FlexShopper, Inc. (NASDAQ:FPAY) Q4 2019 Earnings Conference Call - Final Transcript

Mar 03, 2020 • 09:00 am ET

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FlexShopper, Inc. (NASDAQ:FPAY) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Greetings. Welcome to the FlexShopper Fourth Quarter and Full Year 2019 Earnings Call. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions].

I will now turn the conference over to your host, Jeremy Hellman of The Equity Group. Please go ahead.

Executive
Jeremy Hellman

Thank you, operator. I would like to remind everyone that we have posted an updated investor presentation within the IR section of the company website, www.flexshopper.com and encourage everyone to review the forward-looking statement on page two of that presentation.

With that, I would like to turn to FlexShopper's CEO, Rich House. Please go ahead, Rich.

Executive
Richard R. House

Thank you, Jeremy, and welcome, everyone to our 2019 fourth quarter and full year earnings call. Joining me today is Russ Heiser, our CFO; and Brad Bernstein, the Founder and President of FlexShopper. Russ is going to walk you through the results of our business and provide some forward-looking guidance. And Brad is going to provide you an update on our business-to-business partnership operations. And I'll finally conclude with an update on our consumer operations and a view of our strategy moving forward.

So I want now to hand over the call to Russ now for financial highlights.

Executive
Harold Russell Heiser

Thanks, Rich. A press release and investor deck provides significant detail on both the fourth quarter and full year. So I'll focus on a few high-level metrics, recent events and the new guidance.

Overall, 2019 was a great year for FlexShopper. The financials reflected that with significant improvements across the board, highlighted by $11.4 million increase in EBITDA, increasing $8.3 million in 2019 versus negative $3.1 million in 2018. Moreover, we finished 2019 with $800,000 in pretax earnings, a $10.3 million improvement over 2018.

Given that those improvements were realized on just a $27 million increase in net revenue over the period speaks to the significant operating leverage in the business as we continue to grow. This was driven partly by refocusing on leases that were hitting or exceeding our target IRRs for both the B2C and B2B segments. So while B2C lease originations and new lease dollars were down about 30% in the fourth quarter versus the prior year, the B2B business was up approximately 90%.

In terms of the metrics we typically highlight for the year, our average origination value per lease improved from $416 in 2018 to $452 in 2019. At the same time, we're able to reduce our average customer acquisition cost from $135 to $80 per lease. A significant part of these improvements were driven by the growth of our B2B channel.

In terms of our balance sheet, I want to reaffirm that the combination of our operating cash flow and the existing credit facility provide us ample liquidity with which to operate our business. In fact, in addition to the cash on our balance sheet at year-end, we had approximately $2 million of availability under our credit agreements.

In terms of recent events, we recently finished a warrant tender offer, which was a first step in improving