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Oportun (OPRT) has secured a new $235 million Senior Secured Term Loan to refinance its existing corporate financing facility. The loan, provided by Castlelake L.P. and Neuberger Berman, carries a 15% fixed rate and matures in November 2028. As part of the deal, lenders will receive warrants equal to 9.8% of fully-diluted shares. The company reported preliminary Q3 2024 results with total revenue of $249-251 million and expects an annualized net charge-off rate of 11.9%. For 2025, Oportun projects GAAP EPS between $0.25-$0.50 and Adjusted EPS of $1.00-$1.25.
Oportun (OPRT) ha ottenuto un nuovo prestito senior garantito di 235 milioni di dollari per rifinanziare la sua attuale linea di credito aziendale. Il prestito, fornito da Castlelake L.P. e Neuberger Berman, ha un tasso fisso del 15% e scade a novembre 2028. Come parte dell’accordo, i finanziatori riceveranno warrant pari al 9,8% delle azioni totalmente diluite. L’azienda ha riportato risultati preliminari per il terzo trimestre del 2024 con ricavi totali di 249-251 milioni di dollari e prevede un tasso annualizzato di annullamento netto dell’11,9%. Per il 2025, Oportun prevede un utile per azione GAAP compreso tra 0,25 e 0,50 dollari e un utile per azione rettificato di 1,00-1,25 dollari.
Oportun (OPRT) ha asegurado un nuevo préstamo a plazo senior garantizado de 235 millones de dólares para refinanciar su actual línea de financiamiento corporativo. El préstamo, proporcionado por Castlelake L.P. y Neuberger Berman, tiene una tasa fija del 15% y vence en noviembre de 2028. Como parte del acuerdo, los prestamistas recibirán garantías equivalentes al 9,8% de las acciones totalmente diluidas. La compañía reportó resultados preliminares del tercer trimestre de 2024 con ingresos totales de 249-251 millones de dólares y espera una tasa de baja anualizada del 11,9%. Para 2025, Oportun proyecta un EPS GAAP entre 0,25 y 0,50 dólares y un EPS ajustado de 1,00 a 1,25 dólares.
Oportun (OPRT)는 기존 기업 자금 조달 시설을 재융자하기 위해 2억 3천5백만 달러의 새로운 선순위 담보 대출을 확보했습니다. 이 대출은 Castlelake L.P.와 Neuberger Berman이 제공하며, 고정 이자율은 15%이고 만기는 2028년 11월입니다. 거래의 일환으로 대출자는 완전 희석 주식의 9.8%에 해당하는 워런트를 받을 것입니다. 회사는 2024년 3분기 예비 결과를 발표했으며, 총 수익은 2억 4,900만에서 2억 5,100만 달러에 이를 것으로 보이며, 연간 순손실률은 11.9%로 예상하고 있습니다. 2025년을 위해 Oportun은 GAAP EPS가 0.25~0.50달러, 조정 EPS가 1.00~1.25달러가 될 것으로 예상하고 있습니다.
Oportun (OPRT) a sécurisé un nouveau prêt à terme senior garanti de 235 millions de dollars pour refinancer son installation de financement d’entreprise existante. Le prêt, fourni par Castlelake L.P. et Neuberger Berman, a un taux d’intérêt fixe de 15% et arrive à maturité en novembre 2028. Dans le cadre de l’accord, les prêteurs recevront des bons de souscription équivalant à 9,8% des actions totalement diluées. L’entreprise a rapporté des résultats préliminaires pour le troisième trimestre 2024 avec un revenu total de 249-251 millions de dollars et s’attend à un taux de dépréciation nette annualisé de 11,9%. Pour 2025, Oportun prévoit un bénéfice par action GAAP compris entre 0,25 et 0,50 dollar et un bénéfice par action ajusté de 1,00 à 1,25 dollar.
Oportun (OPRT) hat ein neues 235 Millionen Dollar Senior Secured Term Loan gesichert, um seine bestehende Unternehmensfinanzierungseinrichtung umzuschulden. Der Kredit, bereitgestellt von Castlelake L.P. und Neuberger Berman, hat einen festen Satz von 15% und läuft im November 2028 aus. Im Rahmen des Deals erhalten die Kreditgeber Warrants, die 9,8% der vollständig verwässerten Aktien entsprechen. Das Unternehmen meldete vorläufige Ergebnisse für das dritte Quartal 2024 mit Gesamtumsatz von 249-251 Millionen Dollar und erwartet eine annualisierte Nettominderungsrate von 11,9%. Für 2025 prognostiziert Oportun ein GAAP EPS zwischen 0,25 und 0,50 Dollar und ein bereinigtes EPS von 1,00 bis 1,25 Dollar.
Positive
- New $235M Term Loan provides improved operational and balance sheet flexibility
- Q3 2024 revenue in line with guidance at $249-251M
- Net charge-off rate better than guidance at 11.9%
- Adjusted EBITDA expected at $28-31M, exceeding guidance by $2-5M
- Positive 2025 outlook with projected GAAP EPS of $0.25-$0.50
Negative
- Expected Q3 2024 net loss of $30-32M
- 15% fixed interest rate on new Term Loan is significant
- 9.8% shareholder dilution from warrant issuance
- $35M mark-to-market adjustment impact on ABS notes
Insights
The $235 million refinancing deal marks a significant shift in Oportun’s capital structure, featuring a 15% fixed-rate term loan maturing in 2028. The deal’s structure, while carrying a substantial dilution through 4.86 million warrants (9.8% of fully-diluted shares), offers improved operational flexibility and lower interest rates than the existing facility.
The preliminary Q3 results show mixed performance with revenue of $249-251 million and improved charge-off rates at 11.9%, though a net loss of $30-32 million is expected. The 2025 outlook projects positive earnings with GAAP EPS of $0.25-0.50 and Adjusted EPS of $1.00-1.25. The mandatory $40 million principal repayment by February 2026 demonstrates commitment to debt reduction.
The refinancing structure reflects both opportunities and challenges in Oportun’s credit profile. The improved covenant package acknowledges recent operational improvements, particularly the strategic decision to divest the credit card portfolio. The projected charge-off rate improvement to 11-12% for 2025 from current 11.9% indicates stabilizing credit quality, though still elevated compared to historical norms.
The involvement of specialized lenders Castlelake and Neuberger Berman adds credibility to the transaction, but the 15% fixed rate suggests significant risk premium. The flexible prepayment terms provide pathway for deleveraging, important for long-term financial health.
SAN CARLOS, Calif., Oct. 29, 2024 (GLOBE NEWSWIRE) — Oportun (Nasdaq: OPRT) (“Oportun”, or the “Company”), a mission-driven financial services company, announced today another important step in its plans to optimize the Company’s capital structure and drive improved profitability. Following an extensive review of a range of alternatives led by the Board of Directors, Oportun has entered into a Credit Agreement to refinance its existing corporate financing facility with a new $235 million Senior Secured Term Loan (“Term Loan”). The refinancing will improve Oportun’s operational and balance sheet flexibility with covenants that reflect the performance improvements made by the Company to date, including the agreement to sell the Company’s credit card portfolio, and reward accretive actions and cash flow generation. The Term Loan will be provided by two firms (the “Lenders”), funds managed by Castlelake L.P., a global alternative investment manager specializing in asset-based private credit that led the refinancing, and funds managed by Neuberger Berman, a private employee-owned investment manager. The Term Loan will carry a 15% fixed rate and mature in November 2028.
“After a thorough and competitive process, where multiple strategic options were considered, the Board of Directors determined that this transaction, which was the least dilutive financing option available, would best position Oportun for the future by further strengthening the Company’s balance sheet and liquidity as well as enhancing the ability for Oportun to generate consistent cash flow and deliver increased stockholder value,” said Neil Williams, Lead Independent Director of Oportun’s Board of Directors.
“With this refinancing and the operational and balance sheet flexibility the Term Loan will provide, we’re even better positioned to build on our progress. We expect to build on that momentum in 2025 through improving credit performance, identifying high-quality originations, and further enhancing our GAAP and adjusted profitability on a per-share basis” said Raul Vazquez, CEO of Oportun.
“As we continue our longstanding relationship with Oportun, this refinancing illustrates the confidence we have in the Company’s ability to execute its long-term strategy, underpinned by focusing on its core products while identifying high-quality loan originations” said John Lundquist, Partner at Castlelake.
“We’re pleased to remain a capital partner to Oportun alongside Castlelake, and the revised structure provides the Company with the funding and flexibility to responsibly grow the business and service the needs of its customers,” said Peter Sterling, Head of Specialty Finance at Neuberger Berman. “This transaction reflects the confidence we have in the quality of Oportun’s underwriting and the sustainability of its business model.”
In connection with providing the Term Loan, the Lenders will receive warrants, at an exercise price of $0.01 per share, equal to 9.8% of the fully-diluted shares outstanding of the Company, excluding out-of-the-money options, on a pro-forma basis for the warrants, which as of September 30, 2024 was equal to 4,860,706 warrants, and the Lenders are entitled to Board observer rights. Even given the dilutionary impact from the newly issued warrants, the Company believes it will be able to drive increased profitability on a per share basis through focus on its core products, improving credit performance and maintaining cost discipline.
The new Term Loan provides a lower interest rate than the existing senior secured term loan being refinanced and Oportun is committed to paying off at least $40 million of the principal by February 1, 2026, with the flexibility to make additional pre-payments of $10 million at any time without penalty, and an additional $10 million without penalty after the one-year anniversary of closing. Management expects the Term Loan to close during the week of November 11, 2024, following and subject to customary closing conditions, as well as the closing of the credit card portfolio sale transaction, which was previously announced on September 25, 2024.
Preliminary Financial Results – Third Quarter 2024
Based upon management’s current expectations, the Company will report Total Revenue, Annualized Net Charge-Off Rate, Net Loss, Adjusted EBITDA and Adjusted Net Income (Loss), for the third quarter as follows:
| Metric | Preliminary | Guidance |
| 3Q24 | 3Q24 | |
| Total Revenue | $249-251 million | $248 – $252 million |
| Annualized Net Charge-Off Rate | 11.9% | 12.3% +/- 15 bps |
| Net Loss | $(30) – $(32) million | N/A |
| Adjusted EBITDA 1 | $28 – 31 million | $23 – $26 million |
| Adjusted Net Income (Loss) 1 | $(2) – $1 million | N/A |
| 1 See About Non-GAAP Financial Measures for more detail. | ||
The Company expects to deliver resilient third quarter top-line performance with Total Revenue in line with its guidance range. The Company’s tightened credit posture contributed to delivering annualized net charge-offs 25 bps better than the edge of its guidance range. On a GAAP basis, the Company expects a net loss of $30 to 32 million driven by non-cash fair value marks, including a $35 million mark-to-market adjustment on its ABS notes due to their weighted average price increasing from 96.0% to 97.8% as benchmark interest rates declined and credit spreads tightened significantly. Given strong Total Revenue, improved credit performance and continued expense discipline, the Company also expects to be near break-even to profitable on an Adjusted Net Income basis. The Company expects Adjusted EBITDA to be $28 to $31 million, which will be $2 to $5 million above the top end of its guidance range.
Furthermore, management is providing the following preliminary set of expectations regarding Oportun’s full year 2025 operating performance:
- GAAP EPS between $0.25 and $0.50
- Adjusted EPS between $1.00 and $1.25
- Annualized net charge-off rate between 11% and 12%
“We are pleased with our expected quarterly results and are looking forward to an even better 2025,” said Jonathan Coblentz, CFO of Oportun. “As these results and our future expectations demonstrate, we continue to make significant progress towards driving sustainable, profitable earnings growth, and shareholder value.”
Concurrent with this press release, Oportun has posted a business update presentation on its investor relations website, investor.oportun.com. The presentation further describes the Term Loan, the Company’s operating strategy, recent performance improvements, and preliminary performance expectations going into 2025.
Evercore acted as financial advisor and Orrick, Herrington & Sutcliffe LLP and Wilson Sonsini Goodrich & Rosati served as legal advisors to the Company on the transaction.
About Oportun
Oportun (Nasdaq: OPRT) is a mission-driven financial services company that puts its members’ financial goals within reach. With intelligent borrowing, savings, and budgeting capabilities, Oportun empowers members with the confidence to build a better financial future. Since inception, Oportun has provided more than $18.7 billion in responsible and affordable credit, saved its members more than $2.4 billion in interest and fees, and helped its members save an average of more than $1,800 annually. For more information, visit Oportun.com.
About Castlelake
Castlelake, L.P. is a global alternative investment manager focused on asset-based investments. Founded in 2005, Castlelake manages approximately $24 billion of assets on behalf of a diversified global investor base. The Castlelake team comprises more than 220 experienced professionals, including 80 investment professionals, across seven offices in North America, Europe and Asia. For more information, please visit www.castlelake.com.
About Neuberger Berman
Neuberger Berman, founded in 1939, is a private, independent, employee-owned investment manager. The firm manages a range of strategies – including equity, fixed income, quantitative and multi-asset class, private equity, real estate and hedge funds – on behalf of institutions, advisors and individual investors globally. Neuberger Berman’s investment philosophy is founded on active management, engaged ownership and fundamental research, including industry-leading research into material environmental, social and governance factors. Neuberger Berman is a PRI Leader, a designation awarded to fewer than 1% of investment firms. With offices in 26 countries, the firm’s diverse team has over 2,750 professionals. For nine consecutive years, Neuberger Berman has been named first or second in Pensions & Investments Best Places to Work in Money Management survey (among those with 1,000 employees or more). The firm manages $443 billion in client assets as of June 30, 2023. For more information, please visit Neuberger Berman’s website at www.nb.com.
Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking statements are subject to the safe harbor provisions under the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact contained in this press release, including statements as to future performance and financial position; the Company’s preliminary financial results for the third quarter of 2024; the Company’s full year 2025 outlook; expectations regarding the impact of the Term Loan, including expected timelines; the anticipated closing of the Company’s credit card portfolio sale transaction; our planned products and services; achievement of the Company’s strategic priorities and goals and the plans and objectives of management for our future operations, are forward-looking statements are forward-looking statements. These statements can be generally identified by terms such as “expect,” “plan,” “goal,” “target,” “anticipate,” “assume,” “predict,” “project,” “outlook,” “continue,” “due,” “may,” “believe,” “seek,” or “estimate” and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as “will,” “should,” “would,” “likely” and “could.” These statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause Oportun’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Oportun has based these forward-looking statements on its current expectations and projections about future events, financial trends and risks and uncertainties that it believes may affect its business, financial condition and results of operations. These risks and uncertainties include those risks described in Oportun’s filings with the Securities and Exchange Commission, including Oportun’s most recent annual report on Form 10-K and most recent quarterly report on Form 10-Q. These forward-looking statements speak only as of the date on which they are made and, except to the extent required by federal securities laws, Oportun disclaims any obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In light of these risks and uncertainties, there is no assurance that the events or results suggested by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements.
Preliminary Information
Numbers are as of September 30, 2024, and are unaudited, preliminary and subject to change upon completion of the Company’s closing process and quarterly review procedures. As a result, the Company’s final results may vary materially from the preliminary results included in this press release. Oportun undertakes no obligation to update or supplement the information provided in this press release until the Company releases its financial statements for the three months ended September 30, 2024. The preliminary financial information included in this press release reflects the Company’s current estimates based on information available as of the date of this press release. This preliminary financial and operational information should not be viewed as a substitute for full financial statements prepared in accordance with GAAP and is not necessarily indicative of the results to be achieved for any future periods. This preliminary financial information could be impacted by the effects of financial closing procedures, final adjustments, and other developments.
About Non-GAAP Financial Measures
This press release presents information about the Company’s Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted EPS, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company believes non-GAAP measures can be useful measures for period-to-period comparisons of its core business and provide useful information to investors and others in understanding and evaluating its operating results. Non-GAAP financial measures are provided in addition to, and not as a substitute for, and are not superior to, financial measures calculated in accordance with GAAP. In addition, the non-GAAP measures the Company uses, as presented, may not be comparable to similar measures used by other companies. Reconciliations of non-GAAP to GAAP measures can be found below.
As previously announced on March 12, 2024, beginning with the quarter ended March 31, 2024, the Company has updated its calculation of Adjusted EBITDA and Adjusted Net Income for all periods. To align with these updated calculations, we also updated Adjusted EPS. Comparable prior period non-GAAP financial measures are included in addition to the previously reported metrics.
Adjusted EBITDA
The Company defines Adjusted EBITDA as net income, adjusted to eliminate the effect of certain items as described below. The Company believes that Adjusted EBITDA is an important measure because it allows management, investors and its board of directors to evaluate and compare operating results, including return on capital and operating efficiencies, from period to period by making the adjustments described below. In addition, it provides a useful measure for period-to-period comparisons of Oportun’s business, as it removes the effect of income taxes, certain non-cash items, variable charges and timing differences.
The Company believes it is useful to exclude the impact of income tax expense, as reported, because historically it has included irregular income tax items that do not reflect ongoing business operations.
The Company believes it is useful to exclude depreciation and amortization and stock-based compensation expense because they are non-cash charges.
The Company believes it is useful to exclude the impact of interest expense associated with the Company’s corporate financing facilities, including the senior secured term loan and the residual financing facility, as it views this expense as related to its capital structure rather than its funding.
The Company excludes the impact of certain non-recurring charges, such as expenses associated with our workforce optimization, and other non-recurring charges because it does not believe that these items reflect ongoing business operations. Other non-recurring charges include litigation reserve, impairment charges, debt amendment and warrant amortization costs related to our corporate financing facilities.
The Company also excludes fair value mark-to-market adjustments on its loans receivable portfolio and asset-backed notes carried at fair value because these adjustments do not impact cash.
Adjusted Net Income
The Company defines Adjusted Net Income as net income adjusted to eliminate the effect of certain items as described below. The Company believes that Adjusted Net Income is an important measure of operating performance because it allows management, investors, and the Company’s board of directors to evaluate and compare its operating results, including return on capital and operating efficiencies, from period to period, excluding the after-tax impact of non-cash, stock-based compensation expense and certain non-recurring charges.
The Company believes it is useful to exclude the impact of income tax expense (benefit), as reported, because historically it has included irregular income tax items that do not reflect ongoing business operations. The Company also includes the impact of normalized income tax expense by applying a normalized statutory tax rate.
The Company believes it is useful to exclude the impact of certain non-recurring charges, such as expenses associated with our workforce optimization, and other non-recurring charges because it does not believe that these items reflect its ongoing business operations. Other non-recurring charges include litigation reserve, impairment charges, debt amendment and warrant amortization costs related to our corporate financing facilities.
The Company believes it is useful to exclude stock-based compensation expense because it is a non-cash charge.
The Company also excludes the fair value mark-to-market adjustment on its asset-backed notes carried at fair value to align with the 2023 accounting policy decision to account for new debt financings at amortized cost.
Adjusted EPS
The Company defines Adjusted EPS as Adjusted Net Income divided by weighted average diluted shares outstanding.
Reconciliation of Non-GAAP Financial Measures
| Adjusted EBITDA | ||||
| Three Months Ended September 30, | ||||
| 2024 | 2023 | |||
| (dollars in millions) | ||||
| Net Income (loss) | $(32) – (30) | $(21.1 | ) | |
| Adjustments: | ||||
| Income tax expense (benefit) | (10.2) – (9.5) | (16.2 | ) | |
| Corporate debt interest | 12.6 | 15.0 | ||
| Depreciation and amortization | 13.5 | 13.9 | ||
| Workforce optimization expenses | – | 0.5 | ||
| Stock-based compensation expense | 3.2 | 4.3 | ||
| Other non-recurring charges | 2.9 | 0.3 | ||
| Fair value mark-to-market adjustment | 38.0-38.3 | 16.5 | ||
| Adjusted EBITDA | $28.0-31.0 | $13.2 | ||
| Adjusted Net Income (Loss) | |||||
| Three Months Ended September 30, | |||||
| 2024 | 2023 | ||||
| (dollars in millions) | |||||
| Net Income (loss) | $(32) – (30) | $(21.1 | ) | ||
| Adjustments: | |||||
| Income Tax Expense (benefit) | (10.2) – (9.5) | (16.2 | ) | ||
| Stock-based compensation expense | 3.2 | 4.3 | |||
| Workforce optimization expense | – | 0.5 | |||
| Impairment | – | 1.3 | |||
| Other non-recurring charges | 2.9 | 0.3 | |||
| Fair value mark-to-market adjustment | 33.3 – 34.7 | 14.9 | |||
| Adjusted income before taxes | $ (2.8) – 1.3 | (16.1 | ) | ||
| Normalized income tax expense | (0.8) – 0.3 | (4.3 | ) | ||
| Adjusted income | $ (2.0) – 1.0 | $(11.8 | ) | ||
| Forward-looking Adjusted Net Income and Adjusted EPS | ||||
| FY 2025 | ||||
| Low | High | |||
| (dollars in millions) | ||||
| Net Income | $12.6 | $25.1 | ||
| Adjustments: | ||||
| Income tax expense (benefit) | 4.7 | 9.3 | ||
| Stock-based compensation expense | 14.4 | 14.4 | ||
| Other non-recurring charges | 6.4 | 6.4 | ||
| Fair value mark-to-market adjustment | 30.8 | 30.8 | ||
| Adjusted income before taxes | $68.9 | $86.0 | ||
| Normalized income tax expense | 18.7 | 23.2 | ||
| Adjusted Net Income | $50.2 | $62.8 | ||
| Diluted Weighted Average Shares Outstanding (millions) | 50.2 | 50.2 | ||
| Diluted EPS | $0.25 | $0.50 | ||
| Adjusted EPS | $1.00 | $1.25 | ||
Investor Contact
Dorian Hare
(650) 590-4323
ir@oportun.com
Media Contact for Oportun
Michael Azzano
Cosmo PR for Oportun
(415) 596-1978
michael@cosmo-pr.com
Media Contact for Castlelake
Remy Marin / Alex Hinson
Prosek Partners for Castlelake
(212) 279 3115
Rmarin@prosek.com / ahinson@prosek.com
FAQ
What are the terms of Oportun’s (OPRT) new Term Loan?
Oportun’s new $235 million Senior Secured Term Loan has a 15% fixed rate, matures in November 2028, and requires at least $40 million principal payment by February 2026.
What is Oportun’s (OPRT) expected revenue for Q3 2024?
Oportun expects total revenue of $249-251 million for Q3 2024, which is within their guidance range of $248-252 million.
What is Oportun’s (OPRT) projected EPS for 2025?
Oportun projects GAAP EPS between $0.25-$0.50 and Adjusted EPS between $1.00-$1.25 for full year 2025.
