Market Overview

FirstCash Reports First Quarter EPS of $0.90 and Raises Full Year Guidance; Announces Acquisitions and Openings of 156 Stores; Declares Quarterly Dividend of $0.22 per Share; Completes Share Repurchase Plans and Adds New $100 Million Authorization

Share:

FirstCash, Inc. (the "Company") (NYSE:FCFS), the leading international
operator of 2,247 retail pawn stores in the U.S. and Latin America,
today announced record revenue, net income and earnings per share for
the three month period ended March 31, 2018. In addition, the Company
announced that it increased its earnings per share guidance for 2018,
that the Board of Directors declared a $0.22 per share quarterly cash
dividend and that the Company has completed its previously authorized
share buyback programs and the Board of Directors authorized an
additional $100 million for future share repurchases.

Mr. Rick Wessel, chief executive officer, stated, "FirstCash is off to a
great start in 2018 as first quarter earnings per share of $0.90 grew
34% over the prior year on the strength of Latin American revenue
growth, rapidly improving U.S. profitability metrics, further merger
synergies and the reduced U.S. corporate tax rate. These results, along
with continued investments in store additions, strengthening pawn demand
and continued share repurchases provide the catalysts to increase our
full year 2018 earnings guidance by $0.20 per share, representing 22% to
30% EPS growth versus the prior year.

"We are excited to announce several acquisitions, highlighted by the
purchase in March of 126 stores in Mexico. In the U.S., we acquired
three single stores in the first quarter and, in early April, completed
an acquisition of a 12 store chain in Tennessee and Georgia and a single
store in Maryland. These all-cash acquisitions, coupled with de novo
store openings, which includes our first store in Colombia, brings our
total store count to 2,247 locations, of which 1,136 locations are in
our primary growth market of Latin America and represent 51% of the
total store base." Mr. Wessel concluded.

Adjusted earnings measures for 2018 exclude merger and acquisition
related expenses, which are further described, along with the
adjustments for 2017 results, in the detailed reconciliations of
adjusted earnings provided at the end of this release.

   
Three Months Ended March 31,
2018     2017
In thousands, except per share amounts As Reported     Adjusted As Reported   Adjusted
(GAAP) * (Non-GAAP) (GAAP) * (Non-GAAP)
Revenue $ 449,800 $ 449,800 $ 447,576 $ 447,576
Net income $ 41,635 $ 41,819 $ 32,645 $ 33,053
Diluted earnings per share $ 0.90 $ 0.90 $ 0.67 $ 0.68
EBITDA (non-GAAP measure) $ 72,279 $ 72,518 $ 72,271 $ 72,918
Weighted average diluted shares 46,479 46,479 48,402 48,402
*  

Other than EBITDA, which is a non-GAAP financial measure. See
the detailed reconciliation of non-GAAP financial measures
provided at the end of this release.

Earnings Highlights

  • Diluted earnings per share increased 34% in the first quarter of 2018
    compared to the first quarter of 2017, while on a non-GAAP adjusted
    basis, diluted earnings per share increased 32% for the first quarter
    compared to the prior-year quarter.
  • Net income for the first quarter of 2018 increased 28% compared to the
    first quarter of 2017, while on a non-GAAP adjusted basis, net income
    for the quarter increased 27%.
  • For the trailing twelve months ended March 31, 2018, consolidated
    revenues totaled $1.8 billion, net income was $153 million and
    adjusted EBITDA totaled $273 million. EBITDA and adjusted EBITDA are
    non-GAAP measures and are calculated in the detailed reconciliation of
    non-GAAP financial measures provided at the end of this release.
  • Cash flow from operating activities for the trailing twelve months
    ended March 31, 2018 totaled $248 million, compared to $136 million in
    the prior-year comparative period. Adjusted free cash flow, a non-GAAP
    measure, was $246 million for the twelve months ended, an increase of
    46% over the comparable prior-year amount of $168 million. Adjusted
    free cash flow is a non-GAAP measure and is calculated in the detailed
    reconciliation of non-GAAP financial measures provided at the end of
    this release.
  • The Company continued to drive further merger-related cost synergies,
    including depreciation savings, during the first quarter. Consolidated
    administrative expenses for the first quarter of 2018 were $28
    million, which compares favorably to $33 million in the first quarter
    of 2017 and pro forma administrative expenses of $43 million in the
    first quarter of 2016 prior to the merger. Consolidated depreciation
    and amortization expense in the first quarter was $11 million,
    compared to $14 million in the comparable 2017 quarter and $18 million
    in the first quarter 2016 on a pro forma basis.
  • The profit margin on income before taxes for the first quarter
    improved from 11.7% last year to 12.4% this year, while the net income
    margin improved from 7.3% to 9.3% over the same periods.
  • Net income and earnings per share for the first quarter included the
    benefit of the lower U.S. corporate tax rate of approximately $4
    million, or $0.09 per share, as compared to the first quarter of 2017.
    The U.S. tax benefit was partially offset by expected contraction in
    non-core consumer lending operations, which negatively impacted
    earnings by approximately $0.07 to $0.08 per share as compared to the
    prior year.
  • The weighted average share count in the first quarter of 2018 declined
    4% compared to the prior year as the Company continued to repurchase
    shares funded primarily through operating cash flows.

Acquisition and Store Opening Highlights

  • The Company continues to invest in strategic acquisitions having
    already completed multiple transactions this year to acquire a total
    of 142 locations in the U.S. and Mexico for aggregate, all-cash
    consideration of $24 million. Highlights of these transactions include:

    • The acquisition of 126 pawn locations in Mexico, operating under
      the Prendamex brand, was completed on March 1, 2018. Most of these
      locations are smaller-format, jewelry-focused stores located in
      urban markets in eight states in central and southern Mexico. As
      with the previous Maxi Prenda acquisition in early 2016, which
      were also smaller-format locations, the Company believes there is
      significant long-term growth potential in these stores through
      implementing the FirstPawn IT platform and by training associates
      in Company best practices that increase focus on general
      merchandise lending and retail operations. Additionally, many of
      these smaller stores will benefit from revenue and cost synergies
      arising from their proximity to the Company's larger full-service
      stores. The all-cash acquisition was funded with available cash
      balances in Mexico.
    • The Company acquired 12 full-service pawn locations operating
      under the U.S. Money Shops brand located in Tennessee and Georgia.
      These stores integrate well into the Company's existing footprint
      in these markets where the Company now has a total of 53 locations
      in Tennessee and 46 locations in Georgia. The all-cash acquisition
      closed on April 6, 2018, subsequent to quarter end, and is not
      included in the quarter end store counts.
    • During the first quarter, the Company completed three additional
      single store acquisitions in the states of Louisiana, North
      Carolina and Texas. In addition, the acquisition of a single store
      located in Maryland was completed in April, which is not included
      in the quarter end store counts.
  • FirstCash opened a total of 11 large format de novo locations in Latin
    America during the first quarter, which included nine stores in Mexico
    and single stores in Guatemala and Colombia. The Colombian store
    opening marks the Company's first location in South America, while the
    Guatemalan store is the Company's first large format, First
    Cash-branded store in that market.
  • The Company has a strong pipeline of additional de novo locations
    which are expected to open in 2018, including at least four additional
    stores in Colombia.
  • As of April 26, 2018, FirstCash operated 2,247 stores, composed of
    1,136 stores in Latin America, representing 51% of the store base, and
    1,111 stores in the U.S., representing 49% of the store base.

Note: Certain growth rates in "Latin American Operations" are
calculated on a constant currency basis, a non-GAAP measure defined at
the end of this release and reconciled to the most comparable GAAP
measures in the financial statements in this release. The average
Mexican peso to U.S. dollar exchange rate for the three-month period
ended March 31, 2018 was 18.8 pesos / dollar, a favorable change of 8%
versus the comparable prior-year period.

Latin American Operations

  • Revenues for the first quarter totaled $123 million, an increase of
    25% on a U.S. dollar translated basis and 16% on a constant currency
    basis as compared to the first quarter of 2017, driven by strong
    same-store sales results and contributions from new stores.
  • Same-store core pawn revenues, which includes pawn lending fees and
    retail merchandise sales, for the quarter increased 23% on a U.S.
    dollar translated basis, driven by a 23% increase in both same-store
    retail sales and pawn fees compared to the prior-year quarter. On a
    constant currency basis, core same-store revenues and both of its
    components, retail sales and pawn fees, increased 13% compared to the
    prior-year quarter.
  • Retail margins for the first quarter were consistent with the prior
    year and previous sequential quarter at 36%.
  • Pawn loans, the leading indicator of future revenue growth, increased
    by 22%, or 19% on a constant currency basis, versus the same
    prior-year quarter and totaled $86 million at March 31, 2018.
    Same-store pawn loans at quarter end increased 14% on a dollar
    translated basis and increased 12% on a constant currency basis
    compared to the same prior-year quarter.
  • Inventories at March 31, 2018 increased $16 million to $67 million
    compared to $51 million a year ago. The increase was driven by the net
    addition of 167 stores over the past twelve months and continued
    maturation of existing stores, including the smaller format Maxi
    Prenda stores acquired just over two years ago. As of March 31, 2018,
    inventories aged greater than one year remained extremely low at 1%.
    Inventory turns in Latin America for the prior twelve month period
    were 4.0 times.
  • Pre-tax operating income for the Latin American segment increased 32%
    in U.S. dollars and 23% on a constant currency basis for the first
    quarter, while the net segment operating margin increased over 100
    basis points to 22.2%.

U.S. Operations

  • Revenues for the first quarter totaled $327 million, a decrease of 6%
    compared to the first quarter of 2017, which includes the expected
    impact of a 28% decline in non-core consumer loan and credit services
    fees and a 10% decline in non-core scrap jewelry sales.
  • Same-store retail sales for the first quarter were even with the
    prior-year quarter in the First Cash stores while down 5% in the Cash
    America stores, which reflected intentionally lower inventory levels,
    especially in aged categories, compared to the prior year. As a
    result, overall same-store retail sales in the U.S. declined just
    under 4% for the first quarter compared to the prior-year quarter.
  • Same-store pawn fee revenues decreased 5% in the first quarter
    compared to the prior-year quarter due to the expected year-over-year
    decline in the Cash America pawn balances, partially offset by a 4%
    increase in the legacy First Cash stores and improved yields on the
    Cash America pawn receivables. Same-store pawn fee revenues in the
    Cash America stores declined 8% in the first quarter compared to an
    11% decrease in the prior sequential quarter.
  • Retail margins improved sequentially to 35% for the quarter compared
    to 33% and 34% in the third and fourth quarter of 2017, respectively.
    The retail margin in the Cash America locations saw even stronger
    sequential improvement at 34% compared to 31% in the fourth quarter of
    2017.
  • Pawn loans outstanding at March 31, 2018 totaled $237 million, a
    decrease of 3% in total and on a same-store basis. This represented a
    significant sequential improvement over the fourth quarter of 2017
    when pawn loans were down 6% overall and 7% on a same-store basis.
    Pawn loans in the legacy First Cash stores increased 6% on a
    same-store basis, marking the sixth sequential quarter of positive
    year-over-year comparisons. Pawn loans in the Cash America stores also
    saw significant sequential improvement as the 6% decrease in same
    store pawn loans outstanding at March 31, 2018 compared favorably to
    the 10% decline last quarter.
  • Inventories at March 31, 2018 declined $70 million, or 27%, to $188
    million compared to $258 million a year ago, primarily from strategic
    reductions in overall inventory levels, including focused liquidation
    of aged inventories in the Cash America stores. As of March 31, 2018,
    inventories aged greater than one year were 5%. Aged inventories in
    the legacy First Cash stores were consistent at 5%, while aged
    inventories in the Cash America stores were also 5%, a significant
    sequential improvement over the 7% aged level last quarter and 14%
    aged level in the first and second quarter of 2017. Inv
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