E Loan (NASDAQ:EELN)
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E-LOAN, Inc. Reports Second Quarter 2004 Results
Total Revenue of $35 Million and EPS of $0.00 Per Share; Total Revenue Up 8%
from Q1 2004; Diversified Product Revenue Comprises 70% of Total Revenue;
Updated 2004 Guidance to Revenue of $139 Million and Breakeven Earnings
PLEASANTON, Calif., July 29 /PRNewswire-FirstCall/ -- E-LOAN, Inc.
(NASDAQ:EELN), an online consumer direct lender, today reported results for the
second quarter ended June 30, 2004.
Overview of Results
-- Total revenue of $34.7 million, up 8% from Q1 2004.
-- Net income for the second quarter of 2004 was $270 thousand or
$0.00 per share on 65.8 million shares.
-- Diversified revenue -- comprised of total revenue excluding prime
refinance mortgage -- totaled $24.2 million, up 6% from Q1 2004 and
comprised 70% of E-LOAN's total revenue in Q2 2004.
-- Home Equity revenue was $10.0 million, down 7% from Q1 2004. Home
equity sold loan volume increased 10% in the quarter compared to
Q1 2004. The increased loan volume was offset by a 12% decline in
revenue per loan from Q1 2004, reflecting a tighter capital markets
environment in the second quarter of 2004.
-- Diversified mortgage revenue -- comprised of purchase and non-prime
mortgage -- was $10.0 million, up 22% from the first quarter of 2004.
Diversified mortgage sold loan volume and revenue per loan increased
16% and 13% in the quarter compared to Q1 2004.
-- Auto revenue was $2.9 million, down 5% from Q1 2004. Auto sold loan
volume increased 5% in the quarter compared to Q1 2004. The increased
loan volume was offset by a 13% decline in revenue per loan from
Q1 2004, driven by a 123 basis point increase in 2 year interest rates
during the second quarter of 2004.
-- Refinance mortgage revenue was $10.5 million, up 13% from Q1 2004.
Refinance mortgage sold loan volume increased 21% in the quarter
compared to Q1 2004. The increased loan volume was partially offset by
a 10% decline in revenue per loan from Q1 2004.
-- Direct margin -- defined as revenue minus variable and fixed operations
expense -- was $17.2 million, up 10% from Q1 2004. The increase was
primarily driven by a $1.4 million improvement in net interest margin
as compared to Q1 2004, as we took advantage of the favorable yield
curve environment.
-- Marketing expense totaled $12.5 million, up 12% from Q1 2004.
-- General and administrative expenses declined $1.2 million from Q1 2004,
as the prior quarter included approximately $1 million in one-time
costs associated with the resignation of E-LOAN's former Chief
Operating Officer during the first quarter of 2004.
-- E-LOAN's new subsidiary, Escrow Closing Services, Inc. (ECS), generated
positive direct margin in Q2 2004. Approximately 54% of our home equity
loans used ECS in Q2 2004, up from 22% in Q1 2004.
-- Increased our auto loan QSPE credit facility to a total of $1 billion
and launched two new auto product offerings, Private Party loans and
Lease Buyout loans.
"In the second quarter of 2004, we continued to lay the foundation for E-LOAN's
long-term success," said Chris Larsen, E-LOAN's Chairman and Chief Executive
Officer. "We are confident that we now have the right team and initiatives in
place to deliver on our strategic objectives of growing diversified product
revenue and market share, while at the same time improving the bottom line.
However, the resources and time required to see the results of these objectives
is greater than we had previously anticipated. We are optimistic that we will
begin to see the results of our efforts and that they will become more evident
2005."
"Based on our results in the first half of the year and our current outlook, we
are updating our 2004 financial guidance," said Matt Roberts, E-LOAN's Chief
Financial Officer. "We now expect total 2004 revenues of approximately $139
million and breakeven earnings. This compares to our previous guidance of $142
million in revenues and $11 million in pre-tax earnings (adjusted to include
the approximately $1 million in one-time costs associated with the resignation
of E-LOAN's former Chief Operating Officer during the first quarter of 2004)."
Key assumptions in the updated forecast for 2004 are as follows:
-- 10-year Treasury rates of 4.0 to 5.0 percent for the remainder of the
year.
-- E-LOAN total 2004 sold loan volume of approximately $5.3 billion.
-- Marketing spend of approximately $48 million.
-- Combined Technology and G&A expense of $20.5 million.
-- Average diluted shares outstanding of 66 million.
Operating and Financial Tables
Revenues
E-LOAN's revenues are primarily from the gain on sale of first mortgage, home
equity and auto loans that we originate, fund and then sell. We also earn
interest income on mortgage and home equity loans from the time of funding
through the time of sale.
Components of Revenue Q2 2004 Q1 2004 Q2 2003
($ in thousands)
% of % of % of
$ Total Revenue $ Total Revenue $ Total Revenue
Refi Mortgage $ 7,888 23% $ 7,857 25% $ 21,410 46%
Interest Income on
Refi Mortgage 2,611 8% 1,442 4% 3,258 7%
Diversified Mortgage (1) 8,118 23% 6,679 21% 10,095 22%
Interest Income on
Diversified Mortgage 1,851 5% 1,494 4% 1,894 4%
Home Equity 8,328 24% 9,250 29% 5,334 12%
Interest Income on
Home Equity 1,654 5% 1,473 5% 683 1%
Auto (2) 2,921 8% 3,062 10% 3,035 7%
Closing Services (3) 985 3% 451 1% -- --
Other (4) 295 1% 316 1% 393 1%
Total Revenue $ 34,651 100% $ 32,024 100% $ 46,102 100%
Total Diversified
Revenue (5) $ 24,152 70% $ 22,725 71% $ 21,434 46%
(1) Diversified Mortgage is comprised of purchase and non-prime mortgage
loans.
(2) Auto Revenues include interest income from the retained interest
asset, which was previously reported in Other Income, net.
(3) Closing Services Revenues are from Escrow Closing Services, Inc., a
wholly-owned subsidiary, which provides mortgage closing services,
including HUD-1 Settlement Statement and document preparation,
signing, disbursement and recordation services for a portion of our
Home Equity business.
(4) Other Revenue comes from credit monitoring services and credit card,
personal loan and student loan referrals.
(5) Diversified Revenue is comprised of total revenues excluding prime
refinance mortgage and its related interest income.
Loan Volume
The following table provides a comparison of unit and volume statistics:
Q2'04 Q1'04 Q2'03
$ Millions Loans $ Millions Loans $ Millions Loans
Sold Loans
Refinance Mortgage $496 2,105 $410 1,887 $779 3,732
Diversified Mortgage 403 2,049 347 1,899 436 2,234
Home Equity 332 6,674 302 6,534 192 4,462
Auto 162 9,606 154 8,781 165 8,770
Total Sold Loans $1,393 20,434 $1,213 19,101 $ 1,572 19,198
Closed Loans
Refinance Mortgage $460 1,951 $440 2,007 $785 3,544
Diversified Mortgage 387 1,967 353 1,923 475 2,409
Home Equity 328 6,590 299 6,452 198 4,616
Auto 161 9,568 154 8,813 165 8,764
Total Closed Loans $1,336 20,076 $1,246 19,195 $ 1,623 19,333
Direct Margin
Direct margin is defined as revenue minus variable and fixed operations
expense. The following table provides detail of direct margin classified by
revenue-related categories, both in dollars and expressed as a percentage of
its related revenue.
Direct Margins Q2 2004 Q1 2004 Q2 2003
($ in thousands)
% of % of % of
$ Total Revenue $ Total Revenue $ Total Revenue
Mortgage $ 9,129 57% $ 7,888 54% $ 21,255 67%
Mortgage Interest Margin 2,615 59% 1,532 52% 2,646 51%
Home Equity 3,081 37% 4,180 45% 2,080 39%
Home Equity Interest Margin 891 54% 605 41% 152 22%
Auto 1,085 37% 1,228 40% (667) -22%
Closing Services 120 12% (54) -12% -- --
Other 295 100% 316 100% 393 100%
Total $ 17,216 $ 15,695 $ 25,859
Conversion Statistics
We release conversion rates on a one-quarter lagged basis because of the lag
time that exists between the time an application is submitted and the time the
associated loan actually funds. Our conversion rates are based on a static pool
analysis calculated by dividing the number of qualified applications received
in the quarter by the number of funded loans that resulted from those
applications.
Conversion % Q2'03 Q3'03 Q4'03 Q1'04
Mortgage
Pre-Approval 7% 6% 6% 6%
Purchase 24% 19% 17% 20%
Refinance 28% 21% 21% 22%
Total Mortgage 19% 14% 13% 16%
Home Equity 26% 29% 36% 34%
Auto 14% 19% 26% 28%
Conference Call and Webcast
Chris Larsen, Chairman and CEO of E-LOAN, will host a conference call to
discuss the company's second quarter results today, July 29 at 7:30 a.m. (PDT).
Please dial 712-257-0021 at 7:25 a.m. (PDT) and reference pass code "E-LOAN." A
replay of the call will be available after 9:00 a.m. (PDT) on July 29, 2004
until 11:59 p.m. (PDT), August 5, 2004. The replay may be accessed by dialing
402-530-7752. A live webcast and replay of the conference call will be
available via the investor relations section of the company's website at
http://www.eloan.com/.
This news release contains forward-looking statements based on current
expectations that involve risks and uncertainties. E-LOAN's actual results may
differ from the results described in the forward-looking statements. Factors
that could cause actual results to differ include, but are not limited to,
general conditions in the mortgage and auto industries, interest rate
fluctuations, and the impact of competitive products. These and other risk
factors are detailed in E-LOAN's periodic filings with the Securities and
Exchange Commission.
About E-LOAN, Inc.
E-LOAN, Inc. is an online consumer direct lender dedicated to providing
borrowers across the credit spectrum with a more enjoyable and affordable way
to obtain mortgage, auto and home equity loans. By making credit scores freely
available to consumers and integrating them with a suite of sophisticated
advice tools, E-LOAN is pioneering the nascent debt management advice category
-- helping consumers proactively manage their loan portfolios to lower their
overall borrowing costs. The company relentlessly advocates eliminating the
unnecessary processes, fees, hassle, haggle and lack of transparency
traditionally associated with the consumer loan experience. Protecting
consumers' financial privacy is a paramount concern, prompting E-LOAN to
implement industry leading privacy practices and advocate strong consumer
financial privacy protection laws.
Consumers can log onto http://www.eloan.com/ or call 1-888-E-LOAN-22 to access
E-LOAN's products, services and team of dedicated loan and debt advice
professionals. E-LOAN, Inc. is publicly traded on the Nasdaq National Market
under the symbol EELN. From inception through June 2004, E-LOAN has originated
and sold over $21.5 billion in consumer loans.
E-LOAN, Inc.
Statement of Operations
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
Revenues $34,651 $46,102 $66,675 $82,320
Operating Expenses
Operations 17,435 20,243 33,764 36,982
Sales & marketing 12,506 11,433 23,638 19,925
Technology 2,091 2,479 4,257 4,354
General & administration 2,359 2,901 5,891 4,898
Total operating expenses 34,391 37,056 67,550 66,159
Income from operations 260 9,046 (875) 16,161
Other income, net 10 68 25 100
Income before taxes 270 9,114 (850) 16,261
Income taxes -- (1,038) -- (1,853)
Net income (loss) $270 $8,076 $(850) $14,408
Net income (loss) per share:
Income per share
Basic $0.00 $0.13 $(0.01) $0.24
Diluted $0.00 $0.12 $(0.01) $0.22
Weighted average shares
Basic 62,915 60,177 62,620 59,888
Diluted 65,784 66,708 62,620 65,302
E-LOAN, Inc.
Consolidated Balance Sheet
(in thousands)
June 30, December 31,
2004 2003
ASSETS
Current assets:
Cash and cash equivalents
($2,350 and $4,850 restricted cash) $45,989 $33,973
Loans held-for-sale 25,328 50,874
Accounts receivable, prepaids and
other current assets 21,183 28,287
Total current assets 92,500 113,134
Fixed assets, net 12,775 11,484
Retained interests in auto loans - trading 14,139 11,658
Total assets $119,414 $136,276
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Warehouse and other lines payable $22,420 $44,283
Accounts payable, accrued expenses and
other liabilities 14,283 10,366
Total current liabilities 36,703 54,649
Total liabilities 36,703 54,649
Stockholders' equity:
Common stock 63 62
Additional paid-in-capital 267,077 265,144
Accumulated deficit (184,429) (183,579)
Total stockholders' equity 82,711 81,627
Total liabilities and stockholders' equity $119,414 $136,276
CONTACT:
Tiffany Fox
+1-925-847-6314
DATASOURCE: E-LOAN, Inc.
CONTACT: Tiffany Fox of E-LOAN, Inc., +1-925-847-6314, or
Web site: http://www.eloan.com/