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 through American First Finance (“AFF”), today announced
operating results for the three and six month periods ended
June 30, 2023. The Company also announced that the Board of
Directors declared a quarterly cash dividend of $0.35 per share, an
increase of 6% compared to the previous quarterly dividend of $0.33
per share, which will be paid in August 2023. Additionally, the
Company completed its share repurchase plan and the Board of
Directors authorized a new $200 million plan.
Mr. Rick Wessel, chief executive officer,
stated, “FirstCash posted record second quarter consolidated
revenues and generated strong earnings growth from its core pawn
operations in both the U.S. and Latin America. Coupled with
continued revenue and transaction volume growth in AFF’s retail POS
payment solutions business, we have significant earnings momentum
entering the second half of 2023.
"FirstCash continues to expand its operating
platform as well, with 36 pawn stores added year-to-date and
additional store openings and acquisitions expected over the
balance of the year, while AFF surpassed 10,000 active merchant
door locations in the second quarter. Additionally, our strong
balance sheet and cash flows have allowed us to repurchase $114
million of stock this year, through today’s date, and raise the
quarterly cash dividend.”
This release contains adjusted financial
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 June 30, |
|
As Reported (GAAP) |
|
Adjusted (Non-GAAP) |
In thousands, except per share amounts |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Revenue |
$ |
750,622 |
|
$ |
647,616 |
|
$ |
750,622 |
|
$ |
659,130 |
Net income |
$ |
45,180 |
|
$ |
86,108 |
|
$ |
55,553 |
|
$ |
51,159 |
Diluted earnings per
share |
$ |
0.99 |
|
$ |
1.81 |
|
$ |
1.22 |
|
$ |
1.08 |
EBITDA (non-GAAP measure) |
$ |
108,237 |
|
$ |
151,629 |
|
$ |
107,473 |
|
$ |
96,417 |
Weighted-average diluted
shares |
|
45,678 |
|
|
47,499 |
|
|
45,678 |
|
|
47,499 |
|
Six Months Ended June 30, |
|
As Reported (GAAP) |
|
Adjusted (Non-GAAP) |
In thousands, except per share amounts |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Revenue |
$ |
1,513,361 |
|
$ |
1,307,455 |
|
$ |
1,513,361 |
|
$ |
1,335,142 |
Net income |
$ |
92,568 |
|
$ |
114,113 |
|
$ |
113,253 |
|
$ |
108,031 |
Diluted earnings per
share |
$ |
2.01 |
|
$ |
2.38 |
|
$ |
2.46 |
|
$ |
2.26 |
EBITDA (non-GAAP measure) |
$ |
218,941 |
|
$ |
229,725 |
|
$ |
217,043 |
|
$ |
197,765 |
Weighted-average diluted
shares |
|
45,993 |
|
|
47,897 |
|
|
45,993 |
|
|
47,897 |
Consolidated Operating Highlights
- Consolidated
revenues totaled $751 million in the second quarter, an increase of
16% on a GAAP basis and 14% on an adjusted basis compared to the
prior-year quarter. Year-to-date consolidated revenues totaled $1.5
billion, an increase of 16% on a GAAP basis and 13% on an adjusted
basis compared to the prior-year period.
- On a GAAP basis,
the prior-year second quarter earnings included a significant
non-cash gain ($1.13 per share, net of tax) on the revaluation of
contingent consideration related to the AFF acquisition. As a
result, GAAP-basis diluted earnings per share for the second
quarter of 2023 decreased 45% over the prior-year quarter and 16%
for the year-to-date period. Excluding purchase accounting and
certain other adjustments primarily impacting prior-year results,
adjusted diluted earnings per share increased 13% compared to the
prior-year quarter while year-to-date diluted earnings per share
increased 9% on an adjusted basis compared to the prior-year
period.
- While GAAP net
income for the second quarter decreased 48% over the prior-year
quarter primarily due to the non-cash revaluation gain in 2022,
adjusted net income, which excludes certain purchase accounting and
other adjustments as described herein, increased 9% compared to the
prior-year quarter. Year-to-date net income decreased 19% on a GAAP
basis and increased 5% on an adjusted basis compared to the
prior-year period.
- For the twelve
month period ended June 30, 2023, adjusted EBITDA totaled $457
million, an increase of 25% over the comparable prior-year period.
Adjusted EBITDA for the second quarter increased 11% compared to
the prior-year quarter.
- Operating cash
flows for the twelve month period ended June 30, 2023 were $448
million and adjusted free cash flows (a non-GAAP measure) were $284
million, an increase of 33% and 57%, respectively, compared to the
prior-year period.
Store Base and Platform
Growth
- Pawn
Stores: During the second quarter, 19 pawn locations were
added, and year-to-date, a total of 36 stores have been opened,
bringing the total number of locations at June 30, 2023 to 2,889
locations. By market, the Company reported the following additions:
- U.S.
Pawn: One store in Oklahoma was acquired and two de novo
locations in Las Vegas, Nevada were opened during the second
quarter. At June 30, 2023, the Company had 1,101 full-service U.S.
pawn locations in 25 states and the District of Columbia.The
Company also purchased the underlying real estate at nine of its
existing pawn stores during the second quarter. This brings the
total number of owned U.S. locations to 308.
- Latin
America Pawn: A total of 16 de novo locations were opened
in Latin America during the second quarter of 2023, which included
14 locations in Mexico and two locations in Guatemala.
Year-to-date, 30 locations have been opened in Latin America where
the Company now has 1,788 total locations.
- Retail POS
Payment Solutions Merchant Partnerships: AFF continued to
grow market share with approximately 10,500 active retail and
e-commerce merchant partner locations at June 30, 2023,
representing a 38% increase in active merchant locations compared
to June 30, 2022.
U.S. Pawn Segment Operating
Results
- Segment pre-tax
operating income in the second quarter of 2023 increased $8
million, or 13%, compared to the prior-year quarter. The resulting
segment pre-tax operating margin was 23% for the second quarter of
2023, an improvement over the 21% margin for the prior-year
quarter.
- Year-to-date
segment pre-tax operating income increased by $16 million, or 12%,
compared to the prior-year period. The resulting segment pre-tax
operating margin was 24% for the year-to-date period, an
improvement over the 22% margin for the comparable prior-year
period.
- Pawn fee revenue
increased 13% in total and 11% on a same-store basis for the second
quarter of 2023 as compared to the prior-year quarter, reflecting
continued inflationary pressures driving additional demand and
increased portfolio yield driven by improved customer redemption
rates.
- Pawn receivables
were at a record-level for the end of a second quarter, increasing
7% in total at June 30, 2023 compared to the prior year, while
same-store pawn receivables were up 6%. Both increases represented
sequential quarterly improvement over the growth rates at March 31,
2023.
- Retail merchandise
sales in the second quarter of 2023 were flat compared to the
prior-year quarter and decreased 3% on a same-store basis compared
to the prior-year quarter, as inventory levels remain relatively
constrained due to strong turn rates and lower than normal pawn
forfeiture rates.
- Retail sales
margins increased to 43% in the second quarter of 2023 compared to
41% in the prior-year quarter, reflecting continued demand for
value-priced, pre-owned merchandise and low levels of aged
inventory. The resulting gross profit from retail sales increased
4% in the second quarter compared to a year ago.
- Annualized
inventory turnover was 2.8 times for the trailing twelve months
ended June 30, 2023, while inventories aged greater than one year
at June 30, 2023 remained low at 2%.
- Operating expenses
increased 7% in total and 4% on a same-store basis in the second
quarter of 2023 compared to the prior-year quarter, primarily
reflecting inflationary increases in wages and certain other
operating costs.
Latin America Pawn Segment Operating
Results
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 second quarter of 2023 was 17.7 pesos /
dollar, a favorable change of 12% versus the comparable prior-year
period, and for the six month period ended June 30, 2023 was
18.2 pesos / dollar, a favorable change of 10% versus the
prior-year period.
- Second quarter
segment pre-tax operating income increased 13%, or 3% on a constant
currency basis, over the prior-year quarter. The resulting pre-tax
operating margin was 20% for the second quarter of 2023 compared to
21% in the prior-year quarter.
- Year-to-date
segment pre-tax operating income increased 12%, or 5% on a constant
currency basis, over the prior-year period. The resulting pre-tax
operating margin was 19% for the year-to-date period compared to
20% in the prior-year period.
-
Pawn loan fees increased 19%, or 6% on a constant currency basis,
in the second quarter of 2023 as compared to the prior-year
quarter, both in total and on a same-store basis, reflecting
improved yields on pawn receivables.
-
Pawn receivables were at record levels at June 30, 2023, increasing
18%, or 1% on a constant currency basis, compared to the prior
year. On a same-store basis, pawn receivables increased 17%, or 1%
on a constant currency basis, compared to the prior year. The
Company believes the recent flattening in local currency pawn
balances in part reflects continued increases in
government-mandated minimum wage and benefit programs in Mexico
which have significantly benefited many cash-constrained
consumers.
- Retail merchandise
sales in the second quarter of 2023 increased 23%, or 10% on a
constant currency basis, compared to the prior-year quarter.
Same-store retail merchandise sales in the second quarter of 2023
were up 23%, or 9% on a constant currency basis, compared to the
prior-year quarter.
-
Retail margins remained within historical norms at 35% for the
second quarter of 2023. Annualized inventory turnover was 4.3 times
for the trailing twelve months ended June 30, 2023, while
inventories aged greater than one year at June 30, 2023 remained
extremely low at 1%.
- Operating expenses
increased 24% in total and 23% on a same-store basis compared to
the prior-year quarter. On a constant currency basis, they
increased 11% in total and 10% on a same-store basis, driven in
part by the increased pace of new store openings, higher incentive
compensation expense related to growth in net revenue and segment
earnings, along with general inflationary impacts and increases in
the federally mandated minimum wage and other required benefit
programs.
Retail POS Payment Solutions Segment - American First
Finance (AFF) Operating Results
Note: The reconciliations of GAAP revenues and
earnings for this segment to adjusted revenues and earnings are
provided and described in more detail in the Retail POS Payment
Solutions Segment Results section of this release.
- Segment revenues
for the quarter, comprised of lease-to-own (“LTO”) fees and
interest and fees on finance receivables, increased 30% on a GAAP
basis and 22% on an adjusted basis, which excludes the non-cash
impacts of fair value purchase accounting requirements in the 2022
results. Revenues for the year-to-date period increased 27% on a
GAAP basis and 18% on an adjusted basis.
- Gross transaction
volume from originated LTO and POS financing transactions totaled
$256 million for the second quarter and $506 million year-to-date,
representing an increase of 24% over the second quarter of last
year and 29% year-to-date. The growth was driven by a combination
of an approximate 5% quarter-over-quarter increase in transaction
volumes at existing merchant door locations coupled with 38% growth
in the number of active merchant locations at June 30, 2023
compared to June 30, 2022.
- Combined gross
leased merchandise and finance receivables outstanding at June 30,
2023, excluding the impacts of purchase accounting, increased 18%
compared to the June 30, 2022 balances.
- The combined
provision for lease and loan losses for the quarter increased by
$16 million, or 25%, over the prior-year quarter, driven primarily
by the 24% increase in quarter-over-quarter origination activity.
The year-to-date provision increased by $30 million, or 23%, over
the prior-year period, driven primarily by the 29% increase in
first half origination activity compared to the prior-year
period.
- The average monthly
net charge-off (“NCO”) rate for leased merchandise was 4.7% in the
second quarter and 4.8% year-to-date, which were both consistent
with the respective prior-year periods. The average monthly NCO
rate for finance receivable products in the second quarter improved
to 4.0% as compared to the prior-year rate of 4.5%, and the
year-to-date rate improved to 4.2% as compared to the prior-year
rate of 4.4%.
- Operating expenses
increased 19% compared to the prior-year quarter, primarily due to
an increase in origination-driven variable expenses associated with
the 24% quarter-over-quarter increase in gross transaction
volume.
- Second quarter
segment pre-tax operating income totaled $26 million compared to
the prior-year quarter segment earnings of $12 million on a GAAP
basis and $25 million on an adjusted basis, which excludes the
non-cash impacts of fair value purchase accounting requirements
specific to 2022. Upfront loss provisioning and additional
operating expenses associated with the increased origination
activity ($50 million above the prior-year quarter) caused net
earnings drag of approximately $8 million before taxes, or $0.14
per share, net of taxes for the second quarter of 2023.
- Year-to-date
segment pre-tax operating income totaled $49 million compared to
the prior-year period segment earnings of $17 million on a GAAP
basis and $50 million on an adjusted basis. Upfront loss
provisioning and additional operating expenses associated with the
increased origination activity ($115 million above the prior
year-to-date period) caused net earnings drag of approximately $12
million before taxes, or $0.20 per share, net of taxes for the
first half of 2023.
Cash Flow and Liquidity
- All of the
Company’s operating segments continue to generate significant
operating cash flows. For the twelve month period ended June 30,
2023, consolidated operating cash flows totaled $448 million and
adjusted free cash flows (a non-GAAP measure) were $284 million,
increases of 33% and 57%, respectively, compared to the prior-year
period.
- The Company’s
strong liquidity position at June 30, 2023 includes cash balances
of $105 million and ample borrowing capacity under its bank lines
of credit. The majority of the Company’s long-term financing is
fixed rate debt with favorable interest rates ranging from 4.625%
to 5.625% and maturity dates not until 2028 and 2030.
- The Company’s net
debt to trailing twelve months adjusted EBITDA ratio improved to
2.9x at June 30, 2023 compared to 3.3x at June 30, 2022.
Shareholder Returns
- Through the date of
this release, the Company repurchased 1,248,000 shares of common
stock in 2023 at an aggregate cost of $114 million and an average
cost per share of $91.58. This completes, in less than nine months,
the $100 million share repurchase program authorized in October
2022 and the remainder of the previously authorized plan.
- On July 26, 2023,
the Board of Directors approved a new share repurchase
authorization of up to $200 million, effective immediately. Future
share repurchases are subject to expected liquidity, acquisitions
and other investment opportunities, debt covenant restrictions,
market conditions and other relevant factors.
- The Board of
Directors declared a $0.35 per share third quarter cash dividend,
which will be paid on August 31, 2023 to stockholders of
record as of August 15, 2023. On an annualized basis, the
dividend is now $1.40 per share, representing a 6% increase over
the previous annualized dividend of $1.32 per share. Any future
dividends are subject to approval by the Company’s Board of
Directors.
- The Company
generated a 13% return on equity during the twelve months ended
June 30, 2023 compared to an 11% return for the comparable
prior-year period, while the return on assets for the twelve months
ended June 30, 2023 was 6% compared to 5% in the comparable
prior-year period.
2023 Outlook
Based on strong second quarter results and macro
trends, the Company’s outlook for the remainder of 2023 remains
highly positive, with expected year-over-year growth in revenue and
earnings in all segments driven by the continued growth in earning
asset balances coupled with recent store additions. Anticipated
conditions and trends for the remainder of 2023 include the
following:
Pawn Operations:
- Pawn operations are
expected to remain the primary earnings driver in 2023 as the
Company expects segment income from the combined U.S. and Latin
America pawn segments to be approximately 80% of total segment
level pre-tax income.
- Inflationary
economic environments have historically driven increased customer
demand for both pawn loans and value-priced merchandise offered in
pawn stores. In addition, credit tightening by competing unsecured
lenders typically drives additional demand for pawn products as
well.
- Pawn receivables at
June 30, 2023 were up 7% in the U.S. while Latin American balances
in U.S. dollars were up 18%. U.S. pawn receivables are trending
higher thus far in July compared to last year, up nearly 9% over
the same point a year ago and reflecting a strong post tax season
recovery. The Company expects similar year-over-year growth in
same-store pawn receivables in both the U.S. and Latin America over
the balance of the year, assuming exchange rates similar to the
first half of 2023.
- Full year retail
sales are expected to grow in both markets as well, with margins
anticipated to remain above 40% in the U.S. and in the mid-thirty
percent range in Latin America.
- While operating
expenses are expected to rise moderately in both the U.S. and Latin
America in 2023 due to increased store counts along with continued
inflationary impacts, the Company continues to project robust full
year earnings growth from its pawn segments.
- The Company expects
to open approximately 60 de novo stores in Latin America and four
U.S. de novo locations in 2023. Additionally, four U.S. locations
have been acquired year-to-date and management continues to see a
pipeline of potential roll-up acquisition targets in both the U.S.
and Latin America.
POS Payment Solutions (AFF)
Operations:
- Based on the
strength of first half results, AFF has raised its guidance for
both expected transaction volumes and revenues. Transaction
volumes, or originations, are now expected to increase 12% to 16%
in the second half of 2023 and 20% to 24% for the full year
compared to last year. Resulting adjusted revenues are now forecast
to grow in a range of 16% to 20% in both the second half and the
full year as compared to the respective prior-year periods.
- Although AFF will
incur incremental loss provisioning and decisioning expenses
consistent with the increased origination forecast, the Company
continues to expect full year-over-year segment earnings growth for
AFF based on the increased earning asset portfolio and projected
second half transaction volumes.
- The Company expects
AFF's estimated lease and loan loss provisioning rates for the
remainder of 2023 will continue to reflect a conservative approach
with provisioning above historical pre-pandemic loss rates for most
vintages. Operating expenses for the full year are expected to
increase in 2023 as well, primarily due to the expected increase in
origination activity.
Additional Commentary and
Analysis
Mr. Wessel provided additional insights on the
Company’s second quarter operating performance, “Our results
reflected the strong momentum in our core pawn business coupled
with the meaningful revenue and earnings contribution from AFF.
Additionally, we continued to invest significantly in future growth
through new stores and acquisitions coupled with increased
shareholder returns through stock repurchases and the increased
dividend.
“Pawn operations continue to be especially
robust with total net revenue from pawn fees and merchandise sales
up 13% in the second quarter compared to last year. In the U.S., we
are seeing continued growth in demand for pawn loans, with improved
sequential year-over-year growth rates compared to a quarter ago,
coupled with strong margins from merchandise sales. In Latin
America, strong revenue growth from retail sales was coupled with
the added tailwind of a stronger Mexican peso. We are also
benefiting from higher gold prices thus far in 2023, which have
increased scrap margins and provided an opportunity to lock in the
higher pricing over the next several quarters.
“FirstCash continues to focus on the growth of
its core pawn operations, primarily in U.S. and Latin American
markets with favorable demographics and long-term population
growth. In 2023, we anticipate opening approximately 60 de novo
stores in Latin America plus four new U.S. stores in Las Vegas
while also evaluating a pipeline of additional pawn acquisitions.
Additionally, we continue to purchase the underlying real estate of
our pawn stores and now own approximately 28% of our U.S.
locations.
“We are especially pleased with the performance
of AFF since the acquisition a year and a half ago as it continues
to grow revenues while maintaining stable lease and loan loss
metrics. The 29% increase in year-to-date gross transaction volumes
reflects growth in merchant base and increased same-door
originations which puts them on pace to surpass $1 billion in
originations for the full year. With a merchant base that has now
grown to approximately 10,500 active doors, AFF continues to
diversify and expand the business into additional vertical
categories. We continue to believe there are significant long-term
growth opportunities ahead for AFF with further synergies
achievable.
“Even with the significant investments in the
growth of our operations, the focus on shareholder returns has not
waned. We have repurchased $114 million in stock this year and paid
dividends totaling $61 million over the trailing twelve months.
Given the solid cash flow generation, the Board has authorized an
additional $200 million share repurchase program and increased the
dividend to $1.40 per share on an annualized basis.
“In summary, we continue to focus on growth
through new and acquired stores, improving store profitability and
increased earnings contributions from AFF. This growth coupled with
our strong balance sheet and cash flow generation positions us well
to continue driving 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 in the U.S. and Latin America buy and sell a wide variety of
jewelry, electronics, tools, appliances, sporting goods, musical
instruments and other merchandise, and make small non-recourse 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 10,500 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, outlook 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
“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, outlook 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 related to the extensive regulatory environment
in which the Company operates; risks associated with the legal and
regulatory proceedings that the Company is a party to, or may
become a party to in the future, including the Consumer Financial
Protection Bureau (the “CFPB”) lawsuit filed against the Company;
risks related to the Company’s acquisitions, including the failure
of any material acquisition, including the AFF acquisition, to
deliver the estimated value and benefits expected by the Company
and the ability of the Company to continue to identify and
consummate acquisitions on favorable terms; potential changes in
consumer behavior and shopping patterns which could impact demand
for the Company’s pawn loan, retail, lease-to-own and retail
finance products, including, as a result to, changes in the general
economic conditions; labor shortages and increased labor costs; a
deterioration in the economic conditions in the United States and
Latin America, including as a result of inflation and rising
interest rates, which potentially could have an impact on
discretionary consumer spending and demand for the Company’s
products; currency fluctuations, primarily involving the Mexican
peso; competition the Company faces from other retailers and
providers of retail payment solutions; the ability of the Company
to successfully execute on its business strategies; and other risks
discussed and described in the Company’s most recent Annual Report
on Form 10-K filed with the Securities and Exchange Commission (the
“SEC”), 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 |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue: |
|
|
|
|
|
|
|
Retail merchandise sales |
$ |
320,864 |
|
|
$ |
298,257 |
|
|
$ |
648,779 |
|
|
$ |
601,076 |
|
Pawn loan fees |
|
154,178 |
|
|
|
134,067 |
|
|
|
305,738 |
|
|
|
265,886 |
|
Leased merchandise income |
|
189,805 |
|
|
|
147,700 |
|
|
|
373,243 |
|
|
|
297,647 |
|
Interest and fees on finance receivables |
|
58,192 |
|
|
|
43,744 |
|
|
|
112,834 |
|
|
|
86,193 |
|
Wholesale scrap jewelry sales |
|
27,583 |
|
|
|
23,848 |
|
|
|
72,767 |
|
|
|
56,653 |
|
Total revenue |
|
750,622 |
|
|
|
647,616 |
|
|
|
1,513,361 |
|
|
|
1,307,455 |
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
Cost of retail merchandise sold |
|
192,271 |
|
|
|
179,309 |
|
|
|
391,272 |
|
|
|
361,523 |
|
Depreciation of leased merchandise |
|
102,521 |
|
|
|
82,605 |
|
|
|
204,126 |
|
|
|
176,311 |
|
Provision for lease losses |
|
52,873 |
|
|
|
38,035 |
|
|
|
101,938 |
|
|
|
77,855 |
|
Provision for loan losses |
|
28,190 |
|
|
|
26,800 |
|
|
|
57,475 |
|
|
|
51,497 |
|
Cost of wholesale scrap jewelry sold |
|
21,880 |
|
|
|
19,895 |
|
|
|
57,607 |
|
|
|
48,110 |
|
Total cost of revenue |
|
397,735 |
|
|
|
346,644 |
|
|
|
812,418 |
|
|
|
715,296 |
|
|
|
|
|
|
|
|
|
Net revenue |
|
352,887 |
|
|
|
300,972 |
|
|
|
700,943 |
|
|
|
592,159 |
|
|
|
|
|
|
|
|
|
Expenses and other
income: |
|
|
|
|
|
|
|
Operating expenses |
|
204,781 |
|
|
|
180,555 |
|
|
|
403,842 |
|
|
|
353,851 |
|
Administrative expenses |
|
40,355 |
|
|
|
37,068 |
|
|
|
79,372 |
|
|
|
73,931 |
|
Depreciation and amortization |
|
27,050 |
|
|
|
25,982 |
|
|
|
54,161 |
|
|
|
51,524 |
|
Interest expense |
|
21,071 |
|
|
|
16,246 |
|
|
|
41,968 |
|
|
|
32,467 |
|
Interest income |
|
(408 |
) |
|
|
(222 |
) |
|
|
(925 |
) |
|
|
(898 |
) |
(Gain) loss on foreign exchange |
|
(817 |
) |
|
|
27 |
|
|
|
(1,619 |
) |
|
|
(453 |
) |
Merger and acquisition expenses |
|
252 |
|
|
|
314 |
|
|
|
283 |
|
|
|
979 |
|
Gain on revaluation of contingent acquisition consideration |
|
— |
|
|
|
(65,559 |
) |
|
|
— |
|
|
|
(62,989 |
) |
Other expenses (income), net |
|
79 |
|
|
|
(3,062 |
) |
|
|
124 |
|
|
|
(2,885 |
) |
Total expenses and other income |
|
292,363 |
|
|
|
191,349 |
|
|
|
577,206 |
|
|
|
445,527 |
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
60,524 |
|
|
|
109,623 |
|
|
|
123,737 |
|
|
|
146,632 |
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
15,344 |
|
|
|
23,515 |
|
|
|
31,169 |
|
|
|
32,519 |
|
|
|
|
|
|
|
|
|
Net income |
$ |
45,180 |
|
|
$ |
86,108 |
|
|
$ |
92,568 |
|
|
$ |
114,113 |
|
FIRSTCASH HOLDINGS,
INC.CONSOLIDATED BALANCE
SHEETS(unaudited, in thousands)
|
June 30, |
|
December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2022 |
|
ASSETS |
|
|
|
|
|
Cash and cash equivalents |
$ |
104,598 |
|
|
$ |
110,414 |
|
|
$ |
117,330 |
|
Accounts receivable, net |
|
63,337 |
|
|
|
55,924 |
|
|
|
57,792 |
|
Pawn loans |
|
426,165 |
|
|
|
385,708 |
|
|
|
390,617 |
|
Finance receivables, net
(1) |
|
110,555 |
|
|
|
125,619 |
|
|
|
103,494 |
|
Inventories |
|
267,142 |
|
|
|
260,528 |
|
|
|
288,339 |
|
Leased merchandise, net
(1) |
|
143,145 |
|
|
|
118,924 |
|
|
|
153,302 |
|
Prepaid expenses and other
current assets |
|
30,102 |
|
|
|
21,125 |
|
|
|
19,788 |
|
Total current assets |
|
1,145,044 |
|
|
|
1,078,242 |
|
|
|
1,130,662 |
|
|
|
|
|
|
|
Property and equipment,
net |
|
587,934 |
|
|
|
519,836 |
|
|
|
538,681 |
|
Operating lease right of use
asset |
|
305,513 |
|
|
|
301,979 |
|
|
|
307,009 |
|
Goodwill |
|
1,600,068 |
|
|
|
1,522,192 |
|
|
|
1,581,381 |
|
Intangible assets, net |
|
303,642 |
|
|
|
359,716 |
|
|
|
330,338 |
|
Other assets |
|
9,586 |
|
|
|
8,345 |
|
|
|
9,415 |
|
Deferred tax assets, net |
|
7,770 |
|
|
|
6,231 |
|
|
|
7,381 |
|
Total assets |
$ |
3,959,557 |
|
|
$ |
3,796,541 |
|
|
$ |
3,904,867 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Accounts payable and accrued
liabilities |
$ |
146,163 |
|
|
$ |
198,967 |
|
|
$ |
139,460 |
|
Customer deposits and
prepayments |
|
70,056 |
|
|
|
59,754 |
|
|
|
63,125 |
|
Lease liability, current |
|
96,215 |
|
|
|
90,804 |
|
|
|
92,944 |
|
Total current liabilities |
|
312,434 |
|
|
|
349,525 |
|
|
|
295,529 |
|
|
|
|
|
|
|
Revolving unsecured credit
facilities |
|
376,000 |
|
|
|
274,000 |
|
|
|
339,000 |
|
Senior unsecured notes |
|
1,036,660 |
|
|
|
1,034,761 |
|
|
|
1,035,698 |
|
Deferred tax liabilities,
net |
|
140,609 |
|
|
|
121,046 |
|
|
|
151,759 |
|
Lease liability,
non-current |
|
197,135 |
|
|
|
199,211 |
|
|
|
203,115 |
|
Total liabilities |
|
2,062,838 |
|
|
|
1,978,543 |
|
|
|
2,025,101 |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
Common stock |
|
573 |
|
|
|
573 |
|
|
|
573 |
|
Additional paid-in capital |
|
1,734,122 |
|
|
|
1,729,625 |
|
|
|
1,734,528 |
|
Retained earnings |
|
1,122,579 |
|
|
|
952,011 |
|
|
|
1,060,603 |
|
Accumulated other comprehensive loss |
|
(49,258 |
) |
|
|
(119,994 |
) |
|
|
(106,573 |
) |
Common stock held in treasury, at cost |
|
(911,297 |
) |
|
|
(744,217 |
) |
|
|
(809,365 |
) |
Total stockholders’ equity |
|
1,896,719 |
|
|
|
1,817,998 |
|
|
|
1,879,766 |
|
Total liabilities and stockholders’ equity |
$ |
3,959,557 |
|
|
$ |
3,796,541 |
|
|
$ |
3,904,867 |
|
(1) |
As a result of purchase accounting, AFF’s June 30, 2022 as
reported earning asset balances contain significant fair value
adjustments, which were fully amortized during 2022. See
reconciliation of reported AFF earning asset balances to AFF
earning asset balances adjusted to exclude the impacts of purchase
accounting in the “Retail POS Payment Solutions Segment Results”
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 expenses 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 expenses 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 and amortization expense of intangible
assets related to the purchase of AFF are not included in the
segment pre-tax operating income.
U.S. Pawn Segment Results
U.S. Pawn Operating Results and Margins (dollars in
thousands)
|
Three Months Ended |
|
|
|
June 30, |
|
Increase / |
|
2023 |
|
|
2022 |
|
|
(Decrease) |
Revenue: |
|
|
|
|
|
|
|
Retail merchandise sales |
$ |
196,043 |
|
|
$ |
195,369 |
|
|
— |
|
% |
Pawn loan fees |
|
98,973 |
|
|
|
87,743 |
|
|
13 |
|
% |
Wholesale scrap jewelry sales |
|
17,652 |
|
|
|
15,673 |
|
|
13 |
|
% |
Total revenue |
|
312,668 |
|
|
|
298,785 |
|
|
5 |
|
% |
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
Cost of retail merchandise sold |
|
111,539 |
|
|
|
114,390 |
|
|
(2 |
) |
% |
Cost of wholesale scrap jewelry sold |
|
14,225 |
|
|
|
13,282 |
|
|
7 |
|
% |
Total cost of revenue |
|
125,764 |
|
|
|
127,672 |
|
|
(1 |
) |
% |
|
|
|
|
|
|
|
|
Net revenue |
|
186,904 |
|
|
|
171,113 |
|
|
9 |
|
% |
|
|
|
|
|
|
|
|
Segment expenses: |
|
|
|
|
|
|
|
Operating expenses |
|
108,159 |
|
|
|
101,242 |
|
|
7 |
|
% |
Depreciation and amortization |
|
6,330 |
|
|
|
5,868 |
|
|
8 |
|
% |
Total segment expenses |
|
114,489 |
|
|
|
107,110 |
|
|
7 |
|
% |
|
|
|
|
|
|
|
|
Segment pre-tax operating
income |
$ |
72,415 |
|
|
$ |
64,003 |
|
|
13 |
|
% |
|
|
|
|
|
|
|
|
Operating metrics: |
|
|
|
|
|
|
|
Retail merchandise sales margin |
43 |
% |
|
41 |
% |
|
|
Net revenue margin |
60 |
% |
|
57 |
% |
|
|
Segment pre-tax operating margin |
23 |
% |
|
21 |
% |
|
|
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
|
Six Months Ended |
|
|
|
June 30, |
|
Increase / |
|
2023 |
|
|
2022 |
|
|
(Decrease) |
Revenue: |
|
|
|
|
|
|
|
Retail merchandise sales |
$ |
406,724 |
|
|
$ |
400,311 |
|
|
2 |
% |
Pawn loan fees |
|
201,657 |
|
|
|
178,082 |
|
|
13 |
% |
Wholesale scrap jewelry sales |
|
43,968 |
|
|
|
32,197 |
|
|
37 |
% |
Total revenue |
|
652,349 |
|
|
|
610,590 |
|
|
7 |
% |
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
Cost of retail merchandise sold |
|
233,468 |
|
|
|
234,108 |
|
|
— |
% |
Cost of wholesale scrap jewelry sold |
|
35,307 |
|
|
|
27,812 |
|
|
27 |
% |
Total cost of revenue |
|
268,775 |
|
|
|
261,920 |
|
|
3 |
% |
|
|
|
|
|
|
|
|
Net revenue |
|
383,574 |
|
|
|
348,670 |
|
|
10 |
% |
|
|
|
|
|
|
|
|
Segment expenses: |
|
|
|
|
|
|
|
Operating expenses |
|
217,940 |
|
|
|
200,064 |
|
|
9 |
% |
Depreciation and amortization |
|
12,200 |
|
|
|
11,455 |
|
|
7 |
% |
Total segment expenses |
|
230,140 |
|
|
|
211,519 |
|
|
9 |
% |
|
|
|
|
|
|
|
|
Segment pre-tax operating
income |
$ |
153,434 |
|
|
$ |
137,151 |
|
|
12 |
% |
|
|
|
|
|
|
|
|
Operating metrics: |
|
|
|
|
|
|
|
Retail merchandise sales margin |
43 |
% |
|
42 |
% |
|
|
Net revenue margin |
59 |
% |
|
57 |
% |
|
|
Segment pre-tax operating margin |
24 |
% |
|
22 |
% |
|
|
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
U.S. Pawn Earning Assets and Portfolio
Metrics (dollars in thousands, except as otherwise
noted)
|
As of June 30, |
|
Increase / |
|
2023 |
|
|
2022 |
|
|
(Decrease) |
Earning assets: |
|
|
|
|
|
|
|
Pawn loans |
$ |
291,447 |
|
|
$ |
271,255 |
|
|
7 |
|
% |
Inventories |
|
180,410 |
|
|
|
185,921 |
|
|
(3 |
) |
% |
|
$ |
471,857 |
|
|
$ |
457,176 |
|
|
3 |
|
% |
|
|
|
|
|
|
|
|
Average outstanding pawn loan
amount (in ones) |
$ |
241 |
|
|
$ |
222 |
|
|
9 |
|
% |
|
|
|
|
|
|
|
|
Composition of pawn
collateral: |
|
|
|
|
|
|
|
General merchandise |
31 |
% |
|
35 |
% |
|
|
Jewelry |
69 |
% |
|
65 |
% |
|
|
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
Composition of
inventories: |
|
|
|
|
|
|
|
General merchandise |
44 |
% |
|
45 |
% |
|
|
Jewelry |
56 |
% |
|
55 |
% |
|
|
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
Percentage of inventory aged
greater than one year |
2 |
% |
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
Inventory turns (trailing
twelve months cost of merchandise sales divided by average
inventories) |
2.8 times |
|
2.7 times |
|
|
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
Latin America Pawn Segment
Results
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. See the “Constant Currency
Results” section below for additional discussion of constant
currency operating results.
Latin America Pawn Operating Results and
Margins (dollars in thousands)
|
|
|
|
|
|
|
Constant Currency Basis |
|
|
|
|
|
|
|
Three Months |
|
|
|
|
|
|
|
|
Ended |
|
|
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
|
2023 |
|
|
Increase |
|
|
2023 |
|
|
|
2022 |
|
|
Increase |
|
(Non-GAAP) |
|
(Non-GAAP) |
Revenue: |
|
|
|
|
|
|
|
|
|
|
Retail merchandise sales |
$ |
126,581 |
|
|
$ |
102,888 |
|
|
23 |
% |
|
$ |
112,899 |
|
|
|
10 |
% |
Pawn loan fees |
|
55,205 |
|
|
|
46,324 |
|
|
19 |
% |
|
|
49,177 |
|
|
|
6 |
% |
Wholesale scrap jewelry sales |
|
9,931 |
|
|
|
8,175 |
|
|
21 |
% |
|
|
9,931 |
|
|
|
21 |
% |
Total revenue |
|
191,717 |
|
|
|
157,387 |
|
|
22 |
% |
|
|
172,007 |
|
|
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
Cost of retail merchandise sold |
|
81,660 |
|
|
|
64,919 |
|
|
26 |
% |
|
|
72,893 |
|
|
|
12 |
% |
Cost of wholesale scrap jewelry sold |
|
7,655 |
|
|
|
6,613 |
|
|
16 |
% |
|
|
6,798 |
|
|
|
3 |
% |
Total cost of revenue |
|
89,315 |
|
|
|
71,532 |
|
|
25 |
% |
|
|
79,691 |
|
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
102,402 |
|
|
|
85,855 |
|
|
19 |
% |
|
|
92,316 |
|
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
|
Segment expenses: |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
59,507 |
|
|
|
48,053 |
|
|
24 |
% |
|
|
53,373 |
|
|
|
11 |
% |
Depreciation and amortization |
|
5,203 |
|
|
|
4,553 |
|
|
14 |
% |
|
|
4,693 |
|
|
|
3 |
% |
Total segment expenses |
|
64,710 |
|
|
|
52,606 |
|
|
23 |
% |
|
|
58,066 |
|
|
|
10 |
% |
|
|
|
|
|
|
|
|
|
|
|
Segment pre-tax operating
income |
$ |
37,692 |
|
|
$ |
33,249 |
|
|
13 |
% |
|
$ |
34,250 |
|
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating metrics: |
|
|
|
|
|
|
|
|
|
|
Retail merchandise sales margin |
35 |
% |
|
37 |
% |
|
|
35 |
% |
|
|
|
Net revenue margin |
53 |
% |
|
55 |
% |
|
|
54 |
% |
|
|
|
Segment pre-tax operating margin |
20 |
% |
|
21 |
% |
|
|
20 |
% |
|
|
|
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
|
|
|
|
|
|
|
Constant Currency Basis |
|
|
|
|
|
|
|
Six Months |
|
|
|
|
|
|
|
Ended |
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
Increase / |
|
June 30, |
|
|
|
|
2023 |
|
|
(Decrease) |
|
|
2023 |
|
|
|
2022 |
|
|
Increase |
|
(Non-GAAP) |
|
(Non-GAAP) |
Revenue: |
|
|
|
|
|
|
|
|
|
Retail merchandise sales |
$ |
245,518 |
|
|
$ |
200,765 |
|
|
22 |
% |
|
$ |
222,177 |
|
|
11 |
|
% |
Pawn loan fees |
|
104,081 |
|
|
|
87,804 |
|
|
19 |
% |
|
|
94,092 |
|
|
7 |
|
% |
Wholesale scrap jewelry sales |
|
28,799 |
|
|
|
24,456 |
|
|
18 |
% |
|
|
28,799 |
|
|
18 |
|
% |
Total revenue |
|
378,398 |
|
|
|
313,025 |
|
|
21 |
% |
|
|
345,068 |
|
|
10 |
|
% |
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
Cost of retail merchandise sold |
|
159,623 |
|
|
|
127,415 |
|
|
25 |
% |
|
|
144,550 |
|
|
13 |
|
% |
Cost of wholesale scrap jewelry sold |
|
22,300 |
|
|
|
20,298 |
|
|
10 |
% |
|
|
20,069 |
|
|
(1 |
) |
% |
Total cost of revenue |
|
181,923 |
|
|
|
147,713 |
|
|
23 |
% |
|
|
164,619 |
|
|
11 |
|
% |
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
196,475 |
|
|
|
165,312 |
|
|
19 |
% |
|
|
180,449 |
|
|
9 |
|
% |
|
|
|
|
|
|
|
|
|
|
Segment expenses: |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
115,263 |
|
|
|
93,595 |
|
|
23 |
% |
|
|
104,949 |
|
|
12 |
|
% |
Depreciation and amortization |
|
10,648 |
|
|
|
8,954 |
|
|
19 |
% |
|
|
9,804 |
|
|
9 |
|
% |
Total segment expenses |
|
125,911 |
|
|
|
102,549 |
|
|
23 |
% |
|
|
114,753 |
|
|
12 |
|
% |
|
|
|
|
|
|
|
|
|
|
Segment pre-tax operating income |
$ |
70,564 |
|
|
$ |
62,763 |
|
|
12 |
% |
|
$ |
65,696 |
|
|
5 |
|
% |
|
|
|
|
|
|
|
|
|
|
Operating metrics: |
|
|
|
|
|
|
|
|
|
Retail merchandise sales margin |
35 |
% |
|
37 |
% |
|
|
35 |
% |
|
|
Net revenue margin |
52 |
% |
|
53 |
% |
|
|
52 |
% |
|
|
Segment pre-tax operating margin |
19 |
% |
|
20 |
% |
|
|
19 |
% |
|
|
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
Latin America Pawn Earning Assets and
Portfolio Metrics (dollars in thousands, except as otherwise
noted)
|
|
|
|
|
|
|
|
|
Constant Currency Basis |
|
|
|
|
|
|
|
|
|
As of |
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
Increase / |
|
As of June 30, |
|
|
|
|
2023 |
|
(Decrease) |
|
2023 |
|
|
2022 |
|
|
Increase |
|
(Non-GAAP) |
|
(Non-GAAP) |
Earning assets: |
|
|
|
|
|
|
|
|
|
|
|
Pawn loans |
$ |
134,718 |
|
|
$ |
114,453 |
|
|
18 |
% |
|
$ |
116,100 |
|
1 |
|
% |
Inventories |
|
86,732 |
|
|
|
74,607 |
|
|
16 |
% |
|
|
74,844 |
|
— |
|
% |
|
$ |
221,450 |
|
|
$ |
189,060 |
|
|
17 |
% |
|
$ |
190,944 |
|
1 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Average outstanding pawn loan
amount (in ones) |
$ |
91 |
|
|
$ |
80 |
|
|
14 |
% |
|
$ |
79 |
|
(1 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Composition of pawn
collateral: |
|
|
|
|
|
|
|
|
|
|
|
General merchandise |
66 |
% |
|
69 |
% |
|
|
|
|
|
|
Jewelry |
34 |
% |
|
31 |
% |
|
|
|
|
|
|
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Composition of
inventories: |
|
|
|
|
|
|
|
|
|
|
|
General merchandise |
69 |
% |
|
70 |
% |
|
|
|
|
|
|
Jewelry |
31 |
% |
|
30 |
% |
|
|
|
|
|
|
|
100 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of inventory aged
greater than one year |
1 |
% |
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory turns (trailing
twelve months cost of merchandise sales divided by average
inventories) |
4.3 times |
|
4.2 times |
|
|
|
|
|
|
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
Retail POS Payment Solutions Segment
Results
Retail POS Payment
Solutions Operating Results (dollars in
thousands)
|
|
|
|
|
|
|
Adjusted (1) |
|
|
|
|
|
|
|
Three Months |
|
|
|
|
|
|
|
Ended |
|
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
|
2022 |
|
Increase |
|
|
2023 |
|
|
2022 |
|
Increase |
|
(Non-GAAP) |
|
(Non-GAAP) |
Revenue: |
|
|
|
|
|
|
|
|
|
Leased merchandise income |
$ |
189,805 |
|
$ |
147,700 |
|
29 |
% |
|
$ |
147,700 |
|
29 |
% |
Interest and fees on finance receivables |
|
58,192 |
|
|
43,744 |
|
33 |
% |
|
|
55,258 |
|
5 |
% |
Total revenue |
|
247,997 |
|
|
191,444 |
|
30 |
% |
|
|
202,958 |
|
22 |
% |
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
Depreciation of leased merchandise |
|
103,062 |
|
|
82,605 |
|
25 |
% |
|
|
81,007 |
|
27 |
% |
Provision for lease losses |
|
53,048 |
|
|
38,035 |
|
39 |
% |
|
|
38,035 |
|
39 |
% |
Provision for loan losses |
|
28,190 |
|
|
26,800 |
|
5 |
% |
|
|
26,800 |
|
5 |
% |
Total cost of revenue |
|
184,300 |
|
|
147,440 |
|
25 |
% |
|
|
145,842 |
|
26 |
% |
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
63,697 |
|
|
44,004 |
|
45 |
% |
|
|
57,116 |
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
Segment expenses: |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
37,115 |
|
|
31,260 |
|
19 |
% |
|
|
31,260 |
|
19 |
% |
Depreciation and amortization |
|
751 |
|
|
699 |
|
7 |
% |
|
|
699 |
|
7 |
% |
Total segment expenses |
|
37,866 |
|
|
31,959 |
|
18 |
% |
|
|
31,959 |
|
18 |
% |
|
|
|
|
|
|
|
|
|
|
Segment pre-tax operating
income |
$ |
25,831 |
|
$ |
12,045 |
|
114 |
% |
|
$ |
25,157 |
|
3 |
% |
(1) |
As a result of purchase accounting, AFF’s as reported amounts for
the three months ended June 30, 2022 contain significant fair
value adjustments. The adjusted amounts for the three months ended
June 30, 2022 exclude these fair value purchase accounting
adjustments. |
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
|
|
|
|
|
|
|
Adjusted (1) |
|
|
|
|
|
|
|
Six Months |
|
|
|
|
|
|
|
Ended |
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
Increase / |
|
June 30, |
|
|
|
|
2022 |
|
(Decrease) |
|
|
2023 |
|
|
2022 |
|
Increase |
|
(Non-GAAP) |
|
(Non-GAAP) |
Revenue: |
|
|
|
|
|
|
|
|
|
Leased merchandise income |
$ |
373,243 |
|
$ |
297,647 |
|
25 |
% |
|
$ |
297,647 |
|
25 |
|
% |
Interest and fees on finance receivables |
|
112,834 |
|
|
86,193 |
|
31 |
% |
|
|
113,880 |
|
(1 |
) |
% |
Total revenue |
|
486,077 |
|
|
383,840 |
|
27 |
% |
|
|
411,527 |
|
18 |
|
% |
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
Depreciation of leased merchandise |
|
205,234 |
|
|
176,311 |
|
16 |
% |
|
|
170,354 |
|
20 |
|
% |
Provision for lease losses |
|
102,214 |
|
|
77,855 |
|
31 |
% |
|
|
77,855 |
|
31 |
|
% |
Provision for loan losses |
|
57,475 |
|
|
51,497 |
|
12 |
% |
|
|
51,497 |
|
12 |
|
% |
Total cost of revenue |
|
364,923 |
|
|
305,663 |
|
19 |
% |
|
|
299,706 |
|
22 |
|
% |
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
121,154 |
|
|
78,177 |
|
55 |
% |
|
|
111,821 |
|
8 |
|
% |
|
|
|
|
|
|
|
|
|
|
Segment expenses: |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
70,639 |
|
|
60,192 |
|
17 |
% |
|
|
60,192 |
|
17 |
|
% |
Depreciation and amortization |
|
1,487 |
|
|
1,381 |
|
8 |
% |
|
|
1,381 |
|
8 |
|
% |
Total segment expenses |
|
72,126 |
|
|
61,573 |
|
17 |
% |
|
|
61,573 |
|
17 |
|
% |
|
|
|
|
|
|
|
|
|
|
Segment pre-tax operating
income |
$ |
49,028 |
|
$ |
16,604 |
|
195 |
% |
|
$ |
50,248 |
|
(2 |
) |
% |
(1) |
As a result of purchase accounting, AFF’s as reported amounts for
the six months ended June 30, 2022 contain significant fair
value adjustments. The adjusted amounts for the six months ended
June 30, 2022 exclude these fair value purchase accounting
adjustments. |
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
Retail POS Payment Solutions Gross
Transaction Volumes (dollars in thousands)
|
Three Months Ended |
|
|
|
June 30, |
|
|
|
|
2023 |
|
|
2022 |
|
Increase |
Leased merchandise |
$ |
154,103 |
|
$ |
123,263 |
|
25 |
% |
Finance receivables |
|
101,863 |
|
|
82,929 |
|
23 |
% |
Total gross transaction volume |
$ |
255,966 |
|
$ |
206,192 |
|
24 |
% |
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
|
2023 |
|
|
2022 |
|
Increase |
Leased merchandise |
$ |
305,278 |
|
$ |
235,717 |
|
30 |
% |
Finance receivables |
|
200,303 |
|
|
155,066 |
|
29 |
% |
Total gross transaction volume |
$ |
505,581 |
|
$ |
390,783 |
|
29 |
% |
Retail POS Payment Solutions Earning
Assets (dollars in thousands)
|
|
|
|
|
|
|
Adjusted (2) |
|
|
|
|
|
As of |
|
|
|
|
|
|
|
June 30, |
|
Increase / |
|
As of June 30, |
|
Increase / |
|
|
2022 |
|
|
(Decrease) |
|
|
2023 |
|
|
|
2022 |
|
|
(Decrease) |
|
(Non-GAAP) |
|
(Non-GAAP) |
Leased merchandise, net: |
|
|
|
|
|
|
|
|
|
Leased merchandise, before allowance for lease losses |
$ |
255,465 |
|
|
$ |
188,025 |
|
|
36 |
|
% |
|
$ |
203,199 |
|
|
26 |
% |
Less allowance for lease losses |
|
(110,964 |
) |
|
|
(69,101 |
) |
|
61 |
|
% |
|
|
(86,014 |
) |
|
29 |
% |
Leased merchandise, net (1) |
$ |
144,501 |
|
|
$ |
118,924 |
|
|
22 |
|
% |
|
$ |
117,185 |
|
|
23 |
% |
|
|
|
|
|
|
|
|
|
|
Finance receivables, net: |
|
|
|
|
|
|
|
|
|
Finance receivables, before allowance for loan losses |
$ |
203,609 |
|
|
$ |
199,555 |
|
|
2 |
|
% |
|
$ |
184,585 |
|
|
10 |
% |
Less allowance for loan losses |
|
(93,054 |
) |
|
|
(73,936 |
) |
|
26 |
|
% |
|
|
(73,936 |
) |
|
26 |
% |
Finance receivables, net |
$ |
110,555 |
|
|
$ |
125,619 |
|
|
(12 |
) |
% |
|
$ |
110,649 |
|
|
— |
% |
(1) |
Includes $1.4 million of intersegment transactions as of
June 30, 2023 related to the Company offering AFF’s LTO
payment solution as a payment option in its U.S. pawn stores that
are eliminated upon consolidation. Excluding the intersegment
transactions, consolidated net leased merchandise totaled $143.1
million. |
|
|
(2) |
As a result of purchase accounting, AFF’s June 30, 2022 as
reported earnings assets contain significant fair value
adjustments, which were fully amortized during 2022. The adjusted
amounts as of June 30, 2022 exclude these fair value purchase
accounting adjustments. |
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
Allowance for Lease and Loan Losses and
Other Portfolio Metrics (dollars in thousands)
|
|
|
|
|
|
|
Adjusted (5) |
|
|
|
|
|
|
|
|
|
Three Months |
|
|
|
|
|
|
|
Ended |
|
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
|
June 30, |
|
Increase / |
|
|
2022 |
|
|
Increase |
|
|
2023 |
|
|
|
2022 |
|
|
(Decrease) |
|
(Non-GAAP) |
|
(Non-GAAP) |
Allowance for lease
losses: |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
$ |
93,269 |
|
|
$ |
40,364 |
|
|
131 |
|
% |
|
$ |
76,028 |
|
|
23 |
% |
Provision for lease losses (1) |
|
53,048 |
|
|
|
38,035 |
|
|
39 |
|
% |
|
|
38,035 |
|
|
39 |
% |
Charge-offs |
|
(37,026 |
) |
|
|
(10,301 |
) |
|
259 |
|
% |
|
|
(29,052 |
) |
|
27 |
% |
Recoveries |
|
1,673 |
|
|
|
1,003 |
|
|
67 |
|
% |
|
|
1,003 |
|
|
67 |
% |
Balance at end of period |
$ |
110,964 |
|
|
$ |
69,101 |
|
|
61 |
|
% |
|
$ |
86,014 |
|
|
29 |
% |
|
|
|
|
|
|
|
|
|
|
Leased merchandise portfolio
metrics: |
|
|
|
|
|
|
|
|
|
Provision expense as percentage of originations (2) |
34 |
% |
|
|
|
|
31 |
% |
|
|
Average monthly net charge-off rate (3) |
4.7 |
% |
|
|
|
|
4.7 |
% |
|
|
Delinquency rate (4) |
20.7 |
% |
|
|
|
|
19.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan
losses: |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
$ |
88,610 |
|
|
$ |
72,332 |
|
|
23 |
|
% |
|
|
|
|
Provision for loan losses |
|
28,190 |
|
|
|
26,800 |
|
|
5 |
|
% |
|
|
|
|
Charge-offs |
|
(25,274 |
) |
|
|
(26,579 |
) |
|
(5 |
) |
% |
|
|
|
|
Recoveries |
|
1,528 |
|
|
|
1,383 |
|
|
10 |
|
% |
|
|
|
|
Balance at end of period |
$ |
93,054 |
|
|
$ |
73,936 |
|
|
26 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance receivables portfolio
metrics: |
|
|
|
|
|
|
|
|
|
Provision expense as a percentage of originations (2) |
28 |
% |
|
32 |
% |
|
|
|
|
|
|
Average monthly net charge-off rate (3) |
4.0 |
% |
|
4.5 |
% |
|
|
|
|
|
|
Delinquency rate (4) |
18.1 |
% |
|
19.0 |
% |
|
|
|
|
|
|
(1) |
Includes $0.2 million of intersegment transactions for the three
months ended June 30, 2023 related to the Company offering
AFF’s LTO payment solution as a payment option in its U.S. pawn
stores that are eliminated upon consolidation. Excluding the
intersegment transactions, the provision for lease losses totaled
$52.9 million. |
|
|
(2) |
Calculated as provision for lease or loan losses as a percentage of
the respective gross transaction volume originated. |
|
|
(3) |
Calculated as charge-offs, net of recoveries, as a percentage of
the respective average earning asset balance before allowance for
lease or loan losses (adjusted to exclude any fair value purchase
accounting adjustments, as applicable). |
|
|
(4) |
Calculated as the percentage of the respective contractual earning
asset balance owed that is 1 to 89 days past due (the Company
charges off leases and finance receivables when they are 90 days or
more contractually past due). |
|
|
(5) |
As a result of purchase accounting, AFF’s as reported allowance for
lease losses for the three months ended June 30, 2022 contain
significant fair value adjustments. The adjusted amounts for the
three months ended June 30, 2022 exclude these fair value
purchase accounting adjustments. As a result of the significance of
these accounting adjustments, the Company does not believe that the
unadjusted leased merchandise portfolio metrics for the three
months ended June 30, 2022 provide a useful comparison against
the June 30, 2023 amounts. |
FIRSTCASH HOLDINGS,
INC.OPERATING INFORMATION
(CONTINUED)(UNAUDITED)
|
|
|
|
|
|
|
Adjusted (5) |
|
|
|
|
|
|
|
|
|
Six Months |
|
|
|
|
|
|
|
Ended |
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
June 30, |
|
Increase / |
|
|
2022 |
|
|
Increase |
|
|
2023 |
|
|
|
2022 |
|
|
(Decrease) |
|
(Non-GAAP) |
|
(Non-GAAP) |
Allowance for lease
losses: |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
$ |
79,576 |
|
|
$ |
5,442 |
|
|
1,362 |
|
% |
|
$ |
66,968 |
|
|
19 |
% |
Provision for lease losses (1) |
|
102,214 |
|
|
|
77,855 |
|
|
31 |
|
% |
|
|
77,855 |
|
|
31 |
% |
Charge-offs |
|
(74,172 |
) |
|
|
(16,321 |
) |
|
354 |
|
% |
|
|
(60,934 |
) |
|
22 |
% |
Recoveries |
|
3,346 |
|
|
|
2,125 |
|
|
57 |
|
% |
|
|
2,125 |
|
|
57 |
% |
Balance at end of period |
$ |
110,964 |
|
|
$ |
69,101 |
|
|
61 |
|
% |
|
$ |
86,014 |
|
|
29 |
% |
|
|
|
|
|
|
|
|
|
|
Leased merchandise portfolio
metrics: |
|
|
|
|
|
|
|
|
|
Provision expense as percentage of originations (2) |
33 |
% |
|
|
|
|
33 |
% |
|
|
Average monthly net charge-off rate (3) |
4.8 |
% |
|
|
|
|
4.8 |
% |
|
|
Delinquency rate (4) |
20.7 |
% |
|
|
|
|
19.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan
losses: |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
$ |
84,833 |
|
|
$ |
75,574 |
|
|
12 |
|
% |
|
|
|
|
Provision for loan losses |
|
57,475 |
|
|
|
51,497 |
|
|
12 |
|
% |
|
|
|
|
Charge-offs |
|
(52,391 |
) |
|
|
(55,987 |
) |
|
(6 |
) |
% |
|
|
|
|
Recoveries |
|
3,137 |
|
|
|
2,852 |
|
|
10 |
|
% |
|
|
|
|
Balance at end of period |
$ |
93,054 |
|
|
$ |
73,936 |
|
|
26 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance receivables portfolio
metrics: |
|
|
|
|
|
|
|
|
|
Provision expense as a percentage of originations (2) |
29 |
% |
|
33 |
% |
|
|
|
|
|
|
Average monthly net charge-off rate (3) |
4.2 |
% |
|
4.4 |
% |
|
|
|
|
|
|
Delinquency rate (4) |
18.1 |
% |
|
19.0 |
% |
|
|
|
|
|
|
(1) |
Includes $0.3 million of intersegment transactions for the six
months ended June 30, 2023 related to the Company offering
AFF’s LTO payment solution as a payment option in its U.S. pawn
stores that are eliminated upon consolidation. Excluding the
intersegment transactions, the provision for lease losses totaled
$101.9 million. |
|
|
(2) |
Calculated as provision for lease or loan losses as a percentage of
the respective gross transaction volume originated. |
|
|
(3) |
Calculated as charge-offs, net of recoveries, as a percentage of
the respective average earning asset balance before allowance for
lease or loan losses (adjusted to exclude any fair value purchase
accounting adjustments, as applicable). |
|
|
(4) |
Calculated as the percentage of the respective contractual earning
asset balance owed that is 1 to 89 days past due (the Company
charges off leases and finance receivables when they are 90 days or
more contractually past due). |
|
|
(5) |
As a result of purchase accounting, AFF’s as reported allowance for
lease losses for the six months ended June 30, 2022 contain
significant fair value adjustments. The adjusted amounts for the
six months ended June 30, 2022 exclude these fair value
purchase accounting adjustments. As a result of the significance of
these accounting adjustments, the Company does not believe that the
unadjusted leased merchandise portfolio metrics for the six months
ended June 30, 2022 provide a useful comparison against the
June 30, 2023 amounts. |
FIRSTCASH HOLDINGS,
INC.PAWN STORE LOCATIONS AND MERCHANT PARTNER
LOCATIONS
Pawn Operations
As of June 30, 2023, the Company operated
2,889 pawn store locations comprised of 1,101 stores in 25 U.S.
states and the District of Columbia, 1,697 stores in 32 states in
Mexico, 63 stores in Guatemala, 14 stores in Colombia and 14 stores
in El Salvador.
The following tables detail pawn store count
activity for the three and six months ended June 30, 2023:
|
Three Months Ended June 30, 2023 |
|
U.S. |
|
Latin America |
|
Total |
Total locations, beginning of period |
1,102 |
|
|
1,775 |
|
|
2,877 |
|
New locations opened (1) |
2 |
|
|
16 |
|
|
18 |
|
Locations acquired |
1 |
|
|
— |
|
|
1 |
|
Consolidation of existing pawn locations (2) |
(4 |
) |
|
(3 |
) |
|
(7 |
) |
Total locations, end of period |
1,101 |
|
|
1,788 |
|
|
2,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2023 |
|
U.S. |
|
Latin America |
|
Total |
Total locations, beginning of
period |
1,101 |
|
|
1,771 |
|
|
2,872 |
|
New locations opened (1) |
2 |
|
|
30 |
|
|
32 |
|
Locations acquired |
4 |
|
|
— |
|
|
4 |
|
Consolidation of existing pawn locations (2) |
(6 |
) |
|
(13 |
) |
|
(19 |
) |
Total locations, end of period |
1,101 |
|
|
1,788 |
|
|
2,889 |
|
(1) |
In addition to new store openings, the Company strategically
relocated one store in the U.S. and one store in Latin America
during the three months ended June 30, 2023. During the six
months ended June 30, 2023, the Company strategically
relocated two stores in the U.S. and two stores in Latin
America. |
|
|
(2) |
Store consolidations were primarily acquired locations over the
past six 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. |
POS Payment Solutions
As of June 30, 2023, AFF provided LTO and
retail POS payment solutions for consumer goods and services
through a network of approximately 10,500 active retail merchant
partner locations located in all 50 U.S. states, the District of
Columbia and Puerto Rico.
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. 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
(i) 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 (ii) 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 June 30, |
|
Six Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
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 |
$ |
45,180 |
|
|
$ |
0.99 |
|
|
$ |
86,108 |
|
|
$ |
1.81 |
|
|
$ |
92,568 |
|
|
$ |
2.01 |
|
|
$ |
114,113 |
|
|
$ |
2.38 |
|
Adjustments, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger and acquisition expenses |
|
191 |
|
|
|
— |
|
|
|
242 |
|
|
|
0.01 |
|
|
|
213 |
|
|
|
0.01 |
|
|
|
753 |
|
|
|
0.02 |
|
Non-cash foreign currency gain related to lease liability |
|
(766 |
) |
|
|
(0.01 |
) |
|
|
(12 |
) |
|
|
— |
|
|
|
(1,613 |
) |
|
|
(0.04 |
) |
|
|
(496 |
) |
|
|
(0.01 |
) |
AFF purchase accounting adjustments (1) |
|
10,887 |
|
|
|
0.24 |
|
|
|
21,011 |
|
|
|
0.44 |
|
|
|
21,989 |
|
|
|
0.48 |
|
|
|
47,736 |
|
|
|
1.00 |
|
Gain on revaluation of contingent acquisition consideration |
|
— |
|
|
|
— |
|
|
|
(53,833 |
) |
|
|
(1.13 |
) |
|
|
— |
|
|
|
— |
|
|
|
(51,854 |
) |
|
|
(1.08 |
) |
Other expenses (income), net |
|
61 |
|
|
|
— |
|
|
|
(2,357 |
) |
|
|
(0.05 |
) |
|
|
96 |
|
|
|
— |
|
|
|
(2,221 |
) |
|
|
(0.05 |
) |
Adjusted net income and
diluted earnings per share |
$ |
55,553 |
|
|
$ |
1.22 |
|
|
$ |
51,159 |
|
|
$ |
1.08 |
|
|
$ |
113,253 |
|
|
$ |
2.46 |
|
|
$ |
108,031 |
|
|
$ |
2.26 |
|
(1) See detail of the AFF purchase
accounting adjustments in tables below.
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 June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Pre-tax |
|
Tax |
|
After-tax |
|
Pre-tax |
|
Tax |
|
After-tax |
Merger and acquisition expenses |
$ |
252 |
|
|
$ |
61 |
|
|
$ |
191 |
|
|
$ |
314 |
|
|
$ |
72 |
|
|
$ |
242 |
|
Non-cash foreign currency gain
related to lease liability |
|
(1,095 |
) |
|
|
(329 |
) |
|
|
(766 |
) |
|
|
(17 |
) |
|
|
(5 |
) |
|
|
(12 |
) |
AFF purchase accounting
adjustments (1) |
|
14,140 |
|
|
|
3,253 |
|
|
|
10,887 |
|
|
|
27,287 |
|
|
|
6,276 |
|
|
|
21,011 |
|
Gain on revaluation of
contingent acquisition consideration |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(65,559 |
) |
|
|
(11,726 |
) |
|
|
(53,833 |
) |
Other expenses (income),
net |
|
79 |
|
|
|
18 |
|
|
|
61 |
|
|
|
(3,062 |
) |
|
|
(705 |
) |
|
|
(2,357 |
) |
Total adjustments |
$ |
13,376 |
|
|
$ |
3,003 |
|
|
$ |
10,373 |
|
|
$ |
(41,037 |
) |
|
$ |
(6,088 |
) |
|
$ |
(34,949 |
) |
|
Six Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Pre-tax |
|
Tax |
|
After-tax |
|
Pre-tax |
|
Tax |
|
After-tax |
Merger and acquisition expenses |
$ |
283 |
|
|
$ |
70 |
|
|
$ |
213 |
|
|
$ |
979 |
|
|
$ |
226 |
|
|
$ |
753 |
|
Non-cash foreign currency gain
related to lease liability |
|
(2,305 |
) |
|
|
(692 |
) |
|
|
(1,613 |
) |
|
|
(709 |
) |
|
|
(213 |
) |
|
|
(496 |
) |
AFF purchase accounting
adjustments (1) |
|
28,558 |
|
|
|
6,569 |
|
|
|
21,989 |
|
|
|
61,995 |
|
|
|
14,259 |
|
|
|
47,736 |
|
Gain on revaluation of
contingent acquisition consideration |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(62,989 |
) |
|
|
(11,135 |
) |
|
|
(51,854 |
) |
Other expenses (income),
net |
|
124 |
|
|
|
28 |
|
|
|
96 |
|
|
|
(2,885 |
) |
|
|
(664 |
) |
|
|
(2,221 |
) |
Total adjustments |
$ |
26,660 |
|
|
$ |
5,975 |
|
|
$ |
20,685 |
|
|
$ |
(3,609 |
) |
|
$ |
2,473 |
|
|
$ |
(6,082 |
) |
(1) The following table details AFF
purchase accounting adjustments (in thousands):
|
|
Three Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
Pre-tax |
|
Tax |
|
After-tax |
|
Pre-tax |
|
Tax |
|
After-tax |
|
Amortization of fair value adjustment on acquired finance
receivables |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
11,514 |
|
$ |
2,649 |
|
$ |
8,865 |
|
Amortization of fair value
adjustment on acquired leased merchandise |
|
— |
|
|
— |
|
|
— |
|
|
1,598 |
|
|
367 |
|
|
1,231 |
|
Amortization of acquired
intangible assets |
|
14,140 |
|
|
3,253 |
|
|
10,887 |
|
|
14,175 |
|
|
3,260 |
|
|
10,915 |
|
Total AFF purchase accounting adjustments |
$ |
14,140 |
|
$ |
3,253 |
|
$ |
10,887 |
|
$ |
27,287 |
|
$ |
6,276 |
|
$ |
21,011 |
FIRSTCASH HOLDINGS,
INC.RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURESTO GAAP FINANCIAL MEASURES
(CONTINUED)(UNAUDITED)
|
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
Pre-tax |
|
Tax |
|
After-tax |
|
Pre-tax |
|
Tax |
|
After-tax |
|
Amortization of fair value adjustment on acquired finance
receivables |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
27,687 |
|
$ |
6,368 |
|
$ |
21,319 |
|
Amortization of fair value
adjustment on acquired leased merchandise |
|
— |
|
|
— |
|
|
— |
|
|
5,957 |
|
|
1,370 |
|
|
4,587 |
|
Amortization of acquired
intangible assets |
|
28,558 |
|
|
6,569 |
|
|
21,989 |
|
|
28,351 |
|
|
6,521 |
|
|
21,830 |
|
Total AFF purchase accounting adjustments |
$ |
28,558 |
|
$ |
6,569 |
|
$ |
21,989 |
|
$ |
61,995 |
|
$ |
14,259 |
|
$ |
47,736 |
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 |
|
Six Months Ended |
|
Months Ended |
|
June 30, |
|
June 30, |
|
June 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income |
$ |
45,180 |
|
|
$ |
86,108 |
|
|
$ |
92,568 |
|
|
$ |
114,113 |
|
|
$ |
231,950 |
|
|
$ |
176,880 |
|
Provision for income taxes |
|
15,344 |
|
|
|
23,515 |
|
|
|
31,169 |
|
|
|
32,519 |
|
|
|
68,788 |
|
|
|
51,178 |
|
Depreciation and amortization |
|
27,050 |
|
|
|
25,982 |
|
|
|
54,161 |
|
|
|
51,524 |
|
|
|
106,469 |
|
|
|
75,916 |
|
Interest expense |
|
21,071 |
|
|
|
16,246 |
|
|
|
41,968 |
|
|
|
32,467 |
|
|
|
80,209 |
|
|
|
50,425 |
|
Interest income |
|
(408 |
) |
|
|
(222 |
) |
|
|
(925 |
) |
|
|
(898 |
) |
|
|
(1,340 |
) |
|
|
(1,317 |
) |
EBITDA |
|
108,237 |
|
|
|
151,629 |
|
|
|
218,941 |
|
|
|
229,725 |
|
|
|
486,076 |
|
|
|
353,082 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger and acquisition expenses |
|
252 |
|
|
|
314 |
|
|
|
283 |
|
|
|
979 |
|
|
|
3,043 |
|
|
|
15,176 |
|
Non-cash foreign currency (gain) loss related to lease
liability |
|
(1,095 |
) |
|
|
(17 |
) |
|
|
(2,305 |
) |
|
|
(709 |
) |
|
|
(2,925 |
) |
|
|
82 |
|
AFF purchase accounting adjustments (1) |
|
— |
|
|
|
13,112 |
|
|
|
— |
|
|
|
33,644 |
|
|
|
16,710 |
|
|
|
80,006 |
|
Gain on revaluation of contingent acquisition consideration |
|
— |
|
|
|
(65,559 |
) |
|
|
— |
|
|
|
(62,989 |
) |
|
|
(46,560 |
) |
|
|
(80,860 |
) |
Other expenses (income), net |
|
79 |
|
|
|
(3,062 |
) |
|
|
124 |
|
|
|
(2,885 |
) |
|
|
278 |
|
|
|
(3,215 |
) |
Adjusted EBITDA |
$ |
107,473 |
|
|
$ |
96,417 |
|
|
$ |
217,043 |
|
|
$ |
197,765 |
|
|
$ |
456,622 |
|
|
$ |
364,271 |
|
(1) |
Excludes $14 million, $29 million and $57 million of amortization
expense related to identifiable intangible assets as a result of
the AFF acquisition for the three months, six months and trailing
twelve months ended June 30, 2023, respectively, which is
included in the add back of depreciation and amortization to net
income used to calculate EBITDA. Excludes $14 million, $28 million
and $30 million of amortization expense related to identifiable
intangible assets as a result of the AFF acquisition for the three
months, six months and trailing twelve months ended June 30,
2022, respectively, which is included in the add back of
depreciation and amortization to net income used 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 |
|
Six Months Ended |
|
Months Ended |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flow from operating
activities |
$ |
95,075 |
|
|
$ |
106,622 |
|
|
$ |
205,669 |
|
|
$ |
226,767 |
|
|
$ |
448,207 |
|
|
$ |
336,322 |
|
Cash flow from certain
investing activities: |
|
|
|
|
|
|
|
|
|
|
|
Pawn loans, net (1) |
|
(44,170 |
) |
|
|
(49,648 |
) |
|
|
188 |
|
|
|
(32,265 |
) |
|
|
(3,364 |
) |
|
|
(97,113 |
) |
Finance receivables, net |
|
(32,585 |
) |
|
|
(23,607 |
) |
|
|
(57,125 |
) |
|
|
(23,546 |
) |
|
|
(118,932 |
) |
|
|
(29,390 |
) |
Purchases of furniture, fixtures, equipment and improvements |
|
(14,520 |
) |
|
|
(12,658 |
) |
|
|
(28,348 |
) |
|
|
(19,686 |
) |
|
|
(44,248 |
) |
|
|
(40,683 |
) |
Free cash flow |
|
3,800 |
|
|
|
20,709 |
|
|
|
120,384 |
|
|
|
151,270 |
|
|
|
281,663 |
|
|
|
169,136 |
|
Merger and acquisition expenses paid, net of tax benefit |
|
191 |
|
|
|
242 |
|
|
|
213 |
|
|
|
753 |
|
|
|
2,338 |
|
|
|
11,683 |
|
Adjusted free cash flow |
$ |
3,991 |
|
|
$ |
20,951 |
|
|
$ |
120,597 |
|
|
$ |
152,023 |
|
|
$ |
284,001 |
|
|
$ |
180,819 |
|
(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.
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 |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Total revenue, as
reported |
$ |
750,622 |
|
$ |
647,616 |
|
$ |
1,513,361 |
|
$ |
1,307,455 |
AFF purchase accounting
adjustments (1) |
|
— |
|
|
11,514 |
|
|
— |
|
|
27,687 |
Adjusted total revenue |
$ |
750,622 |
|
$ |
659,130 |
|
$ |
1,513,361 |
|
$ |
1,335,142 |
(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 transacted in local
currencies in Mexico, Guatemala and Colombia. The Company also has
operations in El Salvador, where the reporting and functional
currency is the U.S. dollar.
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. 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.
FIRSTCASH HOLDINGS,
INC.RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURESTO GAAP FINANCIAL MEASURES
(CONTINUED)(UNAUDITED)
Exchange Rates for the Mexican Peso,
Guatemalan Quetzal and Colombian Peso
|
June 30, |
|
Favorable / |
|
2023 |
|
2022 |
|
(Unfavorable) |
Mexican peso / U.S. dollar exchange rate: |
|
|
|
|
|
|
|
|
End-of-period |
17.1 |
|
20.0 |
|
|
15 |
|
% |
Three months ended |
17.7 |
|
20.0 |
|
|
12 |
|
% |
Six months ended |
18.2 |
|
20.3 |
|
|
10 |
|
% |
|
|
|
|
|
|
|
|
|
Guatemalan quetzal / U.S.
dollar exchange rate: |
|
|
|
|
|
|
|
|
End-of-period |
7.8 |
|
7.8 |
|
|
— |
|
% |
Three months ended |
7.8 |
|
7.7 |
|
|
(1 |
) |
% |
Six months ended |
7.8 |
|
7.7 |
|
|
(1 |
) |
% |
|
|
|
|
|
|
|
|
|
Colombian peso / U.S. dollar
exchange rate: |
|
|
|
|
|
|
|
|
End-of-period |
4,191 |
|
4,127 |
|
|
(2 |
) |
% |
Three months ended |
4,431 |
|
3,914 |
|
|
(13 |
) |
% |
Six months ended |
4,596 |
|
3,914 |
|
|
(17 |
) |
% |
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 |
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