FlexShopper, Inc. Reports 2021 Fourth Quarter and Year End Financial Results

Rhea-AI Summary

FlexShopper reported a 22.9% increase in net revenues for FY 2021, totaling $125.4 million, with a net income of $3.3 million. The fourth quarter saw revenues rise 10.5% to $31.1 million and a net income of $633 thousand, improving from a loss in 2020. However, lease originations declined 28.4% year-over-year while the average origination value grew 13.6%. The company anticipates adding over 500 retail partner locations in 2022 and expects continued growth in Adjusted EBITDA.

Positive

• Net revenues increased by 22.9% to $125.4 million.
• Net income of $3.3 million, compared to a loss of $340 thousand in 2020.
• Gross profit rose 30.8% to $46.2 million.
• Adjusted EBITDA improved by 30.6% to $11.4 million.
• Expansion of credit facility from $52 million to $82.5 million.

Negative

• Lease originations decreased by 15.5% year-over-year.
• Average lease origination value increased, indicating potential difficulty in attracting new customers.

FY 2021 Net Revenues Up 22.9% to $125.4 million; Net Income of $3.3 million

BOCA RATON, Fla., March 30, 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 and fiscal year ended December 31, 2021, highlighted by increase in revenue and net income.

Results for Quarter Ended December 31, 2021 vs. Quarter Ended December 31, 2020:

• Total net revenues and fees increased 10.5% to $31.1 million from $28.1 million
  
  
• Originated 51,071 gross leases, down 28.4% from 71,350; average origination value increased by 13.6% to $527
  
  
• Net income of $633 thousand compared with net loss of $(419) thousand
  
  
• Net income attributable to common stockholders of $23 thousand, or $0.00 per diluted share, compared to net loss of $(1.0) million, or $(0.05) per diluted share
  
  
• Gross profit increased 10.3% to $12.2 million from $11.1 million
  
  
• Adjusted EBITDA1 decreased to $2.0 million compared to $2.6 million
  
  

Results for Twelve Months Ended December 31, 2021 vs. Twelve Months Ended December 31, 2020:

• Total net revenues and fees increased 22.9% to $125.4 million from $102.1 million
  
  
• Originated 159,217 gross leases, down 15.5% from 188,468; average origination value increased by 12.0% to $524
  
  
• Net income of $3.3 million compared with net loss of $(340) thousand
  
  
• Net income attributable to common stockholders of $0.8 million, or $0.04 per diluted share, compared to $(3.5) million, or $(0.17) per diluted share in the prior year.
  
  
• Gross profit increased 30.8% to $46.2 million from $35.4 million
  
  
• Adjusted EBITDA¹ improved to $11.4 million from $8.7 million

¹ Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition and reconciliation of this measure under “Non-GAAP Measures”.

Fourth Quarter 2021 Highlights and Recent Developments

• Retail partner rollouts resuming as pandemic impacts recede. FlexShopper currently expects to add over 500 partner store locations during the first half of the year as new and existing pilot programs expand.
  
  
• Expanded borrowing capacity provides capital to support expected growth. The Company recently announced an expansion of its credit facility from $52 million to $82.5 million. The additional capacity is expected to support continued growth of the business.
  
  
• Company expects Adjusted EBITDA growth rate to continue or accelerate. FlexShopper expects demand for alternative finance solutions among subprime customers to continue normalizing in 2022 and, as a result, expects 2022 Adjusted EBITDA to grow at or above the rate in 2021.
  
  

Rich House, CEO, stated, “2021 was a challenging year across our industry as subprime consumers benefitted from a range of government stimulus programs which, in turn, reduced their demand for alternative financing products and solutions. This negatively impacted our new lease originations for the full year. Despite the headwind for much of the year, we were able to grow our bottom line. For the year, we reported net income of $0.8 million after accounting for non-cash preferred dividend accrual, compared with a loss of $3.5 million in the prior year, with Adjusted EBITDA growing 31% to $11.4 million. Importantly, we achieved this improved profitability without compromising our underwriting. Across our industry we saw many participants do the opposite to maintain volume in the face of reduced demand for alternative financing solutions resulting from massive government stimulus. Those competitors now appear to be reversing course, which is a positive for FlexShopper.”

Mr. House continued, “As the recent COVID surge has receded, we have seen our industry steadily returning to normal. Notably, we have seen existing and new retail partners eager to resume rolling out our lease to own solution. We currently expect to add over 500 stores over the first half of the year, consisting of new pilot programs and other full roll outs. We have also recently introduced a consumer lending product to further support our retail partners. Lease to own contracts are limited to durable goods, leaving a gap for our tire store partners when subprime customers need service work such as wheel alignments. Our new lending product addresses this need, providing a value-added solution for our partners and their customers. Initial interest in this product has been positive and we expect to see continued growth through the year, eventually creating a material impact on our financial results.”

Additionally, Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition of this measure under “Non-GAAP Measures.”

Conference Call Details

Date: Thursday, March 31, 2022
Time: 9:00 a.m. Eastern Time

Participant Dial-In Numbers:

Domestic callers: (877) 407-3944
International callers: (412) 902-0038

Access by 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://themediaframe.com/mediaframe/webcast.html?webcastid=5vm0GSlj. An audio replay of the call will be archived on the Company’s website.

FLEXSHOPPER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

		For the three months ended								For the twelve months ended
		December 31,								December 31,
		2021				2020				2021				2020
Revenues:
Lease revenues and fees, net			29,479,017				26,950,434				118,355,184				96,939,767
Lease merchandise sold			1,614,581				1,191,139				7,071,572				5,144,747
Total revenues			31,093,598				28,141,573				125,426,756				102,084,514
Costs and expenses:
Cost of lease revenues, consisting of depreciation and impairment of lease merchandise			17,614,938				16,326,208				73,616,293				63,308,210
Cost of lease merchandise sold			1,261,369				739,281				5,561,593				3,424,880
Marketing			3,557,825				2,260,152				9,129,062				5,880,063
Salaries and benefits			3,160,020				3,116,073				11,489,208				10,440,693
Operating expenses			4,611,743				4,367,210				18,265,781				14,404,953
Total costs and expenses			30,205,895				26,808,924				118,061,937				97,458,799
Operating income			887,703				1,332,649				7,364,819				4,625,715
Gain on extinguishment of debt			-				-				1,931,825				-
Interest expense including amortization of debt issuance costs			(1,383,546	)			1,088,478				(5,238,560	)			(4,302,561	)
Income/(loss) before income taxes			(495,843	)			244,171				4,058,084				323,154
Provision for income taxes			1,129,163				(663,050	)			(785,310	)			(663,050	)
Net income/(loss)			633,320				(418,879	)			3,272,774				(339,896	)
Deemed dividend from exchange offer of warrants			-				-				-				713,212
Dividends on Series 2 Convertible Preferred Shares			609,777				609,771				2,439,099				2,438,988
Net income/(loss) attributable to common shareholders		$	23,543			$	(1,028,650	)		$	833,675			$	(3,492,096	)
Basic and diluted income/(loss) per common share:
Basic		$	-			$	(0.05	)		$	0.04			$	(0.17	)
Diluted		$	-			$	(0.05	)		$	0.04			$	(0.17	)
WEIGHTED AVERAGE COMMON SHARES:
Basic			20,712,772				21,359,912				21,387,960				20,995,349
Diluted			22,455,815				21,359,912				23,227,964				20,995,349

FLEXSHOPPER, INC.
CONSOLIDATED BALANCE SHEETS

		December 31,				December 31,
		2021				2020
ASSETS
CURRENT ASSETS:
Cash		$	5,094,642			$	8,541,232
Accounts receivable, net			29,898,991				10,032,714
Prepaid expenses			957,527				869,081
Lease merchandise, net			40,942,112				42,822,340
Total current assets			76,893,272				62,265,367
PROPERTY AND EQUIPMENT, net			7,841,206				5,911,696
OTHER ASSETS, net			77,578				72,316
Total assets		$	84,812,056			$	68,249,379
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	7,982,180			$	7,907,619
Accrued payroll and related taxes			391,078				352,102
Current portion of promissory notes to related parties, net of $1,247 at 2021 and $8,276 at 2020 of unamortized issuance costs, including accrued interest			1,053,088				4,815,546
Current portion of promissory note – Paycheck Protection Program			-				1,184,952
Accrued expenses			2,987,646				2,646,800
Lease liability - current portion			172,732				160,726
Total current liabilities			12,586,724				17,067,745
Loan payable under credit agreement to beneficial shareholder, net of $1,274 at 2021 and $61,617 at 2020 of unamortized issuance costs and current portion			50,061,924				37,134,009
Promissory notes to related parties, net of current portion			3,750,000				-
Promissory note – Paycheck Protection Program, net of current portion			-				741,787
Accrued payroll and related taxes net of current portion			-				204,437
Deferred income tax liability			495,166				-
Lease liabilities less current portion			1,774,623				1,947,355
Total liabilities			68,668,437				57,095,333
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 21,442,278 shares at 2021 and 21,359,945 shares at 2020			2,144				2,136
Additional paid in capital			38,560,117				36,843,326
Accumulated deficit			(45,222,302	)			(48,495,076	)
Total stockholders’ equity			16,143,619				11,154,046
		$	84,812,056			$	68,249,379

 

FLEXSHOPPER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2021 and 2020

		2021				2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/ (loss)		$	3,272,774			$	(339,896	)
Adjustments to reconcile net income/ (loss) to net cash used in operating activities:
Depreciation and impairment of lease merchandise			73,616,293				63,308,210
Other depreciation and amortization			2,871,541				2,577,084
Amortization of debt issuance cost			220,816				305,797
Compensation expense related to issuance of stock options and warrants			1,648,627				1,388,755
Provision for doubtful accounts			40,489,540				31,930,714
Interest in kind added to promissory notes balance			9,460				13,388
Write off of capitalized software costs			4,361				-
Deferred income tax			495,166				-
Gain on debt extinguishment			(1,931,825	)			-
Changes in operating assets and liabilities:
Accounts receivable			(60,355,817	)			(33,691,096	)
Prepaid expenses and other			(87,394	)			(195,104	)
Lease merchandise			(71,736,065	)			(75,067,446	)
Security deposits			(8,338	)			2,943
Accounts payable			74,561				3,339,730
Lease liabilities			(5,811	)			198,528
Accrued payroll and related taxes			(165,461	)			43,271
Accrued expenses			331,541				1,283,372
Net cash used in operating activities			(11,256,031	)			(5,207,547	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment, including capitalized software costs			(4,949,544	)			(3,098,194	)
Net cash used in investing activities			(4,949,544	)			(3,098,194	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loan payable under credit agreement			19,850,000				15,033,000
Repayment of loan payable under credit agreement			(6,575,000	)			(7,023,250	)
Proceeds from promissory notes- Paycheck Protection Program, net of fees			-				1,914,100
Principal payment under finance lease obligation			(7,707	)			(6,664	)
Proceeds from exercise of warrants			-				131,250
Proceeds from exercise of stock options			68,172				5,662
Repayment of installment loan			(11,207	)			(11,207	)
Debt issuance related costs			(565,273	)			(64,390	)
Net cash provided by financing activities			12,758,985				9,978,501
(DECREASE)/ INCREASE IN CASH			(3,446,590	)			1,672,760
CASH, beginning of period			8,541,232				6,868,472
CASH, end of period		$	5,094,642			$	8,541,232

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 twelve months ended December 31, 2021 and 2020 were as follows:

		Three months ended
		December 31,
		2021				2020				$ Change				% Change
Adjusted EBITDA:
Net income/ (loss)			633,320				(418,879	)			1,052,199				251.2
Provision for income taxes			(1,129,163	)			663,050				(1,792,213	)			(270.3	)
Amortization of debt costs			43,169				71,514				(28,345	)			(39.6	)
Other amortization and depreciation			867,497				615,881				251,616				40.9
Interest expense, excluding amortization of debt costs			1,340,377				1,016,964				323,413				31.8
Stock compensation			230,927				188,020				42,907				22.8
Product/infrastructure expense			-				17,457				(17,457	)			-
Executive separation agreement			-				396,090				(396,090	)			-
Adjusted EBITDA		$	1,986,127			$	2,550,097			$	(563,970	)			(22.1	)

		Twelve months ended
		December 31,
		2021				2020				$ Change				% Change
Adjusted EBITDA:
Net income/ (loss)			3,272,774				(339,896	)			3,612,670				1,062.9
Provision for income taxes			785,310				663,050				122,260				18.4
Amortization of debt costs			220,816				305,797				(84,981	)			(27.8	)
Other amortization and depreciation			2,875,902				2,271,287				604,615				26.6
Interest expense			5,017,744				3,996,764				1,020,980				25.5
Stock compensation			1,125,819				981,261				144,558				14.7
Product/infrastructure expense			10,000				299,287				(289,287	)			(96.7	)
Warrants compensation-consulting agreement			-				139,480				(139,480	)			-
Executive separation agreement			-				396,090				(396,090	)			-
Gain on debt extinguishment			(1,931,825	)			-				(1,931,825	)			-
Adjusted EBITDA		$	11,376,540			$	8,713,120			$	2,663,420				30.6

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 and patent pending 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:

Jeremy Hellman
Vice President
The Equity Group
212-836-9626
jhellman@equityny.com

FlexShopper, Inc.
Investor Relations
ir@flexshopper.com

FlexShopper, Inc.  

 

FAQ

What were FlexShopper's revenues for FY 2021?

FlexShopper reported revenues of $125.4 million for the fiscal year 2021.

How did FlexShopper's net income change in 2021?

FlexShopper's net income for 2021 was $3.3 million, an improvement from a net loss of $0.34 million in 2020.

What is FlexShopper's stock symbol?

FlexShopper is traded under the stock symbol FPAY.

What is the expected growth for FlexShopper in 2022?

FlexShopper expects Adjusted EBITDA growth rates to continue or accelerate in 2022.

How many lease originations did FlexShopper have in 2021?

FlexShopper originated 159,217 gross leases in 2021, a decrease of 15.5% from the previous year.