Form 8-K Elevate Credit, Inc. For: May 03

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May 3, 2021 4:16 PM EDT

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ELEVATE CREDIT ANNOUNCES FIRST QUARTER 2021 RESULTS1
Continued Strong Credit Quality and Profitability

FORT WORTH, TX - May 3, 2021 - Elevate Credit, Inc. (NYSE: ELVT) (“Elevate” or the “Company”), a leading tech-enabled provider of innovative and responsible online credit solutions for non-prime consumers, today announced results for the first quarter ended March 31, 2021.

“Elevate continues to deliver exceptionally strong bottom line growth,” said Elevate CEO, Jason Harvison. “The recent stimulus combined with tax return refunds has led to low delinquencies and more customers returning to their normal payment schedules. At the end of March, the percentage of customers in an active payment flexibility program was 3%, down from 9% at year end. The team is focused on our return to growth strategy as we anticipate overall portfolio growth in the second half of the year.”

First Quarter 2021 Financial Results2

•Net income (loss): Net income for the three months ended March 31, 2021 totaled $12.7 million, up $17.6 million compared to a net loss of $4.9 million in the first quarter of 2020. Fully diluted earnings per share for the first quarter of 2021 totaled $0.34, an increase from a $(0.11) loss per fully diluted share a year ago. Net income from continuing operations for the first quarter of 2021 totaled $12.7 million, an increase of $4.8 million, compared to $7.9 million in the first quarter of 2020 (excluding the net loss from the discontinued operations of the UK).
•Adjusted earnings: Adjusted earnings were $12.7 million for the three months ended March 31, 2021, up $1.5 million from $11.2 million in the first quarter of 2020. Adjusted diluted earnings per share for the first quarter of 2021 totaled $0.34 per fully diluted share, a 31% increase from $0.26 per fully diluted share in the first quarter of 2020. See "Non-GAAP Financial Measures" for a reconciliation of the non-GAAP measures of adjusted earnings and adjusted diluted earnings per share.
•Revenue: Revenues decreased during the first quarter of 2021 to $89.7 million, compared to $162.5 million for the first quarter of 2020. The decrease in revenue is attributable to reductions in loan origination volume and lower effective APRs earned on the loan portfolio due to the economic crisis created by the COVID-19 pandemic beginning in March 2020.
•Combined loans receivable - principal: Combined loans receivable - principal totaled $353.1 million at March 31, 2021, a decrease of $200.4 million, or 36%, from $553.5 million at March 31, 2020. The number of new and former customer loans originated during the first quarter of 2021 totaled approximately 26,800 loans, a decrease from approximately 52,400 in the prior year first quarter. These decreases were also due to the COVID-19 pandemic and lower loan demand due to Federal monetary stimulus payments received by our customers in the first quarter of 2021.
__________________________
1Our 2021 results and comparable periods are presented on a continuing operations basis and exclude the results of discontinued operations in the UK, unless otherwise stated. Elevate exited the UK market in the second quarter of 2020.
2Adjusted EBITDA, Adjusted EBITDA margin, combined loans receivable - principal, combined loans receivable, combined loan loss reserve, adjusted earnings and adjusted diluted earnings per share are non-GAAP financial measures. These terms are defined elsewhere in this release. Please see the schedules appearing later in this release for reconciliations of these non-GAAP measures to the most directly comparable GAAP measures.
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•Credit quality: The combined loan loss reserve at March 31, 2021 totaled $39.2 million, or 10% of combined loans receivable a decrease of 300 basis points when compared to the same period for the prior year. Combined loans receivable - principal that were past due at the end of the first quarter of 2021 totaled 6%, down from 10% for the first quarter of 2020.
•Adjusted EBITDA: Adjusted EBITDA totaled $31.6 million in the first quarter of 2021, down 9.5% from $34.9 million in the first quarter of 2020. The Adjusted EBITDA margin for the first quarter of 2021 was 35.2%, up from 21.5% in the prior-year first quarter.

Impact of COVID-19 on Credit Quality

The Company and the bank originators are proud of the assistance that we were able to provide to borrowers through payment flexibility tools which allowed customers to manage through hardships created by the COVID-19 pandemic. As the economy continues to expand and customers find financial stability, we've seen a decrease in the number of customers in an active payment flexibility program. As of March 31, 2021, 3% of customers are in an active payment flexibility program for a total of $11.8 million in loans with deferred payments. This compares to $34.6 million in loans with deferred payments, or 9% of customers, as of December 31, 2020.

Liquidity and Capital Resources

The Company paid down its debt facilities by over $97 million in January 2021, including the remaining $18.1 million balance of the 4th Tranche Term Note, which was scheduled to mature on February 1, 2021.

In January 2021, the Company’s Board of Directors authorized a $25 million increase to the Company’s existing $30 million common stock repurchase program, providing for the repurchase of up to $55 million of the Company’s common stock through July 31, 2024. During the first quarter of 2021, the Company purchased $10.8 million of common shares (2.5 million common shares) under the Company's previously approved common stock repurchase program or roughly 6.5% of common shares outstanding at the beginning of 2021. As of March 31, 2021, the Company has repurchased approximately 23% of all common shares issued and outstanding since August 2019 under this common stock repurchase program.

As of March 31, 2021, the Company is in compliance with all debt facility covenants.

Financial Outlook

As previously announced, the Company does not plan to issue 2021 earnings guidance at this time due to the uncertain impact on our business and results of operations resulting from the COVID -19 pandemic, including any past and future Federal monetary stimulus payments by the Federal government.

Conference Call

The Company will host a conference call to discuss its first quarter 2021 financial results on Monday, May 3, at 4:00pm Central Time / 5:00pm Eastern Time. Interested parties may access the conference call live over the phone by dialing 1-877-407-0792 (domestic) or 1-201-689-8263 (international) and requesting the Elevate Credit First Quarter 2021 Earnings Conference Call. Participants are asked to dial in a few minutes prior to the call to register for the event. The conference call will also be webcast live through Elevate’s Investor Relations website at https://investors.elevate.com/corporate-profile/.

An audio replay of the conference call will be available approximately three hours after the conference call until 11:59 pm ET on May 17, 2021, and can be accessed by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international), and providing the passcode 13718523, or by accessing Elevate’s Investor Relations website.

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Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "continue," "pursue," or the negative thereof or comparable terminology, and may include (without limitation) information regarding the Company's expectations, goals or intentions regarding future performance. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “likely” and other words and terms of similar meaning. The forward-looking statements include statements regarding our expectations regarding the underwriting changes implemented by us and the bank originators we support to address credit risk associated with loan originations during the economic crisis created by the COVID-19 pandemic, and the uncertain impact on our business and results of operations resulting from the COVID-19 pandemic, including from payment of the second and third rounds of Federal monetary stimulus and potential future additional stimulus payments by the Federal government. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. These risks and uncertainties include, but are not limited to: the effect of the COVID-19 pandemic and various policies being implemented to prevent its spread on the Company's business, financial condition and results of operations; the Company’s limited operating history in an evolving industry; the Company’s ability to grow revenue and maintain or achieve consistent profitability in the future; new laws and regulations in the consumer lending industry in many jurisdictions that could restrict the consumer lending products and services the Company offers, impose additional compliance costs on the Company, render the Company’s current operations unprofitable or even prohibit the Company’s current operations; scrutiny by regulators and payment processors of certain online lenders’ access to the Automated Clearing House system to disburse and collect loan proceeds and repayments; a lack of sufficient debt financing at acceptable prices or disruptions in the credit markets; the impact of competition in our industry and innovation by our competitors; our ability to prevent security breaches, disruption in service and comparable events that could compromise the personal and confidential information held in our data systems, reduce the attractiveness of our platform or adversely impact our ability to service loans; and other risks related to litigation, compliance and regulation. Additional factors that could cause actual results to differ are discussed under the heading "Risk Factors" and in other sections of the Company's most recent Annual Report on Form 10-K, and in the Company's other current and periodic reports filed from time to time with the SEC. All forward-looking statements in this press release are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement.













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About Elevate
Elevate (NYSE: ELVT), together with the banks that license its marketing and technology services, has originated $9.0 billion in non-prime credit to more than 2.5 million non-prime consumers to date and has saved its customers more than $8.2 billion versus the cost of payday loans. Its responsible, tech-enabled online credit solutions provide immediate relief to customers today and help them build a brighter financial future. The company is committed to rewarding borrowers’ good financial behavior with features like interest rates that can go down over time, free financial training and free credit monitoring. Elevate’s suite of groundbreaking credit products includes RISE, Elastic and Today Card. For more information, please visit http://www.elevate.com.

Investor Relations:

Solebury Trout
Sloan Bohlen, (817) 928-1646
investors@elevate.com

or

Media Inquiries:

Solebury Trout
James McCusker, (203) 585-4750
jmccusker@soleburytrout.com





























4

Elevate Credit, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31,
(Dollars in thousands, except share and per share amounts)20212020
Revenues
$89,733 $162,467 
Cost of sales:
      Provision for loan losses
20,970 78,575 
      Direct marketing costs
4,383 10,969 
      Other cost of sales
2,047 2,670 
Total cost of sales
27,400 92,214 
Gross profit
62,333 70,253 
Operating expenses:
Compensation and benefits
19,008 23,474 
Professional services
7,079 7,926 
Selling and marketing
533 954 
Occupancy and equipment
4,956 4,636 
Depreciation and amortization
5,243 4,296 
Other
775 1,071 
Total operating expenses
37,594 42,357 
Operating income
24,739 27,896 
Other expense:
      Net interest expense
(8,786)(13,656)
      Non-operating income (loss)
207 (4,263)
Total other expense
(8,579)(17,919)
Income from continuing operations before taxes
16,160 9,977 
Income tax expense
3,444 2,055 
Net income from continuing operations
12,716 7,922 
Net loss from discontinued operations
— (12,833)
Net income (loss)
$12,716 $(4,911)
Basic earnings per share
Continuing operations
$0.35 $0.18 
Discontinued operations
— (0.29)
Basic earnings (loss) per share
$0.35 $(0.11)
Diluted earnings per share
Continuing operations
$0.34 $0.18 
Discontinued operations
— (0.29)
Diluted earnings (loss) per share
$0.34 $(0.11)
Basic weighted average shares outstanding
36,582,502 43,161,716 
Diluted weighted average shares outstanding
37,579,050 43,631,737 


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Elevate Credit, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)March 31, 2021December 31, 2020
ASSETS
Cash and cash equivalents*
$140,300 $197,983 
Restricted cash*
3,035 3,135 
Loans receivable, net of allowance for loan losses of $39,037 and $48,399, respectively*
335,285 374,832 
Prepaid expenses and other assets*
10,806 10,060 
Operating lease right of use assets
7,304 8,320 
Receivable from CSO lenders
198 1,255 
Receivable from payment processors*
5,263 6,147 
Deferred tax assets, net
22,600 25,958 
Property and equipment, net
32,547 34,000 
Goodwill, net
6,776 6,776 
Intangible assets, net
230 1,133 
Total assets
$564,344 $669,599 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued liabilities*
$42,816 $52,252 
Operating lease liabilities
11,294 11,952 
Deferred revenue*
2,226 3,134 
Notes payable, net*
341,035 438,403 
Total liabilities
397,371 505,741 
COMMITMENTS, CONTINGENCIES AND GUARANTEES
STOCKHOLDERS’ EQUITY
Preferred stock
— — 
Common stock
18 18 
Additional paid-in capital
201,618 200,433 
Treasury stock
(26,611)(16,492)
Accumulated deficit
(8,052)(20,101)
Total stockholders’ equity
166,973 163,858 
Total liabilities and stockholders’ equity
$564,344 $669,599 

* These balances include certain assets and liabilities of variable interest entities (“VIEs”) that can only be used to settle the liabilities of that respective VIE. All assets of the Company are pledged as security for the Company’s outstanding debt, including debt held by the VIEs.
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Non-GAAP Financial Measures

This press release and the attached financial tables contain certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted earnings, adjusted diluted earnings per share, combined loans receivable - principal, combined loans receivable and combined loan loss reserve.

Adjusted Earnings Measures

In addition to the financial information prepared in accordance with GAAP, Elevate uses certain non-GAAP measures such as “Adjusted EBITDA”, "Adjusted EBITDA margin", "Adjusted earnings", and "Adjusted diluted earnings per share" (collectively, "Adjusted Earnings Measures") in assessing its operating performance. Elevate believes these non-GAAP measures are appropriate measures to be used in evaluating the performance of its business.

Elevate defines Adjusted EBITDA as net income from continuing operations excluding the impact of income tax expense, non-operating (income) loss, net interest expense, share-based compensation expense and depreciation and amortization expense. Elevate defines Adjusted EBITDA margin as Adjusted EBITDA divided by revenue.

Elevate defines Adjusted earnings as net income from continuing operations excluding the impact of a contingent loss related to a legal matter (tax effected). Elevate defines Adjusted diluted earnings per share as Adjusted earnings divided by Diluted weighted average shares outstanding.

Management believes that Adjusted Earnings Measures are useful supplemental measures to assist management and investors in analyzing the operating performance of the business and provide greater transparency into the results of operations of our core business. Management uses these non-GAAP financial measures frequently in its decision-making because it provides supplemental information that facilitates internal comparisons to the historical operating performance of prior periods and gives an additional indication of Elevate’s core operating performance. Elevate includes these non-GAAP financial measures in its earnings announcement in order to provide transparency to its investors and enable investors to better compare its operating performance with the operating performance of its competitors.

Adjusted Earnings Measures should not be considered as alternatives to net income or any other performance measure derived in accordance with GAAP. Management's use of Adjusted Earnings Measures has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of these limitations are:
•Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect expected cash capital expenditure requirements for such replacements or for new capital assets;
•Adjusted EBITDA does not reflect changes in, or cash requirements for, the Company's working capital needs; and
•Adjusted EBITDA does not reflect interest associated with notes payable used for funding customer loans, for other corporate purposes or tax payments that may represent a reduction in cash available to the Company.

Additionally, Elevate’s definition of Adjusted Earnings Measures may not be comparable to similarly titled measures reported by other companies.




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The following table presents a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to Elevate’s net income from continuing operations for the three months ended March 31, 2021 and 2020:
 Three Months Ended March 31,
(Dollars in thousands)20212020
Net income from continuing operations$12,716 $7,922 
Adjustments:
Net interest expense8,786 13,656 
Share-based compensation1,602 2,748 
Depreciation and amortization5,243 4,296 
Non-operating (income) loss(207)4,263 
Income tax expense3,444 2,055 
Adjusted EBITDA$31,584 $34,940 
Adjusted EBITDA margin35.2 %21.5 %

Adjusted earnings and adjusted diluted earnings per share

For the three months ended March 31, 2020, the Company recognized $4.3 million of charges related to a contingent loss on a legal matter in Non-operating loss. The following table presents a reconciliation of Net income from continuing operations and diluted earnings per share - continuing operations to Adjusted earnings and Adjusted diluted earnings per share, which excludes the impact of the contingent loss.
 Three Months Ended March 31,
(Dollars in thousands except per share amounts)20212020
Net income from continuing operations$12,716 $7,922 
Impact of contingent loss related to a legal matter— 4,263 
Cumulative tax effect of adjustments— (1,006)
Adjusted earnings$12,716 $11,179 
Diluted earnings per share - continuing operations$0.34 $0.18 
Impact of contingent loss related to a legal matter— 0.10 
Cumulative tax effect of adjustments— (0.02)
Adjusted diluted earnings per share$0.34 $0.26 



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Supplemental Schedules
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Revenue by Product
 Three Months Ended March 31, 2021
Rise (1)ElasticToday
(Dollars in thousands) (Installment Loans)(Lines of Credit)(Credit Card)Total
Average combined loans receivable – principal(2)$217,679 $147,063 $14,135 $378,877 
Effective APR100 %95 %32 %96 %
Finance charges$53,743 $34,370 $1,110 $89,223 
Other62 50 398 510 
Total revenue$53,805 $34,420 $1,508 $89,733 
 Three Months Ended March 31, 2020
Rise (1)ElasticToday
(Dollars in thousands)(Installment Loans)(Lines of Credit)(Credit Card)Total
Average combined loans receivable – principal(2)$339,264 $239,289 $4,617 $583,170 
Effective APR123 %98 %35 %112 %
Finance charges$103,505 $58,175 $399 $162,079 
Other99 171 118 388 
Total revenue$103,604 $58,346 $517 $162,467 
(1)    Includes loans originated by third-party lenders through the CSO programs, which are not included in the Company's condensed consolidated financial statements.
(2)    Average combined loans receivable - principal is calculated using daily principal balances. See the "Combined Loan Information" section for a reconciliation of this non-GAAP measure to the most comparable GAAP measure.

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Loan Loss Reserve by Product
 Three Months Ended March 31, 2021
RiseElasticToday
(Dollars in thousands)(Installment Loans)(Lines of Credit)(Credit Card)Total
Combined loan loss reserve(1):
Beginning balance$33,968 $13,201 $1,910 $49,079 
Net charge-offs(22,674)(7,543)(673)(30,890)
Provision for loan losses15,298 5,091 581 20,970 
Ending balance$26,592 $10,749 $1,818 $39,159 
Combined loans receivable(1)(2)$217,705 $141,647 $15,152 $374,504 
Combined loan loss reserve as a percentage of ending combined loans receivable12 %8 %12 %10 %
Net charge-offs as a percentage of revenues42 %22 %45 %34 %
Provision for loan losses as a percentage of revenues28 %15 %39 %23 %



Three Months Ended March 31, 2020
RiseElasticToday
(Dollars in thousands)(Installment Loans)(Lines of Credit)(Credit Card)Total
Combined loan loss reserve(1):
Beginning balance$52,099 $28,852 $1,041 $81,992 
Net charge-offs(54,961)(27,205)(642)(82,808)
Provision for loan losses54,569 23,497 509 78,575 
Ending balance$51,707 $25,144 $908 $77,759 
Combined loans receivable(1)(2)$346,212 $234,644 $5,404 $586,260 
Combined loan loss reserve as a percentage of ending combined loans receivable15 %11 %17 %13 %
Net charge-offs as a percentage of revenues53 %47 %124 %51 %
Provision for loan losses as a percentage of revenues53 %40 %98 %48 %

(1)    Not a financial measure prepared in accordance with GAAP. See the "Combined Loan Information" section for a reconciliation of this non-GAAP measure to the most comparable GAAP measure.
(2)    Includes loans originated by third-party lenders through the CSO programs, which are not included in the Company's condensed consolidated financial statements.
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Customer Loan Data by Product
Three Months Ended March 31, 2021
RiseElasticToday
(Dollars in thousands)(Installment Loans)(Lines of Credit)(Credit Card)Total
Beginning number of combined loans outstanding103,940 100,105 10,803 214,848 
New customer loans originated8,656 2,852 2,382 13,890 
Former customer loans originated12,856 94 — 12,950 
Attrition(33,944)(13,030)(383)(47,357)
Ending number of combined loans outstanding91,508 90,021 12,802 194,331 
Customer acquisition cost$327 $475 $83 $316 
Average customer loan balance$2,209 $1,514 $1,149 $1,817 
Three Months Ended March 31, 2020
RiseElasticToday
(Dollars in thousands)(Installment Loans)(Lines of Credit)(Credit Card)Total
Beginning number of combined loans outstanding152,435 146,317 3,207 301,959 
New customer loans originated24,413 9,765 1,572 35,750 
Former customer loans originated16,556 131 — 16,687 
Attrition(50,771)(21,973)(166)(72,910)
Ending number of combined loans outstanding142,633 134,240 4,613 281,486 
Customer acquisition cost$309 $334 $110 $307 
Average customer loan balance$2,269 $1,674 $1,134 $1,966 
Combined Loan Information

The Elastic line of credit product is originated by a third-party lender, Republic Bank, which initially provides all of the funding for that product. Republic Bank retains 10% of the balances of all of the loans originated and sells a 90% loan participation in the Elastic lines of credit to a third party SPV, Elastic SPV, Ltd. Elevate is required to consolidate Elastic SPV, Ltd. as a variable interest entity under GAAP and the condensed consolidated financial statements include revenue, losses and loans receivable related to the 90% of Elastic lines of credit originated by Republic Bank and sold to Elastic SPV, Ltd.
Since the fourth quarter of 2018, the Company licensed its Rise installment loan brand to a third-party lender, FinWise Bank, which originates Rise installment loans in seventeen states. FinWise Bank initially provides all of the funding, retains 4% of the balances of all of the loans originated and sells the remaining 96% loan participation in those Rise installment loans to a third party SPV, EF SPV, Ltd. Elevate is required to consolidate EF SPV, Ltd. as a variable interest entity under GAAP and the condensed consolidated financial statements include revenue, losses and loans receivable related to the 96% of Rise installment loans originated by FinWise Bank and sold to EF SPV, Ltd.
Since the third quarter of 2020, the Company also licenses its Rise installment loan brand to an additional third-party lender, Capital Community Bank ("CCB"), which originates Rise installment loans in three states. Similar to the relationship with FinWise Bank, CCB initially provides all of the funding, retains 5% of the balances of all of the loans originated and sells the remaining 95% loan participation in those Rise installment loans to a third-party SPV, EC SPV, Ltd. Elevate is required to consolidate EC SPV, Ltd. as a variable interest entity under GAAP and the condensed consolidated financial statements include revenue, losses and loans receivable related to the 95% of the Rise installment loans originated by CCB and sold to EC SPV, Ltd.
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Elevate defines combined loans receivable - principal as loans owned by the Company plus loans originated and owned by third-party lenders pursuant to our CSO programs. Under these programs, the Company does not make Rise loans directly, but rather acts as a Credit Services Organization (which is also known as a Credit Access Business), or, “CSO,” and the loans are originated by an unaffiliated third party. There were no new loan originations in the first quarter of 2021 under our CSO programs, but the Company continues to have obligations as the CSO until the wind-down of this portfolio is complete. Elevate defines combined loan loss reserve as the loan loss reserve for loans owned by the Company plus the loan loss reserve for loans originated and owned by third-party lenders and guaranteed by the Company. The information presented in the tables below on a combined basis are non-GAAP measures based on a combined portfolio of loans, which includes the total amount of outstanding loans receivable that the Company owns and that are on the Company's condensed consolidated balance sheets plus outstanding loans receivable originated and owned by third parties that the Company guarantees pursuant to CSO programs in which the Company participates.
The Company believes these non-GAAP measures provide investors with important information needed to evaluate the magnitude of potential loan losses and the opportunity for revenue performance of the combined loan portfolio on an aggregate basis. The Company also believes that the comparison of the combined amounts from period to period is more meaningful than comparing only the amounts reflected on the Company's condensed consolidated balance sheets since both revenues and cost of sales as reflected in the Company's condensed consolidated financial statements are impacted by the aggregate amount of loans the Company owns and those CSO loans the Company guarantees.
The Company's use of total combined loans and fees receivable has limitations as an analytical tool, and investors should not consider it in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of these limitations are:
•Rise CSO loans are originated and owned by a third-party lender; and
•Rise CSO loans are funded by a third-party lender and are not part of the VPC Facility.

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As of each of the period ends indicated, the following table presents a reconciliation of:
•Loans receivable, net, Company owned (which reconciles to the Company's condensed consolidated balance sheets included elsewhere in this press release);
•Loans receivable, net, guaranteed by the Company;
•Combined loans receivable (which the Company uses as a non-GAAP measure); and
•Combined loan loss reserve (which the Company uses as a non-GAAP measure).
 20202021
(Dollars in thousands)March 31June 30September 30December 31March 31
Company Owned Loans:
Loans receivable – principal, current, company owned$486,396 $387,939 $346,380 $372,320 $331,251 
Loans receivable – principal, past due, company owned53,923 18,917 21,354 25,563 21,678 
Loans receivable – principal, total, company owned540,319 406,856 367,734 397,883 352,929 
Loans receivable – finance charges, company owned31,621 25,606 24,117 25,348 21,393 
Loans receivable – company owned571,940 432,462 391,851 423,231 374,322 
Allowance for loan losses on loans receivable, company owned(76,188)(59,438)(49,909)(48,399)(39,037)
Loans receivable, net, company owned$495,752 $373,024 $341,942 $374,832 $335,285 
Third Party Loans Guaranteed by the Company:
Loans receivable – principal, current, guaranteed by company$12,606 $6,755 $9,129 $1,795 $145 
Loans receivable – principal, past due, guaranteed by company564 117 314 144 15 
Loans receivable – principal, total, guaranteed by company(1)13,170 6,872 9,443 1,939 160 
Loans receivable – finance charges, guaranteed by company(2)1,150 550 679 299 22 
Loans receivable – guaranteed by company14,320 7,422 10,122 2,238 182 
Liability for losses on loans receivable, guaranteed by company(1,571)(1,156)(1,421)(680)(122)
Loans receivable, net, guaranteed by company(3)$12,749 $6,266 $8,701 $1,558 $60 
Combined Loans Receivable(3):
Combined loans receivable – principal, current$499,002 $394,694 $355,509 $374,115 $331,396 
Combined loans receivable – principal, past due54,487 19,034 21,668 25,707 21,693 
Combined loans receivable – principal553,489 413,728 377,177 399,822 353,089 
Combined loans receivable – finance charges32,771 26,156 24,796 25,647 21,415 
Combined loans receivable$586,260 $439,884 $401,973 $425,469 $374,504 
Combined Loan Loss Reserve(3):
Allowance for loan losses on loans receivable, company owned$(76,188)$(59,438)$(49,909)$(48,399)$(39,037)
Liability for losses on loans receivable, guaranteed by company(1,571)(1,156)(1,421)(680)(122)
Combined loan loss reserve$(77,759)$(60,594)$(51,330)$(49,079)$(39,159)
Combined loans receivable – principal, past due(3)$54,487 $19,034 $21,668 $25,707 $21,693 
Combined loans receivable – principal(3)553,489 413,728 377,177 399,822 353,089 
Percentage past due10 %5 %6 %6 %6 %
Combined loan loss reserve as a percentage of combined loans receivable(3)(4)13 %14 %13 %12 %10 %
Allowance for loan losses as a percentage of loans receivable – company owned13 %14 %13 %11 %10 %

(1)    Represents loans originated by third-party lenders through the CSO programs, which are not included in the Company's condensed consolidated financial statements.
(2)    Represents finance charges earned by third-party lenders through the CSO programs, which are not included in the Company's condensed consolidated financial statements.
(3)    Non-GAAP measure.
(4)    Combined loan loss reserve as a percentage of combined loans receivable is determined using period-end balances.

14
First Quarter FY 2021 Earnings Call May 2021

 
2 Forward-Looking Statements This presentation and responses to various questions contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements present our current expectations and projections relating to our business, financial condition and results of operations, and do not refer to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “likely” and other words and terms of similar meaning. The forward-looking statements include statements regarding: the Company’s belief that it is in a strong position from both an operational and capital perspective; our expectations regarding our 2021 outlook and growth strategies, including our expectation of originations to grow in the second half of 2021 and beyond; our expectations regarding the impact of COVID-19 as well as related government actions and stimulus programs, as well as underwriting changes implemented by us and the banks we support to address credit risks associated with the loan originations during the economic crises created by the pandemic, on our business, customers, results of operations and financial condition, including on loan originations, demand for our products, credit quality, marketing expense and net charge-offs; our expectations regarding the cumulative loss rate as a percentage of originations for the 2019 and 2020 vintages; our expectations with respect to our liquidity position and requirements for additional debt to fund loans; our expectations with respect to our stock repurchase plan and our current valuation; and our expectations regarding the cost of customer acquisition, new customer originations, and the efficacy and cost of our marketing efforts. Forward‐looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. These risks and uncertainties include, but are not limited to: the effect of the COVID-19 pandemic and various policies being implemented to prevent its spread on the Company’s business, financial condition and results of operations; the Company’s limited operating history in an evolving industry; the Company’s ability to grow revenue and maintain or achieve consistent profitability in the future; new laws and regulations in the consumer lending industry in many jurisdictions that could restrict the consumer lending products and services the Company offers, impose additional compliance costs on the Company, render the Company’s current operations unprofitable or even prohibit the Company’s current operations; scrutiny by regulators and payment processors of certain online lenders’ access to the Automated Clearing House system to disburse and collect loan proceeds and repayments; a lack of sufficient debt financing at acceptable prices or disruptions in the credit markets; the impact of competition in our industry and innovation by our competitors; our ability to prevent security breaches, disruption in service and comparable events that could compromise the personal and confidential information held in our data systems, reduce the attractiveness of our platform or adversely impact our ability to service loans; and other risks related to litigation, compliance and regulation. Additional factors that could cause actual results to differ are discussed under the heading "Risk Factors" and in other sections of the most recent Annual Report on Form 10-K; most recent Form 10-Q and in the Company's other current and periodic reports filed from time to time with the SEC. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements regarding risks and uncertainties that are included in our public communications. You should evaluate all forward-looking statements made in this presentation in the context of these risks and uncertainties. Neither we nor any of our respective agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this presentation. This presentation also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Neither we nor any other person makes any representation as to the accuracy or completeness of such data or undertakes any obligation to update such data after the date of this presentation. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk. The information and opinions contained in this presentation are provided as of the date of this presentation and are subject to change without notice. This presentation has not been approved by any regulatory or supervisory agency. See Appendix for additional information and definitions.

 
33 Elevate is reinventing non-prime credit with online products that provide financial relief today, and help people build a brighter financial future. We, along with the banks that license our technology, have originated $9 billion to 2.5 million customers1 and have saved them more than $8.2 billion over payday loans2

 
4 Adjusted EBITDA margin is a non-GAAP financial measures. See appendix for a reconciliation to a GAAP measure. 35.2% Adjusted EBITDA margin2 ~91% customers in good standing1 Great Repayment Strong Margins Continued Profitability $12.7M Net Income First Quarter 2021 Summary

 
5 Median checking account balance1 1st Stimulus ($1,200) 2nd Stimulus ($600) 3rd Stimulus ($1,400) $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600

 
6 $- $10 $20 $30 $40 $50 $60 $70 $80 $90 0% 2% 4% 6% 8% 10% 12% 14% Mar-20 Jun-20 Sep-20 Dec-20 Jan-21 Feb-21 Mar-21 $ of P ri nc ip al ($ m ill io ns ) % o f C om bi ne d Lo an s Re ce iv ab le – Pr in ci pa l1 Past Due Balances Payment Deferral Balances Delinquency % Payment Deferral % Elevate’s Payment Assistance Tools • Committed to helping consumers get back on track • Delinquent balances flat • Deferred (payment assistance tools) balances decreasing • Consumers in good standing has increased from ~82% to ~91% over the past 12 months 2020 by Quarter 2021 by Month Combined loans receivable – principal is a non-GAAP financial measure. See appendix for a reconciliation to a GAAP measure.

 
7 Outlook • Strong credit quality • 2Q’21 loan balances expected to be flat year-over-year • Consumer spend increasing • Expect full year balance growth in the 10-15% range for 2021 3-Tiered Growth Strategy • Re-engage with former customers • Restart traditional direct mail campaigns • Expand new partner channels 2021 Outlook and Growth Strategy

 
The new Elevate.com, our latest offering We want to help consumers achieve financial resilience1 2 3 4 5 Give non-prime consumers access and choice of products Build longer term customer relationships Re-position as non-prime thought leader Say “yes” to more non-prime consumers

 
9 $356 $481 $618 $649 $607 $400 $353 2015 2016 2017 2018 2019 2020 1Q21 (-$20) (-$22) $6 $13 $26 $55 $11 $13 2015 2016 2017 2018 2019 2020 1Q20 1Q21 $434 $580 $673 $787 $639 $465 $162 $90 2015 2016 2017 2018 2019 2020 1Q20 1Q21 $19 $60 $87 $116 $127 $146 $35 $32 2015 2016 2017 2018 2019 2020 1Q20 1Q21 Revenue Adjusted EBITDA2 Key Financial Measures ($ in millions) Ending combined loans receivable – principal, Adjusted EBITDA and Adjusted Earnings are non-GAAP financial measures. See appendix for a reconciliation to a GAAP measure. U.K. operations presented in 2015-2018 only. Adjusted Earnings / (Loss) 3 Ending Combined Loans Receivables - Principal1 As adjusted As adjusted As adjusted

 
10 2020 0% 5% 10% 15% 20% 25% 30% 35% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 Cumulative principal loss rates as a percentage of originations by loan vintage 2013 2014 2015 2016 2017 2018 2019 2020 20172018 2019 Months since origination $255 $297 $256 $235 $237 $245 $241 $297 $316 $175 $200 $225 $250 $275 $300 $325 2013 2014 2015 2016 2017 2018 2019 2020 1Q21 Customer Acquisition Cost CAC Top Target Range $300 Bottom Target Range $250 The 2019 and 2020 vintages are not yet fully mature from a loss perspective. U.K. operations are only presented in the 2013-2017 vintages. Excludes Today Card. U.K. operations are only presented in the 2013-2018 CAC. *2020 and 1Q21 represents limited marketing expense and customer acquisition. * Credit Quality and Customer Acquisition Cost *

 
11 Adjusted EBITDA margin is a non-GAAP financial measure. See Appendix for a reconciliation to GAAP measure. U.K. operations presented in 2018 only. 2018 2019 2020 1Q20 1Q21 LT Target Gross Revenue 100% 100% 100% 100% 100% 100% Loan Loss Provision 52% 51% 34% 48% 23% 50% Direct Marketing and Other Cost of Sales 13% 7% 6% 9% 8% 10% Gross Margin 35% 42% 60% 43% 69% 40% Operating Expenses 20% 22% 28% 21% 34% 20% Adjusted EBITDA Margin1 15% 20% 32% 22% 35% 20% % of Gross Revenues Margin Profile

 
12 $97 million Debt paydown in January 2021 Debt Paydown Share Repurchase 23% Common stock repurchased since inception in August 2019 2.4x Current debt-to-equity ratio 6.5% Common stock repurchased in 1Q 2021 Capital Management & Liquidity

 
1313 We believe everyone deserves a lift.

 
14 Appendix

 
15 Page 3: 1 Originations and customers from 2002-March 2021, attributable to the combined current, predecessor direct, discontinued operations and branded products. 2 For the period from 2013 to March 31, 2021. Based on the average effective APR of 96% for the three months ended March 31, 2021. This estimate, which has not been independently confirmed, is based on our internal comparison of revenues from our combined loan portfolio and the same portfolio with an APR of 400%, which is the approximate average APR for a payday loan according to the Consumer Financial Protection Bureau, or the "CFPB.“ Page 4: 1 Consumers in good standing refers to all consumers in active repayment, excluding those delinquent or using a payment assistance tool. 2 Adjusted EBITDA margin is not a financial measure prepared in accordance with GAAP. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue. See the appendix for a reconciliation to a GAAP measure. Page 5: 1 Average customer checking account balances for select Rise brand customers. Page 6: 1 Combined loans receivable - principal is a non-GAAP financial measure. See the appendix for a reconciliation to a GAAP measure. Page 9: 1 Ending combined loans receivable - principal is a non-GAAP financial measure. See the appendix for a reconciliation to a GAAP measure. 2 Adjusted EBITDA is not a financial measure prepared in accordance with GAAP. See the appendix for a reconciliation to a GAAP measure. 3 Adjusted earnings is not a financial measure prepared in accordance with GAAP. See the appendix for a reconciliation to a GAAP measure. Page 11: 1 Adjusted EBITDA margin is not a financial measure prepared in accordance with GAAP. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue. See the appendix for a reconciliation to a GAAP measure. Footnotes

 
16 ($mm) 2021 2020 2020 2019 Net income from continuing operations 13$ 8 36 26$ Adjustments: Net interest expense 9 14 49 63 Stock-based compensation 2 3 8 10 Depreciation and amortization 5 4 18 16 Non-operating expense - 4 24 1 Income tax expense 3 2 11 11 Adjusted EBITDA 32$ 35 146 127$ Adjusted EBITDA Margin 35% 22% 32% 20% Three months ended March 31, Years ended December 31, Adjusted EBITDA is a non-GAAP financial measure. The Company’s Adjusted EBITDA guidance does not include certain charges and costs. The adjustments in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, such as the impact of income tax benefit or expense, non-operating income, net interest expense, goodwill impairment loss, share-based compensation expense, and depreciation and amortization expense, among others. The Company is not able to provide a reconciliation of the Company’s non-GAAP financial guidance to the corresponding GAAP measure without unreasonable effort because of the uncertainty and variability of the nature and amount of these future charges and costs. UK operations excluded as discontinued operations in 2019-2021. Non-GAAP financials reconciliation – Adjusted EBITDA

 
17 ($mm) 2018 2017 2016 2015 Net income (loss) 13$ (7) (22) (20)$ Adjustments: Net interest expense 79 73 64 37 Stock-based compensation 8 6 2 1 Foreign currency transaction (gain) loss 2 (3) 9 2 Depreciation and amortization 13 10 11 9 Non-operating income - (2) - (6) Income tax expense (benefit) 1 10 (3) (5) Adjusted EBITDA 116$ 87 60 19$ Adjusted EBITDA Margin 15% 13% 10% 4% For the years ended December 31, Non-GAAP financials reconciliation – Adjusted EBITDA (continued) Adjusted EBITDA is a non-GAAP financial measure. The Company’s Adjusted EBITDA guidance does not include certain charges and costs. The adjustments in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, such as the impact of income tax benefit or expense, non-operating income, net interest expense, goodwill impairment loss, share-based compensation expense, and depreciation and amortization expense, among others. The Company is not able to provide a reconciliation of the Company’s non-GAAP financial guidance to the corresponding GAAP measure without unreasonable effort because of the uncertainty and variability of the nature and amount of these future charges and costs. UK operations presented in 2015-2018.

 
18 ($mm) 2021 2020 2020 2019 Net income from continuing operations 13$ 8 36 26$ Adjustments: Impact of contingent loss related to a legal matter - 4 24 - Cumulative tax effect of adjustments - (1) (5) - Adjusted earnings 13$ 11 55 26$ Diluted earnings per share 0.34$ 0.18 0.87 0.59$ Adjustments: Impact of contingent loss related to a legal matter - 0.10 0.58 - Cumulative tax effect of adjustments - (0.02) (0.14) - Adjusted diluted earnings per share 0.34$ 0.26 1.31 0.59$ Three months ended March 31, Years ended December 31, Adjusted earnings and Adjusted diluted earnings per share are non-GAAP financial measures. The Company’s Adjusted earnings exclude the impact of a contingent loss related to a legal matter and the cumulative tax effect of the contingent loss adjustment. Adjusted diluted earnings per share is Adjusted earnings divided by diluted weighted shares outstanding for the period. UK operations excluded as discontinued operations in 2019-2021. Non-GAAP financials reconciliation – Adjusted Earnings

 
19 ($mm) 2018 2017 2016 2015 Net income (loss) 13$ (7) (22) (20)$ Adjustments: Tax Cuts and Jobs Act tax expense - 13 - - Adjusted earnings (loss) 13$ 6 (22) (20)$ Diluted earnings (loss) per share 0.28$ (0.20) (1.74) (1.59)$ Adjustments: Tax Cuts and Jobs Act tax expense - 0.37 - - Adjusted diluted earnings (loss) per share 0.28$ 0.17 (1.74) (1.59)$ For the years ended December 31, Non-GAAP financials reconciliation – Adjusted Earnings (continued) Adjusted earnings and Adjusted diluted earnings per share are non-GAAP financial measures. The Company’s Adjusted earnings exclude the impact of the Tax Cuts and Jobs Act tax expense. Adjusted diluted earnings per share is Adjusted earnings divided by diluted weighted shares outstanding for the period. UK operations presented in 2015-2018.

 
20 (dollars in thousands) Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Company Owned Loans Loans receivable – principal, current, company owned 331,251 372,320 346,380 387,939 486,396 Loans receivable – principal, past due, company owned 21,678 25,563 21,354 18,917 53,923 Loans receivable – principal, total, company owned 352,929 397,883 367,734 406,856 540,319 Loans receivable – finance charges, company owned 21,393 25,348 24,117 25,606 31,621 Loans receivable – company owned 374,322 423,231 391,851 432,462 571,940 Allowance for loan losses on loans receivable, company owned (39,037) (48,399) (49,909) (59,438) (76,188) Loans receivable, net, company owned 335,285 374,832 341,942 373,024 495,752 Third Party Loans Guaranteed by the Company Loans receivable – principal, current, guaranteed by company 145 1,795 9,129 6,755 12,606 Loans receivable – principal, past due, guaranteed by company 15 144 314 117 564 Loans receivable – principal, total, guaranteed by company1 160 1,939 9,443 6,872 13,170 Loans receivable – finance charges, guaranteed by company2 22 299 679 550 1,150 Loans receivable – guaranteed by company 182 2,238 10,122 7,422 14,320 Liability for losses on loans receivable, guaranteed by company (122) (680) (1,421) (1,156) (1,571) Loans receivable, net, guaranteed by company2 60 1,558 8,701 6,266 12,749 Combined loans reconciliation (excluding UK) 1 Represents loans originated by third-party lenders through the CSO programs, which are not included in our financial statements. 2 Represents finance charges earned by third-party lenders through CSO programs, which are not included in our financial statements. 3 Non-GAAP measure. .

 
21 (dollars in thousands) Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Combined Loans Receivable3 Combined loans receivable – principal, current 331,396 374,115 355,509 394,694 499,002 Combined loans receivable – principal, past due 21,693 25,707 21,668 19,034 54,487 Combined loans receivable – principal 353,089 399,822 377,177 413,728 553,489 Combined loans receivable – finance charges 21,415 25,647 24,796 26,156 32,771 Combined loans receivable 374,504 425,469 401,973 439,884 586,260 Combined Loan Loss Reserve3 Allowance for loan losses on loans receivable, company owned (39,037) (48,399) (49,909) (59,438) (76,188) Liability for losses on loans receivable, guaranteed by company (122) (680) (1,421) (1,156) (1,571) Combined loan loss reserve (39,159) (49,079) (51,330) (60,594) (77,759) Combined loans reconciliation - continued (excluding UK) 1 Represents loans originated by third-party lenders through the CSO programs, which are not included in our financial statements. 2 Represents finance charges earned by third-party lenders through CSO programs, which are not included in our financial statements. 3 Non-GAAP measure. .

 
© 2017 Elevate. All Rights Reserved.

 

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