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FirstCash Reports Record Second Quarter Earnings Results; Pawn Segment Earnings Increase 36% in U.S. and 18% in LatAm; Increases Quarterly Dividend by 10% to $0.33 per Share

FirstCash, Inc.
FirstCash, Inc.

FORT WORTH, Texas, July 28, 2022 (GLOBE NEWSWIRE) -- 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 and six month periods ended June 30, 2022. The Company also announced that the Board of Directors declared a quarterly cash dividend of $0.33 per share, an increase of 10% compared to the previous quarterly dividend of $0.30 per share, which will be paid in August 2022.

Mr. Rick Wessel, chief executive officer, stated, “We are excited to report record second quarter results driven by especially strong revenue growth from core pawn operations as consolidated same-store pawn fees grew 20% while consolidated retail sales were up 10% on a same-store basis over the prior-year quarter. Resulting segment earnings from pawn operations increased 36% in the U.S. and 18% in Latin America versus the prior year. The recently acquired AFF operations saw continued growth in active retail merchant locations and gross transaction volumes, which contributed to solid earnings results for the retail POS payment solutions segment.

“The Company’s cash flows and balance sheet continue to be strong, supporting revenue growth, $102 million in stock repurchases so far this year and the announced 10% increase in the cash dividend. We further believe the outlook for the second half of 2022 remains highly positive given July revenue trends in our pawn stores.”

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 June 30,

 

As Reported (GAAP)

 

Adjusted (Non-GAAP)

In thousands, except per share amounts

 

2022

 

 

2021

 

 

2022

 

 

2021

Revenue

$

647,616

 

$

389,578

 

$

659,130

 

$

389,578

Net income

$

86,108

 

$

28,427

 

$

51,159

 

$

29,038

Diluted earnings per share

$

1.81

 

$

0.70

 

$

1.08

 

$

0.71

EBITDA (non-GAAP measure)

$

151,629

 

$

56,786

 

$

96,417

 

$

57,524

Weighted-average diluted shares

 

47,499

 

 

40,802

 

 

47,499

 

 

40,802


 

Six Months Ended June 30,

 

As Reported (GAAP)

 

Adjusted (Non-GAAP)

In thousands, except per share amounts

 

2022

 

 

2021

 

 

2022

 

 

2021

Revenue

$

1,307,455

 

$

797,517

 

$

1,335,142

 

$

797,517

Net income

$

114,113

 

$

62,142

 

$

108,031

 

$

63,966

Diluted earnings per share

$

2.38

 

$

1.52

 

$

2.26

 

$

1.56

EBITDA (non-GAAP measure)

$

229,725

 

$

120,741

 

$

197,765

 

$

123,125

Weighted-average diluted shares

 

47,897

 

 

40,929

 

 

47,897

 

 

40,929

Consolidated Operating Highlights

  • Diluted earnings per share for the second quarter of 2022 increased 159% on a GAAP basis to $1.81, which included a gain related to the revaluation of the contingent consideration related to the AFF acquisition, partially offset by other non-cash AFF purchase accounting adjustments as further discussed in the AFF segment results below.

  • Adjusted non-GAAP diluted earnings per share, which exclude the above impacts and other adjustments described herein, increased 52% to $1.08 compared to the prior-year quarter.

  • Year-to-date diluted earnings per share increased 57% on a GAAP basis and 45% on an adjusted non-GAAP basis compared to the prior year.

  • Consolidated revenues totaled $648 million, a second quarter record, representing a 66% increase over the prior-year quarter. Adjusted consolidated revenues were $659 million, up 69%, for the second quarter, which excludes the non-cash impacts from purchase accounting. Year-to-date consolidated revenues increased 64% on a GAAP basis and increased 67% on an adjusted non-GAAP basis compared to the prior year.

  • EBITDA and Adjusted EBITDA for the second quarter of 2022 increased 167% and 68%, respectively, compared to the prior-year quarter. For the twelve month period ended June 30, 2022, EBITDA increased 64% to $353 million while adjusted EBITDA increased 57% to $364 million over the comparable prior year period.

  • Pre-tax operating income from the Company’s pawn segments increased $22 million, or 29%, in the second quarter of 2022 compared to the prior-year quarter, reflecting significant growth in pawn receivables and more normalized merchandise inventory levels compared to a year ago. Year-to-date profit from the pawn segments for 2022 increased 24% compared to last year and represented 80% of adjusted segment profit.

    • U.S. pawn segment pre-tax income for the second quarter of 2022 was $64 million, an increase of 36% over the second quarter of the prior year. These results were driven primarily by a 31% increase in pawn fee revenue compared to last year.

    • Latin America pawn segment pre-tax income for the second quarter of 2022 was $33 million, an increase of 18% over the second quarter of the prior year, reflecting accelerating pawn loan demand and double digit growth in combined revenue from pawn fees and retail sales.

  • The retail POS payment solutions segment (AFF) contributed second quarter GAAP segment pre-tax income of $12 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 $17 million, or 36%, for the second quarter of 2022 compared to the prior-year quarter. The resulting segment pre-tax operating margin was 21% for the second quarter of 2022, an improvement over the 19% margin for the prior-year quarter.

  • Year-to-date segment pre-tax operating income increased by $29 million, or 27% compared to the prior-year period. The resulting segment pre-tax operating margin was 22% for the year-to-date period, an improvement over the 21% margin for the prior-year.

  • Pawn receivables at June 30, 2022 increased 33% compared to the prior year and are now above the comparative pre-pandemic levels of June 2019. Same-store pawn receivables are also up 33% over the same point a year ago.

  • Pawn loan fee revenue was up 31% for the second quarter of 2022 and 29% on a same-store basis, as compared to the prior-year quarter.

  • Retail merchandise sales in the second quarter of 2022 increased 13% compared to the prior-year quarter. On a same store-basis, retail sales increased 10% compared to the prior-year quarter.

  • Retail sales margins remained strong at 41% in the second quarter of 2022, reflecting solid demand for value-priced, pre-owned merchandise and low levels of aged inventory.

  • Merchandise inventories increased 29% 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) remaining low at 1%.

  • Operating expenses increased 8% in total and 6% on a same-store basis in the second quarter of 2022 compared to the prior-year quarter and includes a 23% increase in variable compensation expense over the prior-year period as a result of the strong operating results.

  • One store in Texas was acquired during the second quarter of 2022 with two additional stores acquired in Florida subsequent to the June 30 quarter end. Two existing store locations have been strategically relocated this year with another four relocations in progress. Additionally, the Company purchased the underlying real estate at 22 of its pawn stores during the second quarter and a total of 28 properties have been acquired year-to-date.

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 second quarter of 2022 was 20.0 pesos / dollar, and for the six month period ended June 30, 2022 was 20.3 pesos / dollar, both of which were materially consistent with the prior-year periods.

  • Segment pre-tax operating income for the second quarter of 2022 increased 18% over the prior-year quarter, reflecting an increased contribution from retail sales revenue. The resulting segment pre-tax operating margin increased to 21% for the second quarter of 2022 compared to 20% in the prior-year quarter.

  • Year-to-date segment pre-tax operating income increased by $9 million, or 17% compared to the prior-year period. The resulting segment pre-tax operating margin was 20% for the year-to-date period, which equaled the prior-year period.

  • Total and same-store retail merchandise sales in the second quarter of 2022 were especially strong, increasing 11% compared to the prior-year quarter, reflecting continued demand for popular value-priced merchandise.

  • Pawn loan fees increased 8% in the second quarter of 2022 as compared to the prior-year quarter, reflecting growth in both pawn receivables and yields on the portfolio. On a same-store basis, pawn loan fees increased 7% compared to the prior-year quarter.

  • Pawn receivables at June 30, 2022 increased 6% compared to the prior year, or 7% on a constant currency basis. On a same-store basis, pawn receivables increased 5%, or 6% on a constant currency basis, compared to the prior year. These constant currency growth rates represented sequential improvement compared to the first quarter and indicated that demand in Latin America is now beginning to follow recent U.S. trends.

  • Retail margins remained consistent and solid at 37% in the second quarter of 2022, especially given the significant percentage of sales coming from cell phones and other consumer electronics.

  • Annualized inventory turnover was 4.2 times for the trailing twelve months ended June 30, 2022, while inventories aged greater than one year as of June 30, 2022 remained low at 1%.

  • Operating expenses increased 5% in total and on a same-store basis compared to the prior-year quarter, which includes a 21% increase in variable compensation expense over the prior year.

  • A total of nine de novo locations were opened in Latin America during the second quarter of 2022 and 19 locations have been opened year-to-date. The Company also continues to strategically relocate and/or consolidate specific acquired stores in order to upgrade the locations and increase operational efficiencies.

Retail POS Payment Solutions Segment - American First Finance (AFF)

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.

  • Total segment revenues, comprised of lease-to-own (“LTO”) fees and interest and fees on finance receivables, for the second quarter of 2022 totaled $191 million on a GAAP basis, or $203 million on an adjusted basis, which excludes the non-cash impacts of fair value purchase accounting requirements. Revenues for the year-to-date period totaled $384 million on a GAAP basis and $412 million on an adjusted basis.

  • Segment pre-tax operating income for the second quarter of 2022 totaled $12 million on a GAAP basis, or $25 million on an adjusted basis, which excludes non-cash purchase accounting impacts. For the year-to-date period, segment pre-tax operating income totaled $17 million on a GAAP basis and $50 million on an adjusted basis.

  • AFF continued to grow market share in the retail POS payment solutions space with approximately 7,600 active retail and e-commerce merchant partner locations at June 30, 2022, representing a 34% increase in active merchant locations compared to the same point last year and a 10% sequential increase.

  • Combined leased merchandise and finance receivables outstanding at June 30, 2022, excluding the impacts of purchase accounting, increased 21% compared to the same point last year.

  • Gross transaction volume from LTO and POS financing transactions totaled $206 million for the second quarter of 2022. This represents an increase of 5% compared to pre-acquisition results in the second quarter of 2021. Gross transaction volume was driven by the growth in retail partner locations and online originations, partially offset by the slowdown in consumer foot traffic in many of AFF’s merchant partner retail locations.

  • Credit loss provisioning was in line with expectations, which is based on CECL-type accounting methodology which estimates full day-one provisioning of expected lifetime losses on both LTO and retail finance products. The provisioning for second quarter 2022 gross transaction originations reflects the historical pre-COVID credit environment supplemented with an additional provisioning overlay given the current macroeconomic environment. Combined lease and loan charge-offs for the second quarter of 2022 were consistent with previously expected losses included in the Company’s loss reserves on the lease and loan portfolio.

  • In addition to the segment level results for AFF, the Company recognized a non-cash gain of $66 million in the second quarter related to a net decrease in the fair value of the contingent consideration payable to the seller of AFF. The contingent consideration is primarily based on AFF’s achievement of certain EBITDA targets by the end of 2022 and in the first half of 2023. Given the macro-driven slowdown in origination activity compared to the forecasts at the time the AFF acquisition was negotiated last summer, the Company now expects the earnout component of the contingent consideration to be at the low end of the payout scale. The gain has been excluded from adjusted earnings measures as described in more detail in the reconciliation of non-GAAP financial measures to GAAP financial measures provided elsewhere in this release.

Cash Flow and Liquidity

  • The Company generated $227 million in cash flow from operations and $152 million in adjusted free cash flow during the six months ended June 30, 2022, which represented year-over-year increases of 99% and 78%, respectively.

  • For the trailing twelve months ended June 30, 2022, cash flow from operations totaled $336 million while adjusted free cash flow was $181 million, representing year-over-year increases of 75% and 136%, respectively.

  • The Company’s strong liquidity position at June 30, 2022 includes cash balances of $110 million and ample borrowing capacity under its bank lines of credit. Year-to-date, the Company has utilized its cash flows and liquidity to fund significant growth in pawn receivables and inventories, strategically purchase $59 million of underlying real estate at 28 pawn store locations and repurchase $88 million of its stock, as further discussed below.

  • The resulting net debt to trailing twelve months adjusted EBITDA ratio improved to 3.3 times as of June 30, 2022 compared to 4.1 times as of December 31, 2021.

Shareholder Returns

  • The Company repurchased 301,000 shares of common stock during the second quarter of 2022 at an aggregate cost of $20 million and an average cost per share of $68.10. Year-to-date, through the date of this release, the Company repurchased 1,486,000 shares of common stock in 2022 at an aggregate cost of $102 million and an average cost per share of $68.79. The Company had $70 million remaining under its current share repurchase authorization as of the date of this release. Future share repurchases are subject to expected liquidity, acquisition opportunities, debt covenant restrictions and other relevant factors.

  • The Board of Directors declared a $0.33 per share third quarter cash dividend on common shares outstanding, which will be paid on August 26, 2022 to stockholders of record as of August 12, 2022. On an annualized basis, the dividend is now $1.32 per share, representing a 10% increase over the previous 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 very positive as it continues to expect significant year-over-year revenue and earnings growth based on first half results and current trends. Anticipated conditions and trends for the remainder of the year include the following:

Pawn Operations:

  • Pawn operations are expected to remain the primary earnings driver for 2022 as the Company expects segment income from the combined U.S. and Latin America pawn segments will be approximately 80% of total adjusted 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.

    • Demand for pawn loans in the U.S. continues to be robust, with continued growth in pawn receivable balances. Customer fundings (new pawns and direct purchases of merchandise from customers) for July continue to be above comparative pre-pandemic levels in 2019.

    • In Latin America, growth in pawn balances accelerated significantly in the second quarter with pawn receivables now above 2019 levels for the first time since the pandemic began. In July to date, the Company has seen continued sequential acceleration in customer fundings compared to June.

    • July retail sales results continue to be extremely strong, with same-store sales up over 13% in the U.S. and over 8% in Latin America month-to-date over the comparative prior-year period.

  • Pawn merchandise inventories remain well-positioned, having essentially normalized to pre-COVID levels with very limited amounts of aged inventory, which continue to drive retail margins at or above historical levels.

  • 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 increased at the beginning of the year. 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 in 2022 through a combination of de novo openings and acquisitions.

  • The current trading level for the Mexican peso to the U.S. dollar is approximately 20.5 to 1. Each full point change in the exchange rate of the peso represents an approximate $0.08 annual impact on earnings per share.

AFF Operations:

  • Despite macroeconomic headwinds negatively impacting retail sales at many of AFF’s retail merchant partners, the Company continues to expect AFF to generate full year growth in gross transaction volumes and total revenues, primarily from increased door counts from both new and existing merchant relationships.

  • The roll out of AFF products to the FirstCash stores in the U.S. is well underway with approximately 300 locations now offering the product and the remainder of the U.S. pawn stores expected to be onboarded in the second half of 2022.

  • AFF’s estimated lease and loan loss provisioning for the remainder of the year is expected to reflect higher, pre-pandemic loss rates with additional provisioning for certain portfolios given the current macroeconomic environment. As a reminder, AFF utilizes a lease and loan reserve methodology that reflects expected lifetime losses on its portfolios. The initial lifetime lease and loan loss reserve is established in the month that the transactions are originated and is updated monthly thereafter only for the change in estimated future losses.

Tax Rate:

  • The consolidated effective income tax rate for the six months ended June 30, 2022 was 22.2%, which included a $3.4 million permanent tax benefit related to the gain on revaluation of contingent acquisition consideration described above. Excluding the permanent tax benefit, the adjusted effective income tax rate was 24.5% for the six months ended June 30, 2022.

  • For the full year of 2022, the adjusted effective income tax rate (excluding the permanent tax benefit described above) 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 strong second quarter operating performance, “Given the inflationary and uncertain macroeconomic environment, our results reflect the durability and often defensive nature of our core pawn business. During the second quarter, we experienced further demand-driven acceleration of pawn receivable growth in both our U.S. and LatAm markets. Additionally, demand for deep value retail goods remained strong, with both segments reporting double-digit growth in same-store retail sales and retail margins at or above historical levels. At the same time, we continued to manage our expenses, with same-store operating expenses up less than the current rate of inflation in both the U.S. and Latin America.

“These outstanding results in our core pawn segments generated strong revenue growth which, coupled with outstanding execution by our experienced operations teams, translated into even greater earnings growth. As we begin the third quarter, our pawn stores in both the U.S. and Latin America continue to see increasing demand for pawn loans and value-priced merchandise, which is consistent with pawn revenue growth demonstrated in previous recessionary economic cycles.

“AFF again posted solid results during its second full quarter since the acquisition late last year. While the retail environment for most of AFF’s merchant partners remains challenging, AFF again saw year-over-year growth in gross transaction volumes and revenues during the second quarter. We are encouraged by the continued growth in the number of active merchant doors across most industry verticals, positioning AFF for future revenue and earnings growth. Credit performance for the quarter was as expected with trends that are consistent with pre-pandemic results in 2018 and 2019. The lease and loan loss reserves continue to reflect lifetime expected losses based on historical performance and expected near-term trends.

“Consolidated second quarter and year-to-date earnings growth translated into strong cash flows which continue to be reinvested into assets supporting revenue growth and shareholder returns. Growth investments included a combination of pawn store acquisitions, new store openings and strategic real estate purchases. We also continued to opportunistically repurchase stock, with second quarter-to-date repurchases of 301,000 shares and almost 1.5 million shares repurchased this year through the date of this release. Since the merger with Cash America in 2016, the Company has now repurchased almost 10 million shares of stock.

“Additionally, we are especially pleased to announce the 10% increase in our quarterly dividend to $0.33 per share, or $1.32 per year, which reflects our continued confidence and optimism about the business.

“As we look toward the second half of the year and beyond, we believe that we are very well-positioned with over 80% of our expected adjusted segment net income for 2022 anticipated to come from our core pawn operations. Additionally, our cash flows and balance sheet are expected to support further long term growth of assets and shareholder returns. I would like to thank our 17,000 employees for their hard work and dedication, particularly over these past few challenging years, while maintaining our high standards of customer service,” 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 7,600 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 related 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 associated with the Consumer Financial Protection Bureau (the “CFPB”) lawsuit filed against the Company, the putative shareholder securities class action 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 related to the regulatory environment in which the Company operates; general economic risks, including the contributory effects of the COVID-19 pandemic and 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, lease-to-own 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 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,

 

2022

 

2021

 

2022

 

2021

Revenue:

 

 

 

 

 

 

 

Retail merchandise sales

$

298,257

 

 

$

265,567

 

 

$

601,076

 

 

$

537,609

 

Pawn loan fees

 

134,067

 

 

 

109,909

 

 

 

265,886

 

 

 

225,431

 

Leased merchandise income

 

147,700

 

 

 

 

 

 

297,647

 

 

 

 

Interest and fees on finance receivables

 

43,744

 

 

 

 

 

 

86,193

 

 

 

 

Wholesale scrap jewelry sales

 

23,848

 

 

 

14,102

 

 

 

56,653

 

 

 

34,477

 

Total revenue

 

647,616

 

 

 

389,578

 

 

 

1,307,455

 

 

 

797,517

 

 

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of retail merchandise sold

 

179,309

 

 

 

153,424

 

 

 

361,523

 

 

 

310,577

 

Depreciation of leased merchandise

 

82,605

 

 

 

 

 

 

176,311

 

 

 

 

Provision for lease losses

 

38,035

 

 

 

 

 

 

77,855

 

 

 

 

Provision for loan losses

 

26,800

 

 

 

 

 

 

51,497

 

 

 

 

Cost of wholesale scrap jewelry sold

 

19,895

 

 

 

11,932

 

 

 

48,110

 

 

 

29,129

 

Total cost of revenue

 

346,644

 

 

 

165,356

 

 

 

715,296

 

 

 

339,706

 

 

 

 

 

 

 

 

 

Net revenue

 

300,972

 

 

 

224,222

 

 

 

592,159

 

 

 

457,811

 

 

 

 

 

 

 

 

 

Expenses and other income:

 

 

 

 

 

 

 

Operating expenses

 

180,555

 

 

 

139,128

 

 

 

353,851

 

 

 

276,452

 

Administrative expenses

 

37,068

 

 

 

27,398

 

 

 

73,931

 

 

 

58,397

 

Depreciation and amortization

 

25,982

 

 

 

10,902

 

 

 

51,524

 

 

 

21,514

 

Interest expense

 

16,246

 

 

 

7,198

 

 

 

32,467

 

 

 

14,428

 

Interest income

 

(222

)

 

 

(119

)

 

 

(898

)

 

 

(277

)

Loss (gain) on foreign exchange

 

27

 

 

 

(577

)

 

 

(453

)

 

 

(310

)

Merger and acquisition expenses

 

314

 

 

 

1,086

 

 

 

979

 

 

 

1,252

 

Gain on revaluation of contingent acquisition consideration

 

(65,559

)

 

 

 

 

 

(62,989

)

 

 

 

Other expenses (income), net

 

(3,062

)

 

 

401

 

 

 

(2,885

)

 

 

1,279

 

Total expenses and other income

 

191,349

 

 

 

185,417

 

 

 

445,527

 

 

 

372,735

 

 

 

 

 

 

 

 

 

Income before income taxes

 

109,623

 

 

 

38,805

 

 

 

146,632

 

 

 

85,076

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

23,515

 

 

 

10,378

 

 

 

32,519

 

 

 

22,934

 

 

 

 

 

 

 

 

 

Net income

$

86,108

 

 

$

28,427

 

 

$

114,113

 

 

$

62,142

 

Certain amounts in the consolidated statements of income for the three and six months ended June 30, 2021 have been reclassified in order to conform to the 2022 presentation.


FIRSTCASH HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

 

June 30,

 

December 31,

 

2022

 

2021

 

2021

ASSETS

 

 

 

 

 

Cash and cash equivalents

$

110,414

 

 

$

50,061

 

 

$

120,046

 

Accounts receivable, net

 

55,924

 

 

 

40,183

 

 

 

55,356

 

Pawn loans

 

385,708

 

 

 

312,166

 

 

 

347,973

 

Finance receivables, net(1)

 

125,619

 

 

 

 

 

 

181,021

 

Inventories

 

260,528

 

 

 

216,955

 

 

 

263,311

 

Leased merchandise, net(1)

 

118,924

 

 

 

 

 

 

143,944

 

Prepaid expenses and other current assets

 

21,125

 

 

 

19,022

 

 

 

17,707

 

Total current assets

 

1,078,242

 

 

 

638,387

 

 

 

1,129,358

 

 

 

 

 

 

 

Property and equipment, net

 

519,836

 

 

 

404,283

 

 

 

462,526

 

Operating lease right of use asset

 

301,979

 

 

 

299,223

 

 

 

306,061

 

Goodwill

 

1,522,192

 

 

 

1,017,273

 

 

 

1,536,178

 

Intangible assets, net

 

359,716

 

 

 

83,372

 

 

 

388,184

 

Other assets

 

8,345

 

 

 

9,406

 

 

 

8,531

 

Deferred tax assets, net

 

6,231

 

 

 

4,489

 

 

 

5,614

 

Total assets

$

3,796,541

 

 

$

2,456,433

 

 

$

3,836,452

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Accounts payable and accrued liabilities

$

198,967

 

 

$

103,700

 

 

$

244,327

 

Customer deposits and prepayments

 

59,754

 

 

 

44,486

 

 

 

57,310

 

Lease liability, current

 

90,804

 

 

 

89,027

 

 

 

90,570

 

Total current liabilities

 

349,525

 

 

 

237,213

 

 

 

392,207

 

 

 

 

 

 

 

Revolving unsecured credit facilities

 

274,000

 

 

 

163,000

 

 

 

259,000

 

Senior unsecured notes

 

1,034,761

 

 

 

493,303

 

 

 

1,033,904

 

Deferred tax liabilities, net

 

121,046

 

 

 

75,912

 

 

 

126,098

 

Lease liability, non-current

 

199,211

 

 

 

196,189

 

 

 

203,166

 

Other liabilities

 

 

 

 

 

 

 

13,950

 

Total liabilities

 

1,978,543

 

 

 

1,165,617

 

 

 

2,028,325

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock

 

573

 

 

 

493

 

 

 

573

 

Additional paid-in capital

 

1,729,625

 

 

 

1,219,948

 

 

 

1,724,956

 

Retained earnings

 

952,011

 

 

 

828,040

 

 

 

866,679

 

Accumulated other comprehensive loss

 

(119,994

)

 

 

(115,790

)

 

 

(131,299

)

Common stock held in treasury, at cost

 

(744,217

)

 

 

(641,875

)

 

 

(652,782

)

Total stockholders’ equity

 

1,817,998

 

 

 

1,290,816

 

 

 

1,808,127

 

Total liabilities and stockholders’ equity

$

3,796,541

 

 

$

2,456,433

 

 

$

3,836,452

 

Certain amounts in the consolidated balance sheets as of June 30, 2021 and December 31, 2021 have been reclassified in order to conform 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. 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

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 June 30, 2022 as compared to June 30, 2021 (dollars in thousands, except as otherwise noted):

 

As of June 30,

 

 

 

2022

 

2021

 

Increase

U.S. Pawn Segment

 

 

 

 

 

 

 

Earning assets:

 

 

 

 

 

 

 

Pawn loans

$

271,255

 

 

$

203,838

 

 

33

%

Inventories

 

185,921

 

 

 

144,083

 

 

29

%

 

$

457,176

 

 

$

347,921

 

 

31

%

 

 

 

 

 

 

 

 

Average outstanding pawn loan amount (in ones)

$

222

 

 

$

209

 

 

6

%

 

 

 

 

 

 

 

 

Composition of pawn collateral:

 

 

 

 

 

 

 

General merchandise

35

%

 

35

%

 

 

Jewelry

65

%

 

65

%

 

 

 

100

%

 

100

%

 

 

 

 

 

 

 

 

 

 

Composition of inventories:

 

 

 

 

 

 

 

General merchandise

45

%

 

49

%

 

 

Jewelry

55

%

 

51

%

 

 

 

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)

2.7 times

 

3.1 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 June 30, 2022 as compared to the three months ended June 30, 2021 (dollars in thousands):

 

Three Months Ended

 

 

 

June 30,

 

 

 

2022

 

2021

 

Increase

U.S. Pawn Segment

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

Retail merchandise sales

$

195,369

 

 

$

173,254

 

 

13

%

Pawn loan fees

 

87,743

 

 

 

66,942

 

 

31

%

Wholesale scrap jewelry sales

 

15,673

 

 

 

6,846

 

 

129

%

Total revenue

 

298,785

 

 

 

247,042

 

 

21

%

 

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of retail merchandise sold

 

114,390

 

 

 

95,599

 

 

20

%

Cost of wholesale scrap jewelry sold

 

13,282

 

 

 

5,387

 

 

147

%

Total cost of revenue

 

127,672

 

 

 

100,986

 

 

26

%

 

 

 

 

 

 

 

 

Net revenue

 

171,113

 

 

 

146,056

 

 

17

%

 

 

 

 

 

 

 

 

Segment expenses:

 

 

 

 

 

 

 

Operating expenses

 

101,242

 

 

 

93,574

 

 

8

%

Depreciation and amortization

 

5,868

 

 

 

5,347

 

 

10

%

Total segment expenses

 

107,110

 

 

 

98,921

 

 

8

%

 

 

 

 

 

 

 

 

Segment pre-tax operating income

$

64,003

 

 

$

47,135

 

 

36

%

 

 

 

 

 

 

 

 

Operating metrics:

 

 

 

 

 

 

 

Retail merchandise sales margin

41

%

 

45

%

 

 

Net revenue margin

57

%

 

59

%

 

 

Segment pre-tax operating margin

21

%

 

19

%

 

 


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 six months ended June 30, 2022 as compared to the six months ended June 30, 2021 (dollars in thousands):

 

Six Months Ended

 

 

 

June 30,

 

 

 

2022

 

2021

 

Increase

U.S. Pawn Segment

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

Retail merchandise sales

$

400,311

 

 

$

363,211

 

 

10

%

Pawn loan fees

 

178,082

 

 

 

143,339

 

 

24

%

Wholesale scrap jewelry sales

 

32,197

 

 

 

16,049

 

 

101

%

Total revenue

 

610,590

 

 

 

522,599

 

 

17

%

 

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of retail merchandise sold

 

234,108

 

 

 

202,129

 

 

16

%

Cost of wholesale scrap jewelry sold

 

27,812

 

 

 

12,900

 

 

116

%

Total cost of revenue

 

261,920

 

 

 

215,029

 

 

22

%

 

 

 

 

 

 

 

 

Net revenue

 

348,670

 

 

 

307,570

 

 

13

%

 

 

 

 

 

 

 

 

Segment expenses:

 

 

 

 

 

 

 

Operating expenses

 

200,064

 

 

 

188,821

 

 

6

%

Depreciation and amortization

 

11,455

 

 

 

10,729

 

 

7

%

Total segment expenses

 

211,519

 

 

 

199,550

 

 

6

%

 

 

 

 

 

 

 

 

Segment pre-tax operating income

$

137,151

 

 

$

108,020

 

 

27

%

 

 

 

 

 

 

 

 

Operating metrics:

 

 

 

 

 

 

 

Retail merchandise sales margin

42

%

 

44

%

 

 

Net revenue margin

57

%

 

59

%

 

 

Segment pre-tax operating margin

22

%

 

21

%

 

 


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:

 

June 30,

 

Favorable /

 

 

2022

 

2021

 

(Unfavorable)

 

Mexican peso / U.S. dollar exchange rate:

 

 

 

 

 

 

End-of-period

20.0

 

19.8

 

(1

)%

Three months ended

20.0

 

20.1

 

%

Six months ended

20.3

 

20.2

 

%

 

 

 

 

 

 

 

Guatemalan quetzal / U.S. dollar exchange rate:

 

 

 

 

 

 

End-of-period

7.8

 

7.7

 

(1

)%

Three months ended

7.7

 

7.7

 

%

Six months ended

7.7

 

7.7

 

%

 

 

 

 

 

 

 

Colombian peso / U.S. dollar exchange rate:

 

 

 

 

 

 

End-of-period

4,127

 

3,757

 

(10

)%

Three months ended

3,914

 

3,690

 

(6

)%

Six months ended

3,914

 

3,622

 

(8

)%


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 June 30, 2022 as compared to June 30, 2021 (dollars in thousands, except as otherwise noted):

 

 

 

 

 

 

 

 

 

Constant Currency Basis

 

 

 

 

 

 

 

 

 

As of

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

 

 

As of June 30,

 

 

 

2022

 

Increase

 

2022

 

2021

 

Increase

 

(Non-GAAP)

 

(Non-GAAP)

Latin America Pawn Segment

 

 

 

 

 

 

 

 

 

 

 

Earning assets:

 

 

 

 

 

 

 

 

 

 

 

Pawn loans

$

114,453

 

 

$

108,328

 

 

6

%

 

$

115,482

 

7

%

Inventories

 

74,607

 

 

 

72,872

 

 

2

%

 

 

75,278

 

3

%

 

$

189,060

 

 

$

181,200

 

 

4

%

 

$

190,760

 

5

%

 

 

 

 

 

 

 

 

 

 

 

 

Average outstanding pawn loan amount (in ones)

$

80

 

 

$

80

 

 

%

 

$

81

 

1

%

 

 

 

 

 

 

 

 

 

 

 

 

Composition of pawn collateral:

 

 

 

 

 

 

 

 

 

 

 

General merchandise

69

%

 

67

%

 

 

 

 

 

 

Jewelry

31

%

 

33

%

 

 

 

 

 

 

 

100

%

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Composition of inventories:

 

 

 

 

 

 

 

 

 

 

 

General merchandise

70

%

 

64

%

 

 

 

 

 

 

Jewelry

30

%

 

36

%

 

 

 

 

 

 

 

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)

4.2 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 June 30, 2022 as compared to the three months ended June 30, 2021 (dollars in thousands):

 

 

 

 

 

 

 

Constant Currency Basis

 

 

 

 

 

 

 

Three Months

 

 

 

 

 

 

 

Ended

 

 

 

Three Months Ended

 

 

 

June 30,

 

 

 

June 30,

 

 

 

2022

 

Increase

 

2022

 

2021

 

Increase

 

(Non-GAAP)

 

(Non-GAAP)

Latin America Pawn Segment

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

Retail merchandise sales

$

102,888

 

 

$

92,313

 

 

11

%

 

$

102,841

 

 

11

%

Pawn loan fees

 

46,324

 

 

 

42,967

 

 

8

%

 

 

46,304

 

 

8

%

Wholesale scrap jewelry sales

 

8,175

 

 

 

7,256

 

 

13

%

 

 

8,175

 

 

13

%

Total revenue

 

157,387

 

 

 

142,536

 

 

10

%

 

 

157,320

 

 

10

%

 

 

 

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

Cost of retail merchandise sold

 

64,919

 

 

 

57,825

 

 

12

%

 

 

64,888

 

 

12

%

Cost of wholesale scrap jewelry sold

 

6,613

 

 

 

6,545

 

 

1

%

 

 

6,609

 

 

1

%

Total cost of revenue

 

71,532

 

 

 

64,370

 

 

11

%

 

 

71,497

 

 

11

%

 

 

 

 

 

 

 

 

 

 

Net revenue

 

85,855

 

 

 

78,166

 

 

10

%

 

 

85,823

 

 

10

%

 

 

 

 

 

 

 

 

 

 

Segment expenses:

 

 

 

 

 

 

 

 

 

Operating expenses

 

48,053

 

 

 

45,554

 

 

5

%

 

 

48,048

 

 

5

%

Depreciation and amortization

 

4,553

 

 

 

4,534

 

 

%

 

 

4,559

 

 

1

%

Total segment expenses

 

52,606

 

 

 

50,088

 

 

5

%

 

 

52,607

 

 

5

%

 

 

 

 

 

 

 

 

 

 

Segment pre-tax operating income

$

33,249

 

 

$

28,078

 

 

18

%

 

$

33,216

 

 

18

%

 

 

 

 

 

 

 

 

 

 

Operating metrics:

 

 

 

 

 

 

 

 

 

Retail merchandise sales margin

37

%

37

%

 

 

37

%

 

 

Net revenue margin

55

%

55

%

 

 

55

%

 

 

Segment pre-tax operating margin

21

%

20

%

 

 

21

%

 

 


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 six months ended June 30, 2022 as compared to the six months ended June 30, 2021 (dollars in thousands):

 

 

 

 

 

 

 

Constant Currency Basis

 

 

 

 

 

 

 

Six Months

 

 

 

 

 

 

 

Ended

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

June 30,

 

 

 

2022