TAMPA, Fla., March 30, 2016 (GLOBE NEWSWIRE) -- LM Funding America, Inc. (NASDAQ:LMFA) (NASDAQ:LMFAW), a specialty finance company offering unique funding solutions to community associations, reported results for the three months and full year ended December 31, 2015.
Fourth Quarter 2015 Highlights
- Revenue totaled $1.77 million versus $1.82 million in Q4 2014
- Cash flow from operations was $523,000 versus $517,000 in Q4 2014
- Average collection per delinquent unit increased to $4,677 from $4,558 in Q4 2014
- Raised $9.7 million of net proceeds in October 2015 IPO
Full Year 2015 Highlights
- Revenue totaled $6.96 million versus $7.65 million in 2014
- Cash flow from operations was $2.25 million versus $2.42 million in 2014
- Average collection per delinquent unit increased to $4,573 from $4,526 in 2014
Management Commentary
“The strong fourth quarter marked our second consecutive profitable quarter as a reporting company,” said Bruce Rodgers, founder and CEO of LM Funding, “and market demand for our unique association funding solutions continues to grow in the new year.
“The capital contributed by our October 2015 IPO provided the much-needed resources to fully capitalize on this major market opportunity. We also have behind us a number of large, one-time expenses that contributed to the capital constraints that challenged our growth in 2015. As such, we think a great indicator of our performance in our IPO year is our cash flow from operations.
“The additional capital resources have supported our recent expansion into Illinois as the fourth state where we operate. The head of our new Chicago office possesses long-standing relationships with the local association community, which presents a tremendous opportunity to provide these associations our easy, cost-effective way to collect their unpaid assessments.”
“Building out our sales teams in other states also represents a key growth driver, so we have added five additional commission-based sales reps in Florida. Our sales teams have set a collective goal to acquire 2,000 delinquent accounts over the next 12 months, which would compare to the 361 we acquired in all of 2015. We expect to maintain profitable growth in the first half of the year, but given our typical multi-month sales cycle, we expect to see more meaningful results from our expanded sales staff and new influx in capital during the second half of the year.”
Fourth Quarter 2015 - Financial Results
Revenues in the fourth quarter of 2015 were $1.77 million compared with $1.82 million in the fourth quarter of 2014. The decrease was due to the decline in collections of the company’s original product, offset by an increase in collections related to the New Neighbor Guaranty product and rental income from REO properties.
Operating expenses in the fourth quarter of 2015 totaled $1.61 million compared with $1.03 million in the fourth quarter of 2014. The change was due to the increase in business activity and expenses related to the IPO and the recognition of estimated credit loss reserve, which was partially offset by a new favorable agreement with partner law firms that lowered expenses.
Interest expense in the fourth quarter of 2015 was $151,000 compared with $225,000 in the fourth quarter of 2014. The decrease is attributable to the refinance of $7.4 million at 8% interest that occurred in December 2014.
Net income in the fourth quarter of 2015 totaled $159,000 compared with $572,000 in the fourth quarter of 2014. The decrease was driven by an increase in costs associated with settlement costs and a one-time provision for credit losses, offset by a decrease in collection costs.
Cash flow from operations, which management believes gives a more accurate representation of their performance as it excludes one-time charges, totaled $523,000 for the fourth quarter of 2015 compared with $517,000 in the fourth quarter of 2014.
At December 31, 2015, cash totaled $9.0 million compared with $2.0 million at December 31, 2014, the increase driven by $9.7 million of net proceeds from the October 2015 IPO.
Full Year 2015 - Financial Results
Revenues in 2015 totaled $6.96 million compared with $7.65 million in 2014. The decrease was due to the decline in collections of the company’s original product, offset by an increase in collections related to the New Neighbor Guaranty product and rental income from REO properties.
Operating expenses in 2015 totaled $4.52 million compared with $4.12 million in the prior year. The change was due to the increase in business activity and expenses related to the IPO and the recognition of estimated credit loss reserve, which was partially offset by a new, favorable agreement with partner law firms which lowered expenses.
Interest expense in 2015 totaled $717,000 compared with $985,000 in 2014. The decrease is attributable to the refinance of $7.4 million at 8% interest that occurred in December 2014.
Net income in 2015 totaled $1.87 million compared with $2.55 million in 2014.
Cash flow from operations totaled $2.25 million for 2015 compared with $2.42 million in 2014.
Conference Call
Management will hold a conference call today at 10:00 a.m. Eastern time to discuss these results, followed by a question and answer period.
Interested parties can listen to the live presentation by dialing the listen-only number below or by clicking the webcast link available on the Investors section of the company's website at www.lmfunding.com.
Date: Wednesday, March 30, 2016
Time: 10:00 a.m. Eastern time
Listen-only toll-free number: (877) 546-2778
Listen-only international number: (281) 973-6268
Conference ID: 77042628
Webcast: http://edge.media-server.com/m/p/9xb2u6st
Please call the conference telephone number 10 minutes before the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at 949-574-3860.
A replay of the call will be available by telephone after 8:00 p.m. Eastern time today and via the Investors section of the LM Funding website at www.lmfunding.com through May 30, 2016.
Toll-free replay number: (855) 859-2056
International replay number: (404) 537-3406
Conference ID: 77042628
About LM Funding America
LM Funding America, Inc., together with its subsidiaries, is a specialty finance company that provides funding to nonprofit community associations (Associations) primarily located in the state of Florida, as well as in the states of Washington, Colorado and Illinois. The company offers funding to Associations by purchasing a certain portion of the associations’ rights to delinquent accounts that are selected by the Associations arising from unpaid Association assessments. It is also involved in the business of purchasing delinquent accounts on various terms tailored to suit each Association’s financial needs, including under its New Neighbor Guaranty™ program. The company was founded in 2008 and is based in Tampa, Florida. The company's common shares and warrants trade on the NASDAQ Capital Market under the symbols "LMFA" and "LMFAW”.
Forward-Looking Statements
This press release may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “estimate,” “expect,” “intend,” “plan,” and “project” and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties. Some of these risks and uncertainties are identified in the company’s filings with the SEC. The occurrence of any of these risks and uncertainties could have a material adverse effect on the company’s business, financial condition, and results of operations.
| LM Funding America, Inc. | ||||||||
| Consolidated Balance Sheet | ||||||||
| December 31, | December 31, | |||||||
| 2015 | 2014 | |||||||
| Assets | ||||||||
| Cash | $ | 8,997,798 | $ | 2,027,694 | ||||
| Finance receivables: | ||||||||
| Original product | 1,537,101 | 2,430,456 | ||||||
| Special product - New Neighbor Guaranty program, net of allowance for credit losses of $125,000 and $0, respectively | 715,534 | 1,042,805 | ||||||
| Due from related party | 406,219 | 463,900 | ||||||
| Prepaid expenses and other assets | 151,362 | 310,688 | ||||||
| Debt issue costs, net | 197,959 | 290,688 | ||||||
| Fixed assets, net | 158,692 | 162,396 | ||||||
| Real estate assets owned | 285,341 | 42,731 | ||||||
| Deferred tax asset | 2,162,380 | — | ||||||
| Total assets | $ | 14,612,386 | $ | 6,771,358 | ||||
| Liabilities and stockholders' equity/members' deficit | ||||||||
| Notes Payable | $ | 7,729,605 | $ | 7,431,938 | ||||
| Accounts payable and accrued expenses | 466,783 | 344,721 | ||||||
| Deferred revenue - origination fees | 51,740 | 61,966 | ||||||
| Deferred tax liability | 41,803 | — | ||||||
| Other liabilities and obligations | 57,989 | 65,910 | ||||||
| Total liabilities | 8,347,920 | 7,904,535 | ||||||
| Members' deficit (see note 9) | — | (1,144,212 | ) | |||||
| Stockholders' equity | ||||||||
| Common stock, par value $.001; 10,000,000 shares authorized; 3,300,000 shares issued and outstanding | 3,300 | — | ||||||
| Additional paid-in capital | 6,281,322 | — | ||||||
| Accumulated deficit | (20,156 | ) | — | |||||
| Noncontrolling interest | — | 11,035 | ||||||
| Total stockholders' equity/(members' deficit) | 6,264,466 | (1,133,177 | ) | |||||
| Total liabilities and stockholders’ equity/(members' deficit) | $ | 14,612,386 | $ | 6,771,358 | ||||
| LM Funding America, Inc. | |||||||||||||||
| Consolidated Statements of Income | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Quarters ended December 31, | Years ended December 31, | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Revenues | |||||||||||||||
| Interest on delinquent association fees | $ | 1,397,373 | $ | 1,472,107 | $ | 5,588,697 | $ | 6,432,878 | |||||||
| Administrative and late fees | 129,541 | 147,272 | 544,067 | 709,846 | |||||||||||
| Recoveries in excess of cost - special product | 122,899 | 61,072 | 345,686 | 136,655 | |||||||||||
| Underwriting and origination fees | 67,736 | 111,296 | 302,154 | 243,366 | |||||||||||
| Rental revenue | 54,785 | 31,289 | 180,157 | 126,644 | |||||||||||
| Total revenues | 1,772,334 | 1,823,036 | 6,960,761 | 7,649,389 | |||||||||||
| Operating Expenses | |||||||||||||||
| Staff Costs & Payroll | 389,884 | 329,109 | 1,288,342 | 1,301,137 | |||||||||||
| Professional fees | 319,935 | 124,948 | 819,343 | 565,537 | |||||||||||
| Settlement costs with associations | 287,541 | 54,245 | 805,180 | 373,422 | |||||||||||
| Selling, general and administrative | 193,695 | 182,207 | 686,721 | 716,503 | |||||||||||
| Real estate management and disposal | 61,080 | 55,966 | 270,574 | 190,743 | |||||||||||
| Depreciation and amortization | 111,501 | 73,580 | 247,646 | 152,668 | |||||||||||
| Collection costs | 92,209 | 190,494 | 206,998 | 715,547 | |||||||||||
| Provision for credit losses | 125,000 | - | 125,000 | — | |||||||||||
| Other operating | 27,437 | 16,359 | 68,565 | 102,476 | |||||||||||
| Operating expenses | 1,608,282 | 1,026,908 | 4,518,369 | 4,118,033 | |||||||||||
| Operating Income | 164,052 | 796,128 | 2,442,392 | 3,531,356 | |||||||||||
| Interest expense | 151,118 | 224,523 | 717,305 | 985,023 | |||||||||||
| Income before income taxes | 12,934 | 571,605 | 1,725,087 | 2,546,333 | |||||||||||
| Income tax benefit | (146,555 | ) | - | 146,555 | — | ||||||||||
| Net income | 159,489 | 571,605 | 1,871,642 | 2,546,333 | |||||||||||
| Net income (loss) attributable to non-controlling interest | (16,172 | ) | (36,015 | ) | (139,865 | ) | (163,869 | ) | |||||||
| Net income (loss) attributable to predecessor members | 163,473 | 535,590 | (1,751,933 | ) | (2,382,464 | ) | |||||||||
| Net income (loss) to common stockholders | $ | (20,156 | ) | $ — | $ | (20,156 | ) | $ — | |||||||
| Income (loss) per share attributable to the stockholders of LM Funding America, Inc. | |||||||||||||||
| Basic | $ | (0.01 | ) | — | |||||||||||
| Diluted | $ | (0.01 | ) | — | |||||||||||
| Weighted average number of common shares outstanding | |||||||||||||||
| Basic | 3,300,000 | — | |||||||||||||
| Diluted | 3,306,038 | — | |||||||||||||
| LM Funding America, Inc. | |||||||||||||||
| Consolidated Statements of Cash Flow | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Quarters ended December 31, | Years ended December 31, | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||
| Interest on delinquent association fees | $ | 1,397,374 | $ | 1,540,108 | $ | 5,588,697 | $ | 6,432,878 | |||||||
| Administrative and late fees | 129,541 | 147,272 | 544,067 | 709,846 | |||||||||||
| Recoveries in excess of cost - special product | 122,902 | (4,688 | ) | 345,686 | 136,655 | ||||||||||
| Underwriting and origination fees | 42,876 | 24,880 | 291,928 | 183,621 | |||||||||||
| Rental revenue | 56,475 | (124,534 | ) | 180,157 | 126,644 | ||||||||||
| Staff costs and payroll | (389,885 | ) | (329,109 | ) | (1,288,342 | ) | (1,301,137 | ) | |||||||
| Other operating expenses | (685,084 | ) | (361,783 | ) | (2,694,649 | ) | (2,785,306 | ) | |||||||
| Interest paid | (151,117 | ) | (374,611 | ) | (717,305 | ) | (1,080,631 | ) | |||||||
| Net cash provided by operating activities | 523,082 | 517,535 | 2,250,239 | 2,422,570 | |||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | — | ||||||||||||||
| Net collections (funding) of finance receivables - original product | 63,002 | 386,754 | 893,355 | 1,327,507 | |||||||||||
| Net collections (funding) of finance receivables - special product | 224,099 | (137,216 | ) | 327,271 | (73,436 | ) | |||||||||
| Capital expenditures | (17,412 | ) | (84,297 | ) | (43,761 | ) | (146,325 | ) | |||||||
| Proceeds / (payments) for real estate assets owned | (244,209 | ) | (22,500 | ) | (242,610 | ) | (22,500 | ) | |||||||
| Net cash provided by investing activities | 25,480 | 142,741 | 934,255 | 1,085,246 | |||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | — | ||||||||||||||
| Proceeds from borrowings | 112,600 | 7,431,938 | 2,172,626 | 7,431,938 | |||||||||||
| Principal repayments | (648,052 | ) | (6,754,447 | ) | (1,874,959 | ) | (8,252,849 | ) | |||||||
| Redemption of membership interest | — | — | (1,960,010 | ) | — | ||||||||||
| Distributions | (2,351,000 | ) | (429,688 | ) | (3,904,459 | ) | (979,163 | ) | |||||||
| Return of capital to non-controlling interest | — | (51,892 | ) | (36,015 | ) | (154,550 | ) | ||||||||
| Advances (repayments) to related party | (206,872 | ) | 72,436 | 57,681 | 21,090 | ||||||||||
| Proceeds from initial public stock offering, net (See Note 9) | 9,688,196 | — | 9,688,196 | — | |||||||||||
| Purchase of non-controlling interest | (250,000 | ) | — | (250,000 | ) | — | |||||||||
| Debt issue costs | (2,500 | ) | (311,438 | ) | (107,450 | ) | (311,438 | ) | |||||||
| Net cash provided by (used in) financing activities | 6,342,372 | (43,091 | ) | 3,785,610 | (2,244,972 | ) | |||||||||
| NET INCREASE IN CASH | 6,890,934 | 617,185 | 6,970,104 | 1,262,844 | |||||||||||
| CASH - BEGINNING OF YEAR | 2,027,694 | 764,850 | |||||||||||||
| CASH - END OF YEAR | $ | 8,997,798 | $ | 2,027,694 | |||||||||||