FlexShopper, Inc. Reports 2023 Fourth Quarter and Year End Financial Results
- None.
- The company reported a net loss attributable to common stockholders of $(715) thousand for Q4 2023 and $8.3 million for full year 2023.
Insights
The financial results released by FlexShopper, Inc. demonstrate significant growth in key financial metrics such as gross profit, which saw an increase of 315.8% and adjusted EBITDA, which turned from a negative figure to a positive $8.1 million. These figures suggest improved operational efficiency and a stronger ability to generate earnings before interest, taxes, depreciation and amortization. However, the net loss attributable to common stockholders indicates that despite these improvements, there are still challenges to be addressed, possibly including interest expenses or non-operational factors.
The refinancing of obligations under the 2015 Credit Agreement and the establishment of the 2024 Credit Agreement with Computershare Trust Company indicates FlexShopper's active management of its debt profile. The new terms, including the ability to borrow up to $150 million, provide the company with substantial liquidity to support operations. The interest rate of SOFR plus 9% per annum is relatively high, reflecting the risk profile of the company and the current interest rate environment. Investors should monitor how this debt restructuring will affect the company's interest expenses and overall financial health in the long term.
FlexShopper's reported increase in total fundings and net lease and loan revenues indicates an expanding market presence, likely driven by a combination of increased consumer demand and strategic initiatives. The lease-to-own sector typically serves customers with limited access to traditional credit, which may expand the company's customer base during economic fluctuations as consumers seek alternative financing options.
The significant growth in gross profit also suggests that FlexShopper is benefiting from economies of scale or has improved its cost management, both of which can enhance competitive positioning. However, the stock market's reaction to these financial results will depend on how these figures align with investor expectations and the company's forward-looking guidance.
The termination of the 2015 Credit Agreement and the entry into the 2024 Credit Agreement are critical legal events that reflect FlexShopper's strategic financial management. It is essential to understand the terms of the new agreement, particularly the events of default and the security interest granted in certain leases and loans as collateral. These terms will have legal implications for the company's operational flexibility and financial obligations.
Investors should note that while the restructuring of debt can provide immediate liquidity relief, it also imposes new covenants and obligations that the company must adhere to. Any failure to comply with these terms could have legal repercussions that impact the company's financial stability and stock performance.
BOCA RATON, Fla., April 01, 2024 (GLOBE NEWSWIRE) -- FlexShopper, Inc. (Nasdaq:FPAY) (“FlexShopper”), a leading national online lease-to-own (“LTO”) retailer and payment solution provider for underserved consumers, today announced its financial results for the quarter ended December 31, 2023.
Results for Quarter Ended December 31, 2023, vs. Quarter Ended December 31, 2022:
- Total fundings increased
12.0% to$35.4 million from$31.6 million
- Total net lease and loan revenues and fees increased
40.9% to$30.3 million from$21.5 million
- Gross profit increased
315.8% to$15.8 million from$3.8 million
- Adjusted EBITDA1 increased by
$12.0 million to$8.1 million from ($3.9) million
- Operating income of
$5.6 million compared with operating loss of$5.5 million
- Net loss attributable to common stockholders of
$(715) thousand , or$(0.03) per diluted share, compared to net income attributable to common stockholders of$6.0 million , or$0.27 per diluted share
Results for Twelve Months Ended December 31, 2023, vs. Twelve Months Ended December 31, 2022:
- Total fundings increased
7.7% to$120.4 million from$111.8 million
- Total net lease and loan revenues and fees increased
3.4% to$117.0 million from$113.1 million
- Gross profit increased
47.4% to$54.7 million from$37.1 million
- Adjusted EBITDA1 increased by
$23.7 million to$23.2 million compared to ($0.5) million
- Operating income of
$13.7 million compared with operating loss of$6.3 million
- Net loss attributable to common stockholders of
$8.3 million , or$(0.51) per diluted share, compared to net income attributable to common stockholders of$9.9 million , or$0.44 per diluted share
| ¹ | Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition and reconciliation of this measure under “Non-GAAP Measures”. |
Subsequent Events:
On March 27, 2024, FlexShopper refinanced all the obligations under the 2015 Credit Agreement owed to the Administrative Agent and the lenders, and all liens held by any of the lenders or the Administrative Agent, were discharged and released. The Administrative Agent, the lenders and FlexShopper terminated the 2015 Credit Agreement.
On March 27, 2024, FlexShopper, through a wholly owned subsidiary (“Borrower”), entered into a new credit agreement (the “2024 Credit Agreement”) with Computershare Trust Company, National Association, as paying agent, various lenders from time to time party thereto and Powerscourt Investment 50, LP, an affiliate of Waterfall Asset Management, LLC, as administrative agent and lender (“Lender”). The Borrower is permitted to borrow funds under the 2024 Credit Agreement based on the Company’s cash on hand and the Amortized Order Value of its Eligible Leases (as defined in the 2024 Credit Agreement), less certain deductions described in the 2024 Credit Agreement. Under the terms of the 2024 Credit Agreement, subject to the satisfaction of certain conditions, the Borrower may borrow up to
The 2024 Credit Agreement includes customary events of default, including, among others, failures to make payment of principal and interest, deficiencies in the borrowing base, and bankruptcy events.
Conference Call and Webcast Details
Conference call
Date: Tuesday, April 2, 2024
Time: 8:30 a.m. Eastern Time
Participant Dial-In Numbers:
Domestic callers: (877) 407-2988
International callers: +1 (201) 389-0923
Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=gSrwUmm0
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://hd.choruscall.com/InComm/?callme=true&passcode=13730035&h=true&info=company&r=true&B=6
An audio replay of the call will be archived on the Company’s website.
| FLEXSHOPPER, INC. CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
| For the years ended December 31, | |||||||
| 2023 | 2022 | ||||||
| Revenues: | |||||||
| Lease revenues and fees, net | $ | 91,943,729 | $ | 105,936,072 | |||
| Loan revenues and fees, net of changes in fair value | 25,031,278 | 7,120,101 | |||||
| Total revenues | 116,975,007 | 113,056,173 | |||||
| Costs and expenses: | |||||||
| Depreciation and impairment of lease merchandise | 56,288,128 | 72,556,431 | |||||
| Loan origination costs and fees | 6,007,598 | 3,384,013 | |||||
| Marketing | 7,620,795 | 11,031,695 | |||||
| Salaries and benefits | 12,499,099 | 10,991,477 | |||||
| Operating expenses | 24,547,729 | 21,395,767 | |||||
| Net change in fair value of promissory note related to acquisition | (3,678,689 | ) | - | ||||
| Total costs and expenses | 103,284,660 | 119,359,383 | |||||
| Operating income/ (loss) | 13,690,347 | (6,303,210 | ) | ||||
| Gain on bargain purchase | - | 14,461,274 | |||||
| Interest expense including amortization of debt issuance costs | (18,913,773 | ) | (11,161,396 | ) | |||
| Loss before income taxes | (5,223,426 | ) | (3,003,332 | ) | |||
| Benefit from income taxes | 989,809 | 16,635,051 | |||||
| Net (loss)/ income | (4,233,617 | ) | 13,631,719 | ||||
| Dividends on Series 2 Convertible Preferred Shares | 4,103,638 | 3,730,580 | |||||
| Net (loss)/ income attributable to common and Series 1 Convertible Preferred shareholders | $ | (8,337,255 | ) | $ | 9,901,139 | ||
| Basic and diluted (loss)/ income per common share: | |||||||
| Basic | $ | (0.51 | ) | $ | 0.45 | ||
| Diluted | $ | (0.51 | ) | $ | 0.44 | ||
| WEIGHTED AVERAGE COMMON SHARES: | |||||||
| Basic | 16,260,349 | 21,646,896 | |||||
| Diluted | 16,260,349 | 22,425,354 | |||||
| FLEXSHOPPER, INC. CONSOLIDATED BALANCE SHEETS | |||||||
| December 31, | December 31, | ||||||
| 2023 | 2022 | ||||||
| ASSETS | |||||||
| CURRENT ASSETS: | |||||||
| Cash | $ | 4,413,130 | $ | 6,051,713 | |||
| Restricted cash | - | 121,636 | |||||
| Lease receivables, net | 44,795,090 | 35,540,043 | |||||
| Loan receivables at fair value | 35,794,290 | 32,932,504 | |||||
| Prepaid expenses and other assets | 3,300,677 | 3,489,136 | |||||
| Lease merchandise, net | 29,131,440 | 31,550,441 | |||||
| Total current assets | 117,434,627 | 109,685,473 | |||||
| Property and equipment, net | 9,308,859 | 8,086,862 | |||||
| Right of use asset, net | 1,237,010 | 1,406,270 | |||||
| Intangible assets, net | 13,391,305 | 15,162,349 | |||||
| Other assets, net | 2,175,215 | 1,934,728 | |||||
| Deferred tax asset, net | 12,943,361 | 12,013,828 | |||||
| Total assets | $ | 156,490,377 | $ | 148,289,510 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| CURRENT LIABILITIES: | |||||||
| Accounts payable | $ | 7,139,848 | $ | 6,511,943 | |||
| Accrued payroll and related taxes | 578,197 | 310,820 | |||||
| Promissory notes to related parties, including accrued interest | 198,624 | 1,209,455 | |||||
| Accrued expenses | 3,972,397 | 3,988,093 | |||||
| Lease liability - current portion | 245,052 | 208,001 | |||||
| Total current liabilities | 12,134,118 | 12,228,312 | |||||
| Loan payable under credit agreement to beneficial shareholder, net of unamortized issuance costs of | 96,384,220 | 80,847,748 | |||||
| Promissory notes to related parties, net of unamortized issuance costs of | 10,100,047 | 10,750,000 | |||||
| Promissory note related to acquisition, net of discount of | - | 3,158,471 | |||||
| Loan payable under Basepoint credit agreement, net of unamortized issuance costs of | 7,319,641 | - | |||||
| Purchase consideration payable related to acquisition | - | 8,703,684 | |||||
| Lease liabilities, net of current portion | 1,321,578 | 1,566,622 | |||||
| Total liabilities | 127,259,604 | 117,254,837 | |||||
| STOCKHOLDERS’ EQUITY | |||||||
| Series 1 Convertible Preferred Stock, | 851,660 | 851,660 | |||||
| Series 2 Convertible Preferred Stock, | 21,952,000 | 21,952,000 | |||||
| Common stock, | 2,176 | 2,176 | |||||
| Treasury shares, at cost- 164,029 shares at 2023 | (166,757 | ) | - | ||||
| Additional paid in capital | 42,415,894 | 39,819,420 | |||||
| Accumulated deficit | (35,824,200 | ) | (31,590,583 | ) | |||
| Total stockholders’ equity | 29,230,773 | 31,034,673 | |||||
| $ | 156,490,377 | $ | 148,289,510 | ||||
| FLEXSHOPPER, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2023 and 2022 | |||||||
| 2023 | 2022 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
| Net (loss)/ income | $ | (4,233,617 | ) | $ | 13,631,719 | ||
| Adjustments to reconcile net (loss)/ income to net cash used in operating activities: | |||||||
| Depreciation and impairment of lease merchandise | 56,288,128 | 72,556,431 | |||||
| Other depreciation and amortization | 7,881,110 | 4,769,614 | |||||
| Amortization of debt issuance costs | 571,538 | 228,843 | |||||
| Amortization of discount on the promissory note related to acquisition | 236,952 | 19,747 | |||||
| Compensation expense related to stock-based compensation | 1,677,708 | 997,830 | |||||
| Provision for doubtful accounts | 42,505,647 | 57,420,480 | |||||
| Interest in kind added to promissory notes balance | - | 155,093 | |||||
| Deferred income tax | (929,533 | ) | (17,282,364 | ) | |||
| Net change in fair value of promissory note related to acquisiton | (3,678,689 | ) | - | ||||
| Gain on bargain purchase | - | (14,461,274 | ) | ||||
| Net changes in the fair value of loan receivables at fair value | (10,217,854 | ) | 9,559,979 | ||||
| Changes in operating assets and liabilities, net of effects of acquisition: | |||||||
| Lease receivables | (51,760,694 | ) | (67,487,369 | ) | |||
| Loan receivables at fair value | 7,356,068 | (25,612,049 | ) | ||||
| Prepaid expenses and other assets | 177,169 | (1,670,836 | ) | ||||
| Lease merchandise | (53,869,127 | ) | (63,164,760 | ) | |||
| Purchase consideration payable related to acquisition | 208,921 | 164,102 | |||||
| Promissory note related to acquisition | 283,266 | - | |||||
| Lease liabilities | (30,268 | ) | (14,488 | ) | |||
| Accounts payable | 627,905 | (1,976,844 | ) | ||||
| Accrued payroll and related taxes | 267,377 | (80,258 | ) | ||||
| Accrued expenses | (26,527 | ) | 1,009,468 | ||||
| Net cash used in operating activities | (6,664,520 | ) | (31,236,936 | ) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Cash acquired in business combination | - | 2,938,355 | |||||
| Purchases of property and equipment, including capitalized software costs | (6,335,276 | ) | (6,498,115 | ) | |||
| Purchases of data costs | (1,225,983 | ) | (1,640,885 | ) | |||
| Net cash used in investing activities | (7,561,259 | ) | (5,200,645 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Proceeds from loan payable under credit agreement | 18,050,000 | 36,455,000 | |||||
| Repayment of loan payable under credit agreement | (2,795,000 | ) | (5,730,000 | ) | |||
| Repayment of loan payable under Basepoint credit agreement | (1,500,000 | ) | - | ||||
| Repayment of promissory notes to related parties | (1,000,000 | ) | - | ||||
| Debt issuance related costs | (115,403 | ) | (166,745 | ) | |||
| Proceeds from exercise of stock options | 1,185 | 261,505 | |||||
| Proceeds from promissory notes to related parties | - | 7,000,000 | |||||
| Principal payment under finance lease obligation | (8,465 | ) | (11,184 | ) | |||
| Repayment of purchase consideration payable related to acquisition | - | (283,266 | ) | ||||
| Repayment of installment loan | - | (9,022 | ) | ||||
| Purchases of Treasury Stock | (166,757 | ) | - | ||||
| Net cash provided by financing activities | 12,465,560 | 37,516,288 | |||||
| (DECREASE)/ INCREASE IN CASH and RESTRICTED CASH | (1,760,219 | ) | 1,078,707 | ||||
| CASH and RESTRICTED CASH, beginning of period | 6,173,349 | 5,094,642 | |||||
| CASH and RESTRICTED CASH, end of period | $ | 4,413,130 | $ | 6,173,349 | |||
| Supplemental cash flow information: | |||||||
| Interest paid | $ | 17,337,292 | $ | 10,289,334 | |||
| Due date extension of warrants | $ | 917,581 | $ | - | |||
| Noncash investing and financing activities | |||||||
| Acquisition of loan receivables at fair value | $ | - | $ | 13,320,326 | |||
| Acquisition of property and equipment | - | 136,249 | |||||
| Acquisition of intangible assets | - | 15,307,894 | |||||
| Acquisition of purchase consideration payable related to acquisition | - | 8,539,582 | |||||
| Acquisition of accounts payable | - | 506,607 | |||||
| Acquisition of deferred tax liability | - | 4,773,370 | |||||
| Issuance of promissory note related to acquisition | - | 3,421,991 | |||||
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 merchandise), 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 years ended December 31, 2023 and 2022 were as follows:
| 2023 | 2022 | $ Change | % Change | ||||||||||||
| Adjusted EBITDA: | |||||||||||||||
| Net (loss)/ income | $ | (4,233,617 | ) | $ | 13,631,719 | $ | (17,865,336 | ) | (131.1 | ) | |||||
| Income taxes | (989,809 | ) | (16,635,051 | ) | 15,645,242 | (94.0 | ) | ||||||||
| Amortization of debt issuance costs | 571,538 | 228,843 | 342,695 | 149.8 | |||||||||||
| Amortization of discount on the promissory note related to acquisition | 236,952 | 19,746 | 217,206 | 1,100.0 | |||||||||||
| Other amortization and depreciation | 7,881,110 | 4,769,614 | 3,111,496 | 65.2 | |||||||||||
| Interest expense | 18,105,282 | 10,912,808 | 7,192,474 | 65.9 | |||||||||||
| Stock-based compensation | 1,677,708 | 997,830 | 679,878 | 68.1 | |||||||||||
| Gain on bargain purchase | - | (14,461,274 | ) | 14,461,274 | |||||||||||
| Adjusted EBITDA | $ | 23,249,164 | $ | (535,765 | ) | $ | 23,784,929 | (4,439.4 | ) | ||||||
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, Inc. (FPAY) is a financial technology company that provides electronics, home furnishings and other durable goods to underserved consumers on a lease-to-own (LTO) basis through its patented e-commerce marketplace (www.FlexShopper.com). FlexShopper also provides LTO and loan technology platforms to a growing number of retailers and e-retailers to facilitate transactions with consumers without access to traditional financing.
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, 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 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.
FAQ
What was the percentage increase in total fundings for FlexShopper (FPAY) in Q4 2023?
What was the gross profit percentage increase for FlexShopper (FPAY) in full year 2023?
What was the adjusted EBITDA for FlexShopper (FPAY) in Q4 2023?
What was the net loss attributable to common stockholders for FlexShopper (FPAY) in full year 2023?
