FlexShopper, Inc. Reports Second Quarter 2022 Financial Results


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 to $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
Time: 9:00 a.m. Eastern Time

Participant Dial-In Numbers:

Domestic callers: (877) 407-2988
International callers: (412) 902-0038

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, $0.001 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, $0.001 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, $0.0001 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.
Investor Relations
ir@flexshopper.com

FlexShopper, Inc.