Firstcash Holdings, Inc. · NASDAQ:FCFS
Firstcash — Investor Presentation (May 2018)
43 slides from Firstcash's investor presentation, May 11, 2018
Slide 1: Investor Relations Presentation May 2018
EXHIBIT 99.1 CORPUS CHRISTI, TEXAS INVESTOR RELATIONS PRESENTATION MAY 2018
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS “This presentation contains forward-looking statements about the business, financial condition and prospects of FirstCash, Inc. and its wholly owned subsidiaries (together, the “Company”). Forward-looking statements, as that term is defined in the Private Securities Litiga
Slide 3: At a Glance Overview
AT A GLANCE OVERVIEW REVENUE ($ IN MILLIONS) • Leading pawn operator with over 2,200 store $1,780 locations in 25 U.S. states and Latin America, including Mexico, Guatemala, El Salvador and $1,088 Colombia. $705 • Retailer of pre-owned consumer products including: – Consumer electronics & appliances
Slide 4: Largest Pawn Operator in the Americas
LARGEST PAWN OPERATOR IN THE AMERICAS OVER 2,200 STORES IN FIVE COUNTRIES U.S. OPERATIONS – 1,110 STORES IN 25 STATES MEXICO OPERATIONS – 1,088 STORES IN 32 STATES Sonora Chihuahua Coahuila Quintana Roo 33 Durango Nuevo Leon Yucatan WA ME Tamaulipas MT ND VT OR MN San Luis Potosi ID NH SD WI NY MA 2
Slide 5: Pawn-Focused Product Mix
PAWN-FOCUSED PRODUCT MIX TRAILING TWELVE MONTHS (TTM) TOTAL REVENUE NET REVENUE $1.8 BILLION $0.9 BILLION 8% 6% 1% 4% 29% 39% 54% 59% PAWN STORE SCRAP JEWELRY CONSUMER LOAN/ PAWN FEES RETAIL SALES SALES SERVICE FEES CONSOLIDATED GROSS MARGIN BY PRODUCT TYPE 35% 100% 5% 73% Note: As of 3/31/2018 5
Slide 6: Typical Pawn Transaction Cycle
TYPICAL PAWN TRANSACTION CYCLE TOTAL TRANSACTION TIME LESS THAN 15 MINUTES CUSTOMER ENTERS STORE WITH PERSONAL ASSET ~20% ~80% SELLS ASSET TO COMPANY PAWN LOAN (COLLATERALIZED WITH ASSET) ~25% ~75% CUSTOMER DOES NOT REPAY CUSTOMER REPAYS LOAN & LOAN OR FEE PAWN SERVICE FEE RETAIL SALES PAWN SERVICE
Slide 7: Limited Credit Risk for Pawn Lending
LIMITED CREDIT RISK FOR PAWN LENDING • PAWN LOANS ARE SMALL AND AVERAGE PAWN LOAN1 AFFORDABLE WITH A SHORT DURATION (COLLATERALIZED WITH ASSET) IN USD $ – 30 TO 60 DAYS $160 • APPROXIMATELY 75% OR MORE OF PAWN LOANS ARE REPAID $120 • ALL LOANS FULLY COLLATERALIZED WITH $80 $164 PERSONAL PROPERTY HEL
Slide 8: Annualized TTM Admin and D&A Expenses
ANNUALIZED TTM ADMIN AND D&A EXPENSES ($ IN MILLIONS ON A TTM BASIS) Realized Synergies of $70 Million at March 2018 $250 $235 $228 $239 $213 $199 $200 $70 $189 $67 $177 $63 $169 $59 $57 $150 $55 $52 $100 $165 $161 $151 $140 $132 $122 $117 $50 $- Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 TTM Q
Slide 9: Latin America Overview
AGUASCALIENTES, MEXICO TIJUANA, MEXICO LATIN AMERICA OVERVIEW MEXICO, GUATEMALA, EL SALVADOR AND COLOMBIA
Slide 10: Over 1,100 Latin America Locations
OVER 1,100 LATIN AMERICA LOCATIONS TOTAL LATIN AMERICA LOCATIONS, END OF PERIOD 10 YEAR CAGR 1,136 18% 48 999 955 46 51% OF TOTAL 46 STORE BASE 737 674 32 597 538 1,088 447 953 386 909 329 705 269 207 157 130 100 60 4 29 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 11: Majority of Stores & Employees Based in LatAm
MAJORITY OF STORES & EMPLOYEES BASED IN LATAM; ALMOST 80% OF STORE INVESTMENTS IN LATAM STORE SEGMENT STORES1 EMPLOYEES3 INVESTMENTS2 CONTRIBUTION4 $30,643 $123,085 79% 1,136 9,039 35% 51% 54% $8,357 7,743 1,110 $233,079 21% 46% 49% 65% LatAm U.S. 1 As of Press Release 4/26/2018 2 TTM 3/31/2018 Stor
Slide 12: LatAm Operating Trends: Q1-2018
LATAM OPERATING TRENDS: Q1-2018 • STRONG REVENUE GROWTH IN THE SAME-STORE TWO-YEAR GROWTH1 FIRST QUARTER 28% 24% – UP 25% ON A USD $ TRANSLATED BASIS 24% 23% 23% – UP 16% ON A CONSTANT CURRENCY BASIS 20% 13% 16% 12% 13% • RESULTS DRIVEN BY STRONG SAME- STORE SALES RESULTS AND 12% CONTRIBUTIONS FROM
Slide 13: LatAm Pawn and Inventory Composition
LATAM PAWN AND INVENTORY COMPOSITION LATAM OPERATIONS SEGMENT PAWN COLLATERAL INVENTORY 11% 10% 64% 2% 60% 1% 2% 2% 2% 2% 19% 25% JEWELRY ELECTRONICS TOOLS SPORTING GOODS MUSICAL INSTRUMENTS OTHER Note: As of 3/31/2018 13
Slide 14: Prendamex Acquisition
PRENDAMEX ACQUISITION • ACQUIRED 126 STORES IN MARCH 2018 • POSITIONED MOSTLY IN URBAN MARKETS ACROSS 8 STATES IN CENTRAL AND SOUTHERN MEXICO • SMALLER-FORMAT LOCATIONS (TYPICALLY LESS THAN 2,500 FT2) FOCUSED PRIMARILY ON JEWELRY LENDING • MANY SIMILARITIES TO THE SUCCESSFUL MAXI PRENDA ACQUISITION
Slide 15: LatAm Growth Strategy
LATAM GROWTH STRATEGY LATIN AMERICA CONTINUES TO BE THE PRIMARY STORE GROWTH VEHICLE - SIGNIFICANT UNTAPPED POTENTIAL IN THE REGION EXISTING COUNTRY PRESENCE LATIN AMERICA SUBSTANTIAL INFRASTRUCTURE AND CASH MARKET ENTRY Q1-2018 WITH GROWTH STRATEGY FLOWS TO ACCOMPLISH NEW ACQUISITIONS NEAR-TERM E
Slide 16: New Store Openings
NEW STORE OPENINGS • 11 LARGE FORMAT DE NOVO LOCATIONS OPENED IN LATAM Q1-2018 – 9 IN MEXICO AND SINGLE STORES IN GUATEMALA AND COLOMBIA • STRONG PIPELINE OF ADDITIONAL DE NOVO LOCATIONS WHICH ARE EXPECTED TO OPEN IN 2018 BOGOTA, COLOMBIA – OPENED Q2-2018 • THE COLOMBIAN STORE OPENINGS MARK THE FIRS
Slide 17: Proven New Store Opening Process
PROVEN NEW STORE OPENING PROCESS OPENED FIRST STORES IN MEXICO IN 1999 EXPERIENCED REAL ESTATE DEVELOPMENT TEAM PROVEN SITE SELECTION STRATEGY STANDARDIZED STORE LAYOUTS, FIXTURES AND EQUIPMENT STATE OF THE ART SECURITY TECHNOLOGY CONSISTENT PROCESS ENSURES THE NEW STORES ARE DELIVERED O
Slide 18: Proven Rapid Payback Model
PROVEN RAPID PAYBACK MODEL MEXICO NEW STORE INVESTMENT AND PROFITABILITY RAMP ($ IN USD) Typical Mexico New Store Ramp New Store Investment Year 1 Year 2 Year 3 Year 4 Year 5 (USD $) Op Margin (4%) 17% 22% 24% 26% Cap Ex $160,000 $500 $200 - Leasehold improvements & fixtures $400 $160 - Computer & s
Slide 19: United States Overview
CORPUS CHRISTI, TEXAS GRAND PRAIRIE, TEXAS UNITED STATES OVERVIEW LOCATIONS IN 25 STATES
Slide 20: U.S. Locations in 25 States
U.S. – Over 1,100 LOCATIONS IN 25 STATES LEGACY FIRST CASH LEGACY CASH AMERICA SHARED MARKETS 33 WA ME MT ND VT OR MN NH ID SD WI NY MA CT 2 MI RI WY IA PA UT 1 119 NJ 27 NE 34 DC DE 25 3 7 OH MD 30 WV NV IL IN KS VA CO 25 6 29 26 KY CA MO NC 41 TN 53 34 NM 18 SC OK AR AZ 27 8 46 MS GA LA AL AK TX 4
Slide 21: U.S. Operating Trends: Q1-2018
U.S. OPERATING TRENDS: Q1-2018 U.S. INVENTORY LEVELS • LEGACY FIRST CASH STORES CONTINUE TO ($ IN MILLIONS) $350 SEE SOLID SAME-STORE INCREASES: $283 $258 – SAME-STORE PAWN LOANS UP 6% $300 11% $244 12% $240 Thousands 12% – SAME-STORE PAWN FEE REVENUE UP 4% $250 9% $217 6% $188 $200 5% $150 • LEGACY
Slide 22: Cash America Merger Synergies Drive Additional Accretion
CASH AMERICA MERGER SYNERGIES DRIVE ADDITIONAL ACCRETION ESTIMATED AMOUNTS ACHIEVED AS OF EXPECTED OPPORTUNITIES AT TIME OF MERGER DECEMBER 2017 IN 2018 ANNUAL OPERATING • ~$45 MILLION PRIMARILY FROM • $43 MILLION IN 2017 COST SYNERGIES TECHNOLOGY, FINANCE AND OTHER Annual ADMINISTRATIVE SYNERGIES o
Slide 23: U.S. Pawn and Inventory Composition
U.S. PAWN AND INVENTORY COMPOSITION U.S. OPERATIONS SEGMENT PAWN COLLATERAL INVENTORY 16% 15% 66% 6% 61% 9% 3% 6% 3% 3% 9% 3% JEWELRY ELECTRONICS TOOLS SPORTING GOODS MUSICAL INSTRUMENTS OTHER Note: As of 3/31/18 23
Slide 24: U.S. Earnings Growth Strategy
U.S. EARNINGS GROWTH STRATEGY •CONTINUE SCOUTING ACQUISITIONS IN EXISTING STATES – ORGANIC DEMAND AS UNBANKED AND UNDERBANKED DEMOGRAPHICS CONTINUE TO GROW – CONTINUED OPPORTUNITIES FOR SMALLER “TUCK-IN” ACQUISITIONS – 12 SHOP ACQUISITION IN TN/GA (US MONEY Q1-2018) – 4 SINGLE STORE ACQUISITIONS TO
Slide 25: Stable Regulatory Climate for Pawn
STABLE REGULATORY CLIMATE FOR PAWN • PAWN LOANS ARE DIFFERENT FROM TRADITIONAL CONSUMER LOAN PRODUCTS AND NOT SUBJECT TO THE CFPB SMALL DOLLAR LOAN RULES BECAUSE THEY: – ARE NON-RECOURSE LOANS – HAVE SIGNIFICANTLY SMALLER AVERAGE LOAN SIZES – DO NOT INVOLVE CREDIT CHECKS, COLLECTION ACTIVITIES, ACH
Slide 26: Limited Exposure to CFPB Rules for Payday Lending
LIMITED EXPOSURE TO CFPB RULES FOR PAYDAY LENDING • IN OCTOBER 2017, THE CFPB RELEASED ITS SMALL-DOLLAR LOAN RULE (THE “SDL RULE”), WHICH IS SCHEDULED TO TAKE EFFECT IN JULY 2019. IF THE SDL RULE TAKES EFFECT, IT WILL IMPACT SHORT-TERM SMALL DOLLAR LOAN PRODUCTS SUCH AS PAYDAY LOANS, AUTO TITLE LOAN
Slide 27: Financial Highlights
PUEBLA, MEXICO CUAUTLA, MEXICO FINANCIAL HIGHLIGHTS
Slide 28: Adjusted Net Income and Adjusted EBITDA
ADJUSTED NET INCOME AND ADJUSTED EBITDA ($ IN MILLIONS) $280 $273 $273 $240 $200 $180 $160 $140 $132 $131 $120 $85 $80 $68 $40 $0 2015 2016 2017 TTM Q1-2018 Adjusted Net Income Adjusted EBITDA Note: Adjusted Net Income and Adjusted Net EBITDA are non-GAAP numbers. See appendix for reconciliation to
Slide 29: Operating Cash Flow and Adjusted Free Cash Flow
OPERATING CASH FLOW AND ADJUSTED FREE CASH FLOW ($ IN MILLIONS) $248 $246 $250 $231 $220 $200 FCF YIELD1 7% TTM 3/31/2018 $150 $97 $100 $93 $68 $68 $50 $0 2015 2016 2017 TTM Q1-2018 Operating Activities Cash Flow Adjusted Free Cash Flow Note: Adjusted Free Cash Flow is a non-GAAP number. See appendi
Slide 30: Adjusted Earnings Per Share Guidance
ADJUSTED EARNINGS PER SHARE GUIDANCE AS PROVIDED ON APRIL 26, 2018 GUIDANCE RANGE2: $4.00 $3.35 - $3.55 $3.50 $3.00 $2.74 $2.50 $2.42 $2.44 $2.00 $1.50 $1.00 $0.50 $0.00 2015 2016 2017 2018 Guidance Adjusted Net Income Per Share1 2018 Guidance 1 Adjusted earnings measures may exclude the impact of t
Slide 31: FirstCash Fiscal 2018 Outlook
FIRSTCASH FISCAL 2018 OUTLOOK •INCREASED FISCAL FULL-YEAR 2018 GUIDANCE FOR DILUTED EARNINGS PER SHARE TO BE IN THE RANGE OF $3.35 TO $3.551 – COMPARES TO PREVIOUS GUIDANCE OF $3.15 TO $3.35 – REPRESENTS EARNINGS PER SHARE GROWTH TO BE IN A RANGE OF 22% TO 30% •KEY ASSUMPTIONS: – EXPECTATION TO ADD
Slide 32: Payout Ratio: Dividends and Share Repurchases
PAYOUT RATIO: DIVIDENDS AND SHARE REPURCHASES AS A % OF ADJUSTED NET INCOME ($ IN MILLIONS) $240 200% TOTAL PAYOUT SINCE MERGER: $248 $220 • REPURCHASES: $192 $38 • DIVIDENDS: $56 $180 157% 150% $129 $120 100% $37 $182 55% 58% 98% $60 50% $40 23% $44 $92 $20 $0 0% 2014 2015 20161 2017 TTM Q1-2018 Sh
Slide 33: Dividends Per Share Continue to Grow
DIVIDENDS PER SHARE CONTINUE TO GROW 2018 GUIDANCE: $1.00 ★ IDENTIFIES SEQUENTIAL QUARTER- OVER-QUARTER DIVIDEND INCREASE $0.88 $0.80 $0.77 $0.22 $0.20 $0.60 $0.57 $0.22 $0.19 $0.19 $0.40 $0.125 $0.22 $0.19 $0.20 $0.125 $0.19 $0.22 $0.125 $0.00 2016 2017 2018 Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 Projected 33
Slide 34: Leverage Profile – Post Merger
LEVERAGE PROFILE – POST MERGER ($ IN MILLIONS) $600 4.0 $560 NET DEBT RATIO1 (NET NET DEBT RATIO1 (NET DEBT/TTM ADJUSTED EBITDA) DEBT/TTM ADJUSTED EBITDA) = 1.0 TO 1 3.5 $460 = 1.2 TO 1 $440 3.0 $397 $407 $400 $383 $360 $140 2.5 $337 $97 $107 $260 $83 2.0 $137 1.5 $200 $300 $300 $300 $300 1.0 Ratio
Slide 35: Over $1.3 Billion in Cumulative Investments & Shareholder Payouts
OVER $1.3 BILLION IN CUMULATIVE INVESTMENTS & SHAREHOLDER PAYOUTS Cumulative Total $1,300 Stock Repurchases & Dividends: $ Millions - 15,045,949 split-adjusted shares repurchased $1,200 - $67 million in cumulative dividends paid $1,100 Acquisitions Since 2004: $1,000 - 164 stores acquired in U.S. -
Slide 36: Investment Recap
INVESTMENT RECAP • PAWN-FOCUSED BUSINESS MODEL ⦁ FOCUSED ON SMALL SECURED LOANS TO UNDERBANKED CONSUMERS WITH LIMITED ACCESS TO TRADITIONAL CREDIT PRODUCTS ⦁ FOCUS ON FULL-SERVICE LENDING & RETAIL MODEL IS A SIGNIFICANT COMPETITIVE ADVANTAGE ⦁ STRONG MARGINS & CASH FLOWS ALLOW FOR STORE GROWTH AND D
Slide 37: Appendix
KANSAS CITY, MISSOURI APPENDIX SANTA TECLA, EL SALVADOR
Slide 38: Top Shareholders and Shareholders Breakdown
TOP 10 SHAREHOLDERS AND SHAREHOLDERS BREAKDOWN Institution Name Shares (FCFS) % S/O (FCFS) Dominant Style l BlackRock Fund Advisors 5,529,870 11.9% Index l l The Vanguard Group, Inc. 4,251,298 9.1% Index l l Fiduciary Management, Inc. 2,256,092 4.8% Value l l Dimensional Fund Advisors, L.P. (U.S.) 2
Slide 39: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION The Company uses certain financial calculations such as adjusted net income, adjusted net income per share, EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow and constant currency results (as defined or explained below) as factors in the measurement and
Slide 40: Reconciliation of Net Income to Adjusted Net Income
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME ($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) YEAR ENDED DECEMBER 31, TTM ENDED MARCH 31, 2015 2016 2017 2018 IN THOUSANDS PER SHARE IN THOUSANDS PER SHARE IN THOUSANDS PER SHARE IN THOUSANDS PER SHARE NET INCOME $60,710 $2.14 $60,127 $1.72 $143,892 $
Slide 41: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA ($ IN THOUSANDS) TTM ENDED MARCH YEAR ENDED DECEMBER 31, 31, 20151 2016 2017 2018 NET INCOME $60,710 $60,127 $143,892 $152,882 INCOME TAXES 26,971 33,320 28,420 22,967 DEPRECIATION AND AMORTIZATION 17,446 31,865 55,233 52,273 INTEREST EXPENS
Slide 42: Reconciliation of Cash Flow from Operating Activities to Free Cash Flow
RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW & ADJUSTED FREE CASH FLOW ($ IN THOUSANDS) TTM ENDED MARCH YEAR ENDED DECEMBER 31, 31, 2015 2016 2017 2018 CASH FLOW FROM OPERATING $92,749 $96,854 $220,357 $247,808 ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES: LOAN RECEIVABL
Slide 43: Investor Contact Information
INVESTOR CONTACT INFORMATION INVESTOR RELATIONS GAR JACKSON INVESTORRELATIONS@FIRSTCASH.COM GLOBAL IR GROUP IR.FIRSTCASH.COM GAR@GLOBALIRGROUP.COM (817) 258-2650 (817) 886-6998 43