Firstcash Holdings, Inc. · NASDAQ:FCFS
Firstcash — Investor Presentation (July 2018)
41 slides from Firstcash's investor presentation, Jul 31, 2018
Slide 1: Investor Presentation August 2018
EXHIBIT 99.1 INVESTOR PRESENTATION AUGUST 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 almost 2,300 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 & applianc
Slide 4: Largest Pawn Operator in the Americas
LARGEST PAWN OPERATOR IN THE AMERICAS APPROACHING 2,300 STORES IN FIVE COUNTRIES U.S. OPERATIONS – 1,106 STORES IN 25 STATES MEXICO OPERATIONS – 1,132 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
Slide 5: Pawn Represents 96% of Revenue
PAWN REPRESENTS 96% OF REVENUE TRAILING TWELVE MONTHS (TTM) TOTAL REVENUE NET REVENUE $1.8 BILLION $0.9 BILLION 7% 1% 4% 5% 29% 40% 54% 60% PAWN STORE SCRAP JEWELRY CONSUMER LOAN/ PAWN FEES RETAIL SALES SALES SERVICE FEES1 CONSOLIDATED GROSS MARGIN BY PRODUCT TYPE 35% 100% 7% 73% 1 Consumer loan fee
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 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 $160 PERSONAL PROPERTY HE
Slide 8: Latin America Overview
AGUASCALIENTES, MEXICO TIJUANA, MEXICO LATIN AMERICA OVERVIEW MEXICO, GUATEMALA, EL SALVADOR AND COLOMBIA
Slide 9: Approaching 1,200 Latin America Locations
APPROACHING 1,200 LATIN AMERICA LOCATIONS TOTAL LATIN AMERICA LOCATIONS, END OF PERIOD 1,184 217 NEW PAWN STORES 52 ADDED YTD IN 2018 999 955 46 46 737 674 32 597 538 1,132 447 953 386 909 329 705 269 207 157 130 100 60 4 29 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slide 10: LatAm Revenue Growth & Currency Impact
LATAM REVENUE GROWTH & CURRENCY IMPACT ($ IN MILLIONS) $800 $720 $700 $675 $600 $571 $500 $436 $388 $400 $300 $487 $525 $417 $200 $388 $368 $100 $0 2014 2015 2016 2017 TTM Q2-2018 Total Revenue, USD CC Revenue, 2014 MXN @ 13.301 1 Constant currency revenue is considered a non-GAAP measurement of fin
Slide 11: Majority of Stores & Employees Based in LatAm
MAJORITY OF STORES & EMPLOYEES BASED IN LATAM; OVER 70% OF STORE INVESTMENTS IN LATAM STORE SEGMENT STORES1 EMPLOYEES1 INVESTMENTS2 CONTRIBUTION3 $46,741 73% $124,938 35% 1,184 9,582 52% 55% 7,780 1,106 $235,983 $17,187 45% 48% 27% 65% LatAm U.S. 1 As of Press Release 7/26/2018 2 TTM 6/30/2018 Store
Slide 12: LatAm Operating Trends: Q2-2018
LATAM OPERATING TRENDS: Q2-2018 • STRONG GROWTH IN CORE REVENUE SAME-STORE TWO-YEAR GROWTH1 CONTINUES IN THE SECOND QUARTER 35% 29% – UP 12% ON A USD $ TRANSLATED BASIS 30% 26% – UP 16% ON A CONSTANT CURRENCY BASIS 25% 13% • RETAIL SALES GROWTH WAS 20% 12% 1 PARTICULARLY STRONG 15% – UP 13% ON A SAM
Slide 13: LatAm Pawn and Inventory Composition
LATAM PAWN AND INVENTORY COMPOSITION LATAM OPERATIONS SEGMENT PAWN COLLATERAL INVENTORY 12% 10% 2% 61% 59% 2% 2% 2% 2% 2% 21% 25% JEWELRY ELECTRONICS TOOLS SPORTING GOODS MUSICAL INSTRUMENTS OTHER Note: As of 6/30/2018 13
Slide 14: 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 MARKET ENTRY Q1-2018 WITH GROWTH STRATEGY FLOWS TO ACCOMPLISH NEW ACQUISITIONS AND DE NOVO
Slide 15: 2018 LatAm Acquisitions
2018 LATAM ACQUISITIONS • MARCH 2018 - ACQUIRED 126 STORES IN CENTRAL MEXICO • JUNE 2018 - ACQUIRED 62 STORES IN NORTHEASTERN/SOUTHEASTERN MEXICO • BOTH ACQUISITIONS WERE SMALLER FORMAT LOCATIONS (TYPICALLY LESS THAN 2,500 FT2) FOCUSED PRIMARILY ON JEWELRY LENDING AND SMALL ELECTRONICS • MANY SIMILA
Slide 16: New Store Openings
NEW STORE OPENINGS • 29 LARGE FORMAT DE NOVO LOCATIONS OPENED IN LATAM YTD 2018 – 23 IN MEXICO, 3 IN COLOMBIA AND 3 IN GUATEMALA • STRONG PIPELINE OF ADDITIONAL DE NOVO LOCATIONS WHICH ARE EXPECTED TO OPEN IN 2018 (FULL YEAR: 60-65 LOCATIONS) • THE 3 COLOMBIAN STORE OPENINGS IN 2018 MARK THE DE NOVO
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 33 DC DE 27 3 7 OH MD 30 WV NV IL IN KS VA CO 25 6 29 26 KY CA MO NC 41 TN 53 33 NM 18 SC OK AR AZ 27 8 46 MS GA LA AL AK TX 4
Slide 21: U.S. Operating Trends: Q2-2018
U.S. OPERATING TRENDS: Q2-2018 • U.S. SEGMENT PRE-TAX OPERATING U.S. RETAIL MARGINS INCOME SEES CONTINUED GROWTH: 42% 40% 40% – UP 6% COMPARED TO Q2-2017 40% 39% 39% – DRIVEN BY INCREASED RETAIL GROSS PROFITS 38% 37% AND ADDITIONAL STORE-LEVEL COST SAVINGS 36% 35% 34% ETAIL ARGINS MPROVED 34% 33% 35
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 • $43 MILLION IN 2017 COST SYNERGIES TECHNOLOGY, FINANCE AND OTHER Annual ADMINISTRATIVE SYNERGIES o
Slide 23: TTM Admin and D&A Expenses
TTM ADMIN AND D&A EXPENSES ($ IN MILLIONS ON A TTM BASIS) Realized Synergies of $73 Million at June 2018 $250 $235 $228 $239 $213 $199 $200 $70 $189 $67 $177 $63 $169 $166 $59 $57 $150 $55 $52 $49 $100 $165 $161 $151 $140 $132 $122 $117 $117 $50 $- Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-
Slide 24: U.S. Pawn and Inventory Composition
U.S. PAWN AND INVENTORY COMPOSITION U.S. OPERATIONS SEGMENT PAWN COLLATERAL INVENTORY 19% 16% 8% 63% 6% 59% 3% 3% 6% 3% 11% 3% JEWELRY ELECTRONICS TOOLS SPORTING GOODS MUSICAL INSTRUMENTS OTHER Note: As of 6/30/18 24
Slide 25: U.S. Earnings Growth Strategy
U.S. EARNINGS GROWTH STRATEGY •CONTINUE SCOUTING ACQUISITIONS IN EXISTING STATES – ORGANIC DEMAND AS UNBANKED AND UNDERBANKED DEMOGRAPHICS CONTINUE TO GROW – CONTINUED OPPORTUNITIES FOR SMALLER “TUCK-IN” ACQUISITIONS – 12 SHOP ACQUISITION IN TN/GA (US MONEY Q2-2018) – 6 SINGLE STORE ACQUISITIONS TO
Slide 26: Stable Regulatory Climate for Pawn
STABLE REGULATORY CLIMATE FOR PAWN • PAWN LOANS ARE DIFFERENT FROM TRADITIONAL CONSUMER LOAN PRODUCTS AND NOT SUBJECT TO THE CFPB SMALL DOLLAR LOAN RULES BECAUSE THEY: – ARE NON-RECOURSE LOANS – HAVE SIGNIFICANTLY SMALLER AVERAGE LOAN SIZES – DO NOT INVOLVE CREDIT CHECKS, COLLECTION ACTIVITIES, ACH
Slide 27: Financial Highlights
PUEBLA, MEXICO CUAUTLA, MEXICO FINANCIAL HIGHLIGHTS
Slide 28: Adjusted Net Income and Adjusted EBITDA
ADJUSTED NET INCOME AND ADJUSTED EBITDA ($ IN MILLIONS) $277 $280 $273 $240 $200 $180 $160 $147 $132 $131 $120 $85 $80 $68 $40 $0 2015 2016 2017 TTM Q2-2018 Adjusted Net Income Adjusted EBITDA Note: Adjusted Net Income and Adjusted EBITDA are non-GAAP numbers. See appendix for reconciliation to Net
Slide 29: Operating Cash Flow and Adjusted Free Cash Flow
OPERATING CASH FLOW AND ADJUSTED FREE CASH FLOW ($ IN MILLIONS) $250 $238 $231 $238 $220 $200 FCF YIELD1 6% $150 TTM 6/30/2018 $97 $100 $93 $68 $68 $50 $0 2015 2016 2017 TTM Q2-2018 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 JULY 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 th
Slide 31: FirstCash Fiscal 2018 Outlook
FIRSTCASH FISCAL 2018 OUTLOOK •REITERATING FISCAL FULL-YEAR 2018 GUIDANCE FOR ADJUSTED DILUTED EARNINGS PER SHARE TO BE IN THE RANGE OF $3.35 TO $3.551 – COMPARES TO INITIAL 2018 GUIDANCE OF $3.15 TO $3.35 – REPRESENTS EARNINGS PER SHARE GROWTH TO BE IN A RANGE OF 22% TO 30% •KEY ASSUMPTIONS: – PROJ
Slide 32: 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 $0.00 2016 2017 2018 Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 Projected 32
Slide 33: Post-Merger Cash Flows Support Investments and Shareholder Returns
POST-MERGER CASH FLOWS SUPPORT INVESTMENTS AND SHAREHOLDER RETURNS WITHOUT INCREASING LEVERAGE ($ IN MILLIONS) Post-Merger Investments OUTSTANDING DEBT $600 $600 & Shareholder Returns $560 $522 $38 MILLION $485 REDUCTION $39 $400 $66 $400 $222 $360 $71 $200 $200 $309 $300 $200 $0 $0 POST MERGER ACTI
Slide 34: Over $1.5 Billion in Cumulative Investments & Shareholder Payouts
OVER $1.5 BILLION IN CUMULATIVE INVESTMENTS & SHAREHOLDER PAYOUTS Cumulative Total $1,500 Stock Repurchases & Dividends: $ Millions $1,400 - 16,286,724 split-adjusted shares repurchased $1,300 - $77 million in cumulative dividends paid $1,200 Acquisitions Since 2004: $1,100 - 179 stores acquired in
Slide 35: Investment Recap
INVESTMENT RECAP • PAWN-FOCUSED BUSINESS MODEL ⦁ FOCUSED ON SMALL SECURED LOANS TO UNDERBANKED CONSUMERS WITH LIMITED ACCESS TO TRADITIONAL CREDIT PRODUCTS ⦁ FOCUS ON FULL-SERVICE LENDING & RETAIL MODEL IS A SIGNIFICANT COMPETITIVE ADVANTAGE ⦁ STRONG MARGINS & CASH FLOWS ALLOW FOR STORE GROWTH AND D
Slide 36: Appendix
KANSAS CITY, MISSOURI APPENDIX SANTA TECLA, EL SALVADOR
Slide 37: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION The Company uses certain financial calculations such as adjusted net income, adjusted net income per share, EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow and constant currency results (as defined or explained below) as factors in the measurement and
Slide 38: Reconciliation of Net Income to Adjusted Net Income
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME ($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) TTM ENDED EAR NDED ECEMBER Y E D 31, JUNE 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 $16
Slide 39: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA ($ IN THOUSANDS) YEAR ENDED DECEMBER 31, TTM ENDED JUNE 30, 20151 2016 2017 2018 NET INCOME $60,710 $60,127 $143,892 $167,814 INCOME TAXES 26,971 33,320 28,420 28,838 DEPRECIATION AND AMORTIZATION 17,446 31,865 55,233 48,536 INTEREST EXPENSE
Slide 40: Reconciliation of Cash Flow from Operations to Free Cash Flow
RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW & ADJUSTED FREE CASH FLOW ($ IN THOUSANDS) YEAR ENDED DECEMBER 31, TTM ENDED JUNE 30, 2015 2016 2017 2018 CASH FLOW FROM OPERATING $92,749 $96,854 $220,357 $237,511 ACTIVITIES CASH FLOW FROM INVESTING ACTIVITIES: LOAN RECEIVABLE
Slide 41: 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 41