LM Funding Reports Fourth Quarter and Full Year 2015 Results

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  
               

 

Company Contact:
Bruce Rodgers
Chairman and CEO
LM Funding America, Inc.
Tel (813) 222-8996
investors@lmfunding.com

Investor Relations Contact:
Michael Koehler
Liolios Group, Inc.
Tel (949) 574-3860
LMFA@liolios.com  

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Source: LM Funding America, Inc.