8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 23, 2023

OPEN LENDING CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	001-39326	84-5031428
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1501 S. MoPac Expressway

Suite 450

Austin, Texas 78746

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: 512-892-0400

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	LPRO	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐ 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02 Results of Operations and Financial Condition.

On February 23, 2023, Open Lending Corporation (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended December 31, 2022. A copy of the press release and additional supplemental financial information are attached as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.

The information furnished under this Item 2.02 and in the accompanying Exhibits 99.1 and 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d)    Exhibits

99.1	Earnings Release, dated February 27, 2023, titled “Open Lending Reports Fourth Quarter and Fiscal Year 2022 Financial Results.”
99.2	Supplemental Earnings Information Q4 2022
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

1

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

OPEN LENDING CORPORATION
By:	/s/ Charles D. Jehl
Name:	Charles D. Jehl
Title:	Chief Financial Officer

Date: February 23, 2023

2

EX-99.1

Exhibit 99.1

Open Lending Reports Fourth Quarter and Fiscal Year 2022 Financial Results

AUSTIN, TX, February 23, 2023 – 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 Outlook

Based 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 Call

Open 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 Measures

The 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 Lending

Investors

openlending@icrinc.com

OPEN LENDING CORPORATION

Consolidated 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 CORPORATION

Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except share data)

	Three Months Ended December 31,				Year Ended December 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 CORPORATION

Consolidated 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 CORPORATION

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited, in thousands)

	Three Months Ended December 31,						Year Ended December 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.

EX-99.2

Earnings Supplement Q4 2022

2 Q4 2022 Financial Highlights Q4 2022 (1) See reconciliation of GAAP to non-GAAP financial measures on page 6 (2) Defined as Adj. EBITDA, minus CAPEX, +/- change in contract assets Q4 2021 Revenue $26.8 million $51.6 million Adj. EBITDA1 $8.5 million $36.6 million Adj. Operating Cash Flow2 $33.0 million $37.5 million Total Certs 34,550 42,639

3 2022 Financial Highlights FY 2022 (1) See reconciliation of GAAP to non-GAAP financial measures on page 6 (2) Defined as Adj. EBITDA, minus CAPEX, +/- change in contract assets FY 2021 Revenue $179.6 million $215.7 million Adj. EBITDA1 $105.7 million $155.0 million Adj. Operating Cash Flow2 $142.6 million $129.2 million Total Certs 165,211 171,697

4 Contract Asset and Profit Share Revenue Estimates Changes in Contract Asset and Profit Share Revenue Estimates attributable to Realized Portfolio Performance versus Prospective Changes in Assumptions Prospective Changes in Assumptions Realized Portfolio Performance $4.0 $7.8 $10.5 $9.5 $31.8 $2.9 $6.4 $2.6 ($1.1) $10.8 $1.1 $4.0 ($3.0) ($3.0) ($0.9) ($0.3) ($3.6) ($0.9) ($11.7) ($16.5) Q1-21 Q2-21 Q3-21 Q4-21 FY 2021 Q1-22 Q2-22 Q3-22 Q4-22 FY 2022 ($ in millions) $5.1 $11.8 $6.5$7.5 $30.9 $2.6 $2.8 $1.7 $(12.8) $(5.7)

5 Q4 2022 Key Performance Indicators Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Certs Credit Unions & Bank Certified Loans (Certs) 28,905 34,385 142,458 123,085 OEM Certs 5,645 8,254 22,753 48,612 Total Certs 34,550 42,639 165,211 171,697 Unit Economics Avg. Profit Share Revenue per Cert (1) 546$ 580$ 579$ 596$ Avg. Program Fee Revenue per Cert 530$ 433$ 488$ 440$ Originations Facilitated Loan Origination Volume ($ in '000s) 1,036,327$ 1,112,835$ 4,758,597$ 4,331,508$ Average Loan Size 29,995$ 26,099$ 28,803 25,228 Channel Overview New Vehicle Certs as a % of Total 15.4% 6.4% 10.4% 11.9% Used Vehicle Certs as a % of Total 84.7% 93.6% 89.7% 88.1% Indirect Certs as a % of Total 66.5% 50.2% 54.1% 59.7% Direct Certs as a % of Total 19.2% 15.4% 16.5% 15.8% Refinance Certs as % of Total 14.4% 34.4% 29.4% 24.5% (1) Represents average profit share revenue per certified loan originated in the period, excluding the impact of profit share revenue recognized in the period associated with historical vintages. The profit share revenue impact related to change in estimates of historical vintages was ($12.8) million and $6.5 million, for the three months ended December 31, 2022 and 2021, respectively, and ($5.7) million and $30.9 million, for the years ended December 31, 2022 and 2021, respectively.

6 Q4 2022 Financial Update ($ in '000s) 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 (1) - - - 55,422 Loss on extinguishment of debt (2) - - - (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$ Three Months Ended December 31, (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. Year Ended December 31,

7 Reconciliation of GAAP to Non-GAAP Financial Measures

8 Total Current Share Count Shares In millions Total Shares Outstanding February 23, 2023 123,687 Treasury Shares 4,511 Total Shares Issued 128,198

XML

Cover	Feb. 23, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Feb. 23, 2023
Entity Registrant Name	OPEN LENDING CORPORATION
Entity Incorporation, State or Country Code	DE
Entity File Number	001-39326
Entity Tax Identification Number	84-5031428
Entity Address, Address Line One	1501 S. MoPac Expressway
Entity Address, City or Town	Austin
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78746
City Area Code	512
Local Phone Number	892-0400
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	LPRO
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0001806201
Amendment Flag	false
Entity Address, Address Line Two	Suite 450