FirstCash Holdings, Inc. (“FirstCash” or the “Company”) (Nasdaq:
FCFS), the leading international operator of retail pawn stores and
a leading provider of retail point-of-sale (“POS”) payment
solutions, today announced operating results for the three-month
period ended March 31, 2022. The Company also announced the
completion of its current $100 million share repurchase plan and
the authorization of a new $100 million share repurchase plan. In
addition, the Board of Directors declared a quarterly cash dividend
of $0.30 per share, which will be paid in May 2022.
Mr. Rick Wessel, chief executive officer,
stated, “Our first quarter results were outstanding, driven
primarily by strong year-over-year growth in revenue and earnings
from our core pawn operations, which represented over 80% of
segment pre-tax income for the quarter. Growth in pawn receivables,
which is a leading indicator of future revenue growth, was
especially strong in the U.S. with pawn receivables up 42% at
quarter end compared to the same point last year. Operating results
for recently acquired American First Finance (“AFF”) were
highlighted by year-over-year growth in retail POS door counts and
gross transaction volumes coupled with accretive revenues, earnings
and cash flows.
“The first quarter results also yielded strong
operating cash flows which were used to repurchase over one million
shares of stock in addition to reducing debt by $41 million. The
declaration of the cash dividend and the new share repurchase
authorization further reinforces FirstCash’s commitment to
shareholder returns.”
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 March 31, |
|
|
As Reported (GAAP) |
|
Adjusted (Non-GAAP) |
In thousands, except per share amounts |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Revenue |
|
$ |
659,839 |
|
$ |
407,939 |
|
$ |
676,012 |
|
$ |
407,939 |
Net income |
|
$ |
28,005 |
|
$ |
33,715 |
|
$ |
56,871 |
|
$ |
34,928 |
Diluted earnings per
share |
|
$ |
0.58 |
|
$ |
0.82 |
|
$ |
1.18 |
|
$ |
0.85 |
EBITDA (non-GAAP measure) |
|
$ |
78,096 |
|
$ |
63,955 |
|
$ |
101,348 |
|
$ |
65,601 |
Weighted-average diluted
shares |
|
|
48,300 |
|
|
41,056 |
|
|
48,300 |
|
|
41,056 |
Consolidated Operating
Highlights
- Diluted earnings
per share for the first quarter of 2022 decreased 29% on a GAAP
basis, primarily due to non-cash purchase accounting impacts
related to the AFF acquisition. Adjusted non-GAAP earnings per
share, excluding these impacts, increased 39% compared to the
prior-year quarter.
- EBITDA and Adjusted
EBITDA for the first quarter of 2022 increased 22% and 54%,
respectively, compared to the prior-year quarter. For the twelve
month period ended March 31, 2022, EBITDA increased 21% while
adjusted EBITDA increased 43% over the comparable prior year
period.
- Consolidated
revenues totaled a record $660 million for the quarter,
representing a 62% increase over the prior-year quarter. Adjusted
consolidated revenues were $676 million for the quarter, which
excludes the impacts of purchase accounting.
- Pre-tax operating
income from the Company’s core pawn segments increased $16 million,
or 19%, in the first quarter of 2022 compared to the prior-year
quarter, reflecting significant growth in pawn receivables and
merchandise inventory levels compared to a year ago:
- U.S. pawn segment
pre-tax income for the first quarter of 2022 was $73 million, an
increase of 20% over the first quarter of the prior year. These
results were driven primarily by an 18% increase in pawn fee
revenue compared to last year.
- Latin America pawn
segment pre-tax income for the first quarter of 2022 was $30
million, an increase of 15% over the first quarter of the prior
year (also 15% on a constant currency basis), reflecting a 19%
increase in retail sales (20% on a constant currency basis).
- The retail POS
payment solutions segment (AFF), in its first full quarter as a
subsidiary of the Company, contributed first quarter GAAP segment
pre-tax income of $5 million. Excluding non-cash purchase
accounting impacts, adjusted segment pre-tax income was $25
million.
U.S. Pawn Segment
- Segment pre-tax
operating income increased by $12 million, or 20%, for the first
quarter of 2022 compared to the prior-year quarter. The resulting
segment pre-tax operating margin was 23% for the first quarter of
2022, an improvement over the 22% margin for the prior-year
quarter.
- Pawn receivables
increased 42% in total at March 31, 2022 compared to the prior
year, while same-store pawn receivables were up 38%. The growth was
driven by a significant recovery in pawn balances and
lower-than-normal seasonal pay downs normally associated with tax
refunds. Pawn receivables are currently above pre-COVID levels when
compared to the same point in 2019.
- Pawn loan fee
revenue, which typically lags pawn receivables growth, was up 18%
for the first quarter of 2022 and 14% on a same-store basis, as
compared to the prior-year quarter.
- Retail merchandise
sales in the first quarter of 2022 increased 8% compared to the
prior-year quarter, despite continued COVID and weather-related
headwinds which dampened retail traffic in January and early
February. On a same store-basis, retail sales increased 4% compared
to the prior-year quarter.
- Retail sales
margins remained strong at 42% in the first quarter of 2022,
reflecting solid demand for value-priced, pre-owned merchandise and
low levels of aged inventory.
- Merchandise
inventories increased 44% on a year-over-year basis versus the
depleted levels a year ago and are now normalized to pre-COVID
levels. Inventories remain well-positioned, with aged inventory
(greater than one year) decreasing to a record low of only 1%
versus the prior-year at 2%.
- Operating expenses
increased 4% in total for the first quarter of 2022 compared to the
prior-year quarter, which is consistent with the 3% increase in the
U.S. store count. Operating expenses were flat on a same-store
basis compared to the prior-year quarter.
Latin America Pawn Segment
Note: Certain growth rates 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 first quarter of 2022 was 20.5 pesos /
dollar, an unfavorable change of 1% versus the comparable
prior-year period.
-
Segment pre-tax operating income for the first quarter of 2022
increased 15%, also 15% on a constant currency basis, over the
prior-year quarter, reflecting an increased contribution from
retail sales revenue. The resulting segment pre-tax operating
margin was 19% for the first quarter of 2022, which equaled the
prior-year quarter.
-
Retail merchandise sales in the first quarter of 2022 were
especially strong, increasing 19%, or 20% on a constant currency
basis, compared to the prior-year quarter. Same-store retail sales
grew 18%, or 19% on a constant currency basis, compared to the
prior-year quarter.
-
Pawn receivables at March 31, 2022 increased 7% compared to the
prior year, or 4% on a constant currency basis. On a same-store
basis, pawn receivables increased 6%, or 3% 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., which were
up a reported 27% in 2021 (on a year-over-year basis) and
21% in the first two months of 2022 compared to last year.
-
Pawn loan fees increased 6% in the first quarter of 2022, or 7% on
a constant currency basis, as compared to the prior-year quarter,
reflecting strong yields on the portfolio. On a same-store basis,
pawn loan fees increased 5%, or 6% on a constant currency basis,
compared to the prior-year quarter.
-
Retail margins remained solid at 36% in the first quarter of 2022,
especially given the significant percentage of sales coming from
cell phones and other popular electronics.
-
Annualized inventory turnover was particularly strong at 4.3 times
for the trailing twelve months ended March 31, 2022, while
inventories aged greater than one year as of March 31, 2022
decreased to 1% versus the prior-year of 2%.
- Operating expenses
increased 8%, or 9% on a constant currency basis, for the first
quarter of 2022, compared to the prior-year quarter, reflecting
continued store growth and inflationary pressure on labor and other
operating expenses in the current quarter. Same-store operating
expenses increased 7%, or 8% on a constant currency basis, compared
to the prior-year quarter.
- A total of 10 de
novo locations were opened in Latin America during the first
quarter of 2022, all of which were located in Mexico.
Retail Point-of-Sale Payment Solutions Segment -
American First Finance
- Segment revenues
from lease-to-own (“LTO”) fees and interest and fees on finance
receivables for the first quarter of 2022 totaled $192 million on a
GAAP basis, or $209 million on an adjusted basis, which excludes
the impacts of purchase accounting.
- Segment pre-tax
operating income for the first quarter of 2022 totaled $5 million
on a GAAP basis, or $25 million on an adjusted basis, excluding
certain non-cash purchase accounting impacts.
- AFF continued to
grow market share in the retail POS payment solutions space with
approximately 6,900 active retail and e-commerce merchant partner
locations at March 31, 2022, representing a 34% increase in door
count compared to the same point last year.
- Combined leased
merchandise and finance receivables outstanding at March 31, 2022,
excluding the impacts of purchase accounting, increased 47%
compared to the same point last year.
- Gross transaction
volume from LTO and POS financing transactions totaled $185 million
for the first quarter of 2022. This represents an increase of 16%
compared to pre-acquisition results in the first quarter of 2021,
which was driven by the growth in retail partner locations and
e-commerce originations, partially offset by reduced merchant
partner retail traffic due to COVID issues early in the quarter and
a delayed tax refund season.
- Credit loss
provisioning is based on a methodology which estimates full day-one
provisioning of expected lifetime losses on both LTO and retail
finance products. The provision rate on first quarter of 2022 gross
transaction volume reflects seasonally higher provisioning and
expected normalization of credit trends to pre-COVID loss rates.
Actual charge-offs for the first quarter of 2022 were materially
consistent with previously established losses included in the
Company’s loss reserves on the lease and loan portfolio.
Cash Flow and Liquidity
- The Company
generated $106 million in cash flow from operations and $131
million in adjusted free cash flow during the first quarter of
2022, which represented year-over-year increases of 54% and 28%,
respectively.
- Utilizing strong
first quarter 2022 cash flows, the Company was able to reduce
outstanding debt by $41 million during the quarter. The Company’s
strong liquidity position at March 31, 2022 includes cash balances
of $113 million and ample borrowing capacity under its bank lines
of credit.
- The resulting net
debt to trailing twelve months adjusted EBITDA ratio improved to
3.5 times as of March 31, 2022 compared to 4.1 times as of December
31, 2021.
Shareholder Returns
- The Company
repurchased 1,048,000 shares of common stock during the first
quarter of 2022 at an aggregate cost of $72 million and an average
cost per share of $68.87 to complete the $100 million share
repurchase program authorized in January 2021.
- On April 27, 2022,
the Board of Directors approved a new share repurchase
authorization of up to $100 million of common shares. Future share
repurchases are subject to expected liquidity, acquisition
opportunities, debt covenant restrictions and other relevant
factors.
- The Board of
Directors declared a $0.30 per share second quarter cash dividend
on common shares outstanding, which will be paid on May 31,
2022 to stockholders of record as of May 16, 2022. This
represents an annualized dividend of $1.20 per share. Any future
dividends are subject to approval by the Company’s Board of
Directors.
2022 Outlook
The Company outlook for 2022 remains extremely
positive as it continues to expect significant year-over-year
revenue and earnings growth in 2022 based on first quarter results
and current trends. These expected trends for the remainder of the
year include the following:
Pawn Operations:
- Inflationary
economic environments have historically driven increased customer
demand for pawn loans and value-priced merchandise offered in pawn
stores. Demand for pawn loans in the U.S. continues to be robust in
April and we continue to expect year-over-year strong growth in
domestic pawn loan fees. Given the building inflationary pressures
in Latin America, growth in pawn balances is also expected,
especially in the second half of the year after the normal seasonal
pay-down in May due to employee profit sharing distributions.
- Pawn merchandise
inventories are well-positioned, having essentially normalized to
pre-COVID levels with very limited amounts of aged inventory, which
continues to drive higher than normal retail margins.
- With over 50% of
pawn collateral and inventories held in jewelry, the Company
believes the continued strength of gold prices will provide
increased collateral values for customers in addition to generating
potentially higher margins on the liquidation of scrap
jewelry.
- Increases in wages
and certain other operating costs across all markets are expected
in 2022, including Mexico in particular, where the federal minimum
wage and certain statutory employee benefits were recently
increased. The Company believes these additional expenses are
manageable and expects them to be more than offset by increased
revenues.
- The Company
continues to expect up to 60 new store additions for the full year
2022, primarily in Latin America, and continues to seek and
evaluate accretive pawn acquisitions across all of its existing
markets.
- The current trading
level for the Mexican peso to the U.S. dollar is approximately 20
to 1, which is a slight tailwind compared to the average exchange
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.
AFF Operations:
- Despite headwinds
that could potentially impact retail sales at AFF’s retail merchant
partners, such as inflation, consumer credit quality and inventory
shortages, the Company continues to expect AFF to generate full
year growth in gross transaction volumes and revenues, primarily
from increased door counts, which is expected to drive EBITDA
accretion of 30% or more. AFF’s estimated lease and loan loss
provisioning for the remainder of the year reflects normalization
to higher pre-pandemic loss rates.
- As a reminder
regarding the seasonality of AFF’s business, average outstanding
balances for merchandise on lease and outstanding finance
receivables typically decline during the first quarter due to tax
season early buyouts and principal balance pay downs. With the
delayed tax season, these lower balances may extend longer into the
second quarter and potentially impact second quarter revenues.
Tax Rate:
- 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%.
Additional Commentary and
Analysis
Mr. Wessel provided additional insights on the
Company’s first quarter of 2022 results. “Our strong first quarter
results reflect continued resiliency and the diversity of our core
pawn businesses in both the U.S. and Latin America. On a combined
basis, pre-tax segment income from pawn operations for the first
quarter increased 19% over last year.
“In the U.S. pawn segment, demand for pawn loans
was especially strong, which we believe was driven by consumer
behavior normalizing, continued normalization of the consumer
credit environment and inflationary pressures resulting in the
rapid increases in the price of gasoline and consumer staples. Our
U.S. retail business, that offers a broad selection of consumer
products at deep values, also performed better with margins well
above historical averages.
“In Latin America, our retail sales were
particularly strong as higher inventory balances and healthy
consumer spending drove a 19% increase in retail sales, or 20% on a
constant currency basis. Pawn receivable growth has slowed due to
increased remittance activity over the past year, but we believe
remittance activity could decline over the course of the current
year given inflationary pressures in the U.S. further impacting
Latin American consumers.
“FirstCash continues to see de novo store growth
opportunities in Latin America and anticipates opening
approximately 60 new locations this year, primarily in Mexico.
Additionally, we continue to strategically acquire underlying store
real estate when appropriate. Over the past 12 months, we have
purchased 47 locations in the U.S. and currently own the real
estate for approximately 24% of the U.S. store base.
“We are very pleased with AFF’s first quarter as
part of the FirstCash family. The process of integrating our senior
executive teams and combining certain administrative functions is
well underway. The first quarter operating results saw increased
year-over-year LTO and POS financing transaction volumes despite
challenges related to COVID and the delayed tax refund season. As
the credit environment normalizes to pre-pandemic conditions, we
continue to reserve for future expected credit losses in what we
believe to be a prudent manner. Additionally, we are beginning to
pilot AFF’s LTO product in our pawn locations and are seeing
positive results. Looking forward, we continue to see meaningful
opportunities to add additional merchant partner relationships to
further drive AFF’s long-term growth.
“On a consolidated basis, first quarter of 2022
EBITDA totaled $78 million while adjusted EBITDA was a first
quarter record at $101 million. Cash flows were impressive this
quarter as well, which we utilized to pay our dividend, further
fund share buybacks and reduce outstanding debt. We were especially
pleased to both complete the remaining $72 million share repurchase
authorization under the existing plan and announce a new $100
million repurchase authorization while also reducing leverage on
our balance sheet. At the same time, we remain focused on growing
the footprint of our core pawn operations through new store
openings and acquisitions, noting that the environment for
potential acquisition opportunities continues to remain
favorable.
“Given all of the factors highlighted in this
release and the diversity of products and geographic markets, we
continue to be confident in our ability to thrive across multiple
economic environments and drive further shareholder value,”
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 approximately 6,900 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.
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 putative shareholder
securities class action lawsuit filed against the Company, the
Consumer Financial Protection Bureau (the “CFPB”) lawsuit filed
against the Company, the California private lawsuits filed against
the Company in which the plaintiffs are seeking class
certification, and subpoenas seeking information from the Company
received from state regulators from time to time, 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, including 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; potential changes in consumer
behavior and shopping patterns which could impact demand for 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, 2021 and filed with the Securities and Exchange Commission (the
“SEC”) on February 28, 2022, including the risks described in Part
1, Item 1A, “Risk Factors” thereof, and other reports filed with
the SEC. 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 |
|
|
March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue: |
|
|
|
|
Retail merchandise sales |
|
$ |
302,819 |
|
|
$ |
272,042 |
|
Pawn loan fees |
|
|
131,819 |
|
|
|
115,522 |
|
Leased merchandise income |
|
|
149,947 |
|
|
|
— |
|
Interest and fees on finance receivables |
|
|
42,449 |
|
|
|
— |
|
Wholesale scrap jewelry sales |
|
|
32,805 |
|
|
|
20,375 |
|
Total revenue |
|
|
659,839 |
|
|
|
407,939 |
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
Cost of retail merchandise sold |
|
|
182,214 |
|
|
|
157,153 |
|
Depreciation of leased merchandise |
|
|
93,706 |
|
|
|
— |
|
Provision for lease losses |
|
|
39,820 |
|
|
|
— |
|
Provision for loan losses |
|
|
24,697 |
|
|
|
— |
|
Cost of wholesale scrap jewelry sold |
|
|
28,215 |
|
|
|
17,197 |
|
Total cost of revenue |
|
|
368,652 |
|
|
|
174,350 |
|
|
|
|
|
|
Net revenue |
|
|
291,187 |
|
|
|
233,589 |
|
|
|
|
|
|
Expenses and other
income: |
|
|
|
|
Operating expenses |
|
|
173,296 |
|
|
|
137,324 |
|
Administrative expenses |
|
|
36,863 |
|
|
|
30,999 |
|
Depreciation and amortization |
|
|
25,542 |
|
|
|
10,612 |
|
Interest expense |
|
|
16,221 |
|
|
|
7,230 |
|
Interest income |
|
|
(676 |
) |
|
|
(158 |
) |
(Gain) loss on foreign exchange |
|
|
(480 |
) |
|
|
267 |
|
Merger and acquisition expenses |
|
|
665 |
|
|
|
166 |
|
Loss on revaluation of contingent acquisition consideration |
|
|
2,570 |
|
|
|
— |
|
Impairments and dispositions of certain other assets |
|
|
177 |
|
|
|
878 |
|
Total expenses and other income |
|
|
254,178 |
|
|
|
187,318 |
|
|
|
|
|
|
Income before income
taxes |
|
|
37,009 |
|
|
|
46,271 |
|
|
|
|
|
|
Provision for income taxes |
|
|
9,004 |
|
|
|
12,556 |
|
|
|
|
|
|
Net income |
|
$ |
28,005 |
|
|
$ |
33,715 |
|
Certain amounts in the consolidated statements
of income for the three months ended March 31, 2021 have been
reclassified in order to conform to the 2022 presentation.
FIRSTCASH HOLDINGS,
INC.CONSOLIDATED BALANCE
SHEETS(unaudited, in thousands)
|
|
March 31, |
|
December 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2021 |
|
ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
113,317 |
|
|
$ |
54,641 |
|
|
$ |
120,046 |
|
Accounts receivable, net |
|
|
52,017 |
|
|
|
35,334 |
|
|
|
55,356 |
|
Pawn loans |
|
|
344,101 |
|
|
|
265,438 |
|
|
|
347,973 |
|
Finance receivables, net
(1) |
|
|
140,481 |
|
|
|
— |
|
|
|
181,021 |
|
Inventories |
|
|
247,276 |
|
|
|
185,336 |
|
|
|
263,311 |
|
Leased merchandise, net
(1) |
|
|
119,147 |
|
|
|
— |
|
|
|
143,944 |
|
Prepaid expenses and other
current assets |
|
|
22,592 |
|
|
|
16,865 |
|
|
|
17,707 |
|
Total current assets |
|
|
1,038,931 |
|
|
|
557,614 |
|
|
|
1,129,358 |
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
471,193 |
|
|
|
384,617 |
|
|
|
462,526 |
|
Operating lease right of use
asset |
|
|
303,444 |
|
|
|
287,418 |
|
|
|
306,061 |
|
Goodwill |
|
|
1,541,424 |
|
|
|
974,051 |
|
|
|
1,536,178 |
|
Intangible assets, net |
|
|
373,928 |
|
|
|
83,229 |
|
|
|
388,184 |
|
Other assets |
|
|
8,318 |
|
|
|
9,365 |
|
|
|
8,531 |
|
Deferred tax assets, net |
|
|
5,930 |
|
|
|
3,869 |
|
|
|
5,614 |
|
Total assets |
|
$ |
3,743,168 |
|
|
$ |
2,300,163 |
|
|
$ |
3,836,452 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
$ |
237,164 |
|
|
$ |
86,714 |
|
|
$ |
244,327 |
|
Customer deposits and
prepayments |
|
|
57,874 |
|
|
|
38,727 |
|
|
|
57,310 |
|
Lease liability, current |
|
|
92,091 |
|
|
|
86,529 |
|
|
|
90,570 |
|
Total current liabilities |
|
|
387,129 |
|
|
|
211,970 |
|
|
|
392,207 |
|
|
|
|
|
|
|
|
Revolving unsecured credit
facilities |
|
|
218,000 |
|
|
|
44,000 |
|
|
|
259,000 |
|
Senior unsecured notes |
|
|
1,034,355 |
|
|
|
493,108 |
|
|
|
1,033,904 |
|
Deferred tax liabilities,
net |
|
|
126,741 |
|
|
|
73,020 |
|
|
|
126,098 |
|
Lease liability,
non-current |
|
|
198,760 |
|
|
|
186,972 |
|
|
|
203,166 |
|
Other liabilities |
|
|
13,950 |
|
|
|
— |
|
|
|
13,950 |
|
Total liabilities |
|
|
1,978,935 |
|
|
|
1,009,070 |
|
|
|
2,028,325 |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Common stock |
|
|
573 |
|
|
|
493 |
|
|
|
573 |
|
Additional paid-in capital |
|
|
1,726,750 |
|
|
|
1,218,323 |
|
|
|
1,724,956 |
|
Retained earnings |
|
|
880,138 |
|
|
|
811,921 |
|
|
|
866,679 |
|
Accumulated other comprehensive loss |
|
|
(119,510 |
) |
|
|
(130,767 |
) |
|
|
(131,299 |
) |
Common stock held in treasury, at cost |
|
|
(723,718 |
) |
|
|
(608,877 |
) |
|
|
(652,782 |
) |
Total stockholders’ equity |
|
|
1,764,233 |
|
|
|
1,291,093 |
|
|
|
1,808,127 |
|
Total liabilities and stockholders’ equity |
|
$ |
3,743,168 |
|
|
$ |
2,300,163 |
|
|
$ |
3,836,452 |
|
Certain amounts in the consolidated balance
sheets as of March 31, 2021 and December 31, 2021 have been
reclassified in order to confirm to the 2022 presentation.
(1) See reconciliation of 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 March 31,
2022 as compared to March 31, 2021 (dollars in thousands,
except as otherwise noted):
|
As of March 31, |
|
|
|
2022 |
|
|
2021 |
|
|
Increase |
U.S. Pawn
Segment |
|
|
|
|
|
|
|
|
|
Earning assets: |
|
|
|
|
|
|
|
|
|
Pawn loans |
$ |
241,597 |
|
|
$ |
169,642 |
|
|
|
42 |
% |
|
Inventories |
|
184,671 |
|
|
|
128,308 |
|
|
|
44 |
% |
|
|
$ |
426,268 |
|
|
$ |
297,950 |
|
|
|
43 |
% |
|
|
|
|
|
|
|
|
|
|
|
Average outstanding pawn loan
amount (in ones) |
$ |
226 |
|
|
$ |
215 |
|
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Composition of pawn
collateral: |
|
|
|
|
|
|
|
|
|
General merchandise |
33 |
% |
|
30 |
% |
|
|
|
|
Jewelry |
67 |
% |
|
70 |
% |
|
|
|
|
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of
inventories: |
|
|
|
|
|
|
|
|
|
General merchandise |
44 |
% |
|
44 |
% |
|
|
|
|
Jewelry |
56 |
% |
|
56 |
% |
|
|
|
|
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of inventory aged
greater than one year |
1 |
% |
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory turns (trailing
twelve months cost of merchandise sales divided by average
inventories) |
2.8 times |
|
|
3.3 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 March 31, 2022 as compared
to the three months ended March 31, 2021 (dollars in
thousands):
|
Three Months Ended |
|
|
|
|
|
March 31, |
|
|
|
2022 |
|
|
2021 |
|
|
Increase |
U.S. Pawn
Segment |
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
Retail merchandise sales |
$ |
204,942 |
|
|
$ |
189,957 |
|
|
|
8 |
% |
|
Pawn loan fees |
|
90,339 |
|
|
|
76,397 |
|
|
|
18 |
% |
|
Wholesale scrap jewelry sales |
|
16,524 |
|
|
|
9,203 |
|
|
|
80 |
% |
|
Total revenue |
|
311,805 |
|
|
|
275,557 |
|
|
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
Cost of retail merchandise sold |
|
119,718 |
|
|
|
106,530 |
|
|
|
12 |
% |
|
Cost of wholesale scrap jewelry sold |
|
14,530 |
|
|
|
7,513 |
|
|
|
93 |
% |
|
Total cost of revenue |
|
134,248 |
|
|
|
114,043 |
|
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
177,557 |
|
|
|
161,514 |
|
|
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
Segment expenses: |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
98,822 |
|
|
|
95,247 |
|
|
|
4 |
% |
|
Depreciation and amortization |
|
5,587 |
|
|
|
5,382 |
|
|
|
4 |
% |
|
Total segment expenses |
|
104,409 |
|
|
|
100,629 |
|
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Segment pre-tax operating
income |
$ |
73,148 |
|
|
$ |
60,885 |
|
|
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating metrics: |
|
|
|
|
|
|
|
|
|
Retail merchandise sales margin |
42 |
% |
|
44 |
% |
|
|
|
|
Net revenue margin |
57 |
% |
|
59 |
% |
|
|
|
|
Segment pre-tax operating margin |
23 |
% |
|
22 |
% |
|
|
|
|
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
Latin America Pawn Segment
Results
The Company’s management reviews and analyzes
certain 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:
|
|
March 31, |
|
Favorable / |
|
|
2022 |
|
2021 |
|
(Unfavorable) |
Mexican peso / U.S. dollar
exchange rate: |
|
|
|
|
|
|
|
|
End-of-period |
|
20.0 |
|
20.6 |
|
|
3 |
% |
|
Three months ended |
|
20.5 |
|
20.3 |
|
|
(1) |
% |
|
|
|
|
|
|
|
|
|
|
Guatemalan quetzal / U.S.
dollar exchange rate: |
|
|
|
|
|
|
|
|
End-of-period |
|
7.7 |
|
7.7 |
|
|
— |
% |
|
Three months ended |
|
7.7 |
|
7.8 |
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
Colombian peso / U.S. dollar
exchange rate: |
|
|
|
|
|
|
|
|
End-of-period |
|
3,748 |
|
3,737 |
|
|
— |
% |
|
Three months ended |
|
3,914 |
|
3,553 |
|
|
(10) |
% |
|
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
March 31, 2022 as compared to March 31, 2021 (dollars in
thousands, except as otherwise noted):
|
|
|
|
|
|
|
|
|
|
|
Constant Currency Basis |
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
|
As of March 31, |
|
|
|
2022 |
|
Increase |
|
2022 |
|
|
2021 |
|
|
Increase |
|
(Non-GAAP) |
|
(Non-GAAP) |
Latin America Pawn
Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pawn loans |
$ |
102,504 |
|
|
$ |
95,796 |
|
|
|
7 |
% |
|
|
$ |
99,610 |
|
|
4 |
% |
|
Inventories |
|
62,605 |
|
|
|
57,028 |
|
|
|
10 |
% |
|
|
|
60,841 |
|
|
7 |
% |
|
|
$ |
165,109 |
|
|
$ |
152,824 |
|
|
|
8 |
% |
|
|
$ |
160,451 |
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average outstanding pawn loan
amount (in ones) |
$ |
79 |
|
|
$ |
76 |
|
|
|
4 |
% |
|
|
$ |
76 |
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of pawn
collateral: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General merchandise |
68 |
% |
|
66 |
% |
|
|
|
|
|
|
|
|
|
|
Jewelry |
32 |
% |
|
34 |
% |
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of
inventories: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General merchandise |
68 |
% |
|
58 |
% |
|
|
|
|
|
|
|
|
|
|
Jewelry |
32 |
% |
|
42 |
% |
|
|
|
|
|
|
|
|
|
|
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of inventory aged
greater than one year |
1 |
% |
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory turns (trailing
twelve months cost of merchandise sales divided by average
inventories) |
4.3 times |
|
4.4 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 March 31, 2022 as
compared to the three months ended March 31, 2021 (dollars in
thousands):
|
|
|
|
|
|
|
|
|
|
|
Constant Currency Basis |
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
|
|
|
|
|
|
|
|
|
|
|
Ended |
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
March 31, |
|
|
|
|
March 31, |
|
|
|
|
2022 |
|
|
Increase |
|
|
|
2022 |
|
|
|
|
2021 |
|
|
Increase |
|
(Non-GAAP) |
|
(Non-GAAP) |
Latin America Pawn
Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail merchandise sales |
|
$ |
97,877 |
|
|
|
$ |
82,085 |
|
|
|
19 |
% |
|
|
$ |
98,802 |
|
|
|
20 |
% |
|
Pawn loan fees |
|
|
41,480 |
|
|
|
|
39,125 |
|
|
|
6 |
% |
|
|
|
41,873 |
|
|
|
7 |
% |
|
Wholesale scrap jewelry sales |
|
|
16,281 |
|
|
|
|
11,172 |
|
|
|
46 |
% |
|
|
|
16,281 |
|
|
|
46 |
% |
|
Total revenue |
|
|
155,638 |
|
|
|
|
132,382 |
|
|
|
18 |
% |
|
|
|
156,956 |
|
|
|
19 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of retail merchandise sold |
|
|
62,496 |
|
|
|
|
50,623 |
|
|
|
23 |
% |
|
|
|
63,084 |
|
|
|
25 |
% |
|
Cost of wholesale scrap jewelry sold |
|
|
13,685 |
|
|
|
|
9,684 |
|
|
|
41 |
% |
|
|
|
13,819 |
|
|
|
43 |
% |
|
Total cost of revenue |
|
|
76,181 |
|
|
|
|
60,307 |
|
|
|
26 |
% |
|
|
|
76,903 |
|
|
|
28 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
|
79,457 |
|
|
|
|
72,075 |
|
|
|
10 |
% |
|
|
|
80,053 |
|
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
45,542 |
|
|
|
|
42,077 |
|
|
|
8 |
% |
|
|
|
45,965 |
|
|
|
9 |
% |
|
Depreciation and amortization |
|
|
4,401 |
|
|
|
|
4,263 |
|
|
|
3 |
% |
|
|
|
4,451 |
|
|
|
4 |
% |
|
Total segment expenses |
|
|
49,943 |
|
|
|
|
46,340 |
|
|
|
8 |
% |
|
|
|
50,416 |
|
|
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment pre-tax operating
income |
|
$ |
29,514 |
|
|
|
$ |
25,735 |
|
|
|
15 |
% |
|
|
$ |
29,637 |
|
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail merchandise sales margin |
36 |
% |
|
38 |
% |
|
|
|
|
36 |
% |
|
|
|
|
Net revenue margin |
51 |
% |
|
54 |
% |
|
|
|
|
51 |
% |
|
|
|
|
Segment pre-tax operating margin |
19 |
% |
|
19 |
% |
|
|
|
|
19 |
% |
|
|
|
|
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. 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 March 31, 2022 (in thousands):
|
As of March 31, 2022 |
|
As Reported(GAAP) |
|
Adjustments |
|
Adjusted(Non-GAAP) |
Leased merchandise, before allowance for lease losses (1) |
$ |
159,511 |
|
|
$ |
32,327 |
|
|
$ |
191,838 |
|
Less allowance for lease losses |
|
(40,364 |
) |
|
|
(35,664 |
) |
|
|
(76,028 |
) |
Leased merchandise, net |
$ |
119,147 |
|
|
$ |
(3,337 |
) |
|
$ |
115,810 |
|
(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.
The following table provides a detail of finance
receivables as reported and as adjusted to exclude the impacts of
purchase accounting as of March 31, 2022 (in thousands):
|
As of March 31, 2022 |
|
As Reported(GAAP) |
|
Adjustments |
|
Adjusted(Non-GAAP) |
Finance receivables, before allowance for loan losses (1) |
$ |
212,813 |
|
|
$ |
(26,484 |
) |
|
$ |
186,329 |
|
Less allowance for loan losses |
|
(72,332 |
) |
|
|
— |
|
|
|
(72,332 |
) |
Finance receivables, net |
$ |
140,481 |
|
|
$ |
(26,484 |
) |
|
$ |
113,997 |
|
(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 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
three months ended March 31, 2022 (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. Administrative expenses of AFF and amortization
expense of intangible assets related to the purchase of AFF are not
included in the segment pre-tax operating income.
|
Three Months Ended March 31, 2022 |
|
As Reported |
|
|
|
Adjusted |
|
(GAAP) |
|
Adjustments |
|
(Non-GAAP) |
Retail POS Payment
Solutions Segment |
|
|
|
|
|
Revenue: |
|
|
|
|
|
Leased merchandise income |
$ |
149,947 |
|
$ |
— |
|
|
$ |
149,947 |
Interest and fees on finance receivables |
|
42,449 |
|
|
16,173 |
|
|
|
58,622 |
Total revenue |
|
192,396 |
|
|
16,173 |
|
|
|
208,569 |
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
Depreciation of leased merchandise |
|
93,706 |
|
|
(4,359 |
) |
|
|
89,347 |
Provision for lease losses |
|
39,820 |
|
|
— |
|
|
|
39,820 |
Provision for loan losses |
|
24,697 |
|
|
— |
|
|
|
24,697 |
Total cost of revenue |
|
158,223 |
|
|
(4,359 |
) |
|
|
153,864 |
|
|
|
|
|
|
Net revenue |
|
34,173 |
|
|
20,532 |
|
|
|
54,705 |
|
|
|
|
|
|
Segment expenses: |
|
|
|
|
|
Operating expenses |
|
28,932 |
|
|
— |
|
|
|
28,932 |
Depreciation and amortization |
|
682 |
|
|
— |
|
|
|
682 |
Total segment expenses |
|
29,614 |
|
|
— |
|
|
|
29,614 |
|
|
|
|
|
|
Segment pre-tax operating
income |
$ |
4,559 |
|
$ |
20,532 |
|
|
$ |
25,091 |
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 |
|
March 31, |
|
|
2022 |
|
|
|
2021 |
|
Consolidated Results
of Operations |
|
|
|
Segment pre-tax operating
income: |
|
|
|
U.S. pawn |
$ |
73,148 |
|
|
$ |
60,885 |
|
Latin America pawn |
|
29,514 |
|
|
|
25,735 |
|
Retail POS payment solutions (1) |
|
4,559 |
|
|
|
— |
|
Consolidated segment pre-tax operating income |
|
107,221 |
|
|
|
86,620 |
|
|
|
|
|
Corporate expenses and other
income: |
|
|
|
Administrative expenses |
|
36,863 |
|
|
|
30,999 |
|
Depreciation and amortization |
|
14,872 |
|
|
|
967 |
|
Interest expense |
|
16,221 |
|
|
|
7,230 |
|
Interest income |
|
(676 |
) |
|
|
(158 |
) |
(Gain) loss on foreign exchange |
|
(480 |
) |
|
|
267 |
|
Merger and acquisition expenses |
|
665 |
|
|
|
166 |
|
Loss on revaluation of contingent acquisition consideration |
|
2,570 |
|
|
|
— |
|
Impairments and dispositions of certain other assets |
|
177 |
|
|
|
878 |
|
Total corporate expenses and other income |
|
70,212 |
|
|
|
40,349 |
|
|
|
|
|
Income before income
taxes |
|
37,009 |
|
|
|
46,271 |
|
|
|
|
|
Provision for income taxes |
|
9,004 |
|
|
|
12,556 |
|
|
|
|
|
Net income |
$ |
28,005 |
|
|
$ |
33,715 |
|
(1) The AFF results are significantly
impacted by certain purchase accounting adjustments as noted in the
retail POS payment solutions segment results of operations above.
Adjusted retail POS payment solutions segment pre-tax operating
income excluding such purchase accounting adjustments was $25
million for the three months ended March 31, 2022.
FIRSTCASH HOLDINGS,
INC.PAWN STORE COUNT ACTIVITY
As of March 31, 2022, the Company operated
2,829 pawn store locations composed of 1,078 stores in 25 U.S.
states and the District of Columbia, 1,663 stores in 32 states in
Mexico, 60 stores in Guatemala, 15 stores in Colombia and 13 stores
in El Salvador.
The following table details pawn store count
activity for the three months ended March 31, 2022:
|
|
Three Months Ended March 31, 2022 |
|
|
U.S. |
|
Latin America |
|
Total |
Total locations, beginning of period |
|
1,081 |
|
|
1,744 |
|
|
2,825 |
|
New locations opened (1) |
|
— |
|
|
10 |
|
|
10 |
|
Consolidation of existing pawn locations (2) |
|
(3 |
) |
|
(3 |
) |
|
(6 |
) |
Total locations, end of period |
|
1,078 |
|
|
1,751 |
|
|
2,829 |
|
(1) In addition to new store
openings, the Company strategically relocated one store in Latin
America during the three months ended March 31,
2022.(2) 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.
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,
including the Company’s transaction expenses incurred in connection
with its acquisition of AFF, and the impacts of purchase accounting
with respect to the AFF acquisition in order 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 March 31, |
|
|
2022 |
|
|
|
2021 |
|
In Thousands |
|
Per Share |
|
In Thousands |
|
Per Share |
Net income and diluted earnings per share, as reported |
$ |
28,005 |
|
|
$ |
0.58 |
|
|
$ |
33,715 |
|
$ |
0.82 |
Adjustments, net of tax: |
|
|
|
|
|
|
|
Merger and acquisition expenses |
|
511 |
|
|
|
0.01 |
|
|
|
116 |
|
|
— |
Non-cash foreign currency (gain) loss related to lease
liability |
|
(484 |
) |
|
|
(0.01 |
) |
|
|
421 |
|
|
0.01 |
AFF purchase accounting adjustments, net (1) |
|
28,703 |
|
|
|
0.60 |
|
|
|
— |
|
|
— |
Impairments and dispositions of certain other assets |
|
136 |
|
|
|
— |
|
|
|
676 |
|
|
0.02 |
Adjusted net income and
diluted earnings per share |
$ |
56,871 |
|
|
$ |
1.18 |
|
|
$ |
34,928 |
|
$ |
0.85 |
(1) Includes $13 million related to
the amortization of purchase accounting adjustments to record
acquired finance receivables at fair value, $11 million related to
the amortization of acquired intangible assets, $3 million related
to the amortization of purchase accounting adjustments to record
acquired leased merchandise at fair value and a $2 million loss on
the revaluation of AFF contingent acquisition consideration (all
shown net of tax).The following table provides 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 March 31, |
|
|
2022 |
|
|
|
2021 |
|
Pre-tax |
|
Tax |
|
After-tax |
|
Pre-tax |
|
Tax |
|
After-tax |
Merger and acquisition expenses |
$ |
665 |
|
|
$ |
154 |
|
|
$ |
511 |
|
|
$ |
166 |
|
$ |
50 |
|
$ |
116 |
Non-cash foreign currency (gain) loss related to lease
liability |
|
(692 |
) |
|
|
(208 |
) |
|
|
(484 |
) |
|
|
602 |
|
|
181 |
|
|
421 |
AFF purchase accounting adjustments, net |
|
37,277 |
|
|
|
8,574 |
|
|
|
28,703 |
|
|
|
— |
|
|
— |
|
|
— |
Impairment and dispositions of certain other assets |
|
177 |
|
|
|
41 |
|
|
|
136 |
|
|
|
878 |
|
|
202 |
|
|
676 |
Total adjustments |
$ |
37,427 |
|
|
$ |
8,561 |
|
|
$ |
28,866 |
|
|
$ |
1,646 |
|
$ |
433 |
|
$ |
1,213 |
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):
|
|
|
|
|
|
|
|
Trailing Twelve |
|
|
Three Months Ended |
|
Months Ended |
|
|
March 31, |
|
March 31, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net income |
|
$ |
28,005 |
|
|
$ |
33,715 |
|
|
$ |
119,199 |
|
|
$ |
107,376 |
|
Provision for income taxes |
|
|
9,004 |
|
|
|
12,556 |
|
|
|
38,041 |
|
|
|
36,877 |
|
Depreciation and amortization |
|
|
25,542 |
|
|
|
10,612 |
|
|
|
60,836 |
|
|
|
42,043 |
|
Interest expense |
|
|
16,221 |
|
|
|
7,230 |
|
|
|
41,377 |
|
|
|
28,156 |
|
Interest income |
|
|
(676 |
) |
|
|
(158 |
) |
|
|
(1,214 |
) |
|
|
(1,513 |
) |
EBITDA |
|
|
78,096 |
|
|
|
63,955 |
|
|
|
258,239 |
|
|
|
212,939 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Merger and acquisition expenses |
|
|
665 |
|
|
|
166 |
|
|
|
15,948 |
|
|
|
1,414 |
|
Non-cash foreign currency (gain) loss related to lease
liability |
|
|
(692 |
) |
|
|
602 |
|
|
|
(650 |
) |
|
|
(2,533 |
) |
AFF purchase accounting adjustments, net (1) |
|
|
23,102 |
|
|
|
— |
|
|
|
51,593 |
|
|
|
— |
|
Impairments and dispositions of certain other assets |
|
|
177 |
|
|
|
878 |
|
|
|
248 |
|
|
|
4,412 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,737 |
|
Adjusted EBITDA |
|
$ |
101,348 |
|
|
$ |
65,601 |
|
|
$ |
325,378 |
|
|
$ |
227,969 |
|
(1) Excludes $14 million and $16
million of amortization expense related to identifiable intangible
assets as a result of the AFF acquisition for the three months and
trailing twelve months ended March 31, 2022, respectively,
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 additional measures 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, that 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):
|
|
|
|
|
|
Trailing Twelve |
|
|
Three Months Ended |
|
Months Ended |
|
|
March 31, |
|
March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Cash flow from operating
activities |
|
$ |
106,397 |
|
|
$ |
69,174 |
|
|
$ |
260,527 |
|
|
$ |
214,053 |
|
Cash flow from certain
investing activities: |
|
|
|
|
|
|
|
|
Pawn loans, net (1) |
|
|
17,383 |
|
|
|
42,394 |
|
|
|
(98,351 |
) |
|
|
96,603 |
|
Finance receivables, net |
|
|
13,809 |
|
|
|
— |
|
|
|
7,965 |
|
|
|
520 |
|
Purchases of furniture, fixtures, equipment and improvements |
|
|
(7,028 |
) |
|
|
(9,491 |
) |
|
|
(39,559 |
) |
|
|
(36,453 |
) |
Free cash flow |
|
|
130,561 |
|
|
|
102,077 |
|
|
|
130,582 |
|
|
|
274,723 |
|
Merger and acquisition expenses paid, net of tax benefit |
|
|
511 |
|
|
|
116 |
|
|
|
12,267 |
|
|
|
1,057 |
|
Adjusted free cash flow |
|
$ |
131,072 |
|
|
$ |
102,193 |
|
|
$ |
142,849 |
|
|
$ |
275,780 |
|
(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 above for additional reconciliations of certain amounts
adjusted to exclude the impacts of purchase accounting to as
reported GAAP amounts.
Additionally, the following table provides a
reconciliation of consolidated total revenue presented in
accordance with GAAP to adjusted total revenue, which excludes the
impacts of purchase accounting (in thousands):
|
Three Months Ended March 31, |
|
|
2022 |
|
|
2021 |
Total revenue, as reported |
$ |
659,839 |
|
$ |
407,939 |
Adjustments: |
|
|
|
AFF purchase accounting adjustments (1) |
|
16,173 |
|
|
— |
Adjusted total revenue |
$ |
676,012 |
|
$ |
407,939 |
(1) Adjustment relates to the net
amortization of the fair value premium on acquired finance
receivables, which is recognized as an adjustment to interest
income on an effective yield basis over the lives of the acquired
finance receivables. See the retail POS payment solutions segment
tables above for additional segment level
reconciliations.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 pawn segment tables elsewhere in
this release for an additional reconciliation of certain constant
currency amounts to as reported GAAP amounts.
For further information, please contact: Gar
JacksonGlobal IR GroupPhone: (817) 886-6998Email:
gar@globalirgroup.com
Doug Orr, Executive Vice President and Chief Financial
OfficerPhone: (817) 258-2650Email:
investorrelations@firstcash.comWebsite: investors.firstcash.com
FirstCash (NASDAQ:FCFS)
Historical Stock Chart
From Jun 2024 to Jul 2024
FirstCash (NASDAQ:FCFS)
Historical Stock Chart
From Jul 2023 to Jul 2024