Firstcash Holdings, Inc. · NASDAQ:FCFS
Firstcash — Investor Presentation (February 2019)
45 slides from Firstcash's investor presentation, Feb 11, 2019
Slide 1: Investor Presentation February 2019
EXHIBIT 99.1 Investor Presentation FEBRUARY 2019
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
AT A GLANCE • LEADING PAWN OPERATOR WITH MORE THAN 2,500 STORE LOCATIONS EARNINGS PER SHARE 1 IN 5 COUNTRIES: $3.53 – UNITED STATES (1,093 LOCATIONS) – EL SALVADOR (13 LOCATIONS) EPS ADJ. EPS $3.41 $3.00 – MEXICO (1,383 LOCATIONS) – COLOMBIA (4 LOCATIONS) $2.74 $2.44 – GUATEMALA (43 LOCATIONS) $1.72
Slide 4: Attractive industry dynamics, growth metrics and shareholder returns
• ATTRACTIVE INDUSTRY DYNAMICS – STEADY DEMAND ACROSS ECONOMIC CYCLES – RECESSION RESISTANT – CUSTOMER BASE IS UNDERSERVED – MOST LENDERS DO NOT OFFER LOANS OF $150 OR LESS – STABLE REGULATORY ENVIRONMENT •STRONG GROWTH METRICS $315 CASH DIVIDENDS – STORE LOCATIONS $41 STOCK REPURCHASES – NET INCOME
Slide 5: Largest Pawn Operator in the Americas
LARGEST PAWN OPERATOR IN THE AMERICAS MORE THAN 2,500 STORES IN FIVE COUNTRIES U.S. OPERATIONS – 1,093 STORES IN 25 STATES MEXICO OPERATIONS – 1,383 STORES IN 32 STATES POPULATION GDP PER CAPITA INFLATION INFORMAL MARKET POPULATION 329M US $60.0K 1.9% 5% 132M GDP PER CAPITA WA US $8.9K 1,383 INFLATI
Slide 6: Pawn Operations Represent 97% of Revenue
PAWN OPERATIONS REPRESENT 97% OF REVENUE $1.8 BILLION $1.0 BILLION 2018 TOTAL REVENUE 2018 NET REVENUE 6% 1% 3% 4% 30% 41% 54% 61% 1 RETAIL SALES PAWN FEES SCRAP JEWELRY SALES CONSUMER LOAN/SERVICE FEES 1 Consumer loan fees expected to be 2% of revenue and 2% of net revenue in 2019
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% PAWN LOAN SELLS ASSET TO COMPANY (COLLATERALIZED WITH ASSET) ~25% ~75% CUSTOMER REPAYS LOAN CUSTOMER DOES NOT REPAY LOAN OR FEE & PAWN SERVICE FEE RETAIL SALES PAWN SERVICE
Slide 8: Pawn Loans Have Limited Credit Risk
PAWN LOANS HAVE LIMITED CREDIT RISK • PAWN LOANS ARE SMALL AND 1 $200 AVERAGE PAWN LOAN K AFFORDABLE WITH A SHORT DURATION (COLLATERALIZED WITH ASSET) – 30 TO 60 DAYS $160 • ALL LOANS FULLY COLLATERALIZED WITH $120 PERSONAL PROPERTY – RAPID LIQUIDATION OF COLLATERAL $80 $172 THROUGH ON-SITE PAWN RET
Slide 9: Latin America Overview
LATIN AMERICA OVERVIEW MEXICO, GUATEMALA, EL SALVADOR AND COLOMBIA JALISCO, MEXICO
Slide 10: FirstCash Latin America Store Count
FIRSTCASH LATIN AMERICA STORE COUNT 1,443 1,379 10 YEAR CAGR 723 18% 955 999 672 309 674 737 308 597 538 101 130 447 54 386 46 329 17 269 17 17 647 690 707 720 17 573 607 492 543 369 430 252 312 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 AS OF 1/31/2019 NEW STORE OPENINGS ACQUISITIONS
Slide 11: LatAm Revenue Growth
LATAM REVENUE GROWTH 3 YEAR REVENUE CAGR $700 U.S. DOLLAR – 15% $666 CONSTANT CURRENCY – 22% $600 $573 $485 $500 $400 $368 $300 $557 $487 $200 $368 $417 $100 $0 2015 2016 2017 2018 TOTAL REVENUE, USD CC REVENUE @ 2015 FX RATE Note: Presented constant currency results are non-GAAP financial measures
Slide 12: Majority of Stores & Employees Based in LatAm
MAJORITY OF STORES & EMPLOYEES BASED IN LATAM STORE SEGMENT STORES1 EMPLOYEES3 INVESTMENTS2 CONTRIBUTION4 $110,447 $128,122 75% 11,516 35% 1,443 60% 57% 1,093 7,722 43% $37,418 40% $242,970 25% 65% LATAM U.S. 75% OF STORE 1 As of 1/31/2019 2 TTM 12/31/2018 Store CapEx and Acquisitions 3 As of 12/31/
Slide 13: Growing Segment Contribution from LatAm
GROWING SEGMENT CONTRIBUTION FROM LATAM ($ IN MILLIONS) $180 LATAM SEGMENT CONTRIBUTION % OF TOTAL SEGMENT CONTRIBUTIONS $160 $153 ACTUAL $136 $140 $128 2018 $122 $120 $116 35% $105 LATAM $100 $87 $87 $80 $60 PROJECTED $40 2019 $20 40% LATAM $0 2015 2016 2017 2018 USD CC @ 2015 FX RATE Note: Segment
Slide 14: LatAm Operating Trends: Q4-2018
LATAM OPERATING TRENDS: Q4-2018 • REVENUES FOR THE FOURTH QUARTER OF YEAR-OVER-YEAR GROWTH 2018 TOTALED $162 MILLION 40% 34% 34% – UP 13% ON A USD $ TRANSLATED BASIS 35% U.S. DOLLAR CONSTANT CURRENCY – UP 18% ON A CONSTANT CURRENCY BASIS 30% • PAWN LOANS OUTSTANDING TOTALED 25% $91 MILLION 20% 18% –
Slide 15: LatAm Pawn and Inventory Composition
LATAM PAWN AND INVENTORY COMPOSITION LATAM OPERATIONS SEGMENT PAWN COLLATERAL INVENTORY 11% 11% 55% 52% 4% 1% 2% 2% 2% 2% 26% 32% JEWELRY ELECTRONICS TOOLS SPORTING GOODS MUSICAL INSTRUMENTS OTHER Note: As of 12/31/2018
Slide 16: 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 FLOWS TO ACCOMPLISH NEW ACQUISITIONS AND DE NOVO EXISTING COUNTRY PRESENCE EXPANSION Mexico MARKET ENTRY Q1-2018 WITH NEAR-TERM EX
Slide 17: 2018 Marks Record Year for LatAm Acquisitions
2018 MARKS RECORD YEAR FOR LATAM ACQUISITIONS ACQUISITION TIME LINE ACQUISITIONS BY QUARTER MAR 126 STORES IN CENTRAL MEXICO 400 366 62 STORES IN NORTHEASTERN/ SOUTHEASTERN JUN 24 MEXICO 350 342 97 STORES IN THE SOUTHERN GULF REGION OF AUG MEXICO 300 SEP 57 STORES IN EAST-CENTRAL MEXICO 154 250 OCT
Slide 18: LatAm New Store Openings
LATAM NEW STORE OPENINGS • 52 LARGE FORMAT DE NOVO LOCATIONS OPENED IN 2018 – 42 IN MEXICO – 4 IN COLOMBIA – 6 IN GUATEMALA FUTURE GROWTH • PLANS TO OPEN APPROXIMATELY 80 TO 85 NEW FULL-SERVICE PAWN STORES IN 2019 – APPROXIMATELY 15 IN GUATEMALA – APPROXIMATELY 10 IN COLOMBIA – REMAINDER IN MEXICO
Slide 19: Proven New Store Opening Process
PROVEN NEW STORE OPENING PROCESS UNDEVELOPED SITE SAME SITE AFTER REDEVELOPMENT 04 ◼ ◼ OPENED FIRST STORES IN MEXICO IN 1999 STANDARDIZED STORE LAYOUTS, FIXTURES AND EQUIPMENT ◼ ◼ EXPERIENCED REAL ESTATE DEVELOPMENT TEAM STATE OF THE ART SECURITY TECHNOLOGY ◼ ◼ PROVEN SITE SELECTION STRATEGY CONSIST
Slide 20: Proven Rapid Payback Model
PROVEN RAPID PAYBACK MODEL MEXICO NEW STORE INVESTMENT AND PROFITABILITY RAMP NEW STORE INVESTMENT Typical Mexico New Store Ramp (USD $) Year 1 Year 2 Year 3 Year 4 Year 5 CAP EX $160,000 Op Margin (4%) 17% 22% 24% 26% - LEASEHOLD IMPROVEMENTS & FIXTURES $500 $200 - COMPUTER & SECURITY EQUIPMENT $40
Slide 21: United States Overview
UNITED STATES OVERVIEW LOCATIONS IN 25 STATES KANSAS CITY, MISSOURI
Slide 22: Approximately 1,100 U.S. Locations in States
APPROXIMATELY 1,100 U.S. LOCATIONS IN 25 STATES Note: As of 1/31/2019 33 WA ME MT ND VT OR MN ID NH SD WI NY MA CT 2 MI RI WY IA PA UT NJ 1 119 27 NE 33 DC DE 27 3 7 OH MD 30 WV NV IN KS IL CO 24 6 VA 29 25 KY CA MO NC 41 TN 53 31 NM 18 SC OK AR AZ 27 8 46 MS LA AL GA AK TX 396 26 6 75 FL HI
Slide 23: Significant Presence in Fastest Growing U.S. Cities
SIGNIFICANT PRESENCE IN FASTEST GROWING U.S. CITIES RANKED BY ESTIMATED 2018 POPULATION Source: Business Insider 100 43% OF DOMESTIC STORES WITHIN 89 90 A 25 MILE RADIUS OF THE TOP 35 77 80 UP AND COMING U.S. CITIES TORES 70 S 60 ASH C IDENTIFIES MARKETS WITH SIGNIFICANT ZONING IRST 50 F AND LICENSI
Slide 24: U.S. Operating Trends: Q4-2018
U.S. OPERATING TRENDS: Q4-2018 • U.S. SEGMENT PRE-TAX OPERATING INCOME RETAIL MARGINS SEES ONTINUED ROWTH C G : 42% – UP 5% COMPARED TO Q4-2017 40% 40% 40% – UP 11% EXCLUDING NON-CORE CONSUMER LENDING 39% 39% 39% 39% PRODUCTS 38% 37% 37% 37% – DRIVEN BY INCREASED RETAIL GROSS PROFITS AND 36% 37% ADD
Slide 25: U.S. Pawn and Inventory Composition
U.S. PAWN AND INVENTORY COMPOSITION U.S. OPERATIONS SEGMENT PAWN COLLATERAL INVENTORY 16% 17% 58% 6% 66% 9% 3% 6% 2% 3% 11% 3% JEWELRY ELECTRONICS TOOLS SPORTING GOODS MUSICAL INSTRUMENTS OTHER Note: As of 12/31/2018
Slide 26: U.S. Growth Strategy
U.S. GROWTH STRATEGY •CONTINUE SCOUTING SMALL ACQUIRED STORES BY YEAR ACQUISITIONS IN EXISTING STATES 27 • ORGANIC DEMAND AS UNBANKED AND CASH PLUS PAWN UNDERBANKED DEMOGRAPHICS CONTINUE SUPERIOR PAWN 5 U.S. MONEY SHOPS TO GROW SINGLE PAWN STORES 4 • 2018 ACQUISITIONS – 12 STORE ACQUISITION IN TN/GA
Slide 27: Stable Regulatory Climate for Pawn
STABLE • PAWN LOANS ARE DIFFERENT FROM TRADITIONAL CONSUMER LOAN PRODUCTS AND NOT SUBJECT TO THE CFPB SMALL DOLLAR LOAN RULES REGULATORY BECAUSE THEY: – ARE NON-RECOURSE LOANS CLIMATE FOR – HAVE SIGNIFICANTLY SMALLER AVERAGE LOAN SIZES – DO NOT INVOLVE CREDIT CHECKS, COLLECTION ACTIVITIES, PAWN ACH
Slide 28: Wind-Down of U.S. Consumer Lending
WIND-DOWN OF U.S. CONSUMER LENDING PRO FORMA INCLUDING CASH AMERICA ($ IN MILLIONS) $140 .GROSS CONSUMER LOAN REVENUE. 10% .CONSUMER LOAN LOCATIONS. 9% $120 $115 454 8% 54 371 $100 $91 7% 357 36 6% 114 35 $80 7% $75 279 5% 113 113 9 $60 5% $55 RANGE: 4% 113 4% $25 - $31 $40 3% 3% 286 2% 222 209 $20
Slide 29: Financial Highlights
FINANCIAL HIGHLIGHTS FORT WORTH, TEXAS
Slide 30: Consolidated Revenue
CONSOLIDATED REVENUE ($ IN MILLIONS) PAWN REVENUE CONSUMER LENDING REVENUE $1,780 $1,781 RETAIL SALES CONSUMER LOAN/CREDIT SERVICES $77 $56 PAWN LOAN FEES SCRAP SALES $1,088 $44 $705 $1,703 $1,725 $28 $1,045 $677 2015 2016 2017 2018
Slide 31: Net Income, Adjusted Net Income and Adjusted EBITDA
NET INCOME, ADJUSTED NET INCOME AND ADJUSTED EBITDA ($ IN MILLIONS) $300 $284 $273 $250 $200 $180 $158 $144 $153 $150 $131 $100 $85 $60 $50 $0 2016 2017 2018 NET INCOME ADJUSTED NET INCOME ADJUSTED EBITDA Note: Adjusted Net Income and Adjusted EBITDA are non-GAAP financial measures. See appendix for
Slide 32: Operating Cash Flow and Adjusted Free Cash Flow
OPERATING CASH FLOW AND ADJUSTED FREE CASH FLOW ($ IN MILLIONS) $300 $250 $242 $243 $220 $225 $200 1 $150 FCF YIELD 7% AS OF 12/31/2018 $97 $100 $81 $50 $0 2016 2017 2018 CASH FLOW FROM OPERATING ACTIVITIES ADJUSTED FREE CASH FLOW Note: Adjusted Free Cash Flow is a non-GAAP financial measure. See ap
Slide 33: Earnings Per Share Guidance
EARNINGS PER SHARE GUIDANCE AS PROVIDED ON JANUARY 31, 2019 $5.00 GUIDANCE RANGE: $3.75 - $3.95 $4.50 $4.00 $3.41 $3.53 $3.50 $3.00 $3.00 $2.74 $2.44 $2.50 $2.00 $1.72 $1.50 $1.00 $0.50 $0.00 2016 2017 2018 2019 2019 1 GUIDANCEGUIDANCE EARNINGS PER SHARE ADJUSTED EARNINGS PER SHARE 2019 GUIDANCE 1 A
Slide 34: Fiscal 2019 Outlook
FISCAL 2019 OUTLOOK ISSUED FISCAL FULL-YEAR 2019 GUIDANCE FOR ADJUSTED DILUTED EARNINGS PER SHARE TO BE IN THE RANGE OF $3.75 TO $3.95 – REPRESENTS EARNINGS PER SHARE GROWTH TO BE IN A RANGE OF 6% TO 12% – EXCLUDING EXPECTED HEADWINDS OUTLINED BELOW, EARNINGS FROM CORE PAWN OPERATIONS EXPECTED TO BE
Slide 35: Dividend Per Share Continues to Grow
DIVIDEND PER SHARE CONTINUES TO GROW ANNUALIZED DIVIDEND INCREASED 14% TO $1.00 PER SHARE $1.00 $1.00 BEGINNING Q4-2018 $0.91 $0.77 $0.25 $0.80 $0.25 $0.20 $0.60 $0.57 $0.25 $0.22 $0.19 $0.19 $0.40 $0.25 $0.22 $0.125 $0.19 $0.20 $0.125 $0.22 $0.25 $0.125 $0.19 $0.00 2016 2017 2018 2019 RUN RATE ★ ID
Slide 36: Post-Merger Cash Flows Support Investments and Shareholder Returns
POST-MERGER CASH FLOWS SUPPORT INVESTMENTS AND SHAREHOLDER RETURNS WITH MINIMAL ADDED LEVERAGE POST-MERGER INVESTMENTS & OUTSTANDING DEBT SHAREHOLDER RETURNS $700 $672 $595 $600 $560 $600 $117 $35 MILLION $500 INCREASE $500 $87 $295 $400 $360 $400 $103 $300 ACQUISITIONS $300 DIVIDENDS $200 $200 CAPI
Slide 37: $1.5 Billion in Cumulative Investments & Shareholder Payouts
$1.5 BILLION IN CUMULATIVE INVESTMENTS & SHAREHOLDER PAYOUTS OVER THE LAST 10 YEARS CUMULATIVE TOTAL $1,400 STOCK REPURCHASES & DIVIDENDS: $ MILLIONS - 10,170,098 SPLIT-ADJUSTED SHARES REPURCHASED - $97 MILLION IN CUMULATIVE DIVIDENDS PAID $1,200 ACQUISITIONS SINCE 2009: $1,000 - 188 STORES ACQUIRED
Slide 38: Investment Recap
INVESTMENT RECAP • PAWN-FOCUSED BUSINESS MODEL ⦁ FOCUSED ON SMALL SECURED LOANS TO UNBANKED AND UNDERBANKED CONSUMERS WITH LIMITED ACCESS TO TRADITIONAL CREDIT PRODUCTS ⦁ FOCUS ON FULL-SERVICE LENDING AND RETAIL MODEL IS A SIGNIFICANT COMPETITIVE ADVANTAGE ⦁ STRONG MARGINS AND CASH FLOWS ALLOW FOR S
Slide 39: Appendix
APPENDIX CORPUS CHRISTI, TEXAS
Slide 40: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION THE COMPANY USES CERTAIN FINANCIAL CALCULATIONS SUCH AS ADJUSTED NET INCOME, ADJUSTED DILUTED EARNINGS PER SHARE, ADJUSTED PRE-TAX PROFIT MARGIN, ADJUSTED NET INCOME MARGIN, EBITDA, ADJUSTED EBITDA, FREE CASH FLOW, ADJUSTED FREE CASH FLOW AND CONSTANT CURRENCY RESULTS
Slide 41: Reconciliation of Net Income to Adjusted Net Income
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME ($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) YEAR ENDED DECEMBER 31, 2016 2017 2018 IN THOUSANDS PER SHARE IN THOUSANDS PER SHARE IN THOUSANDS PER SHARE NET INCOME $60,127 $1.72 $143,892 $3.00 $153,206 $3.41 ADJUSTMENTS, NET OF TAX: MERGER AND OTHER
Slide 42: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA ($ IN THOUSANDS) YEAR ENDED DECEMBER 31, 2016 2017 2018 NET INCOME $60,127 $143,892 $153,206 INCOME TAXES 33,320 28,420 52,103 DEPRECIATION AND AMORTIZATION 31,865 55,233 42,961 INTEREST EXPENSE 20,320 24,035 29,173 INTEREST INCOME (751) (1,
Slide 43: Reconciliation of Operating Cash Flow to Free Cash Flow
RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW & ADJUSTED FREE CASH FLOW ($ IN THOUSANDS) YEAR ENDED DECEMBER 31, 2016 2017 2018 CASH FLOW FROM OPERATING ACTIVITIES $96,854 $220,357 $243,429 CASH FLOW FROM INVESTING ACTIVITIES: LOAN RECEIVABLES, NET OF CASH REPAYMENTS (16,07
Slide 44: Constant Currency
CONSTANT CURRENCY CERTAIN PERFORMANCE METRICS DISCUSSED IN THIS PRESENTATION ARE PRESENTED ON A “CONSTANT CURRENCY” BASIS, WHICH IS CONSIDERED A NON-GAAP FINANCIAL MEASURE. THE COMPANY’S MANAGEMENT USES CONSTANT CURRENCY RESULTS TO EVALUATE OPERATING RESULTS OF BUSINESS OPERATIONS IN LATIN AMERICA,
Slide 45: Investor Relations
INVESTOR RELATIONS INVESTORRELATIONS@FIRSTCASH.COM INVESTORS.FIRSTCASH.COM 817.258.2650 GAR JACKSON GLOBAL IR GROUP GAR@GLOBALIRGROUP.COM 817.886.6998