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FirstCash Reports Record Third Quarter Earnings Results; Revenues Grow 68% and Net Income Increases 78% over Prior Year; Authorizes New $100 Million Share Buyback Plan and Declares $0.33 Quarterly Cash Dividend

FirstCash, Inc.
FirstCash, Inc.

FORT WORTH, Texas, Oct. 27, 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 nine month periods ended September 30, 2022. The Company also announced that the Board of Directors declared a quarterly cash dividend of $0.33 per share, which will be paid in November 2022, and authorized a new $100 million share repurchase plan.

Mr. Rick Wessel, chief executive officer, stated, “Our third quarter results were outstanding, with exceptionally strong pawn growth metrics in both the U.S. and Latin America which drove increases in segment income of 35% and 14%, respectively, compared to the third quarter of last year. Pawn receivables, inventories and resulting revenues are all well ahead of comparable pre-pandemic metrics at this point in 2019. The impressive pawn results, which comprised 84% of third quarter segment income, were further complemented with solid earnings from the retail POS payment solutions segment, which continues to see year-over-year revenue growth coupled with improving credit metrics.

“We again generated strong and increasing cash flows this quarter which continue to support our dividend and share repurchase programs. To date in 2022, we have now repurchased over two million shares of stock and increased our cash dividend. Additionally, the Board of Directors authorized a new $100 million share repurchase plan, furthering our commitment to shareholder returns.”

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 September 30,

 

 

As Reported (GAAP)

 

Adjusted (Non-GAAP)

In thousands, except per share amounts

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Revenue

 

$

672,143

 

$

399,674

 

$

679,254

 

$

399,674

Net income

 

$

59,316

 

$

33,396

 

$

61,064

 

$

34,041

Diluted earnings per share

 

$

1.26

 

$

0.82

 

$

1.30

 

$

0.84

EBITDA (non-GAAP measure)

 

$

119,442

 

$

63,331

 

$

108,848

 

$

64,217

Weighted-average diluted shares

 

 

47,022

 

 

40,516

 

 

47,022

 

 

40,516


 

 

Nine Months Ended September 30,

 

 

As Reported (GAAP)

 

Adjusted (Non-GAAP)

In thousands, except per share amounts

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Revenue

 

$

1,979,598

 

$

1,197,191

 

$

2,014,396

 

$

1,197,191

Net income

 

$

173,429

 

$

95,538

 

$

169,095

 

$

98,007

Diluted earnings per share

 

$

3.64

 

$

2.34

 

$

3.55

 

$

2.40

EBITDA (non-GAAP measure)

 

$

349,167

 

$

184,072

 

$

306,613

 

$

187,342

Weighted-average diluted shares

 

 

47,602

 

 

40,789

 

 

47,602

 

 

40,789

Consolidated Operating Highlights

  • Third quarter diluted earnings per share increased 54% over the prior-year quarter on a GAAP basis while adjusted diluted earnings per share, which excludes certain purchase accounting related adjustments as described herein, increased 55% compared to the prior-year quarter. Year-to-date diluted earnings per share increased 56% on a GAAP basis and 48% on an adjusted basis compared to the prior year.

  • Net income for the third quarter increased 78% over the prior-year quarter on a GAAP basis while adjusted net income, which excludes certain purchase accounting related adjustments as described herein, increased 79% compared to the prior-year quarter. Year-to-date net income increased 82% on a GAAP basis and 73% on an adjusted basis compared to the prior year.

  • Consolidated revenues totaled $672 million in the third quarter, representing a 68% increase over the prior-year quarter. Adjusted consolidated revenues, which excludes certain non-cash impacts from purchase accounting, were $679 million, up 70% over the prior-year quarter. Year-to-date consolidated revenues increased 65% on a GAAP basis and increased 68% on an adjusted basis compared to the prior year.

  • EBITDA and adjusted EBITDA for the third quarter of 2022 increased 89% and 70%, respectively, compared to the prior-year quarter. For the twelve month period ended September 30, 2022, both EBITDA and adjusted EBITDA totaled $409 million, increases of 67% and 64%, respectively, over the comparable prior-year period.

  • Combined pre-tax operating income from the Company’s two pawn segments increased 27% in the third quarter of 2022 compared to the prior-year quarter and represented 84% of consolidated segment profit.

    • U.S. pawn segment pre-tax income for the third quarter of 2022 was $70 million, an increase of 35% over the third quarter of the prior year. These results were driven primarily by a 25% increase in pawn fee revenue compared to the prior-year quarter.

    • Latin America pawn segment pre-tax income for the third quarter of 2022 was $37 million, an increase of 14% over the third quarter of the prior year (15% on a constant currency basis), reflecting continued acceleration of pawn loan demand across all markets.

  • The retail POS payment solutions segment (AFF) contributed third quarter GAAP segment pre-tax income of $20 million while adjusted segment pre-tax income, which excludes non-cash purchase accounting impacts, was $28 million and increased 11% compared to the second quarter of 2022.

U.S. Pawn Segment

  • Segment pre-tax operating income in the third quarter of 2022 increased by $18 million, or 35%, compared to the prior-year quarter driven primarily by increased pawn loan fees. The resulting segment pre-tax operating margin was 23% for the third quarter of 2022, an improvement over the 21% margin for the prior-year quarter.

  • Year-to-date segment pre-tax operating income increased by $48 million, or 30%, compared to the prior-year period. The resulting segment pre-tax operating margin was 23% for the year-to-date period, an improvement over the 21% margin for the comparable prior-year period.

  • Pawn loan fee revenue increased 25% for the third quarter of 2022, both in total and on a same-store basis, as compared to the prior-year quarter.

  • Retail merchandise sales in the third quarter of 2022 increased 17% compared to the prior-year quarter. On a same store-basis, retail sales increased 16% compared to the prior-year quarter.

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

  • Pawn receivables at September 30, 2022 increased 15% compared to the prior year and are now above the comparative pre-pandemic levels of September 2019. Same-store pawn receivables are also up 15% over the same point a year ago.

  • Merchandise inventories increased 17% on a year-over-year basis versus the depleted levels a year ago, and we believe are now normalized to pre-COVID levels. Annualized inventory turnover was 2.7 times for the trailing twelve months ended September 30, 2022 and inventories remain well-positioned, with aged inventory (greater than one year) remaining low at 1%.

  • Operating expenses increased 10% in total and 9% on a same-store basis in the third quarter of 2022 compared to the prior-year quarter and includes a 38% increase in variable compensation expense over the prior-year period as a result of the strong operating results.

  • Two stores in Florida were acquired during the third quarter of 2022. Two existing store locations have been strategically relocated this year with another five relocations in progress. Additionally, the Company purchased the underlying real estate at 10 of its pawn stores during the third quarter and a total of 38 properties have been acquired year-to-date. This brings the total number of owned U.S. locations to 288, most of which have been purchased over the last five years.

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 third quarter of 2022 was 20.2 pesos / dollar, an unfavorable change of 1% versus the comparable prior-year period, and for the nine month period ended September 30, 2022 was 20.3 pesos / dollar, an unfavorable change of 1% versus the prior-year period.

  • Segment pre-tax operating income for the third quarter of 2022 increased 14%, and 15% on a constant currency basis, over the prior-year quarter, driven primarily by increased pawn loan fees. The resulting pre-tax operating margin increased to 22% for the third quarter of 2022 compared to 21% in the prior-year quarter.

  • Year-to-date segment pre-tax operating income increased 16% (in total and on a constant currency basis), or $13 million, compared to the prior-year period. The resulting pre-tax operating margin improved to 21% for the year-to-date period compared to 20% in the prior-year period.

  • Pawn receivables were at record levels as of September 30, 2022, increasing 17% compared to the prior year both in total and on a same-store basis. The growth rates represented accelerating sequential improvement compared to the second quarter.

  • Pawn loan fees increased 11%, or 12% on a constant currency basis, in the third quarter of 2022 as compared to the prior-year quarter, reflecting growth in pawn receivables. On a same-store basis, pawn loan fees increased 10%, 12% on a constant currency basis, compared to the prior-year quarter.

  • Retail merchandise sales in the third quarter of 2022 remained strong as well, increasing 6%, 7% on a constant currency basis, compared to the prior-year quarter. Same-store retail merchandise sales in the third quarter of 2022 were up 5%, 7% on a constant currency basis, compared to the prior-year quarter while retail margins remained consistent at 36%.

  • Annualized inventory turnover was 4.0 times for the trailing twelve months ended September 30, 2022, while inventories aged greater than one year as of September 30, 2022 remained low at 1%.

  • Operating expenses increased 6% in total and 5% on a same-store basis compared to the prior-year quarter, driven in part by increased incentive compensation expense over the prior year.

  • A total of nine de novo locations were opened in Latin America during the third quarter of 2022 and 28 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.

  • Segment pre-tax operating income for the third quarter totaled $20 million on a GAAP basis and $28 million on an adjusted basis, which excludes non-cash purchase accounting impacts. This represents a sequential improvement over the second quarter of 2022. For the year-to-date period, segment pre-tax operating income totaled $37 million on a GAAP basis and $78 million on an adjusted basis.

  • Segment revenues for the quarter, comprised of lease-to-own (“LTO”) fees and interest and fees on finance receivables, totaled $207 million on a GAAP basis, or $214 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 $591 million on a GAAP basis and $626 million on an adjusted basis.

  • AFF continued to grow market share in the retail POS payment solutions space with approximately 8,600 active retail and e-commerce merchant partner locations at September 30, 2022, representing a 40% increase in active merchant locations compared to the same point last year and a 13% sequential increase. With these additions, the Company continues to realize increased diversification of its key merchant relationships and market verticals.

  • Combined leased merchandise and finance receivables outstanding at September 30, 2022, excluding the impacts of purchase accounting, increased 8% compared to the same point last year.

  • Gross volume from originated LTO and POS financing transactions totaled $221 million for the third quarter of 2022, which represents an increase of 2% compared to pre-acquisition results in the third quarter of 2021. Gross transaction volume was driven by the continued growth in retail partner locations and online originations, partially offset by the slowdown in consumer foot traffic and spending in many of AFF’s merchant partner retail locations.

  • AFF saw sequential improvement in many key credit metrics during the third quarter as compared to the second quarter. The net charge-off rate (principal charge-offs as a percentage of average merchandise on lease) on the core leased merchandise portfolio for the quarter was 13.6% which was below comparative pre-pandemic charge-off rates for the third quarters of 2018 and 2019. Other credit metrics during the quarter, including delinquencies and first payment default rates, saw sequential third quarter improvement and continued to be within the range of historical pre-COVID metrics.

  • Lease and loan loss provisioning for third quarter 2022 transaction originations continued to reflect the historical pre-COVID credit environment supplemented with an additional provisioning overlay given the current macroeconomic environment, adding a further conservative element to the expected lifetime loss estimates.

Cash Flow and Liquidity

  • The Company generated $326 million in cash flow from operations and $173 million in adjusted free cash flow during the nine months ended September 30, 2022, which represented year-over-year increases of 136% and 374%, respectively.

  • For the trailing twelve months ended September 30, 2022, cash flow from operations totaled $411 million while adjusted free cash flow was $251 million, representing year-over-year increases of 125% and 644%, respectively.

  • The Company’s strong liquidity position at September 30, 2022 includes cash balances of $101 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 $78 million of underlying real estate at 38 pawn store locations, pay dividends that total $44 million and repurchase $140 million of its stock, as further discussed below.

  • In August 2022, the Company amended its unsecured credit facility to increase the total lender commitment from $500 million to $590 million with three new banks added to the commercial bank lending group. In addition, the term of the facility was extended through August 30, 2027, and certain financial covenants were favorably amended. The current leverage ratio, as calculated in the amended facility, is 3.0 to 1, which is below the permitted leverage ratio of 3.5 times EBITDA and is consistent with the leverage ratio in the prior sequential quarter.

Shareholder Returns

  • The Company repurchased 686,000 shares of common stock during the third quarter of 2022 at an aggregate cost of $52 million and an average cost per share of $75.88. Year-to-date, through the date of this release, the Company has repurchased 2,204,000 shares of common stock at an aggregate cost of $158 million and an average cost per share of $71.63. The Company has approximately $14 million remaining under the share repurchase program authorized in April 2022.

  • On October 26, 2022, the Board of Directors approved a new share repurchase authorization of up to $100 million to become effective upon the completion of the current authorization. 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 fourth quarter cash dividend on common shares outstanding which will be paid on November 30, 2022 to stockholders of record as of November 15, 2022. This represents an annualized dividend of $1.32 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 the first nine-months 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.

    • Cash fundings to customers (new pawns and direct purchases of merchandise from customers) in both the U.S. and Latin America remain exceptionally robust, with October fundings above comparative pre-pandemic levels in 2019 and continued double-digit growth in same-store pawn receivables over last year.

    • October retail sales results continue to be strong as well, with month-to-date same-store sales up 7% in the U.S. and over 10% in Latin America over the comparative prior-year period.

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

  • 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 19.9 to 1. Each full point change in the exchange rate of the peso represents an approximate $0.08 to $0.10 annual impact on earnings per share.

AFF Operations:

  • Despite macroeconomic retail headwinds, the Company expects AFF to see continued growth in gross transaction volumes, primarily from increased merchant door counts. Revenues are anticipated to grow as well, given the 8% year-over-year increase in beginning Q4 2022 gross leased merchandise and finance receivable balances.

  • 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 overlay 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 if there are changes in estimated future losses based upon actual performance trends.

Tax Rate:

  • The consolidated effective income tax rate for the nine months ended September 30, 2022 was 21.9%, which included a $4.3 million permanent tax benefit related to the gain on revaluation of contingent acquisition consideration. Excluding the permanent tax benefit, the adjusted effective income tax rate was 23.8% for the nine months ended September 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 23% to 24%.

Additional Commentary and Analysis

Mr. Wessel provided additional insights on the Company’s third quarter operating performance, “The third quarter operating results demonstrate the long-term resiliency of our core pawn operations as evidenced by the revenue and earnings growth seen this year in both the U.S. and Latin America pawn segments. Coupled with the solid performance of AFF, we continued to post accelerating growth in revenues and profitability despite uncertain economic conditions.

“Pawn remains by far our primary revenue and profitability driver, which positions us extremely well in the current economic environment. Demand for pawn loans remained strong during the third quarter in the U.S. and Latin America as the inflationary environment and tightening of subprime consumer credit drove same-store pawn fee growth of 25% and 12%, respectively, during the third quarter. Given the current strength of pawn receivables thus far in October, we expect to see continued double-digit growth rate in pawn fees for the fourth quarter.

“Retail sales in our pawn stores during the third quarter were strong as well, evidenced by the 16% increase in same-store sales in the U.S. and a 7% increase in Latin America, with retail margins at or above historical averages in both markets. These retail results reflect FirstCash’s recognized positioning in the current climate as a deep value retail destination, and we believe we are well-positioned for continued growth in retail sales during the key holiday shopping season.

“With regard to the retail POS payment solutions segment, AFF continues to execute a balanced approach for meeting merchant funding expectations while ensuring that the lease and loan portfolios remain healthy in a market environment where both retail demand, especially in the furniture vertical, and consumer strength are softer. With AFF now part of a larger, more diversified FirstCash enterprise, AFF is better positioned with its merchants as a more consistent partner in terms of resources, capital and the ability to take a long-term approach for driving success. We believe our merchant partners continue to value AFF’s results, as reflected in our continued year-over-year growth in application volume and significant net new door additions.

“To date this year, AFF has achieved growth in applications, originations, revenue and gross profit while maintaining consistency in the lease and loan loss reserves. Most importantly, credit performance this year continues to remain in line with our expectations. In a market that is seen to be tightening more recently, AFF believes its decision to prudently reserve for credit losses and stay in front of the economic trends at hand have paid off.

“The Company’s strong cash flows and balance sheet continue to provide liquidity for growth investments and shareholder returns. In particular, we continue to pursue pawn acquisition opportunities in both the U.S. and Latin America while continuing to repurchase our stock and pay dividends. The majority of our long-term financing is unsecured fixed rate debt at below-market rates with maturities not beginning until 2028 and after. Our long-term capital structure and liquidity was further enhanced in the third quarter with the long-term extension and upsizing of our unsecured commercial bank line of credit.

“In summary, we believe we have tremendous revenue and earnings momentum entering the fourth quarter and expect continued growth for the remainder of the year. More importantly, we believe there are continued long-term opportunities for growth and shareholder returns,” 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 8,600 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 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, the putative shareholder securities class action lawsuit filed against the Company, and the California private lawsuits filed against the Company; risks related to the regulatory environment in which the Company operates; general economic risks, including the contributory effects of the COVID-19 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; rising interest rates; 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

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenue:

 

 

 

 

 

 

 

Retail merchandise sales

$

300,899

 

 

$

268,726

 

 

$

901,975

 

 

$

806,335

 

Pawn loan fees

 

145,727

 

 

 

121,365

 

 

 

411,613

 

 

 

346,796

 

Leased merchandise income

 

158,089

 

 

 

 

 

 

455,736

 

 

 

 

Interest and fees on finance receivables

 

48,846

 

 

 

 

 

 

135,039

 

 

 

 

Wholesale scrap jewelry sales

 

18,582

 

 

 

9,583

 

 

 

75,235

 

 

 

44,060

 

   Total revenue

 

672,143

 

 

 

399,674

 

 

 

1,979,598

 

 

 

1,197,191

 

 

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of retail merchandise sold

 

182,199

 

 

 

158,057

 

 

 

543,722

 

 

 

468,634

 

Depreciation of leased merchandise

 

86,519

 

 

 

 

 

 

262,830

 

 

 

 

Provision for lease losses

 

31,916

 

 

 

 

 

 

109,771

 

 

 

 

Provision for loan losses

 

31,956

 

 

 

 

 

 

83,453

 

 

 

 

Cost of wholesale scrap jewelry sold

 

16,261

 

 

 

8,528

 

 

 

64,371

 

 

 

37,657

 

   Total cost of revenue

 

348,851

 

 

 

166,585

 

 

 

1,064,147

 

 

 

506,291

 

 

 

 

 

 

 

 

 

Net revenue

 

323,292

 

 

 

233,089

 

 

 

915,451

 

 

 

690,900

 

 

 

 

 

 

 

 

 

Expenses and other income:

 

 

 

 

 

 

 

Operating expenses

 

185,547

 

 

 

138,619

 

 

 

539,398

 

 

 

415,071

 

Administrative expenses

 

36,951

 

 

 

30,208

 

 

 

110,882

 

 

 

88,605

 

Depreciation and amortization

 

25,971

 

 

 

11,217

 

 

 

77,495

 

 

 

32,731

 

Interest expense

 

18,282

 

 

 

7,961

 

 

 

50,749

 

 

 

22,389

 

Interest income

 

(206

)

 

 

(143

)

 

 

(1,104

)

 

 

(420

)

Loss (gain) on foreign exchange

 

255

 

 

 

558

 

 

 

(198

)

 

 

248

 

Merger and acquisition expenses

 

733

 

 

 

12

 

 

 

1,712

 

 

 

1,264

 

Gain on revaluation of contingent acquisition consideration

 

(19,800

)

 

 

 

 

 

(82,789

)

 

 

 

Other expenses (income), net

 

164

 

 

 

361

 

 

 

(2,721

)

 

 

1,640

 

   Total expenses and other income

 

247,897

 

 

 

188,793

 

 

 

693,424

 

 

 

561,528

 

 

 

 

 

 

 

 

 

Income before income taxes

 

75,395

 

 

 

44,296

 

 

 

222,027

 

 

 

129,372

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

16,079

 

 

 

10,900

 

 

 

48,598

 

 

 

33,834

 

 

 

 

 

 

 

 

 

Net income

$

59,316

 

 

$

33,396

 

 

$

173,429

 

 

$

95,538

 

 

 

FIRSTCASH HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

 

September 30,

 

December 31,

 

 

2022

 

 

 

2021

 

 

 

2021

 

ASSETS

 

 

 

 

 

Cash and cash equivalents

$

100,620

 

 

$

49,907

 

 

$

120,046

 

Accounts receivable, net

 

58,435

 

 

 

43,492

 

 

 

55,356

 

Pawn loans

 

404,227

 

 

 

348,993

 

 

 

347,973

 

Finance receivables, net (1)

 

111,945

 

 

 

 

 

 

181,021

 

Inventories

 

295,428

 

 

 

254,260

 

 

 

263,311

 

Leased merchandise, net (1)

 

132,097

 

 

 

 

 

 

143,944

 

Prepaid expenses and other current assets

 

38,322

 

 

 

14,793

 

 

 

17,707

 

Total current assets

 

1,141,074

 

 

 

711,445

 

 

 

1,129,358

 

 

 

 

 

 

 

Property and equipment, net

 

535,584

 

 

 

411,042

 

 

 

462,526

 

Operating lease right of use asset

 

299,052

 

 

 

300,040

 

 

 

306,061

 

Goodwill

 

1,523,699

 

 

 

1,014,052

 

 

 

1,536,178

 

Intangible assets, net

 

345,512

 

 

 

83,019

 

 

 

388,184

 

Other assets

 

9,133

 

 

 

8,413

 

 

 

8,531

 

Deferred tax assets, net

 

6,906

 

 

 

5,472

 

 

 

5,614

 

Total assets

$

3,860,960

 

 

$

2,533,483

 

 

$

3,836,452

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Accounts payable and accrued liabilities

$

175,964

 

 

$

88,151

 

 

$

244,327

 

Customer deposits and prepayments

 

63,066

 

 

 

46,702

 

 

 

57,310

 

Lease liability, current

 

91,115

 

 

 

89,502

 

 

 

90,570

 

Total current liabilities

 

330,145

 

 

 

224,355

 

 

 

392,207

 

 

 

 

 

 

 

Revolving unsecured credit facilities

 

338,000

 

 

 

246,000

 

 

 

259,000

 

Senior unsecured notes

 

1,035,226

 

 

 

493,499

 

 

 

1,033,904

 

Deferred tax liabilities, net

 

155,263

 

 

 

78,191

 

 

 

126,098

 

Lease liability, non-current

 

197,171

 

 

 

197,618

 

 

 

203,166

 

Other liabilities

 

 

 

 

 

 

 

13,950

 

Total liabilities

 

2,055,805

 

 

 

1,239,663

 

 

 

2,028,325

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock

 

573

 

 

 

493

 

 

 

573

 

Additional paid-in capital

 

1,732,500

 

 

 

1,222,432

 

 

 

1,724,956

 

Retained earnings

 

995,669

 

 

 

849,438

 

 

 

866,679

 

Accumulated other comprehensive loss

 

(127,366

)

 

 

(125,761

)

 

 

(131,299

)

Common stock held in treasury, at cost

 

(796,221

)

 

 

(652,782

)

 

 

(652,782

)

   Total stockholders’ equity

 

1,805,155

 

 

 

1,293,820

 

 

 

1,808,127

 

   Total liabilities and stockholders’ equity

$

3,860,960

 

 

$

2,533,483

 

 

$

3,836,452

 

Certain amounts in the consolidated balance sheets as of September 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 September 30, 2022 as compared to September 30, 2021 (dollars in thousands, except as otherwise noted):

 

As of September 30,

 

 

 

2022

 

 

2021

 

 

Increase

U.S. Pawn Segment

 

 

 

 

 

 

 

 

Earning assets:

 

 

 

 

 

 

 

 

Pawn loans

$

279,645

 

 

$

242,825

 

 

 

15

%

Inventories

 

204,359

 

 

 

175,047

 

 

 

17

%

 

$

484,004

 

 

$

417,872

 

 

 

16

%

 

 

 

 

 

 

 

 

 

Average outstanding pawn loan amount (in ones)

$

232

 

 

$

208

 

 

 

12

%

 

 

 

 

 

 

 

 

 

Composition of pawn collateral:

 

 

 

 

 

 

 

 

General merchandise

32

%

 

36

%

 

 

 

Jewelry

68

%

 

64

%

 

 

 

 

100

%

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

Composition of inventories:

 

 

 

 

 

 

 

 

General merchandise

43

%

 

48

%

 

 

 

Jewelry

57

%

 

52

%

 

 

 

 

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

 

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

 

Three Months Ended

 

 

 

 

September 30,

 

 

 

2022

 

2021

 

Increase

U.S. Pawn Segment

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Retail merchandise sales

$

195,854

 

 

$

167,257

 

 

 

17

%

Pawn loan fees

 

96,222

 

 

 

76,674

 

 

 

25

%

Wholesale scrap jewelry sales

 

12,956

 

 

 

4,168

 

 

 

211

%

   Total revenue

 

305,032

 

 

 

248,099

 

 

 

23

%

 

 

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

Cost of retail merchandise sold

 

114,899

 

 

 

93,326

 

 

 

23

%

Cost of wholesale scrap jewelry sold

 

11,338

 

 

 

3,778

 

 

 

200

%

   Total cost of revenue

 

126,237

 

 

 

97,104

 

 

 

30

%

 

 

 

 

 

 

 

 

 

Net revenue

 

178,795

 

 

 

150,995

 

 

 

18

%

 

 

 

 

 

 

 

 

 

Segment expenses:

 

 

 

 

 

 

 

 

Operating expenses

 

102,508

 

 

 

93,247

 

 

 

10

%

Depreciation and amortization

 

5,806

 

 

 

5,662

 

 

 

3

%

   Total segment expenses

 

108,314

 

 

 

98,909

 

 

 

10

%

 

 

 

 

 

 

 

 

 

Segment pre-tax operating income

$

70,481

 

 

$

52,086

 

 

 

35

%

 

 

 

 

 

 

 

 

 

Operating metrics:

 

 

 

 

 

 

 

 

Retail merchandise sales margin

41

%

 

44

%

 

 

 

Net revenue margin

59

%

 

61

%

 

 

 

Segment pre-tax operating margin

23

%

 

21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Nine Months Ended

 

 

 

 

September 30,

 

 

 

2022

 

2021

 

Increase

U.S. Pawn Segment

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

Retail merchandise sales

$

596,165

 

 

$

530,468

 

 

 

12

%

Pawn loan fees

 

274,304

 

 

 

220,013

 

 

 

25

%

Wholesale scrap jewelry sales

 

45,153

 

 

 

20,217

 

 

 

123

%

   Total revenue

 

915,622

 

 

 

770,698

 

 

 

19

%

 

 

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

Cost of retail merchandise sold

 

349,007

 

 

 

295,455

 

 

 

18

%

Cost of wholesale scrap jewelry sold

 

39,150

 

 

 

16,678

 

 

 

135

%

   Total cost of revenue

 

388,157

 

 

 

312,133

 

 

 

24

%

 

 

 

 

 

 

 

 

 

Net revenue

 

527,465

 

 

 

458,565

 

 

 

15

%

 

 

 

 

 

 

 

 

 

Segment expenses:

 

 

 

 

 

 

 

 

Operating expenses

 

302,572

 

 

 

282,068

 

 

 

7

%

Depreciation and amortization

 

17,261

 

 

 

16,391

 

 

 

5

%

   Total segment expenses

 

319,833

 

 

 

298,459

 

 

 

7

%

 

 

 

 

 

 

 

 

 

Segment pre-tax operating income

$

207,632

 

 

$

160,106

 

 

 

30

%

 

 

 

 

 

 

 

 

 

Operating metrics:

 

 

 

 

 

 

 

 

Retail merchandise sales margin

41

%

 

44

%

 

 

 

Net revenue margin

58

%

 

59

%

 

 

 

Segment pre-tax operating margin

23

%

 

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:

 

 

September 30,

 

Favorable /

 

 

2022

 

2021

 

(Unfavorable)

Mexican peso / U.S. dollar exchange rate:

 

 

 

 

 

 

 

End-of-period

 

20.3

 

20.3

 

 

— %

Three months ended

 

20.2

 

20.0

 

 

(1)%

Nine months ended

 

20.3

 

20.1

 

 

(1)%

 

 

 

 

 

 

 

 

Guatemalan quetzal / U.S. dollar exchange rate:

 

 

 

 

 

 

 

End-of-period

 

7.9

 

7.7

 

 

(3)%

Three months ended

 

7.8

 

7.7

 

 

(1)%

Nine months ended

 

7.7

 

7.7

 

 

— %

 

 

 

 

 

 

 

 

Colombian peso / U.S. dollar exchange rate:

 

 

 

 

 

 

 

End-of-period

 

4,532

 

3,835

 

 

(18)%

Three months ended

 

4,375

 

3,844

 

 

(14)%

Nine months ended

 

4,068

 

3,696

 

 

(10)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIRSTCASH HOLDINGS, INC.
OPERATING INFORMATION (CONTINUED)
(UNAUDITED)

The following table details earning assets, which consist of pawn loans and inventories as well as other earning asset metrics of the Latin America pawn segment, as of September 30, 2022 as compared to September 30, 2021 (dollars in thousands, except as otherwise noted):

 

 

 

 

 

 

 

 

 

 

Constant Currency Basis

 

 

 

 

 

 

 

 

 

 

As of

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

 

As of September 30,

 

 

 

2022

 

Increase

 

2022

 

2021

 

Increase

 

(Non-GAAP)

 

(Non-GAAP)

Latin America Pawn Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

Earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Pawn loans

$

124,582

 

 

$

106,168

 

 

 

17

%

 

$

124,711

 

 

17

%

Inventories

 

91,069

 

 

 

79,213

 

 

 

15

%

 

 

91,167

 

 

15

%

 

$

215,651

 

 

$

185,381

 

 

 

16

%

 

$

215,878

 

 

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average outstanding pawn loan amount (in ones)

$

79

 

 

$

76

 

 

 

4

%

 

$

79

 

 

4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Composition of pawn collateral:

 

 

 

 

 

 

 

 

 

 

 

 

 

General merchandise

69

%

 

68

%

 

 

 

 

 

 

 

 

Jewelry

31

%

 

32

%

 

 

 

 

 

 

 

 

 

100

%

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Composition of inventories:

 

 

 

 

 

 

 

 

 

 

 

 

 

General merchandise

71

%

 

67

%

 

 

 

 

 

 

 

 

Jewelry

29

%

 

33

%

 

 

 

 

 

 

 

 

 

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)

4.0 times

 

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

 

 

 

 

 

 

 

 

 

 

Constant Currency Basis

 

 

 

 

 

 

 

 

 

 

Three Months

 

 

 

 

 

 

 

 

 

 

Ended

 

 

 

 

 

Three Months Ended

 

 

 

 

September 30,

 

 

 

 

September 30,

 

Increase /

 

2022

 

Increase

 

 

2022

 

 

2021

 

(Decrease)

 

(Non-GAAP)

 

(Non-GAAP)

Latin America Pawn Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail merchandise sales

 

$

107,591

 

 

 

$

101,469

 

 

 

6

%

 

$

108,808

 

 

 

7

%

Pawn loan fees

 

 

49,505

 

 

 

 

44,691

 

 

 

11

%

 

 

50,067

 

 

 

12

%

Wholesale scrap jewelry sales

 

 

5,626

 

 

 

 

5,415

 

 

 

4

%

 

 

5,626

 

 

 

4

%

   Total revenue

 

 

162,722

 

 

 

 

151,575

 

 

 

7

%

 

 

164,501

 

 

 

9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of retail merchandise sold

 

 

68,642

 

 

 

 

64,731

 

 

 

6

%

 

 

69,415

 

 

 

7

%

Cost of wholesale scrap jewelry sold

 

 

4,923

 

 

 

 

4,750

 

 

 

4

%

 

 

4,977

 

 

 

5

%

   Total cost of revenue

 

 

73,565

 

 

 

 

69,481

 

 

 

6

%

 

 

74,392

 

 

 

7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue

 

 

89,157

 

 

 

 

82,094

 

 

 

9

%

 

 

90,109

 

 

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

47,979

 

 

 

 

45,372

 

 

 

6

%

 

 

48,527

 

 

 

7

%

Depreciation and amortization

 

 

4,566

 

 

 

 

4,591

 

 

 

(1)

%

 

 

4,630

 

 

 

1

%

   Total segment expenses

 

 

52,545

 

 

 

 

49,963

 

 

 

5

%

 

 

53,157

 

 

 

6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment pre-tax operating income

 

$

36,612

 

 

 

$

32,131

 

 

 

14

%

 

$

36,952

 

 

 

15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating metrics:

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail merchandise sales margin

36

%

 

36

%

 

 

 

36

%

 

 

 

Net revenue margin

55

%

 

54

%

 

 

 

55

%

 

 

 

Segment pre-tax operating margin

22

%

 

21

%

 

 

 

22

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIRSTCASH HOLDINGS, INC.
OPERATING INFORMATION (CONTINUED)
(UNAUDITED)

The following table presents segment pre-tax operating income and other operating metrics of the Latin America pawn segment for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

Constant Currency Basis

 

 

 

 

 

 

 

 

 

 

Nine Months