FirstCash Holdings, Inc. (“FirstCash” or the “Company”) (Nasdaq:
FCFS), the leading international operator of retail pawn stores and
growing provider of technology-driven retail point-of-sale payment
solutions, today announced operating results for the fourth quarter
and full-year ended December 31, 2021. In addition, the Board
of Directors declared a $0.30 per share quarterly cash dividend to
be paid in February 2022.
As previously announced on December 17, 2021,
the Company completed its acquisition of American First Finance
(“AFF”), establishing FirstCash’s entry into the large and growing
lease-to-own and retail point-of-sale (“POS”) payment space.
Mr. Rick Wessel, chief executive officer,
stated, “Our fourth quarter results were outstanding, with strong
revenue growth driving a 43% increase in U.S. pawn segment earnings
and a 19% increase in Latin America pawn segment earnings compared
to last year. As we begin a new year, pawn receivables and
inventories have recovered to near normalized levels in most of our
2,800-plus locations. With the improving store performance and
additional expected accretion from 2021 store openings and
acquisitions, we expect continued growth in revenue and earnings
from pawn operations in 2022. With the AFF transaction complete, we
are going to the market with a diversified product offering, which
is expected to provide significant additional revenue and earnings
momentum in 2022.”
This release contains adjusted earnings
measures, which exclude certain non-operating and/or non-cash
expenses, which are non-GAAP financial measures. Please refer to
the descriptions and reconciliations to GAAP of these and other
non-GAAP financial measures at the end of this release.
|
|
Three Months Ended December 31, |
|
|
As Reported (GAAP) |
|
Adjusted (Non-GAAP) |
In thousands, except per share amounts |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
Revenue |
|
$ |
501,774 |
|
$ |
392,158 |
|
$ |
501,774 |
|
$ |
392,158 |
Net income |
|
$ |
29,371 |
|
$ |
32,726 |
|
$ |
63,472 |
|
$ |
34,532 |
Diluted earnings per
share |
|
$ |
0.70 |
|
$ |
0.79 |
|
$ |
1.52 |
|
$ |
0.84 |
EBITDA (non-GAAP measure) |
|
$ |
60,026 |
|
$ |
60,848 |
|
$ |
102,289 |
|
$ |
62,105 |
Weighted-average diluted
shares |
|
|
41,720 |
|
|
41,331 |
|
|
41,720 |
|
|
41,331 |
|
|
Twelve Months Ended December 31, |
|
|
As Reported (GAAP) |
|
Adjusted (Non-GAAP) |
In thousands, except per share amounts |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
Revenue |
|
$ |
1,698,965 |
|
$ |
1,631,284 |
|
$ |
1,698,965 |
|
$ |
1,631,284 |
Net income |
|
$ |
124,909 |
|
$ |
106,579 |
|
$ |
161,479 |
|
$ |
125,153 |
Diluted earnings per
share |
|
$ |
3.04 |
|
$ |
2.56 |
|
$ |
3.94 |
|
$ |
3.01 |
EBITDA (non-GAAP measure) |
|
$ |
244,098 |
|
$ |
213,608 |
|
$ |
289,631 |
|
$ |
236,974 |
Weighted-average diluted
shares |
|
|
41,024 |
|
|
41,600 |
|
|
41,024 |
|
|
41,600 |
Consolidated Earnings Highlights
- Diluted earnings
per share for the fourth quarter decreased 11% on a GAAP basis
primarily due to non-recurring AFF transaction costs and other
purchase accounting impacts related to the acquisition. Adjusted
non-GAAP earnings per share increased 81% compared to the
prior-year quarter.
- For the full year
of 2021, diluted earnings per share increased 19% on a GAAP basis
and increased 31% on an adjusted non-GAAP basis compared to the
prior year.
- While EBITDA for
the fourth quarter decreased 1% compared to the prior-year quarter,
reflective of non-recurring AFF transaction and purchase accounting
impacts, adjusted EBITDA increased 65% compared to the prior-year
quarter. For the full year, EBITDA increased 14% while adjusted
EBITDA increased 22% compared to the prior year. Importantly,
fourth quarter 2021 adjusted EBITDA was up 14% over the fourth
quarter two years ago in 2019, which was the last pre-pandemic
comparative period. EBITDA and adjusted EBITDA are non-GAAP
financial measures.
- The strength in
revenue and adjusted earnings growth in the fourth quarter of 2021
was driven primarily by increased pawn receivables and inventories,
leading to significant growth in revenues and profitability in both
the U.S. and Latin America pawn segments versus the prior-year
period:
- Consolidated retail
pawn merchandise sales increased 28% in the fourth quarter and
gross profit from retail sales increased 22%.
- Total pawn fees
increased 13% in the fourth quarter compared to the prior-year
quarter.
- U.S. pawn segment
income for the fourth quarter was $73 million, an increase of 43%
over the fourth quarter of the prior year. The U.S. pawn operating
margin improved from 21% in the fourth quarter of 2020 to 24% in
the fourth quarter of 2021.
- Latin America pawn
segment income for the fourth quarter was $36 million, an increase
of 19% over the fourth quarter of the prior year and 20% on a
constant currency basis. The Latin America pawn operating margin
improved to 22% in fourth quarter of 2021 compared to 21% in the
prior year.
Acquisition of American First
Finance
- On December 17,
2021, the Company completed its acquisition of AFF, a leading
technology-driven retail POS payments platform primarily focused on
providing lease-to-own solutions and other retail financing
solutions through approximately 6,500 retail and e-commerce
merchant partner locations.
- AFF’s full fourth
quarter results, including the period prior to the acquisition, saw
strong lease-to-own and retail finance transaction volumes with the
corresponding revenue growth driven by the increase in receivable
balances. Reported GAAP earnings for the brief stub period from the
December 17 acquisition date through December 31 included in the
Company’s consolidated results reflected certain required purchase
accounting entries, primarily to establish loss reserves using
expected lifetime loss methodologies. On an adjusted basis,
excluding purchase accounting adjustments, AFF earnings for the 15
days post closing of the acquisition were approximately $0.07 per
share, net of interest and taxes.
Pawn Acquisitions and Store Opening
Highlights
- On October 18,
2021, the Company acquired a chain of 18 pawn stores in the U.S.
gulf coast region with locations in southwest Florida, Alabama,
Mississippi and Louisiana. FirstCash now has a total of 87 stores
in the growing Florida market, and the acquisition resulted in the
addition of the Company’s first two locations in Mississippi.
Including this acquisition, a total of 46 U.S. pawn stores were
acquired in 2021 for an aggregate purchase price of approximately
$78 million.
- A total of 11 de
novo pawn stores were opened in Latin America during the fourth
quarter, all of which were located in Mexico.
- For the full year
of 2021, a total of 107 stores were added, composed of 46 acquired
U.S. stores, 60 de novo stores opened in three Latin American
countries and one de novo store opened in the U.S. The Company also
acquired a pawn license to add a new store in Las Vegas, Nevada
which it expects to open in 2022. Including this new location, the
Company will have 23 stores in the Las Vegas metro area. In
addition, a total of seven stores were optimally sized and
strategically relocated to improved locations.
- As of December 31,
2021, the Company operated 2,825 pawn stores, with 1,744 stores
located in Latin America and 1,081 stores in the U.S. The Latin
American locations include 1,656 stores in Mexico, 60 stores in
Guatemala, 15 stores in Colombia and 13 stores in El Salvador.
U.S. Pawn Segment
- Segment pre-tax
operating income increased 43% for the fourth quarter compared to
the prior-year quarter. The resulting segment pre-tax operating
margin was 24% for the fourth quarter of 2021, a significant
improvement over the 21% margin for the prior-year quarter.
- Pawn receivables
were up 16% in total at December 31, 2021 compared to the prior
year, while same-store pawn receivables increased 13%, reflecting
the continuing recovery in pawn balances from 2020 levels.
Resulting pawn fees, which typically lag pawn receivables growth,
were up 15% in total for the fourth quarter and up 10% on a
same-store basis, as compared to the prior-year quarter.
- Retail merchandise
sales for the fourth quarter of 2021 increased 29% compared to the
prior-year quarter. On a same-store basis, retail sales increased
24% compared to the prior-year quarter.
- Retail sales
margins remained robust at 43% in the fourth quarter, reflecting
continued retail demand for value-priced pre-owned merchandise,
increased buying of fresh merchandise from customers and lower
levels of aged inventory, all of which reduced the need for
discounting. Full-year retail sales margins increased to 44% for
2021 compared to 42% in the prior year.
- Inventories
increased 45% on a year-over-year basis versus the prior year’s
depleted levels and are approaching normalized, pre-COVID levels on
a per store basis on the higher store count. Inventories aged
greater than one year decreased to 1% versus the prior-year end
period of 2%.
- Operating expenses
increased 6% in total and 2% on a same-store basis compared to the
prior-year quarter, reflecting increased store count and increased
incentive compensation expense driven by higher revenues. For the
full year, operating expenses decreased 4% in total and 6% on a
same-store basis compared to the prior year, reflecting expense
optimization efforts from reduced staffing levels and other
operating efficiency initiatives versus the prior-year period.
Note: Certain growth rates in “Latin America
Pawn Segment” below are calculated on a constant currency basis, a
non-GAAP financial measure defined at the end of this release. The
average Mexican peso to U.S. dollar exchange rate for the fourth
quarter of 2021 was 20.7 pesos / dollar, or flat versus the
prior-year period, and for the twelve-month period ended
December 31, 2021 was 20.3 pesos / dollar, a favorable change
of 6% versus the comparable prior-year period.
Latin America Pawn Segment
-
Segment pre-tax operating income for the fourth quarter of 2021
increased 19% (20% on a constant currency basis) over the
prior-year quarter. The resulting segment pre-tax operating margin
increased to 22% for the fourth quarter of 2021 (also 22% on a
constant currency basis) compared to 21% in the prior-year
quarter.
-
Pawn receivables at December 31, 2021 increased 4% on a U.S. dollar
basis compared to the prior year and 7% on a constant currency
basis. On a same-store basis, pawn receivables increased 3% on a
U.S. dollar basis and 6% on a constant currency basis compared to
the prior year. The Company attributes slower growth in Latin
American pawn receivables in part to continued record levels of
currency remittances from the U.S.
-
Pawn fees in the fourth quarter increased 11% in total, or 12% on a
constant currency basis, as compared to the prior-year quarter. On
a same-store basis, pawn fees increased 10% on a U.S. dollar basis
and 11% on a constant currency basis. For the full year, pawn fees
increased 16% and 10% compared to the prior year on a U.S. dollar
and constant currency basis, respectively.
-
Retail merchandise sales in the fourth quarter increased 25%, or
26% on a constant currency basis, compared to the prior-year
quarter. Same-store retail sales increased 24% on a U.S. dollar
basis and on a constant currency basis. For the full year, retail
sales increased 10% and 4% on a U.S. dollar and constant currency
basis, respectively, compared to the prior year.
-
Retail margins were 36% in the fourth quarter of 2021 compared to
38% in 2020. For the full year, retail margins were 37% in both
2021 and 2020.
-
Inventories turned 4.2 times in 2021 compared to 4.3 times in 2020,
while inventories aged greater than one year decreased to 1% versus
the prior-year end period of 2%.
- Same-store operating expenses
increased 7% on a dollar-denominated basis and 8% on a constant
currency basis, compared to the prior-year quarter as a result of
lower than normal expenses in the prior year and inflationary
impacts on certain expenses in the current year. For the full year,
dollar-denominated and constant currency same-store operating
expenses increased 6% and 1%, respectively, compared to the prior
year.
Liquidity and Shareholder
Returns
- In December 2021,
the Company successfully completed an offering of $550 million of
5.625% senior unsecured notes due in 2030. The Company used the
proceeds from the offering to finance the cash consideration and
transaction expenses for the AFF acquisition, repay, in full, the
outstanding debt under AFF’s credit facility, pay fees and expenses
related to the note offering and reduce the outstanding balance on
the Company’s revolving unsecured credit facility.
- The Board of
Directors declared a $0.30 per share first quarter cash dividend on
common shares outstanding, which will be paid on February 28,
2022 to stockholders of record as of February 21, 2022. This
represents an annualized cash dividend of $1.20 per share. Any
future dividends are subject to approval by the Company’s Board of
Directors.
- During 2021, the
Company repurchased 688,000 shares of common stock at an aggregate
cost of $50 million and an average cost per share of $72.10. The
Company has $72 million remaining under its current share
repurchase authorization. Future share repurchases are subject to
expected liquidity, acquisition opportunities, debt covenant
restrictions and other relevant factors.
2022 Outlook
The current operating environment continues to
present uncertainties related to the COVID-19 pandemic and other
macroeconomic factors such as supply chain issues, inflation and
weaker consumer sentiment, all of which could have both positive
and negative impacts on the Company’s operations. In particular,
COVID related concerns, staffing constraints, supply chain delays
and weather events year-to-date have impacted operations and
traffic counts for many retailers, including the Company’s pawn
stores and many of AFF’s retail merchant partners. While
inflationary price increases typically drive increased demand for
pawn transactions, its impact on retail sales in pawn stores and
for AFF’s merchant partners are difficult to predict. Additionally,
there are potential impacts around the U.S. tax refund season due
to expectations for delayed timing and size of the refunds (which
may decline for many households due to advance funding of child tax
credits in the second half of 2021) on consumer liquidity which
could affect retail sales and customer payments in the first
quarter of 2022. There is also the uncertainty around consumer
behavior as government stimulus programs in place in the prior year
have expired. As a result of these factors, the Company is not
providing 2022 earnings guidance at this time.
Despite these near-term uncertainties, the
Company expects to achieve significant revenue and earnings growth
in 2022 based on the following factors:
- Demand for pawn
loans continues to improve, especially in the U.S., where
same-store pawn receivables at January 31, 2022 were up 24% over
the prior year, and same-store originations in January 2022 were up
38% over January 2021 originations. In Mexico, same-store pawn
receivables at January 31, 2022 are up 4% compared to balances a
year ago, with originations for the month of January 2022 up 1%
compared to the same month last year.
- Pawn merchandise
inventories are well positioned, having essentially normalized to
pre-COVID levels with very limited amounts of aged inventory. The
Company expects the improved inventory position to drive increased
sales in 2022, although the Company’s sales thus far in 2022 have
been temporarily impacted by reduced customer traffic, weather
events and other COVID-related operational challenges in the
Company’s pawn stores.
- The new retail POS
payment solutions segment (AFF) is expected to drive significant
revenue and earnings growth from its lease-to-own and retail
finance products in 2022. While the Company believes that many of
AFF’s retail partners faced retailing issues described above, which
negatively impacted the volume of AFF’s lease-to-own and credit
transactions in January, it continues to expect full year 2022
adjusted EBITDA accretion from AFF of 30% or more.
- AFF’s estimated
lease and loan loss reserves reflect continued normalization to
higher pre-pandemic loss rates while also considering the potential
impact of reduced U.S. tax refunds as previously noted above. As an
additional point of reference for AFF’s expected 2022 results,
first quarter and early second quarter results will also reflect a
normal seasonal increase in loss provisioning rates for
originations for the few months after the tax refund season
consistent with historical lifetime loss rates under CECL
accounting methodologies.
- The Company expects
up to 60 new store additions for the full year 2022, primarily in
Latin America, and will continue to seek and evaluate accretive
pawn acquisitions across all of its existing markets. In addition,
the Company continues to optimize its footprint in Mexico through
strategic consolidations of overlapping acquired stores.
- Inflationary
economic environments typically benefit the Company by driving
increased customer demand for value priced products and lending
services in pawn stores. Of note, over 50% of the Company’s pawn
collateral and inventories are held in gold. At the same time, the
Company expects to see increases in wages and other operating costs
in 2022, particularly in Mexico, where the government recently
raised the federal minimum wage and increased certain other
statutory employer funded benefits.
- For the full year
of 2022, the effective income tax rate under current tax codes in
the U.S. and Latin America is expected to range from 24.5% to
25.5%.
- The current trading
level for the Mexican peso to the U.S. dollar is approximately 20.7
to 1, which is a slight headwind to the average rate in 2021 of
20.3 to 1. Each full point in the exchange rate represents an
approximate $0.08 impact on earnings per share.
Additional Commentary and
Analysis
Mr. Wessel further commented on the 2021
results, “Our fourth quarter and full year results again
demonstrated the resiliency and durability of our core pawn
business. The strong fourth quarter profitability and operational
metrics, such as pawn receivable growth, retail margins, inventory
turns and segment profitability, reflected increased consumer
demand for pawn loans and value-priced merchandise along with
superb operational focus and discipline on the part of our
pawnbrokers.
“FirstCash continued to invest in the long-term
growth of its pawn business through the opening and acquisition of
more pawn stores in 2021. The addition of 47 U.S. stores, primarily
through highly accretive acquisitions, was the highest U.S. annual
store count increase since the merger with Cash America in 2016. In
Latin America, we continued to add de novo locations, with 60
openings in three countries despite continued logistical and supply
chain challenges in 2021. The Company also acquired the underlying
real estate for 53 of its U.S. stores in 2021, where we now own
over 20% of our domestic locations. We believe that owning this
real estate is a solid strategic decision for protecting high
performance locations in addition to reducing long-term occupancy
costs.
“Our core pawn business is well-positioned for
further expected growth in 2022, driven by continued store
additions and increased same-store pawn receivables and
inventories. Additionally, we believe that we can maintain margin
strength given our current inventory quality and freshness. Despite
January’s operational challenges from COVID in most markets and
weather events in certain U.S. regions, we are seeing especially
strong year-over-year growth in pawn receivables and pawn fees thus
far in 2022.
“Since closing the AFF transaction in December,
we are rapidly integrating our senior management teams and continue
to see long-term opportunities for revenue synergies and operating
efficiencies across both our pawn and retail POS payment solutions
platforms. More importantly, we believe in the long-term prospects
for AFF’s operations to be highly accretive to the consolidated
earnings and cash flows of FirstCash as we expand and diversify our
platforms for serving credit-constrained consumers.
“We are confident in our ability to drive
additional revenue and growth in 2022. Our balance sheet and cash
flow generation remain strong and position us well to grow earning
assets and store locations while continuing to pay dividends,
purchase real estate and make stock repurchases. I would like to
thank our 17,000 employees who make this all possible,” concluded
Mr. Wessel.
About FirstCash
FirstCash is the leading international operator
of pawn stores and a leading provider of technology-driven
point-of-sale payment solutions, both focused on serving cash and
credit-constrained consumers. FirstCash’s more than 2,800 pawn
stores buy and sell a wide variety of jewelry, electronics, tools,
appliances, sporting goods, musical instruments and other
merchandise, and make small consumer pawn loans secured by pledged
personal property. FirstCash, through its wholly owned subsidiary,
AFF, also provides lease-to-own and retail finance payment
solutions for consumer goods and services through a nationwide
network of more than 6,500 active retail merchant partner
locations. As one of the largest omni-channel providers of “no
credit required” payment options, AFF’s technology provides its
merchant partners with seamless leasing and financing experiences
in-store, online, in-cart and on mobile devices.
FirstCash is a component company in both the
Standard & Poor’s MidCap 400 Index® and the
Russell 2000 Index®. FirstCash’s common stock
(ticker symbol “FCFS”) is traded on the Nasdaq,
the creator of the world’s first electronic stock market. For
additional information regarding FirstCash and the services it
provides, visit FirstCash’s websites located at
http://www.firstcash.com and
http://www/americanfirstfinance.com.
Forward-Looking
Information
This release contains forward-looking statements
about the business, financial condition and prospects of FirstCash
Holdings, Inc. and its wholly owned subsidiaries (together, the
“Company”). Forward-looking statements, as that term is defined in
the Private Securities Litigation Reform Act of 1995, can be
identified by the use of forward-looking terminology such as
“outlook,” “believes,” “projects,” “expects,” “may,” “estimates,”
“should,” “plans,” “targets,” “intends,” “could,” “would,”
“anticipates,” “potential,” “confident,” “optimistic,” or the
negative thereof, or other variations thereon, or comparable
terminology, or by discussions of strategy, objectives, estimates,
guidance, expectations and future plans. Forward-looking statements
can also be identified by the fact that these statements do not
relate strictly to historical or current matters. Rather,
forward-looking statements relate to anticipated or expected
events, activities, trends or results. Because forward-looking
statements relate to matters that have not yet occurred, these
statements are inherently subject to risks and uncertainties. The
forward-looking statements contained in this release include,
without limitation, statements related to the Company’s
expectations for its performance and growth in 2022, the
anticipated benefits of the AFF transaction, the anticipated impact
of the transaction on the combined company’s business and future
financial and operating results and the Company’s goals, plans and
projections with respect to its operations, financial position and
business strategy.
While the Company believes the expectations
reflected in forward-looking statements are reasonable, there can
be no assurances such expectations will prove to be accurate.
Security holders are cautioned such forward-looking statements
involve risks and uncertainties. Certain factors may cause results
to differ materially from those anticipated by the forward-looking
statements made in this release. Such factors may include, without
limitation, risks associated with the CFPB lawsuit filed against
the Company, including the incurrence of meaningful expenses,
reputational damage, monetary damages and other penalties, risks
relating to the AFF transaction, including the failure of the
transaction to deliver the estimated value and benefits expected by
the Company, the incurrence of unexpected future costs, liabilities
or obligations as a result of the transaction, the effect of the
transaction on the ability of the Company to retain and hire
personnel and maintain relationships with retail partners,
consumers and others with whom the Company and AFF do business, the
ability of the Company to successfully integrate AFF’s operations,
the ability of the Company to successfully implement its plans,
forecasts and other expectations with respect to AFF’s business,
risks related to the COVID-19 pandemic, which include risks and
uncertainties related to the current unknown duration and severity
of the COVID-19 pandemic, the impact of governmental responses that
have been, and may in the future be, imposed in response to the
pandemic, including stimulus programs which could adversely impact
demand for pawn loans and AFF’s lease-to-own and retail finance
products, potential changes in consumer behavior and shopping
patterns which could impact demand for both the Company’s pawn
loan, retail and retail finance products, labor shortages and
increased labor costs, inflation, a deterioration in the economic
conditions in the United States and Latin America which potentially
could have an impact on discretionary consumer spending, currency
fluctuations, primarily involving the Mexican peso and those other
risks discussed and described in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2020 and filed with the
Securities and Exchange Commission (the “SEC”) on February 1, 2021,
including the risks described in Part 1, Item 1A, “Risk Factors”
thereof, and in the other reports filed with the SEC, including the
Company’s Current Report on Form 8-K filed with the SEC on December
7, 2021. Many of these risks and uncertainties are beyond the
ability of the Company to control, nor can the Company predict, in
many cases, all of the risks and uncertainties that could cause its
actual results to differ materially from those indicated by the
forward-looking statements. The forward-looking statements
contained in this release speak only as of the date of this
release, and the Company expressly disclaims any obligation or
undertaking to report any updates or revisions to any such
statement to reflect any change in the Company’s expectations or
any change in events, conditions or circumstances on which any such
statement is based, except as required by law.
FIRSTCASH HOLDINGS,
INC.CONSOLIDATED STATEMENTS OF
INCOME(unaudited, in thousands)
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
December 31, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Revenue: |
|
|
|
|
|
|
|
|
Retail merchandise sales |
|
$ |
327,914 |
|
|
$ |
256,507 |
|
|
$ |
1,134,249 |
|
|
$ |
1,075,518 |
|
Pawn loan fees |
|
|
128,986 |
|
|
|
113,842 |
|
|
|
475,782 |
|
|
|
457,517 |
|
Leased merchandise income |
|
|
22,720 |
|
|
|
— |
|
|
|
22,720 |
|
|
|
— |
|
Interest and fees on finance receivables |
|
|
9,024 |
|
|
|
13 |
|
|
|
9,024 |
|
|
|
2,016 |
|
Wholesale scrap jewelry sales |
|
|
13,130 |
|
|
|
21,796 |
|
|
|
57,190 |
|
|
|
96,233 |
|
Total revenue |
|
|
501,774 |
|
|
|
392,158 |
|
|
|
1,698,965 |
|
|
|
1,631,284 |
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
Cost of retail merchandise sold |
|
|
194,830 |
|
|
|
147,651 |
|
|
|
663,464 |
|
|
|
641,087 |
|
Depreciation of leased merchandise |
|
|
12,826 |
|
|
|
— |
|
|
|
12,826 |
|
|
|
— |
|
Provision for lease losses |
|
|
5,442 |
|
|
|
— |
|
|
|
5,442 |
|
|
|
— |
|
Provision for loan losses (1) |
|
|
48,952 |
|
|
|
(8 |
) |
|
|
48,952 |
|
|
|
(488 |
) |
Cost of wholesale scrap jewelry sold |
|
|
11,472 |
|
|
|
18,524 |
|
|
|
49,129 |
|
|
|
79,546 |
|
Total cost of revenue |
|
|
273,522 |
|
|
|
166,167 |
|
|
|
779,813 |
|
|
|
720,145 |
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
|
228,252 |
|
|
|
225,991 |
|
|
|
919,152 |
|
|
|
911,139 |
|
|
|
|
|
|
|
|
|
|
Expenses and other
income: |
|
|
|
|
|
|
|
|
Operating expenses |
|
|
149,761 |
|
|
|
135,546 |
|
|
|
564,832 |
|
|
|
562,158 |
|
Administrative expenses |
|
|
22,654 |
|
|
|
25,289 |
|
|
|
111,259 |
|
|
|
110,931 |
|
Depreciation and amortization |
|
|
13,175 |
|
|
|
10,681 |
|
|
|
45,906 |
|
|
|
42,105 |
|
Interest expense |
|
|
9,997 |
|
|
|
7,391 |
|
|
|
32,386 |
|
|
|
29,344 |
|
Interest income |
|
|
(276 |
) |
|
|
(331 |
) |
|
|
(696 |
) |
|
|
(1,540 |
) |
Loss (gain) on foreign exchange |
|
|
188 |
|
|
|
(755 |
) |
|
|
436 |
|
|
|
884 |
|
Merger and acquisition expenses |
|
|
14,185 |
|
|
|
1,107 |
|
|
|
15,449 |
|
|
|
1,316 |
|
Gain on revaluation of contingent acquisition consideration
(2) |
|
|
(17,871 |
) |
|
|
— |
|
|
|
(17,871 |
) |
|
|
— |
|
Impairments and dispositions of certain other assets |
|
|
(691 |
) |
|
|
3,956 |
|
|
|
949 |
|
|
|
10,505 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,737 |
|
Total expenses and other income |
|
|
191,122 |
|
|
|
182,884 |
|
|
|
752,650 |
|
|
|
767,440 |
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
37,130 |
|
|
|
43,107 |
|
|
|
166,502 |
|
|
|
143,699 |
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
7,759 |
|
|
|
10,381 |
|
|
|
41,593 |
|
|
|
37,120 |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
29,371 |
|
|
$ |
32,726 |
|
|
$ |
124,909 |
|
|
$ |
106,579 |
|
Certain amounts in the consolidated statements
of income for the three months and year ended December 31, 2020
have been reclassified in order to conform to the 2021
presentation.
(1) Includes $44 million
expense to establish the initial allowance for expected lifetime
credit losses for acquired finance receivables of AFF. See “Retail
POS Payment Solutions Segment Results”
below.(2) Gain resulting from decrease in the
estimated fair value of the liability for contingent AFF purchase
price consideration resulting from the increase in the Company’s
stock price between the acquisition closing date of December 17,
2021 and the closing year end price as of December 31, 2021.
FIRSTCASH HOLDINGS,
INC.CONSOLIDATED BALANCE
SHEETS(unaudited, in thousands)
|
|
December 31, |
|
|
|
2021 |
|
|
|
2020 |
|
ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
120,046 |
|
|
$ |
65,850 |
|
Accounts receivable, net |
|
|
55,356 |
|
|
|
41,110 |
|
Pawn loans |
|
|
347,973 |
|
|
|
308,231 |
|
Finance receivables, net
(1) |
|
|
181,021 |
|
|
|
— |
|
Inventories |
|
|
263,311 |
|
|
|
190,352 |
|
Leased merchandise, net
(1) |
|
|
143,944 |
|
|
|
— |
|
Income taxes receivable |
|
|
11,139 |
|
|
|
9,634 |
|
Prepaid expenses and other
current assets |
|
|
12,288 |
|
|
|
9,388 |
|
Total current assets |
|
|
1,135,078 |
|
|
|
624,565 |
|
|
|
|
|
|
Property and equipment,
net |
|
|
462,526 |
|
|
|
373,667 |
|
Operating lease right of use
asset |
|
|
306,061 |
|
|
|
298,957 |
|
Goodwill |
|
|
1,528,233 |
|
|
|
977,381 |
|
Intangible assets, net |
|
|
388,184 |
|
|
|
83,651 |
|
Other assets |
|
|
8,531 |
|
|
|
9,818 |
|
Deferred tax assets |
|
|
5,614 |
|
|
|
4,158 |
|
Total assets |
|
$ |
3,834,227 |
|
|
$ |
2,372,197 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
Accounts payable and accrued
liabilities |
|
$ |
239,519 |
|
|
$ |
81,917 |
|
Customer deposits and
prepayments |
|
|
57,310 |
|
|
|
34,719 |
|
Income taxes payable |
|
|
3,387 |
|
|
|
1,148 |
|
Lease liability, current |
|
|
90,570 |
|
|
|
88,622 |
|
Total current liabilities |
|
|
390,786 |
|
|
|
206,406 |
|
|
|
|
|
|
Revolving unsecured credit
facilities |
|
|
259,000 |
|
|
|
123,000 |
|
Senior unsecured notes |
|
|
1,033,904 |
|
|
|
492,916 |
|
Deferred tax liabilities |
|
|
125,294 |
|
|
|
71,173 |
|
Lease liability,
non-current |
|
|
203,166 |
|
|
|
194,887 |
|
Other liabilities |
|
|
13,950 |
|
|
|
— |
|
Total liabilities |
|
|
2,026,100 |
|
|
|
1,088,382 |
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
Common stock |
|
|
573 |
|
|
|
493 |
|
Additional paid-in capital |
|
|
1,724,956 |
|
|
|
1,221,788 |
|
Retained earnings |
|
|
866,679 |
|
|
|
789,303 |
|
Accumulated other comprehensive loss |
|
|
(131,299 |
) |
|
|
(118,432 |
) |
Common stock held in treasury, at cost |
|
|
(652,782 |
) |
|
|
(609,337 |
) |
Total stockholders’ equity |
|
|
1,808,127 |
|
|
|
1,283,815 |
|
Total liabilities and stockholders’ equity |
|
$ |
3,834,227 |
|
|
$ |
2,372,197 |
|
The balance sheet is subject to change as the
Company finalizes the analysis of the fair value of the assets
acquired and liabilities assumed as of the date of the AFF
Acquisition.
(1) See reconciliation of as
reported AFF earning asset balances to AFF earning asset balances
adjusted to exclude the impacts of purchase accounting in the
“Reconciliations of non-GAAP Financial Measures to GAAP Financial
Measures” section elsewhere in this release.
FIRSTCASH HOLDINGS,
INC.OPERATING
INFORMATION(UNAUDITED)
The Company’s reportable segments are as
follows:
- U.S.
pawn
- Latin America
pawn
- Retail POS payment solutions
(AFF)
The Company provides revenues, cost of revenues,
operating expenses, pre-tax operating income and earning assets by
segment. Operating expenses include salary and benefit expense of
pawn store-level employees, occupancy costs, bank charges,
security, insurance, utilities, supplies and other costs incurred
by the pawn stores. Additionally, costs incurred in operating AFF
have been classified as operating expenses, which include salary
and benefit expense of certain operations focused departments,
merchant partner incentives, bank and other payment processing
charges, credit reporting costs, information technology costs,
advertising costs and other operational costs incurred by AFF.
U.S. Pawn Segment Results
The following table details earning assets,
which consist of pawn loans and inventories, as well as other
earning asset metrics of the U.S. pawn segment as of
December 31, 2021 as compared to December 31, 2020
(dollars in thousands, except as otherwise noted):
|
As of December 31, |
|
|
|
2021 |
|
|
2020 |
|
|
Increase |
U.S. Pawn
Segment |
|
|
|
|
|
|
|
|
|
Earning assets: |
|
|
|
|
|
|
|
|
|
Pawn loans |
$ |
256,311 |
|
|
$ |
220,391 |
|
|
|
16 |
% |
|
Inventories |
|
197,486 |
|
|
|
136,109 |
|
|
|
45 |
% |
|
|
$ |
453,797 |
|
|
$ |
356,500 |
|
|
|
27 |
% |
|
|
|
|
|
|
|
|
|
|
|
Average outstanding pawn loan
amount (in ones) |
$ |
222 |
|
|
$ |
198 |
|
|
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
|
Composition of pawn
collateral: |
|
|
|
|
|
|
|
|
|
General merchandise |
34 |
% |
|
33 |
% |
|
|
|
|
Jewelry |
66 |
% |
|
67 |
% |
|
|
|
|
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of
inventories: |
|
|
|
|
|
|
|
|
|
General merchandise |
45 |
% |
|
46 |
% |
|
|
|
|
Jewelry |
55 |
% |
|
54 |
% |
|
|
|
|
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of inventory aged
greater than one year |
1 |
% |
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory turnover (trailing
twelve months cost of merchandise sales divided by average
inventories) |
2.8 times |
|
3.2 times |
|
|
|
|
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
The following table presents segment pre-tax
operating income and other operating metrics of the U.S. pawn
segment for the three months ended December 31, 2021 as
compared to the three months ended December 31, 2020 (dollars
in thousands):
|
Three Months Ended |
|
|
|
|
|
December 31, |
|
Increase / |
|
2021 |
|
|
2020 |
|
|
(Decrease) |
U.S. Pawn
Segment |
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
Retail merchandise sales |
$ |
211,906 |
|
|
$ |
163,753 |
|
|
|
29 |
% |
|
Pawn loan fees |
|
85,337 |
|
|
|
74,500 |
|
|
|
15 |
% |
|
Wholesale scrap jewelry sales |
|
6,946 |
|
|
|
7,678 |
|
|
|
(10 |
)% |
|
Interest and fees on finance receivables (1) |
|
— |
|
|
|
13 |
|
|
|
(100 |
)% |
|
Total revenue |
|
304,189 |
|
|
|
245,944 |
|
|
|
24 |
% |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
Cost of retail merchandise sold |
|
120,584 |
|
|
|
90,075 |
|
|
|
34 |
% |
|
Cost of wholesale scrap jewelry sold |
|
6,208 |
|
|
|
6,830 |
|
|
|
(9 |
)% |
|
Provision for loan losses (1) |
|
— |
|
|
|
(8 |
) |
|
|
100 |
% |
|
Total cost of revenue |
|
126,792 |
|
|
|
96,897 |
|
|
|
31 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
177,397 |
|
|
|
149,047 |
|
|
|
19 |
% |
|
|
|
|
|
|
|
|
|
|
|
Segment expenses: |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
98,827 |
|
|
|
92,941 |
|
|
|
6 |
% |
|
Depreciation and amortization |
|
5,843 |
|
|
|
5,391 |
|
|
|
8 |
% |
|
Total segment expenses |
|
104,670 |
|
|
|
98,332 |
|
|
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
Segment pre-tax operating
income |
$ |
72,727 |
|
|
$ |
50,715 |
|
|
|
43 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating metrics: |
|
|
|
|
|
|
|
|
|
Retail merchandise sales margin |
43 |
% |
|
45 |
% |
|
|
|
|
Net revenue margin |
58 |
% |
|
61 |
% |
|
|
|
|
Segment pre-tax operating margin |
24 |
% |
|
21 |
% |
|
|
|
|
(1) Effective June 30, 2020,
the Company’s U.S. pawn segment no longer offers an unsecured
consumer loan product.
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
The following table presents segment pre-tax
operating income and other operating metrics of the U.S. pawn
segment for the twelve months ended December 31, 2021 as
compared to the twelve months ended December 31, 2020 (dollars
in thousands):
|
Twelve Months Ended |
|
|
|
|
|
December 31, |
|
Increase / |
|
2021 |
|
|
2020 |
|
|
(Decrease) |
U.S. Pawn
Segment |
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
Retail merchandise sales |
$ |
742,374 |
|
|
$ |
720,281 |
|
|
|
3 |
% |
|
Pawn loan fees |
|
305,350 |
|
|
|
310,437 |
|
|
|
(2 |
)% |
|
Wholesale scrap jewelry sales |
|
27,163 |
|
|
|
45,405 |
|
|
|
(40 |
)% |
|
Interest and fees on finance receivables (1) |
|
— |
|
|
|
2,016 |
|
|
|
(100 |
)% |
|
Total revenue |
|
1,074,887 |
|
|
|
1,078,139 |
|
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
Cost of retail merchandise sold |
|
416,039 |
|
|
|
415,938 |
|
|
|
— |
% |
|
Cost of wholesale scrap jewelry sold |
|
22,886 |
|
|
|
39,584 |
|
|
|
(42 |
)% |
|
Provision for loan losses (1) |
|
— |
|
|
|
(488 |
) |
|
|
100 |
% |
|
Total cost of revenue |
|
438,925 |
|
|
|
455,034 |
|
|
|
(4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
635,962 |
|
|
|
623,105 |
|
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
Segment expenses: |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
380,895 |
|
|
|
396,627 |
|
|
|
(4 |
)% |
|
Depreciation and amortization |
|
22,234 |
|
|
|
21,743 |
|
|
|
2 |
% |
|
Total segment expenses |
|
403,129 |
|
|
|
418,370 |
|
|
|
(4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
Segment pre-tax operating
income |
$ |
232,833 |
|
|
$ |
204,735 |
|
|
|
14 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating metrics: |
|
|
|
|
|
|
|
|
|
Retail merchandise sales margin |
44 |
% |
|
42 |
% |
|
|
|
|
Net revenue margin |
59 |
% |
|
58 |
% |
|
|
|
|
Segment pre-tax operating margin |
22 |
% |
|
19 |
% |
|
|
|
|
(1) Effective June 30, 2020,
the Company’s U.S. pawn segment no longer offers an unsecured
consumer loan product.
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
Latin America Pawn Segment
Results
The Company’s management reviews and analyzes
operating results in Latin America on a constant currency basis
because the Company believes this better represents the Company’s
underlying business trends. Constant currency results are non-GAAP
financial measures, which exclude the effects of foreign currency
translation and are calculated by translating current-year results
at prior-year average exchange rates. The wholesale scrap jewelry
sales in Latin America are priced and settled in U.S. dollars, and
are not affected by foreign currency translation, as are a small
percentage of the operating and administrative expenses in Latin
America, which are billed and paid in U.S. dollars. Amounts
presented on a constant currency basis are denoted as such. See the
“Constant Currency Results” section below for additional discussion
of constant currency results.
The following table provides exchange rates for
the Mexican peso, Guatemalan quetzal and Colombian peso for the
current and prior-year periods:
|
|
December 31, |
|
Favorable / |
|
|
2021 |
|
2020 |
|
(Unfavorable) |
Mexican peso / U.S. dollar
exchange rate: |
|
|
|
|
|
|
|
|
End-of-period |
|
20.6 |
|
19.9 |
|
|
(4 |
)% |
|
Three months ended |
|
20.7 |
|
20.6 |
|
|
— |
% |
|
Twelve months ended |
|
20.3 |
|
21.5 |
|
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
Guatemalan quetzal / U.S.
dollar exchange rate: |
|
|
|
|
|
|
|
|
End-of-period |
|
7.7 |
|
7.8 |
|
|
1 |
% |
|
Three months ended |
|
7.7 |
|
7.8 |
|
|
1 |
% |
|
Twelve months ended |
|
7.7 |
|
7.7 |
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
Colombian peso / U.S. dollar
exchange rate: |
|
|
|
|
|
|
|
|
End-of-period |
|
3,981 |
|
3,433 |
|
|
(16 |
)% |
|
Three months ended |
|
3,880 |
|
3,662 |
|
|
(6 |
)% |
|
Twelve months ended |
|
3,742 |
|
3,693 |
|
|
(1 |
)% |
|
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
The following table details earning assets,
which consist of pawn loans and inventories as well as other
earning asset metrics of the Latin America pawn segment as of
December 31, 2021 as compared to December 31, 2020 (dollars in
thousands, except as otherwise noted):
|
|
|
|
|
|
|
|
|
|
|
Constant Currency Basis |
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
As of December 31, |
|
Increase / |
|
2021 |
|
Increase |
|
2021 |
|
|
2020 |
|
|
(Decrease) |
|
(Non-GAAP) |
|
(Non-GAAP) |
Latin America Pawn
Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pawn loans |
$ |
91,662 |
|
|
$ |
87,840 |
|
|
|
4 |
% |
|
|
$ |
94,420 |
|
|
7 |
% |
|
Inventories |
|
65,825 |
|
|
|
54,243 |
|
|
|
21 |
% |
|
|
|
67,821 |
|
|
25 |
% |
|
|
$ |
157,487 |
|
|
$ |
142,083 |
|
|
|
11 |
% |
|
|
$ |
162,241 |
|
|
14 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average outstanding pawn loan
amount (in ones) |
$ |
77 |
|
|
$ |
78 |
|
|
|
(1 |
)% |
|
|
$ |
79 |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of pawn
collateral: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General merchandise |
67 |
% |
|
64 |
% |
|
|
|
|
|
|
|
|
|
|
Jewelry |
33 |
% |
|
36 |
% |
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of
inventories: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General merchandise |
68 |
% |
|
56 |
% |
|
|
|
|
|
|
|
|
|
|
Jewelry |
32 |
% |
|
44 |
% |
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of inventory aged
greater than one year |
1 |
% |
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory turnover (trailing
twelve months cost of merchandise sales divided by average
inventories) |
4.2 times |
|
4.3 times |
|
|
|
|
|
|
|
|
|
|
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
The following table presents segment pre-tax
operating income and other operating metrics of the Latin America
pawn segment for the three months ended December 31, 2021 as
compared to the three months ended December 31, 2020 (dollars
in thousands):
|
|
|
|
|
|
|
|
|
|
|
Constant Currency Basis |
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
|
|
|
|
|
|
|
|
|
|
|
Ended |
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
December 31, |
|
Increase / |
|
December 31, |
|
Increase / |
|
|
2021 |
|
|
(Decrease) |
|
2021 |
|
|
2020 |
|
|
(Decrease) |
|
(Non-GAAP) |
|
(Non-GAAP) |
Latin America Pawn
Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail merchandise sales |
$ |
116,008 |
|
|
$ |
92,754 |
|
|
|
25 |
% |
|
|
$ |
116,608 |
|
|
|
26 |
% |
|
Pawn loan fees |
|
43,649 |
|
|
|
39,342 |
|
|
|
11 |
% |
|
|
|
43,875 |
|
|
|
12 |
% |
|
Wholesale scrap jewelry sales |
|
6,184 |
|
|
|
14,118 |
|
|
|
(56 |
)% |
|
|
|
6,184 |
|
|
|
(56 |
)% |
|
Total revenue |
|
165,841 |
|
|
|
146,214 |
|
|
|
13 |
% |
|
|
|
166,667 |
|
|
|
14 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of retail merchandise sold |
|
74,246 |
|
|
|
57,576 |
|
|
|
29 |
% |
|
|
|
74,627 |
|
|
|
30 |
% |
|
Cost of wholesale scrap jewelry sold |
|
5,264 |
|
|
|
11,694 |
|
|
|
(55 |
)% |
|
|
|
5,288 |
|
|
|
(55 |
)% |
|
Total cost of revenue |
|
79,510 |
|
|
|
69,270 |
|
|
|
15 |
% |
|
|
|
79,915 |
|
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
86,331 |
|
|
|
76,944 |
|
|
|
12 |
% |
|
|
|
86,752 |
|
|
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
46,017 |
|
|
|
42,605 |
|
|
|
8 |
% |
|
|
|
46,250 |
|
|
|
9 |
% |
|
Depreciation and amortization |
|
4,446 |
|
|
|
4,248 |
|
|
|
5 |
% |
|
|
|
4,474 |
|
|
|
5 |
% |
|
Total segment expenses |
|
50,463 |
|
|
|
46,853 |
|
|
|
8 |
% |
|
|
|
50,724 |
|
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment pre-tax operating
income |
$ |
35,868 |
|
|
$ |
30,091 |
|
|
|
19 |
% |
|
|
$ |
36,028 |
|
|
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail merchandise sales margin |
36 |
% |
|
38 |
% |
|
|
|
|
36 |
% |
|
|
|
|
Net revenue margin |
52 |
% |
|
53 |
% |
|
|
|
|
52 |
% |
|
|
|
|
Segment pre-tax operating margin |
22 |
% |
|
21 |
% |
|
|
|
|
22 |
% |
|
|
|
|
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
The following table presents segment pre-tax
operating income and other operating metrics of the Latin America
pawn segment for the twelve months ended December 31, 2021 as
compared to the twelve months ended December 31, 2020 (dollars
in thousands):
|
|
|
|
|
|
|
|
|
|
|
Constant Currency Basis |
|
|
|
|
|
|
|
|
Twelve Months |
|
|
|
|
|
|
|
|
|
|
Ended |
|
|
|
Twelve Months Ended |
|
|
|
|
|
December 31, |
|
Increase / |
|
December 31, |
|
Increase / |
|
2021 |
|
(Decrease) |
|
2021 |
|
|
2020 |
|
|
(Decrease) |
|
(Non-GAAP) |
|
(Non-GAAP) |
Latin America Pawn Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail merchandise sales |
$ |
391,875 |
|
|
$ |
355,237 |
|
|
|
10 |
% |
|
|
$ |
371,033 |
|
|
|
4 |
% |
|
Pawn loan fees |
|
170,432 |
|
|
|
147,080 |
|
|
|
16 |
% |
|
|
|
161,336 |
|
|
|
10 |
% |
|
Wholesale scrap jewelry sales |
|
30,027 |
|
|
|
50,828 |
|
|
|
(41 |
)% |
|
|
|
30,027 |
|
|
|
(41 |
)% |
|
Total revenue |
|
592,334 |
|
|
|
553,145 |
|
|
|
7 |
% |
|
|
|
562,396 |
|
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of retail merchandise sold |
|
247,425 |
|
|
|
225,149 |
|
|
|
10 |
% |
|
|
|
234,308 |
|
|
|
4 |
% |
|
Cost of wholesale scrap jewelry sold |
|
26,243 |
|
|
|
39,962 |
|
|
|
(34 |
)% |
|
|
|
24,837 |
|
|
|
(38 |
)% |
|
Total cost of revenue |
|
273,668 |
|
|
|
265,111 |
|
|
|
3 |
% |
|
|
|
259,145 |
|
|
|
(2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
318,666 |
|
|
|
288,034 |
|
|
|
11 |
% |
|
|
|
303,251 |
|
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
179,020 |
|
|
|
165,531 |
|
|
|
8 |
% |
|
|
|
170,108 |
|
|
|
3 |
% |
|
Depreciation and amortization |
|
17,834 |
|
|
|
15,816 |
|
|
|
13 |
% |
|
|
|
17,005 |
|
|
|
8 |
% |
|
Total segment expenses |
|
196,854 |
|
|
|
181,347 |
|
|
|
9 |
% |
|
|
|
187,113 |
|
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment pre-tax operating income |
$ |
121,812 |
|
|
$ |
106,687 |
|
|
|
14 |
% |
|
|
$ |
116,138 |
|
|
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail merchandise sales margin |
37 |
% |
|
37 |
% |
|
|
|
|
37 |
% |
|
|
|
|
Net revenue margin |
54 |
% |
|
52 |
% |
|
|
|
|
54 |
% |
|
|
|
|
Segment pre-tax operating margin |
21 |
% |
|
19 |
% |
|
|
|
|
21 |
% |
|
|
|
|
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
Retail POS Payment Solutions Segment
Results
The Company completed the AFF acquisition on
December 17, 2021, and the results of operations of AFF have been
consolidated since the acquisition date. The Company has performed
a preliminary valuation analysis of identifiable assets acquired
and liabilities assumed and allocated the aggregate purchase
consideration based on the preliminary fair values of those
identifiable assets and liabilities.
As a result of purchase accounting, AFF’s as
reported earning assets, consisting of leased merchandise and
finance receivables, contain significant fair value adjustments.
The fair value adjustments will be amortized over the life of the
lease contracts and finance receivables acquired at the time of
acquisition.
The following table provides a detail of leased
merchandise as reported and as adjusted to exclude the impacts of
purchase accounting as of December 31, 2021 (in thousands):
|
As of December 31, 2021 |
|
As Reported(GAAP) |
|
Adjustments |
|
Adjusted(Non-GAAP) |
Leased merchandise, before allowance for lease losses (1) |
$ |
149,386 |
|
$ |
53,829 |
|
|
$ |
203,215 |
Less allowance for lease losses (2) |
|
5,442 |
|
|
61,526 |
|
|
|
66,968 |
Leased merchandise, net |
$ |
143,944 |
|
$ |
(7,697 |
) |
|
$ |
136,247 |
(1) As reported acquired leased
merchandise was recorded at fair value (which includes estimates
for charge-offs) in conjunction with purchase accounting.
Adjustment represents the difference between the original
depreciated cost and fair value of the remaining acquired leased
merchandise.
(2) As reported allowance for
lease losses represents the provision for lease losses for leases
originated between December 17, 2021 and December 31, 2021.
Adjustment represents the remaining allowance for lease losses of
acquired leased merchandise, which is included in the fair value of
the acquired leased merchandise described in (1) above.
The following table provides a detail of finance
receivables as reported and as adjusted to exclude the impacts of
purchase accounting as of December 31, 2021 (in thousands):
|
As of December 31, 2021 |
|
As Reported(GAAP) |
|
Adjustments |
|
Adjusted(Non-GAAP) |
Finance receivables, before allowance for loan losses (1) |
$ |
256,595 |
|
$ |
(42,657 |
) |
|
$ |
213,938 |
Less allowance for loan losses |
|
75,574 |
|
|
— |
|
|
|
75,574 |
Finance receivables, net |
$ |
181,021 |
|
$ |
(42,657 |
) |
|
$ |
138,364 |
(1) As reported acquired
finance receivables was recorded at fair value in conjunction with
purchase accounting. Adjustment represents the difference between
the original amortized cost basis and fair value of the remaining
acquired finance receivables.
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
AFF’s as reported results of operations also
contain significant purchase accounting impacts. The following
table presents segment pre-tax operating income as reported and as
adjusted to exclude the impacts of purchase accounting for the
period from December 17, 2021 through December 31, 2021 (in
thousands). Operating expenses include salary and benefit expense
of certain operations focused departments, merchant partner
incentives, bank and other payment processing charges, credit
reporting costs, information technology costs, advertising costs
and other operational costs incurred by AFF.
|
December 17, 2021 - December 31, 2021 |
|
As Reported |
|
|
|
Adjusted |
|
(GAAP) |
|
Adjustments |
|
(Non-GAAP) |
Retail POS Payment
Solutions Segment |
|
|
|
|
|
Revenue: |
|
|
|
|
|
Leased merchandise income |
$ |
22,720 |
|
|
$ |
404 |
|
|
$ |
23,124 |
Interest and fees on finance receivables |
|
9,024 |
|
|
|
1,708 |
|
|
|
10,732 |
Total revenue |
|
31,744 |
|
|
|
2,112 |
|
|
|
33,856 |
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
Depreciation of leased merchandise |
|
12,826 |
|
|
|
— |
|
|
|
12,826 |
Provision for lease losses |
|
5,442 |
|
|
|
— |
|
|
|
5,442 |
Provision for loan losses (1) |
|
48,952 |
|
|
|
(44,250 |
) |
|
|
4,702 |
Total cost of revenue |
|
67,220 |
|
|
|
(44,250 |
) |
|
|
22,970 |
|
|
|
|
|
|
Net revenue |
|
(35,476 |
) |
|
|
46,362 |
|
|
|
10,886 |
|
|
|
|
|
|
Segment expenses: |
|
|
|
|
|
Operating expenses |
|
4,917 |
|
|
|
— |
|
|
|
4,917 |
Depreciation and amortization (2) |
|
122 |
|
|
|
— |
|
|
|
122 |
Total segment expenses |
|
5,039 |
|
|
|
— |
|
|
|
5,039 |
|
|
|
|
|
|
Segment pre-tax operating
income |
$ |
(40,515 |
) |
|
$ |
46,362 |
|
|
$ |
5,847 |
(1) As reported provision for
loan losses includes the establishment of the initial allowance for
expected lifetime credit losses for acquired finance receivables
not considered purchased credit deteriorated, which is recorded as
an expense in the provision for loan losses.
(2) Amortization of identified
intangible assets in the AFF acquisition are considered corporate
expenses and not included in segment depreciation and
amortization.
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
Consolidated Results of Operations
The following table reconciles pre-tax operating
income of the Company’s U.S. pawn segment, Latin America pawn
segment and retail POS payment solutions segment discussed above to
consolidated net income (in thousands):
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
December 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Consolidated Results
of Operations |
|
|
|
|
|
|
|
Segment pre-tax operating
income: |
|
|
|
|
|
|
|
U.S. pawn |
$ |
72,727 |
|
|
$ |
50,715 |
|
|
$ |
232,833 |
|
|
$ |
204,735 |
|
Latin America pawn |
|
35,868 |
|
|
|
30,091 |
|
|
|
121,812 |
|
|
|
106,687 |
|
Retail POS payment solutions (1) |
|
(40,515 |
) |
|
|
— |
|
|
|
(40,515 |
) |
|
|
— |
|
Consolidated segment pre-tax operating income |
|
68,080 |
|
|
|
80,806 |
|
|
|
314,130 |
|
|
|
311,422 |
|
|
|
|
|
|
|
|
|
Corporate expenses and other
income: |
|
|
|
|
|
|
|
Administrative expenses |
|
22,654 |
|
|
|
25,289 |
|
|
|
111,259 |
|
|
|
110,931 |
|
Depreciation and amortization |
|
2,764 |
|
|
|
1,042 |
|
|
|
5,716 |
|
|
|
4,546 |
|
Interest expense |
|
9,997 |
|
|
|
7,391 |
|
|
|
32,386 |
|
|
|
29,344 |
|
Interest income |
|
(276 |
) |
|
|
(331 |
) |
|
|
(696 |
) |
|
|
(1,540 |
) |
Loss (gain) on foreign exchange |
|
188 |
|
|
|
(755 |
) |
|
|
436 |
|
|
|
884 |
|
Merger and acquisition expenses |
|
14,185 |
|
|
|
1,107 |
|
|
|
15,449 |
|
|
|
1,316 |
|
Gain on revaluation of contingent acquisition consideration |
|
(17,871 |
) |
|
|
— |
|
|
|
(17,871 |
) |
|
|
— |
|
Impairments and dispositions of certain other assets |
|
(691 |
) |
|
|
3,956 |
|
|
|
949 |
|
|
|
10,505 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,737 |
|
Total corporate expenses and other income |
|
30,950 |
|
|
|
37,699 |
|
|
|
147,628 |
|
|
|
167,723 |
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
37,130 |
|
|
|
43,107 |
|
|
|
166,502 |
|
|
|
143,699 |
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
7,759 |
|
|
|
10,381 |
|
|
|
41,593 |
|
|
|
37,120 |
|
|
|
|
|
|
|
|
|
Net income |
$ |
29,371 |
|
|
$ |
32,726 |
|
|
$ |
124,909 |
|
|
$ |
106,579 |
|
(1) Includes the results of
operations for AFF for the period December 17, 2021 to December 31,
2021. These results are significantly impacted by certain
non-recurring purchase accounting adjustments as noted in the
retail POS payment solutions segment results above.
FIRSTCASH HOLDINGS,
INC.PAWN STORE COUNT ACTIVITY
The following tables detail pawn store count activity:
|
|
Three Months Ended December 31, 2021 |
|
|
U.S. |
|
Latin America |
|
Total |
Total locations, beginning of period |
|
1,069 |
|
|
1,739 |
|
|
2,808 |
|
New locations opened |
|
— |
|
|
11 |
|
|
11 |
|
Locations acquired |
|
18 |
|
|
— |
|
|
18 |
|
Consolidation of existing pawn locations (1) |
|
(6 |
) |
|
(6 |
) |
|
(12 |
) |
Total locations, end of period |
|
1,081 |
|
|
1,744 |
|
|
2,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2021 |
|
|
U.S. |
|
Latin America |
|
Total |
Total locations, beginning of
period |
|
1,046 |
|
|
1,702 |
|
|
2,748 |
|
New locations opened (2) |
|
1 |
|
|
60 |
|
|
61 |
|
Locations acquired |
|
46 |
|
|
— |
|
|
46 |
|
Consolidation of existing pawn locations (1) |
|
(12 |
) |
|
(18 |
) |
|
(30 |
) |
Total locations, end of period |
|
1,081 |
|
|
1,744 |
|
|
2,825 |
|
(1) Store consolidations were
primarily acquired locations over the past five years which have
been combined with overlapping stores and for which the Company
expects to maintain a significant portion of the acquired customer
base in the consolidated location.(2) In addition
to new store openings, the Company strategically relocated five and
two stores in the U.S. and Latin America, respectively, during the
twelve months ended December 31, 2021.
FIRSTCASH HOLDINGS,
INC.RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURESTO GAAP FINANCIAL
MEASURES(UNAUDITED)
The Company uses certain financial calculations
such as adjusted net income, adjusted diluted earnings per share,
EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow,
adjusted retail POS payment solutions segment metrics and constant
currency results as factors in the measurement and evaluation of
the Company’s operating performance and period-over-period growth.
The Company derives these financial calculations on the basis of
methodologies other than generally accepted accounting principles
(“GAAP”), primarily by excluding from a comparable GAAP measure
certain items the Company does not consider to be representative of
its actual operating performance. These financial calculations are
“non-GAAP financial measures” as defined under the SEC rules. The
Company uses these non-GAAP financial measures in operating its
business because management believes they are less susceptible to
variances in actual operating performance that can result from the
excluded items, other infrequent charges and currency fluctuations.
The Company presents these financial measures to investors because
management believes they are useful to investors in evaluating the
primary factors that drive the Company’s core operating performance
and provide greater transparency into the Company’s results of
operations. However, items that are excluded and other adjustments
and assumptions that are made in calculating these non-GAAP
financial measures are significant components in understanding and
assessing the Company’s financial performance. These non-GAAP
financial measures should be evaluated in conjunction with, and are
not a substitute for, the Company’s GAAP financial measures.
Further, because these non-GAAP financial measures are not
determined in accordance with GAAP and are thus susceptible to
varying calculations, the non-GAAP financial measures, as
presented, may not be comparable to other similarly titled measures
of other companies.
While acquisitions are an important part of the
Company’s overall strategy, the Company has adjusted the applicable
financial calculations to exclude merger and acquisition expenses
to allow more accurate comparisons of the financial results to
prior periods, which include the Company’s transaction expenses
incurred in connection with its acquisition of AFF. In addition,
the Company does not consider these merger and acquisition expenses
to be related to the organic operations of the acquired businesses
or its continuing operations and such expenses are generally not
relevant to assessing or estimating the long-term performance of
the acquired businesses. Merger and acquisition expenses
include incremental costs directly associated with merger and
acquisition activities, including professional fees, legal
expenses, severance, retention and other employee-related costs,
contract breakage costs and costs related to the consolidation of
technology systems and corporate facilities, among others.
The Company has certain leases in Mexico which
are denominated in U.S. dollars. The lease liability of these U.S.
dollar denominated leases, which is considered a monetary
liability, is remeasured into Mexican pesos using current period
exchange rates resulting in the recognition of foreign currency
exchange gains or losses. The Company has adjusted the applicable
financial measures to exclude these remeasurement gains or losses
because they are non-cash, non-operating items that could create
volatility in the Company’s consolidated results of operations due
to the magnitude of the end of period lease liability being
remeasured and to improve comparability of current periods
presented with prior periods.
In conjunction with the Cash America merger in
2016, the Company recorded certain lease intangibles related to
above or below market lease liabilities of Cash America which are
included in the operating lease right of use asset on the
consolidated balance sheets. As the Company continues to
opportunistically purchase real estate from landlords at certain
Cash America stores, the associated lease intangible, if any, is
written-off and gain or loss is recognized. The Company has
adjusted the applicable financial measures to exclude these gains
or losses given the variability in size and timing of these
transactions and because they are non-cash, non-operating gains or
losses. The Company believes this improves comparability of
operating results for current periods presented with prior
periods.
FIRSTCASH HOLDINGS,
INC.RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURESTO GAAP FINANCIAL MEASURES
(CONTINUED)(UNAUDITED)
Adjusted Net Income and Adjusted Diluted
Earnings Per Share
Management believes the presentation of adjusted
net income and adjusted diluted earnings per share provides
investors with greater transparency and provides a more complete
understanding of the Company’s financial performance and prospects
for the future by excluding items that management believes are
non-operating in nature and not representative of the Company’s
core operating performance. In addition, management believes the
adjustments shown below are useful to investors in order to allow
them to compare the Company’s financial results for the current
periods presented with the prior periods presented.
The following table provides a reconciliation
between net income and diluted earnings per share calculated in
accordance with GAAP to adjusted net income and adjusted diluted
earnings per share, which are shown net of tax (in thousands,
except per share amounts):
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
2020 |
|
In Thousands |
|
Per Share |
|
In Thousands |
|
Per Share |
|
In Thousands |
|
Per Share |
|
In Thousands |
|
Per Share |
Net income and diluted
earnings per share, as reported |
$ |
29,371 |
|
|
$ |
0.70 |
|
|
$ |
32,726 |
|
|
$ |
0.79 |
|
|
$ |
124,909 |
|
$ |
3.04 |
|
$ |
106,579 |
|
$ |
2.56 |
Adjustments, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger and acquisition expenses |
|
10,922 |
|
|
|
0.26 |
|
|
|
839 |
|
|
|
0.02 |
|
|
|
11,872 |
|
|
0.29 |
|
|
991 |
|
|
0.02 |
Non-cash foreign currency loss (gain) related to lease
liability |
|
195 |
|
|
|
0.01 |
|
|
|
(1,579 |
) |
|
|
(0.04 |
) |
|
|
451 |
|
|
0.01 |
|
|
874 |
|
|
0.02 |
AFF purchase accounting adjustments, net (1) |
|
23,517 |
|
|
|
0.56 |
|
|
|
— |
|
|
|
— |
|
|
|
23,517 |
|
|
0.58 |
|
|
— |
|
|
— |
Impairments and dispositions of certain other assets |
|
(533 |
) |
|
|
(0.01 |
) |
|
|
1,853 |
|
|
|
0.05 |
|
|
|
730 |
|
|
0.02 |
|
|
6,979 |
|
|
0.17 |
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
9,037 |
|
|
0.22 |
Accrual of pre-merger Cash America income tax liability |
|
— |
|
|
|
— |
|
|
|
693 |
|
|
|
0.02 |
|
|
|
— |
|
|
— |
|
|
693 |
|
|
0.02 |
Adjusted net income and
diluted earnings per share |
$ |
63,472 |
|
|
$ |
1.52 |
|
|
$ |
34,532 |
|
|
$ |
0.84 |
|
|
$ |
161,479 |
|
$ |
3.94 |
|
$ |
125,153 |
|
$ |
3.01 |
(1) Includes $34 million
related to the establishment of the initial allowance for expected
lifetime credit losses for purchased AFF finance receivables that
are not considered credit deteriorated (non-PCD loans), which is
recorded as an expense in the provision for loan losses, $2 million
related to the amortization of acquired intangible assets and $2
million related to other non-cash purchase accounting adjustments,
partially offset by the $14 million gain on revaluation of AFF
contingent acquisition consideration (all shown net of tax).
FIRSTCASH HOLDINGS,
INC.RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURESTO GAAP FINANCIAL MEASURES
(CONTINUED)(UNAUDITED)
The following tables provide a reconciliation of
the gross amounts, the impact of income taxes and the net amounts
for the adjustments included in the table above (in thousands):
|
Three Months Ended December 31, |
|
|
2021 |
|
|
|
2020 |
|
|
Pre-tax |
|
Tax |
|
After-tax |
|
Pre-tax |
|
Tax |
|
After-tax |
Merger and acquisition expenses |
$ |
14,185 |
|
|
$ |
3,263 |
|
|
$ |
10,922 |
|
|
$ |
1,107 |
|
|
$ |
268 |
|
|
$ |
839 |
|
Non-cash foreign currency loss (gain) related to lease
liability |
|
278 |
|
|
|
83 |
|
|
|
195 |
|
|
|
(2,256 |
) |
|
|
(677 |
) |
|
|
(1,579 |
) |
AFF purchase accounting adjustments, net |
|
30,542 |
|
|
|
7,025 |
|
|
|
23,517 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Impairment and dispositions of certain other assets |
|
(691 |
) |
|
|
(158 |
) |
|
|
(533 |
) |
|
|
2,406 |
|
|
|
553 |
|
|
|
1,853 |
|
Accrual of pre-merger Cash America income tax liability |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(693 |
) |
|
|
693 |
|
Total adjustments |
$ |
44,314 |
|
|
$ |
10,213 |
|
|
$ |
34,101 |
|
|
$ |
1,257 |
|
|
$ |
(549 |
) |
|
$ |
1,806 |
|
|
Twelve Months Ended December 31, |
|
|
2021 |
|
|
2020 |
|
Pre-tax |
|
Tax |
|
After-tax |
|
Pre-tax |
|
Tax |
|
After-tax |
Merger and acquisition expenses |
$ |
15,449 |
|
$ |
3,577 |
|
$ |
11,872 |
|
$ |
1,316 |
|
$ |
325 |
|
|
$ |
991 |
Non-cash foreign currency loss related to lease liability |
|
644 |
|
|
193 |
|
|
451 |
|
|
1,249 |
|
|
375 |
|
|
|
874 |
AFF purchase accounting adjustments, net |
|
30,542 |
|
|
7,025 |
|
|
23,517 |
|
|
— |
|
|
— |
|
|
|
— |
Impairment and dispositions of certain other assets |
|
949 |
|
|
219 |
|
|
730 |
|
|
9,064 |
|
|
2,085 |
|
|
|
6,979 |
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
— |
|
|
11,737 |
|
|
2,700 |
|
|
|
9,037 |
Accrual of pre-merger Cash America income tax liability |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(693 |
) |
|
|
693 |
Total adjustments |
$ |
47,584 |
|
$ |
11,014 |
|
$ |
36,570 |
|
$ |
23,366 |
|
$ |
4,792 |
|
|
$ |
18,574 |
FIRSTCASH HOLDINGS,
INC.RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURESTO GAAP FINANCIAL MEASURES
(CONTINUED)(UNAUDITED)
Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) and Adjusted EBITDA
The Company defines EBITDA as net income before
income taxes, depreciation and amortization, interest expense and
interest income and adjusted EBITDA as EBITDA adjusted for certain
items as listed below that management considers to be non-operating
in nature and not representative of its actual operating
performance. The Company believes EBITDA and adjusted EBITDA are
commonly used by investors to assess a company’s financial
performance, and adjusted EBITDA is used as a starting point in the
calculation of the consolidated total debt ratio as defined in the
Company’s senior unsecured notes. The following table provides a
reconciliation of net income to EBITDA and adjusted EBITDA (in
thousands):
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
December 31, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Net income |
|
$ |
29,371 |
|
|
$ |
32,726 |
|
|
$ |
124,909 |
|
|
$ |
106,579 |
|
Income taxes |
|
|
7,759 |
|
|
|
10,381 |
|
|
|
41,593 |
|
|
|
37,120 |
|
Depreciation and amortization |
|
|
13,175 |
|
|
|
10,681 |
|
|
|
45,906 |
|
|
|
42,105 |
|
Interest expense |
|
|
9,997 |
|
|
|
7,391 |
|
|
|
32,386 |
|
|
|
29,344 |
|
Interest income |
|
|
(276 |
) |
|
|
(331 |
) |
|
|
(696 |
) |
|
|
(1,540 |
) |
EBITDA |
|
|
60,026 |
|
|
|
60,848 |
|
|
|
244,098 |
|
|
|
213,608 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Merger and acquisition expenses |
|
|
14,185 |
|
|
|
1,107 |
|
|
|
15,449 |
|
|
|
1,316 |
|
Non-cash foreign currency loss (gain) related to lease
liability |
|
|
278 |
|
|
|
(2,256 |
) |
|
|
644 |
|
|
|
1,249 |
|
AFF purchase accounting adjustments, net (1) |
|
|
28,491 |
|
|
|
— |
|
|
|
28,491 |
|
|
|
— |
|
Impairments and dispositions of certain other assets |
|
|
(691 |
) |
|
|
2,406 |
|
|
|
949 |
|
|
|
9,064 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,737 |
|
Adjusted EBITDA |
|
$ |
102,289 |
|
|
$ |
62,105 |
|
|
$ |
289,631 |
|
|
$ |
236,974 |
|
(1) Excludes $2 million of
amortization expense related to identifiable intangible assets from
the AFF acquisition for the three and twelve months ended December
31, 2021, which is already included in the add back of depreciation
and amortization to calculate EBITDA.
FIRSTCASH HOLDINGS,
INC.RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURESTO GAAP FINANCIAL MEASURES
(CONTINUED)(UNAUDITED)
Free Cash Flow and Adjusted Free Cash Flow
For purposes of its internal liquidity
assessments, the Company considers free cash flow and adjusted free
cash flow. The Company defines free cash flow as cash flow from
operating activities less purchases of furniture, fixtures,
equipment and improvements and net fundings/repayments of pawn loan
and finance receivables, which are considered to be operating in
nature by the Company but are included in cash flow from investing
activities. Adjusted free cash flow is defined as free cash flow
adjusted for merger and acquisition expenses paid that management
considers to be non-operating in nature.
Free cash flow and adjusted free cash flow are
commonly used by investors as an additional measure of cash
generated by business operations that may be used to repay
scheduled debt maturities and debt service or, following payment of
such debt obligations and other non-discretionary items, may be
available to invest in future growth through new business
development activities or acquisitions, repurchase stock, pay cash
dividends or repay debt obligations prior to their maturities.
These metrics can also be used to evaluate the Company’s ability to
generate cash flow from business operations and the impact that
this cash flow has on the Company’s liquidity. However, free cash
flow and adjusted free cash flow have limitations as analytical
tools and should not be considered in isolation or as a substitute
for cash flow from operating activities or other income statement
data prepared in accordance with GAAP. The following table
reconciles cash flow from operating activities to free cash flow
and adjusted free cash flow (in thousands):
|
Three Months Ended |
|
Twelve Months Ended |
|
December 31, |
|
December 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Cash flow from operating
activities |
$ |
85,454 |
|
|
$ |
44,898 |
|
|
$ |
223,304 |
|
|
$ |
222,264 |
|
Cash flow from investing
activities: |
|
|
|
|
|
|
|
Pawn loans, net (1) |
|
(2,703 |
) |
|
|
(38,932 |
) |
|
|
(73,340 |
) |
|
|
105,418 |
|
Finance receivables, net |
|
(5,844 |
) |
|
|
10 |
|
|
|
(5,844 |
) |
|
|
1,590 |
|
Purchases of furniture, fixtures, equipment and improvements |
|
(10,414 |
) |
|
|
(9,690 |
) |
|
|
(42,022 |
) |
|
|
(37,543 |
) |
Free cash flow |
|
66,493 |
|
|
|
(3,714 |
) |
|
|
102,098 |
|
|
|
291,729 |
|
Merger and acquisition expenses paid, net of tax benefit |
|
10,922 |
|
|
|
840 |
|
|
|
11,872 |
|
|
|
991 |
|
Adjusted free cash flow |
$ |
77,415 |
|
|
$ |
(2,874 |
) |
|
$ |
113,970 |
|
|
$ |
292,720 |
|
(1) Includes the funding of new
loans net of cash repayments and recovery of principal through the
sale of inventories acquired from forfeiture of pawn
collateral.
FIRSTCASH HOLDINGS,
INC.RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURESTO GAAP FINANCIAL MEASURES
(CONTINUED)(UNAUDITED)
Retail POS Payment Solutions Segment Purchase Accounting
Adjustments
Management believes the presentation of certain
retail POS payment solutions segment metrics adjusted to exclude
the impacts of purchase accounting provides investors with greater
transparency and provides a more complete understanding of AFF’s
financial performance and prospects for the future by excluding the
impacts of purchase accounting, which management believes is
non-operating in nature and not representative of AFF’s core
operating performance. See the retail POS payment solutions segment
tables elsewhere in this release for additional reconciliation of
certain amounts adjusted to exclude the impacts of purchase
accounting to as reported GAAP amounts.
Constant Currency Results
The Company’s reporting currency is the U.S.
dollar. However, certain performance metrics discussed in this
release are presented on a “constant currency” basis, which is
considered a non-GAAP financial measure. The Company’s management
uses constant currency results to evaluate operating results of
business operations in Latin America, which are primarily
transacted in local currencies.
The Company believes constant currency results
provide valuable supplemental information regarding the underlying
performance of its business operations in Latin America, consistent
with how the Company’s management evaluates such performance and
operating results. Constant currency results reported herein are
calculated by translating certain balance sheet and income
statement items denominated in local currencies using the exchange
rate from the prior-year comparable period, as opposed to the
current comparable period, in order to exclude the effects of
foreign currency rate fluctuations for purposes of evaluating
period-over-period comparisons. Business operations in Mexico,
Guatemala and Colombia are transacted in Mexican pesos, Guatemalan
quetzales and Colombian pesos. The Company also has operations in
El Salvador where the reporting and functional currency is the U.S.
dollar. See the Latin America segment tables elsewhere in this
release for additional reconciliation of certain constant currency
amounts to as reported GAAP amounts.
For further information, please contact: |
Gar Jackson |
|
Global IR Group |
Phone: |
(817) 886-6998 |
Email: |
gar@globalirgroup.com |
|
|
Doug Orr, Executive Vice President and Chief
Financial Officer |
Phone: |
(817) 258-2650 |
Email: |
investorrelations@firstcash.com |
Website: |
investors.firstcash.com |
FirstCash (NASDAQ:FCFS)
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