credit losses of $4.3 million compared with $4.6 million in the prior quarter and $4.3 million in the second quarter last year
• Equity to assets ratio of 17.03%, a reduction of 14 basis points from the prior quarter
• Subsequent to quarter end, the Company completed an asset-backed term securitization through the issuance of notes in the amount of $201.7 million

Commenting on Marlin’s business outlook for the full year, Mr. Hilzinger said, “Given our origination volume through the first half of 2018, we’ve updated our original guidance of 20% growth to a range of 15% to 20% growth. The primary driver underlying this change is the near-term impact of open sales positions resulting from several restructuring initiatives that we’ve implemented within our salesforce to better position it for future growth. In addition, due to the lag we are experiencing in passing through increases in base interest rates, our decision to upsize the recent securitization due to better-than-expected execution and updated assumptions regarding product mix, we’ve adjusted our net interest margin guidance from a range of 10.00% to 10.25% to a range of 9.75% to 10.00%. And, finally, as a result of our strong EPS performance during the first half of the year, we have increased the bottom of our guidance range by $0.05 and we now expect full year earnings in a range of $2.00 to $2.10 per share. Overall, we are pleased with our recent performance and anticipate that our continued focus on execution will help drive profitable growth in 2018 and beyond.”

GUIDANCE:

Marlin Business Services sees FY2018 EPS of $2.00-$2.10, versus the consensus of $2.09.

For earnings history and earnings-related data on Marlin Business Services (MRLN) click here.

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