Open Lending Corporation (Nasdaq: LPRO) (the “Company” or “Open
Lending”), a leading provider of lending enablement and risk
analytics solutions to financial institutions, today reported
financial results for its fourth quarter and fiscal year 2022.
“For the year ended December 31, 2022, we
certified over 165,000 loans, reported total revenue of $179.6
million and adjusted operating cash flows of $142.6 million. While
these results were below our expectations, we faced unprecedented
industry challenges including new and used vehicle sales being the
worst in nearly a decade, historic declines in wholesale used car
values, and vehicle affordability at record highs,” said Keith
Jezek, CEO of Open Lending. “While we expect these challenges to
persist throughout 2023, we are thoughtfully investing in
initiatives that support our long-term competitive advantages.
These initiatives focus on growing our customer base as well as
expanding with our existing customers. We believe that optimizing
our sales channels and refining our technology offering will
position us for long term success by supporting our goal of gaining
market share.”
Three Months Ended
December 31, 2022
Highlights
- The Company facilitated 34,550
certified loans during the fourth quarter of 2022, compared to
42,639 certified loans in the fourth quarter of 2021.
- Total revenue was $26.8 million
during the fourth quarter of 2022, compared to $51.6 million in the
fourth quarter of 2021. The fourth quarter of 2022 was impacted by
a $12.8 million reduction in estimated future revenues related to
business in historic vintages.
- Gross profit was $21.9 million
during the fourth quarter of 2022, compared to $46.9 million in the
fourth quarter of 2021.
- Net loss was $4.2 million during
the fourth quarter of 2022, compared to net income of $27.8 million
in the fourth quarter of 2021.
- Adjusted EBITDA was $8.5 million
during the fourth quarter of 2022, compared to $36.6 million in the
fourth quarter of 2021.
Twelve Months Ended
December 31, 2022
Highlights
- The Company facilitated 165,211
certified loans during the year ended December 31, 2022,
compared to 171,697 certified loans in the prior year.
- Total revenue was $179.6 million
during the year ended December 31, 2022, compared to $215.7
million in the prior year.
- Gross profit was $159.6 million
during the year ended December 31, 2022, compared to $197.0
million in the prior year.
- Net income was $66.6 million during
the year ended December 31, 2022, compared to $146.1 million
in the prior year.
- Adjusted EBITDA was $105.7 million
during the year ended December 31, 2022, compared to $155.0
million in the prior year.
Adjusted EBITDA is a non-GAAP financial measure.
Reconciliations of this non-GAAP financial measure to its most
directly comparable GAAP financial measure are provided in the
financial table included at the end of this press release. An
explanation of this measure and how it is calculated is also
included under the heading “Non-GAAP Financial Measures.”
First Quarter 2023
OutlookBased on the fourth quarter results and trends into
early 2023, the Company is issuing its first quarter 2023 guidance
ranges as follows:
|
First
Quarter 2023 Outlook |
Total Certified Loans |
28,000 - 32,000 |
Total Revenue |
$30 - $34 million |
Adjusted EBITDA |
$13 - $17 million |
The guidance provided above includes
forward-looking statements within the meaning of U.S. securities
laws. While the financial guidance takes into account the
continuing impact of the global COVID-19 pandemic, the impact of
the pandemic has been unprecedented and the future effect of the
pandemic on the global economy and our financial results remains
uncertain, and our actual results may differ materially. See
“Forward-Looking Statements” below.
Conference CallOpen Lending
will host a conference call to discuss the fourth quarter and
fiscal year 2022 financial results today at 5:00 pm ET. Hosting the
call will be John Flynn, Chairman, Keith Jezek, CEO and Chuck Jehl,
CFO. The conference call will be webcast live from the Company's
investor relations website at https://investors.openlending.com/
under the “Events” section. The conference call can also be
accessed live over the phone by dialing (877) 407-4018, or for
international callers (201) 689-8471; the conference ID is
13735205. An archive of the webcast will be available at the same
location on the website shortly after the call has concluded.
About Open Lending Open Lending
(Nasdaq: LPRO) provides loan analytics, risk-based pricing, risk
modeling and default insurance to auto lenders throughout the
United States. For 20 years, we have been empowering financial
institutions to create profitable auto loan portfolios by saying
“yes” to more automotive loans. For more information, please visit
www.openlending.com.
Forward-Looking Statements This
press release includes certain statements that are not historical
facts but are forward-looking statements for purposes of the safe
harbor provisions under the United States Private Securities
Litigation Reform Act of 1995, including statements related to
market trends, the impact of the global COVID-19 pandemic on
factors impacting the Company’s business, the Company’s new lender
pipeline, consumer behavior and demand for automotive loans, as
well as future financial performance under the heading “2023
Outlook” above. Forward-looking statements generally are
accompanied by words such as “believe,” “may,” “will,” “estimate,”
“continue,” “anticipate,” “intend,” “expect,” “should,” “would,”
“plan,” “predict,” “potential,” “seem,” “seek,” “future,”
“outlook,” and similar expressions that predict or indicate future
events or trends or that are not statements of historical matters.
These statements are based on various assumptions and on the
current expectations of the Company’s management and are not
predictions of actual performance. These forward-looking statements
are provided for illustrative purposes only and are not intended to
serve as, and must not be relied on by any investor as, a
guarantee, an assurance, a prediction or a definitive statement of
fact or probability. Actual events and circumstances are difficult
or impossible to predict and will differ from assumptions. Many
actual events and circumstances are beyond the Company’s control.
These forward-looking statements are subject to a number of risks
and uncertainties, including general economic, market, political
and business conditions; the continuing effects of the COVID-19
pandemic on consumer behavior; applicable taxes, inflation, supply
chain disruptions including global hostilities and responses
thereto, interest rates and the regulatory environment; the outcome
of judicial proceedings to which Open Lending is, or may become a
party; failure to realize the anticipated benefits of the business
combination with Nebula Acquisition Corporation (“Business
Combination”); other risks discussed in our filings with the
Securities and Exchange Commission, including our Annual Report on
Form 10-K for the year ended December 31, 2021 and our
subsequently filed Quarterly Reports on Form 10-Q. If the risks
materialize or assumptions prove incorrect, actual results could
differ materially from the results implied by these forward-looking
statements. There may be additional risks that the Company
presently does not know or that they currently believe are
immaterial that could also cause actual results to differ from
those contained in the forward-looking statements. In addition,
forward-looking statements reflect the Company’s expectations,
plans or forecasts of future events and views as of the date of
this press release. The Company anticipates that subsequent events
and developments will cause their assessments to change. However,
while the Company may elect to update these forward-looking
statements at some point in the future, the Company specifically
disclaims any obligation to do so. These forward-looking statements
should not be relied upon as representing the Company’s assessments
as of any date subsequent to the date of this press release.
Accordingly, undue reliance should not be placed upon the
forward-looking statements.
Non-GAAP Financial MeasuresThe
non-GAAP financial measures included in this press release are
financial information that has not been prepared in accordance with
GAAP. The Company uses Adjusted EBITDA, Adjusted EBITDA margin and
Adjusted operating cash flows internally in analyzing our financial
results and believes it is useful to investors, as a supplement to
GAAP measures, in evaluating our ongoing operational performance.
The Company believes that the use of non-GAAP financial measures
provides an additional tool for investors to use in evaluating
ongoing operating results and trends and in comparing our financial
results with other companies in our industry, many of which present
similar non-GAAP financial measures to investors.
The Company believes these measures provide useful information
to investors and others in understanding and evaluating its
operating results in the same manner as its management and board of
directors. In addition, these measures provide useful measures for
period-to-period comparisons of our business, as they remove the
effect of certain non-cash items and certain non-recurring variable
charges. Adjusted EBITDA is defined as GAAP net income (loss)
excluding interest expense, income tax expense, depreciation and
amortization expense, share-based compensation expense, gain on
extinguishment of the Company's tax receivable agreement, loss on
extinguishment of debt, change in fair value of contingent
consideration, change in measurement - tax receivable agreement and
transaction bonuses as a result of the Business Combination.
Adjusted EBITDA margin is defined as Adjusted EBITDA expressed as a
percentage of total revenue. Adjusted operating cash flows is
defined as adjusted EBITDA, minus CAPEX, plus or minus change in
contract assets.
Non-GAAP financial measures should not be
considered in isolation from, or as a substitute for, financial
information prepared in accordance with GAAP. Investors are
encouraged to review the reconciliation of non-GAAP financial
measures to their most directly comparable GAAP financial measure
provided in the financial statement tables included below in this
press release.
Contact:ICR for Open
LendingInvestorsopenlending@icrinc.com
OPEN LENDING
CORPORATIONConsolidated Balance
Sheets(In thousands, except share
data)
|
|
December 31, |
|
|
|
2022 |
|
|
|
2021 |
|
Assets |
|
|
|
|
Current
assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
204,450 |
|
|
$ |
116,454 |
|
Restricted cash |
|
|
4,069 |
|
|
|
3,055 |
|
Accounts receivable, net |
|
|
5,721 |
|
|
|
6,525 |
|
Current contract assets, net |
|
|
54,429 |
|
|
|
70,542 |
|
Income tax receivable |
|
|
9,714 |
|
|
|
1,345 |
|
Other current assets |
|
|
2,361 |
|
|
|
4,873 |
|
Total current assets |
|
|
280,744 |
|
|
|
202,794 |
|
Property and equipment, net |
|
|
2,573 |
|
|
|
2,663 |
|
Operating lease right-of-use asset, net |
|
|
4,610 |
|
|
|
5,189 |
|
Contract assets, net |
|
|
21,001 |
|
|
|
42,414 |
|
Deferred tax asset, net |
|
|
65,128 |
|
|
|
65,503 |
|
Other assets |
|
|
5,575 |
|
|
|
262 |
|
Total
assets |
|
$ |
379,631 |
|
|
$ |
318,825 |
|
Liabilities and
stockholders’ equity |
|
|
|
|
Current
liabilities |
|
|
|
|
Accounts payable |
|
$ |
288 |
|
|
$ |
1,285 |
|
Accrued expenses |
|
|
6,388 |
|
|
|
3,984 |
|
Current portion of debt |
|
|
3,750 |
|
|
|
3,125 |
|
Third-party claims administration liability |
|
|
4,055 |
|
|
|
3,050 |
|
Other current liabilities |
|
|
626 |
|
|
|
621 |
|
Total current liabilities |
|
|
15,107 |
|
|
|
12,065 |
|
Long-term debt, net of deferred financing costs |
|
|
143,683 |
|
|
|
143,135 |
|
Operating lease liabilities |
|
|
4,082 |
|
|
|
4,643 |
|
Other liabilities |
|
|
3,935 |
|
|
|
— |
|
Total
liabilities |
|
|
166,807 |
|
|
|
159,843 |
|
Commitments and
contingencies |
|
|
|
|
Stockholders’
equity |
|
|
|
|
Preferred stock, $0.01 par value; 10,000,000 shares authorized,
none issued and outstanding |
|
$ |
— |
|
|
$ |
— |
|
Common stock, $0.01 par value; 550,000,000 shares authorized,
128,198,185 shares issued and 123,646,059 shares outstanding as of
December 31, 2022 and 128,198,185 shares issued and
126,212,876 shares outstanding as of December 31, 2021 |
|
|
1,282 |
|
|
|
1,282 |
|
Additional paid-in capital |
|
|
499,625 |
|
|
|
496,983 |
|
Accumulated deficit |
|
|
(215,819 |
) |
|
|
(282,439 |
) |
Treasury stock at cost, 4,552,126 shares as of December 31,
2022, and 1,985,309 shares as of December 31, 2021 |
|
|
(72,264 |
) |
|
|
(56,844 |
) |
Total stockholders’
equity |
|
|
212,824 |
|
|
|
158,982 |
|
Total liabilities and
stockholders’ equity |
|
$ |
379,631 |
|
|
$ |
318,825 |
|
OPEN LENDING
CORPORATIONConsolidated Statements of Operations
and Comprehensive Income (Loss)(In thousands,
except share data)
|
Three Months EndedDecember
31, |
|
Year EndedDecember 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue |
|
|
|
|
|
|
|
Profit share |
$ |
6,066 |
|
|
$ |
31,196 |
|
|
$ |
90,056 |
|
|
$ |
133,215 |
|
Program fees |
|
18,309 |
|
|
|
18,484 |
|
|
|
80,611 |
|
|
|
75,630 |
|
Claims administration and other service fees |
|
2,446 |
|
|
|
1,950 |
|
|
|
8,927 |
|
|
|
6,810 |
|
Total
revenue |
|
26,821 |
|
|
|
51,630 |
|
|
|
179,594 |
|
|
|
215,655 |
|
Cost of
services |
|
4,896 |
|
|
|
4,739 |
|
|
|
19,968 |
|
|
|
18,621 |
|
Gross
profit |
|
21,925 |
|
|
|
46,891 |
|
|
|
159,626 |
|
|
|
197,034 |
|
Operating
expenses |
|
|
|
|
|
|
|
General and administrative |
|
11,165 |
|
|
|
6,603 |
|
|
|
35,950 |
|
|
|
30,393 |
|
Selling and marketing |
|
4,148 |
|
|
|
3,341 |
|
|
|
17,856 |
|
|
|
12,000 |
|
Research and development |
|
1,839 |
|
|
|
1,720 |
|
|
|
8,205 |
|
|
|
4,352 |
|
Total operating expenses |
|
17,152 |
|
|
|
11,664 |
|
|
|
62,011 |
|
|
|
46,745 |
|
Operating
income |
|
4,773 |
|
|
|
35,227 |
|
|
|
97,615 |
|
|
|
150,289 |
|
Interest expense |
|
(2,297 |
) |
|
|
(489 |
) |
|
|
(5,832 |
) |
|
|
(5,859 |
) |
Interest income |
|
1,627 |
|
|
|
36 |
|
|
|
1,995 |
|
|
|
213 |
|
Gain on extinguishment of tax receivable agreement |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
55,422 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(8,778 |
) |
Other income (expense) |
|
1 |
|
|
|
11 |
|
|
|
(238 |
) |
|
|
(119 |
) |
Income before income
taxes |
|
4,104 |
|
|
|
34,785 |
|
|
|
93,540 |
|
|
|
191,168 |
|
Income tax
expense |
|
8,293 |
|
|
|
6,945 |
|
|
|
26,920 |
|
|
|
45,086 |
|
Net income
(loss) |
$ |
(4,189 |
) |
|
$ |
27,840 |
|
|
$ |
66,620 |
|
|
$ |
146,082 |
|
Net income (loss) per
common share |
|
|
|
|
|
|
|
Basic |
$ |
(0.03 |
) |
|
$ |
0.23 |
|
|
$ |
0.53 |
|
|
$ |
1.16 |
|
Diluted |
$ |
(0.03 |
) |
|
$ |
0.23 |
|
|
$ |
0.53 |
|
|
$ |
1.16 |
|
Weighted average common
shares outstanding |
|
|
|
|
|
|
|
Basic |
|
125,763,245 |
|
|
|
126,202,593 |
|
|
|
126,108,329 |
|
|
|
126,354,597 |
|
Diluted |
|
125,794,209 |
|
|
|
126,220,184 |
|
|
|
126,261,614 |
|
|
|
126,390,435 |
|
OPEN LENDING
CORPORATIONConsolidated Statements of Cash
Flows(in thousands)
|
|
Year Ended December 31, |
|
|
|
2022 |
|
|
|
2021 |
|
Cash flows from operating
activities |
|
|
|
|
Net income |
|
$ |
66,620 |
|
|
$ |
146,082 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
Share-based compensation |
|
|
5,449 |
|
|
|
3,815 |
|
Depreciation and amortization |
|
|
1,339 |
|
|
|
1,122 |
|
Non-cash operating lease cost |
|
|
579 |
|
|
|
544 |
|
Gain on extinguishment of tax receivable agreement |
|
|
— |
|
|
|
(55,422 |
) |
Loss on extinguishment of debt |
|
|
— |
|
|
|
8,778 |
|
Deferred income taxes |
|
|
375 |
|
|
|
20,055 |
|
Changes in assets and
liabilities: |
|
|
|
|
Accounts receivable, net |
|
|
804 |
|
|
|
(2,181 |
) |
Contract assets, net |
|
|
37,527 |
|
|
|
(23,763 |
) |
Other current and non-current assets |
|
|
(2,685 |
) |
|
|
(1,120 |
) |
Accounts payable |
|
|
(996 |
) |
|
|
(2,157 |
) |
Accrued expenses |
|
|
2,405 |
|
|
|
693 |
|
Income tax receivable, net |
|
|
(8,369 |
) |
|
|
(450 |
) |
Operating lease liabilities |
|
|
(495 |
) |
|
|
(364 |
) |
Third-party claims administration liability |
|
|
1,005 |
|
|
|
459 |
|
Other current and non-current liabilities |
|
|
3,873 |
|
|
|
(935 |
) |
Net cash provided by
operating activities |
|
|
107,431 |
|
|
|
95,156 |
|
Cash flows from investing
activities |
|
|
|
|
Purchase of property and
equipment |
|
|
(624 |
) |
|
|
(1,987 |
) |
Net cash used in
investing activities |
|
|
(624 |
) |
|
|
(1,987 |
) |
Cash flows from financing
activities |
|
|
|
|
Proceeds from term loans |
|
|
150,000 |
|
|
|
125,000 |
|
Proceeds from revolving credit
facility |
|
|
— |
|
|
|
50,000 |
|
Payments on term loans |
|
|
(123,594 |
) |
|
|
(169,191 |
) |
Payments on revolving credit
facility |
|
|
(25,000 |
) |
|
|
(25,000 |
) |
Payment of deferred financing
costs |
|
|
(976 |
) |
|
|
(1,669 |
) |
Shares repurchased |
|
|
(18,018 |
) |
|
|
(20,000 |
) |
Shares withheld for taxes related
to restricted stock units |
|
|
(209 |
) |
|
|
— |
|
Settlement of tax receivable
agreement |
|
|
— |
|
|
|
(36,948 |
) |
Net cash used in
financing activities |
|
|
(17,797 |
) |
|
|
(77,808 |
) |
Net change in cash and
cash equivalents and restricted cash |
|
|
89,010 |
|
|
|
15,361 |
|
Cash and cash equivalents
and restricted cash at the beginning of the period |
|
|
119,509 |
|
|
|
104,148 |
|
Cash and cash
equivalents and restricted cash at the end of the
period |
|
$ |
208,519 |
|
|
$ |
119,509 |
|
Supplemental disclosure
of cash flow information: |
|
|
|
|
Interest paid |
|
$ |
3,520 |
|
|
$ |
5,243 |
|
Income tax paid, net |
|
|
36,112 |
|
|
|
25,280 |
|
Property and equipment accrued
but not paid |
|
|
— |
|
|
|
24 |
|
OPEN LENDING
CORPORATIONReconciliation of GAAP to Non-GAAP
Financial Measures(Unaudited, in
thousands)
|
Three Months EndedDecember
31, |
|
Year EndedDecember 31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Adjusted
EBITDA |
|
|
|
|
|
|
|
Net income
(loss) |
$ |
(4,189 |
) |
|
$ |
27,840 |
|
|
$ |
66,620 |
|
|
$ |
146,082 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
Interest expense |
|
2,297 |
|
|
|
489 |
|
|
|
5,832 |
|
|
|
5,859 |
|
Income tax expense |
|
8,293 |
|
|
|
6,945 |
|
|
|
26,920 |
|
|
|
45,086 |
|
Depreciation and amortization expense |
|
235 |
|
|
|
202 |
|
|
|
915 |
|
|
|
792 |
|
Share-based compensation |
|
1,885 |
|
|
|
1,089 |
|
|
|
5,449 |
|
|
|
3,815 |
|
Gain on extinguishment of tax receivable agreement (1) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(55,422 |
) |
Loss on extinguishment of debt (2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,778 |
|
Total
adjustments |
|
12,710 |
|
|
|
8,725 |
|
|
|
39,116 |
|
|
|
8,908 |
|
Adjusted
EBITDA |
|
8,521 |
|
|
|
36,565 |
|
|
|
105,736 |
|
|
|
154,990 |
|
Total
revenue |
$ |
26,821 |
|
|
$ |
51,630 |
|
|
$ |
179,594 |
|
|
$ |
215,655 |
|
Adjusted EBITDA
margin |
|
32 |
% |
|
|
71 |
% |
|
|
59 |
% |
|
|
72 |
% |
|
|
|
|
|
|
|
|
Adjusted operating
cash flows (3) |
|
|
|
|
|
|
|
Adjusted
EBITDA |
$ |
8,521 |
|
|
$ |
36,565 |
|
|
$ |
105,736 |
|
|
$ |
154,990 |
|
CAPEX |
|
13 |
|
|
|
(202 |
) |
|
|
(624 |
) |
|
|
(1,987 |
) |
Decrease (increase) in contract
assets, net |
|
24,511 |
|
|
|
1,157 |
|
|
|
37,527 |
|
|
|
(23,763 |
) |
Adjusted operating cash
flows |
$ |
33,045 |
|
|
$ |
37,520 |
|
|
$ |
142,639 |
|
|
$ |
129,240 |
|
Notes:
(1) Reflects the gain recognized as a result of
the early termination and settlement of the tax receivable
agreement.(2) Reflects unamortized deferred
financing costs that were written off in connection with the
refinancing of our prior term loan in March
2021.(3) Adjusted operating cash flow is defined
as Adjusted EBITDA, minus CAPEX, +/- change in contract assets.
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