Firstcash Holdings, Inc. · NASDAQ:FCFS
Firstcash — Investor Presentation (October 2018)
43 slides from Firstcash's investor presentation, Oct 29, 2018
Slide 1: Investor Presentation November 2018
EXHIBIT 99.1 INVESTOR PRESENTATION NOVEMBER 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 MORE THAN $1,780 STORE LOCATIONS IN STATES AND 2,400 25 U.S. $1,088 LATIN AMERICA, INCLUDING MEXICO, $705 GUATEMALA, EL SALVADOR AND COLOMBIA. • RETAILER OF PRE-OWNED CONSUMER PRODUCTS 2015 2016 2017 INCLUDING: ADJUSTED EBITDA
Slide 4: At a Glance Overview: Growth Metrics and Shareholder Returns
AT A GLANCE OVERVIEW STORE COUNT – END OF PERIOD • STRONG GROWTH METRICS 2,446 – STORE LOCATIONS – NET INCOME AND EPS 2,085 2,111 – FREE CASH FLOW • ENHANCED SHAREHOLDER RETURNS – RISING DIVIDENDS 2016 2017 YTD-Sep 2018 CTIVE HARE EPURCHASE ROGRAM – A S R P CASH DIVIDENDS AND STOCK REPURCHASES ($ IN
Slide 5: Largest Pawn Operator in the Americas
LARGEST PAWN OPERATOR IN THE AMERICAS MORE THAN 2,400 STORES IN FIVE COUNTRIES U.S. OPERATIONS – 1,100 STORES IN 25 STATES MEXICO OPERATIONS – 1,292 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
Slide 6: Pawn Represents 97% of Revenue
PAWN REPRESENTS 97% OF REVENUE TRAILING TWELVE MONTHS (TTM) TOTAL REVENUE NET REVENUE $1.8 BILLION $1.0 BILLION 7% 1% 3% 5% 29% 40% 54% 61% PAWN STORE SCRAP JEWELRY CONSUMER LOAN/ PAWN FEES RETAIL SALES SALES SERVICE FEES1 CONSOLIDATED GROSS MARGIN BY PRODUCT TYPE 36% 100% 8% 72% 1 Consumer loan fee
Slide 7: 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 8: Limited Credit Risk from Pawn Lending
LIMITED CREDIT RISK FROM 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 $163 PERSONAL PROPERTY HE
Slide 9: Latin America Overview
AGUASCALIENTES, MEXICO TIJUANA, MEXICO LATIN AMERICA OVERVIEW MEXICO, GUATEMALA, EL SALVADOR AND COLOMBIA
Slide 10: Over 1,300 Latin America Locations
OVER 1,300 LATIN AMERICA LOCATIONS 385 NEW PAWN STORES 1,346 ADDED YTD IN 2018 54 TOTAL LATIN AMERICA 999 955 46 LOCATIONS, END OF PERIOD 46 737 674 32 597 1,292 538 447 953 386 909 329 269 705 207 130 157 100 60 4 29 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20
Slide 11: LatAm Revenue Growth
LATAM REVENUE GROWTH ($ IN MILLIONS) $700 $636 $600 $573 $485 $500 $400 $368 $300 $538 $487 $417 $200 $368 $100 $0 2015 2016 2017 TTM Q3-2018 1 TOTAL REVENUE, USD CC REVENUE, 2015 MXN @ 15.85 1 Constant currency revenue is considered a non-GAAP measurement of financial performance 11
Slide 12: Majority of Stores & Employees Based in LatAm
MAJORITY OF STORES & EMPLOYEES BASED IN LATAM; OVER 80% OF STORE INVESTMENTS IN LATAM STORE SEGMENT STORES1 EMPLOYEES1 INVESTMENTS2 CONTRIBUTION3 $98,301 $125,343 10,645 82% 34% 1,346 58% 55% 7,694 1,100 $21,774 45% 42% $239,424 18% 66% LatAm U.S. 1 As of 9/30/2018 2 TTM 9/30/2018 Store CapEx and Ac
Slide 13: LatAm Operating Trends: Q3-2018
LATAM OPERATING TRENDS: Q3-2018 • REVENUES FOR THE THIRD QUARTER Q3 YEAR-OVER-YEAR GROWTH 30% OF 2018 TOTALED $142 MILLION 25% – UP 10% ON A USD $ TRANSLATED BASIS 25% 21% – UP 17% ON A CONSTANT CURRENCY BASIS 20% 17% • PAWN LOANS OUTSTANDING TOTALED 15% 10% $109 MILLION 10% – UP 21% ON A USD $ TRAN
Slide 14: LatAm Pawn and Inventory Composition
LATAM PAWN AND INVENTORY COMPOSITION LATAM OPERATIONS SEGMENT PAWN COLLATERAL INVENTORY 11% 10% 5% 57% 57% 2% 2% 2% 2% 2% 23% 27% JEWELRY ELECTRONICS TOOLS SPORTING GOODS MUSICAL INSTRUMENTS OTHER Note: As of 9/30/2018 14
Slide 15: LatAm Growth Strategy
LATAM GROWTH STRATEGY LATIN AMERICA CONTINUES TO BE THE PRIMARY STORE GROWTH VEHICLE - SIGNIFICANT UNTAPPED POTENTIAL IN THE REGION SUBSTANTIAL INFRASTRUCTURE AND CASH EXISTING COUNTRY PRESENCE LATIN AMERICA FLOWS TO ACCOMPLISH NEW ACQUISITIONS MARKET ENTRY Q1-2018 WITH GROWTH STRATEGY AND DE NOVO
Slide 16: 2018 LatAm Acquisitions
2018 LATAM ACQUISITIONS • MARCH - ACQUIRED 126 STORES IN CENTRAL MEXICO LATAM ACQUISITIONS YEAR-TO-DATE 2018 • JUNE - ACQUIRED 62 STORES IN 400 NORTHEASTERN SOUTHEASTERN EXICO / M 350 342 UGUST CQUIRED STORES IN THE SOUTHERN GULF • A - A 97 300 REGION OF MEXICO 154 250 • SEPTEMBER - ACQUIRED 57 STOR
Slide 17: New Store Openings
NEW STORE OPENINGS • 43 LARGE FORMAT DE NOVO LOCATIONS OPENED IN LATAM YTD 2018 – 35 IN MEXICO, 4 IN COLOMBIA AND 4 IN GUATEMALA • STRONG PIPELINE OF ADDITIONAL DE NOVO LOCATIONS WHICH ARE EXPECTED TO OPEN IN 2018 AND EARLY 2019 • THE 4 COLOMBIAN STORE OPENINGS IN 2018 MARK THE DE NOVO EXPANSION INT
Slide 18: 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 19: 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 20: United States Overview
CORPUS CHRISTI, TEXAS GRAND PRAIRIE, TEXAS UNITED STATES OVERVIEW LOCATIONS IN 25 STATES
Slide 21: U.S. – 1,100 Locations in 25 States
U.S. – 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 33 DC DE 27 3 7 OH MD 30 WV NV IL IN KS VA CO 24 6 29 26 KY CA MO NC 41 TN 53 31 NM 18 SC OK AR AZ 27 8 46 MS GA LA AL AK TX 402 26
Slide 22: U.S. Operating Trends: Q3-2018
U.S. OPERATING TRENDS: Q3-2018 • U.S. SEGMENT PRE-TAX OPERATING U.S. RETAIL MARGINS INCOME SEES CONTINUED GROWTH: 42% – UP 7% COMPARED TO Q3-2017 40% 40% 40% 39% 39% 39% – UP 12% EXCLUDING NON-CORE CONSUMER 38% 37% 37% LENDING PRODUCTS 36% 35% – DRIVEN BY INCREASED RETAIL GROSS PROFITS 36% 34% 35% A
Slide 23: 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 • $43 MILLION IN 2017 COST SYNERGIES TECHNOLOGY, FINANCE AND OTHER Annual ADMINISTRATIVE SYNERGIES o
Slide 24: TTM Admin and D&A Expenses
TTM ADMIN AND D&A EXPENSES ($ IN MILLIONS ON A TTM BASIS) REALIZED SYNERGIES OF $77 MILLION AT SEP 2018 $250 $235 $228 $239 $213 $199 $200 $70 $189 $67 $177 $63 $169 $166 $59 $162 $57 $150 $55 $52 $49 $45 $100 $165 $161 $151 $140 $132 $122 $117 $117 $117 $50 $- Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-201
Slide 25: U.S. Pawn and Inventory Composition
U.S. PAWN AND INVENTORY COMPOSITION U.S. OPERATIONS SEGMENT PAWN COLLATERAL INVENTORY 18% 18% 64% 6% 8% 58% 3% 3% 6% 3% 10% 3% JEWELRY ELECTRONICS TOOLS SPORTING GOODS MUSICAL INSTRUMENTS OTHER Note: As of 9/30/2018 25
Slide 26: U.S. Earnings Growth Strategy
U.S. EARNINGS GROWTH STRATEGY •CONTINUE SCOUTING ACQUISITIONS IN EXISTING STATES – ORGANIC DEMAND AS UNBANKED AND UNDERBANKED DEMOGRAPHICS CONTINUE TO GROW – CONTINUED OPPORTUNITIES FOR SMALLER “TUCK-IN” ACQUISITIONS – 12 STORE ACQUISITION IN TN/GA (US MONEY Q2-2018) – 6 SINGLE STORE ACQUISITIONS TO
Slide 27: Stable Regulatory Climate for Pawn
STABLE REGULATORY CLIMATE FOR PAWN • PAWN LOANS ARE DIFFERENT FROM TRADITIONAL CONSUMER LOAN PRODUCTS AND NOT SUBJECT TO THE CFPB SMALL DOLLAR LOAN RULES BECAUSE THEY: – ARE NON-RECOURSE LOANS – HAVE SIGNIFICANTLY SMALLER AVERAGE LOAN SIZES – DO NOT INVOLVE CREDIT CHECKS, COLLECTION ACTIVITIES, ACH
Slide 28: Financial Highlights
PUEBLA, MEXICO CUAUTLA, MEXICO FINANCIAL HIGHLIGHTS
Slide 29: Consolidated Revenue
CONSOLIDATED REVENUE ($ IN MILLIONS) $1,780 $1,780 $182 CORE PAWN REVENUE NON-CORE REVENUE $218 RETAIL SALES SCRAP SALES PAWN LOAN FEES CONSUMER LOAN/CREDIT SERVICES $1,088 $106 $713 $705 $1,562 $1,598 $85 $60 $982 $628 $645 2014 2015 2016 2017 TTM Q3-2018 29
Slide 30: Adjusted Net Income and Adjusted EBITDA
ADJUSTED NET INCOME AND ADJUSTED EBITDA ($ IN MILLIONS) $280 $280 $273 $240 $200 $180 $160 $153 $132 $131 $120 $85 $80 $68 $40 $0 2015 2016 2017 TTM Q3-2018 ADJUSTED NET INCOME ADJUSTED EBITDA Note: Adjusted Net Income and Adjusted EBITDA are non-GAAP numbers. See appendix for reconciliation to Net
Slide 31: Operating Cash Flow and Adjusted Free Cash Flow
OPERATING CASH FLOW AND ADJUSTED FREE CASH FLOW ($ IN MILLIONS) $246 $250 $242 $244 $220 $200 FCF YIELD1 7% $150 TTM 9/30/2018 $93 $97 $100 $81 $72 $50 $0 2015 2016 2017 TTM Q3-2018 OPERATING ACTIVITIES CASH FLOW ADJUSTED FREE CASH FLOW Note: Adjusted Free Cash Flow is a non-GAAP number. See appendi
Slide 32: Adjusted Earnings Per Share Guidance
DJUSTED ARNINGS ER HARE A E P S 2 GUIDANCE AS PROVIDED ON OCTOBER 25, 2018 GUIDANCE RANGE : $3.45 - $3.55 $4.00 YOY GROWTH: 26% - 30% $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 measur
Slide 33: FirstCash Fiscal 2018 Outlook
FIRSTCASH FISCAL 2018 OUTLOOK •UPDATED FISCAL FULL-YEAR 2018 GUIDANCE FOR ADJUSTED DILUTED EARNINGS PER SHARE TO BE IN THE RANGE OF $3.45 TO $3.551 – AT THE UPPER HALF OF THE PREVIOUS GUIDANCE OF $3.35 TO $3.55 – REPRESENTS EARNINGS PER SHARE GROWTH TO BE IN A RANGE OF 26% TO 30% •KEY ASSUMPTIONS: –
Slide 34: Dividends Per Share Continue to Grow
DIVIDENDS PER SHARE CONTINUE TO GROW $1.00 ANNUALIZED DIVIDEND INCREASED 14% TO $0.91 $1.00 PER SHARE BEGINNING Q4 2018 $0.77 $0.80 $0.25 $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 $0.00 2016 2017 2018 Projected Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 ★ IDENTIFI
Slide 35: Post-Merger Cash Flows Support Investments and Shareholder Returns
POST-MERGER CASH FLOWS SUPPORT INVESTMENTS AND SHAREHOLDER RETURNS WITH MINIMAL ADDED LEVERAGE ($ IN MILLIONS) Post-Merger Investments OUTSTANDING DEBT & Shareholder Returns $605 $600 $560 $606 $600 $45 MILLION $92 $500 INCREASE $305 $76 $400 $360 $400 $88 $300 $200 $200 $350 $300 $100 $200 $0 $0 PO
Slide 36: Over $1.4 Billion in Cumulative Investments & Shareholder Payouts
OVER $1.4 BILLION IN CUMULATIVE INVESTMENTS & SHAREHOLDER PAYOUTS OVER THE LAST 10 YEARS $1,600 Cumulative Total STOCK REPURCHASES & DIVIDENDS: $1,500 $ Millions - 9,941,132 SPLIT-ADJUSTED SHARES REPURCHASED $1,400 - $87 MILLION IN CUMULATIVE DIVIDENDS PAID $1,300 ACQUISITIONS SINCE 2009: $1,200 - 1
Slide 37: Investment Recap
INVESTMENT RECAP • PAWN-FOCUSED BUSINESS MODEL ⦁ FOCUSED ON SMALL SECURED LOANS TO UNDERBANKED CONSUMERS WITH LIMITED ACCESS TO TRADITIONAL CREDIT PRODUCTS ⦁ FOCUS ON FULL-SERVICE LENDING & RETAIL MODEL IS A SIGNIFICANT COMPETITIVE ADVANTAGE ⦁ STRONG MARGINS & CASH FLOWS ALLOW FOR STORE GROWTH AND D
Slide 38: Appendix
KANSAS CITY, MISSOURI APPENDIX SANTA TECLA, EL SALVADOR
Slide 39: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION THE COMPANY USES CERTAIN FINANCIAL CALCULATIONS SUCH AS ADJUSTED NET INCOME, ADJUSTED DILUTED EARNINGS PER SHARE, ADJUSTED PRE-TAX PROFIT MARGIN, ADJUSTED NET INCOME MARGIN, EBITDA, ADJUSTED EBITDA, FREE CASH FLOW, ADJUSTED FREE CASH FLOW AND CONSTANT CURRENCY RESULTS
Slide 40: Reconciliation of Net Income to Adjusted Net Income
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME ($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) TTM ENDED EAR NDED ECEMBER Y E D 31, SEPT 30, 2015 2016 2017 2018 IN THOUSANDS PER SHARE IN THOUSANDS PER SHARE IN THOUSANDS PER SHARE IN THOUSANDS NET INCOME $60,710 $2.14 $60,127 $1.72 $143,892 $3.00 $17
Slide 41: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA ($ IN THOUSANDS) YEAR ENDED DECEMBER 31, TTM ENDED SEPT 30, 20151 2016 2017 2018 NET INCOME $60,710 $60,127 $143,892 $172,865 INCOME TAXES 26,971 33,320 28,420 26,303 DEPRECIATION AND AMORTIZATION 17,446 31,865 55,233 45,514 INTEREST EXPENSE
Slide 42: Reconciliation of Cash Flow to Free Cash Flow
RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW & ADJUSTED FREE CASH FLOW ($ IN THOUSANDS) YEAR ENDED DECEMBER 31, TTM ENDED SEPT 30, 2015 2016 2017 2018 CASH FLOW FROM OPERATING $92,749 $96,854 $220,357 $245,730 ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES: LOAN RECEIVABLE
Slide 43: Investor Contact Information
INVESTOR CONTACT INFORMATION INVESTOR RELATIONS GAR JACKSON INVESTORRELATIONS@FIRSTCASH.COM GLOBAL IR GROUP INVESTORS.FIRSTCASH.COM GAR@GLOBALIRGROUP.COM (817) 258-2650 (817) 886-6998 43