Firstcash Holdings, Inc. · NASDAQ:FCFS
Firstcash — Investor Presentation (February 2020)
37 slides from Firstcash's investor presentation, Feb 11, 2020
Slide 1: Investor Presentation February 2020
EXHIBIT 99.1 1 INVESTOR PRESENTATION FEBRUARY 2020
Slide 2: Forward-Looking Statements
2 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 LITIG
Slide 3: Who We Are
3 U.S. OPERATIONS – 1,056 STORES IN 24 STATES AND THE DISTRICT OF COLUMBIA WHO WE ARE LEADING INTERNATIONAL PAWN OPERATOR WITH MORE THAN 2,600 RETAIL PAWN LOCATIONS AND 21,000 EMPLOYEES IN 5 COUNTRIES 1,056 PAWN-FOCUSED BUSINESS MODEL SMALL SECURED PAWN LOANS TO UNBANKED AND CENTRAL + SOUTH AMERICA
Slide 4: Why FirstCash?
WHY FIRSTCASH? 4 ATTRACTIVE INDUSTRY DYNAMICS 1 –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 SHAREHOLDER RETURNS & 2 –STORE LOCATIONS 3 STOCK REPURCHASE
Slide 5: FirstCash Timeline
FIRSTCASH TIMELINE 5 1988 – BEGAN 2015 – 2016 PERATIONS IN EXAS O T MAXI PRENDA ACQUISITION – FIRST STORES IN GUATEMALA & EL SALVADOR U.S. ROLL-UPS YEAR-END 2019 ~ 100 STORES STORE COUNT CONTINUED U.S. GROWTH 2018 – FIRST DE NOVO 2,679 THROUGH ACQUISITIONS STORES IN COLOMBIA 1988 1999 2015 2019 5 EX
Slide 6: Largest Pawn Operator in the Americas
LARGEST PAWN OPERATOR IN THE AMERICAS 6 – PAWN OPERATIONS REPRESENT 99% OF REVENUE – ALMOST $2 BILLION IN REVENUE 1% 2% 6% 1% 55% 30% TOTAL REVENUE NET REVENUE $1.9 BILLION $1.0 BILLION 63% 42% 1 RETAIL SALES PAWN FEES SCRAP JEWELRY SALES CONSUMER LOAN/SERVICE FEES 1Consumer lending operations are e
Slide 7: Pawn Loans Are Small, Affordable and With No Credit Risk
PAWN LOANS ARE SMALL, AFFORDABLE AND WITH NO CREDIT RISK 7 ✓ PAWN LOANS ARE SMALL AND ✓ TYPICAL PAWN TRANSACTION CYCLE AFFORDABLE WITH A SHORT DURATION – TOTAL TRANSACTION TIME LESS THAN 15 MINUTES – TYPICALLY 30 TO 60 DAY TERM CUSTOMER ENTERS STORE – AVERAGE LOAN SIZE WITH PERSONAL ASSET U.S. $177
Slide 8: Pawn Collateral and Inventory Composition
PAWN COLLATERAL AND INVENTORY COMPOSITION 8 U.S. SEGMENT LATAM SEGMENT 15% 33% 66% 50% 6% 3% PAWN COLLATERAL 7% PAWN COLLATERAL 3% 2% 2% 2% 11% 19% 49% 53% 34% 10% INVENTORY INVENTORY 3% 2% 12% 2% 3% 1% 12% JEWELRY ELECTRONICS TOOLS SPORTING GOODS MUSICAL INSTRUMENTS OTHER Results as of 12/31/2019
Slide 9: Pawn Revenue Growth Across Economic Cycles
PAWN REVENUE GROWTH ACROSS ECONOMIC CYCLES LEGACY FIRST CASH U.S. AND LATAM CORE GROSS PROFIT1 PER STORE 9 FINANCIAL CRISIS POST CRISIS RECOVERY CURRENT CYCLE $900 $817 $804 $774 $770 $763 $784 $750 $710 $732 $705 $732 $606 $647 $600 $450 U.S. $300 $150 $0 2008 2009 2010 2011 2012 2013 2014 2015 201
Slide 10: Pawnshops Serve Unbanked and Underbanked Consumers
PAWNSHOPS SERVE UNBANKED AND UNDERBANKED CONSUMERS 10 PAWN LOANS CAN BE EASILY ACCESSED BY CUSTOMERS WITH LIMITED ACCESS TO TRADITIONAL CREDIT PRODUCTS — NO BANK ACCOUNT OR CREDIT HISTORY NECESSARY — ONLY A VALID GOVERNMENT ISSUED ID AND COLLATERAL REQUIRED TRUE MICROFINANCE PRODUCT — SMALL, AFFORDA
Slide 11: Environmental Sustainability and Circular Economy
11 ENVIRONMENTAL SUSTAINABILITY CIRCULAR ECONOMY NO SUPPLY CHAIN NEIGHBORHOOD-BASED STORES WHICH CONTRIBUTE TO THE LOCAL SOURCING OF PRE-OWNED GOODS ELIMINATES NEED FOR MANUFACTURING MODERN “CIRCULAR ECONOMY” – BUY → USE → RETURN FACILITIES, DISTRIBUTION CENTERS AND TRANSPORTATION SERVICES SAFE ENVI
Slide 12: Latin America Overview
LATIN AMERICA OVERVIEW 1 First@asir
Slide 13: FirstCash LatAm Growth – Revenue and Store Count
FIRSTCASH LATAM GROWTH – REVENUE AND STORE COUNT 13 REVENUE GROWTH STORE COUNT 1,623 1,379 $803 $800 828 ACQUISITIONS 955 999 672 $700 $666 737 309 DE NOVO 308 OPENINGS 130 $600 $573 795 607 647 690 707 $500 $485 2015 2016 2017 2018 2019 $400 $368 $671 $300 $557 STORE ADDITIONS BY YEAR $487 418 $200
Slide 14: Majority of Stores & Employees Based in LatAm
14 MAJORITY OF STORES & EMPLOYEES BASED IN LATAM LATAM U.S. 1,623 $55 13,363 $145 61% 72% 64% 37% 1,056 $21 7,488 $242 39% 28% 36% 63% STORES STORE ADDITION EMPLOYEES SEGMENT TOTAL COUNT: 2,679 INVESTMENT TOTAL COUNT: 20,851 CONTRIBUTION TOTAL AMOUNT: $76 MILLION TOTAL AMOUNT: $387 MILLION OVER 70%
Slide 15: Growing Segment Contribution from LatAm
GROWING SEGMENT CONTRIBUTION FROM LATAM 15 % OF TOTAL SEGMENT CONTRIBUTIONS LATAM SEGMENT CONTRIBUTION GROWTH $180 $160 $140 40% 2020 PROJECTION $120 $100 $80 $60 $40 35% 2018 37% 2019 $20 ACTUAL ACTUAL $0 2015 2016 2017 2018 2019 Total Segment Cont. – USD $ CC Segment Cont. – 2015 MXN @ 15.85
Slide 16: Over 1,600 LatAm Locations
16 OVER 1,600 LATAM LOCATIONS IN 4 COUNTRIES LATIN AMERICA CONTINUES TO BE THE PRIMARY STORE GROWTH VEHICLE - SIGNIFICANT UNTAPPED POTENTIAL IN THE REGION ✓ SUBSTANTIAL INFRASTRUCTURE AND CASH FLOWS TO MEXICO OPERATIONS – 1,548 STORES IN 32 STATES ACCOMPLISH NEW ACQUISITIONS AND DE NOVO EXPANSION PO
Slide 17: Prendamex Acquisitions
17 PRENDAMEX ACQUISITIONS 529 ACQUIRED PRENDAMEX STORES – MOSTLY SMALLER FORMAT LOCATIONS (TYPICALLY LESS THAN 2,500 FT2) IN HIGH TRAFFIC AREAS – FOCUSED ON JEWELRY AND SMALL ELECTRONICS MANY SIMILARITIES TO THE SUCCESSFUL MAXI PRENDA ACQUISITION IN MEXICO IN EARLY 2016 – POTENTIAL TO INCREASE RETAI
Slide 18: Proven New Store Opening Process and Rapid Payback Model
UNDEVELOPED SITE PROVEN NEW STORE OPENING PROCESS 18 AND RAPID PAYBACK MODEL NEW STORE TYPICAL MEXICO NEW STORE RAMP ($ IN USD) REVENUE INVESTMENT (USD $) $600 CAP EX $181,000 $500 ◼ OPENED FIRST STORES IN MEXICO IN 1999 - LEASEHOLD IMPROVEMENTS & $400 FIXTURES ◼ EXPERIENCED REAL ESTATE DEVELOPMENT
Slide 19: United States Overview
UNITED STATES OVERVIEW | First@asir
Slide 20: Over 1,000 U.S. Locations
OVER 1,000 U.S. LOCATIONS IN 24 STATES 20 AND THE DISTRICT OF COLUMBIA ✓OPERATIONS FOCUSED IN STATES WITH: – GROWING POPULATIONS 32 WA – STABLE AND FAVORABLE REGULATIONS ✓SIGNIFICANT UNDERBANKED DEMOGRAPHICS 2 WY 27 1 OH 3DC ✓CONTINUE SCOUTING SMALL ACQUISITIONS NV 6 NE 27 30 67 29 IN 29MD UT IL 6 V
Slide 21: U.S. Operating Trends: Q4-2019
U.S. OPERATING TRENDS: Q4–2019 21 • RETAIL AND OPERATIONS MARGINS CONTINUE TO ETAIL ARGIN AND EGMENT PERATING ARGINS IMPROVE DUE TO OPTIMIZATION OF LENDING AND R M S O M RETAILING STRATEGIES IN CASH AMERICA LOCATIONS 50% 40% 36.5% 37.0% 37.3% 37.6% 38.0% 34.4% 34.8% 35.6% • DESPITE CONSUMER LENDING
Slide 22: Stable Regulatory Climate for Pawn
STABLE REGULATORY CLIMATE FOR PAWN 22 ✓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, AC
Slide 23: Wind-Down of Non-Core Consumer Lending Products and Stores
WIND-DOWN OF NON-CORE CONSUMER LENDING PRODUCTS AND STORES 23 PRO FORMA INCLUDING CASH AMERICA CONSUMER LOAN REVENUE CONSUMER LOAN LOCATIONS $140 10% 600 531 $118 9% $120 500 8% 82 448 434 $100 $93 7% 64 400 114 63 7% $77 6% $80 113 5% 300 113 279 $60 5% $56 8 4% 4% 200 113 $40 3% 335 3% 2% 271 258
Slide 24: Financial Highlights
FINANCIAL HIGHLIGHTS First@asir
Slide 25: Revenue and Earnings Growth
25 REVENUE AND EARNINGS GROWTH ($ IN MILLIONS) REVENUE PROFITABILITY $1,864 $1,780 $1,781 $304 $168 $20 $165 $158 $56 $284 $77 $153 $273 $144 $131 $1,088 $180 $44 $1,844 $85 $1,703 $1,725 $132 $705 $68 $61 $28 $60 $1,045 $677 2015 2016 2017 2018 2019 NET INCOME ADJUSTED NET INCOME ADJUSTED EBITDA PA
Slide 26: Earnings Per Share
26 EARNINGS PER SHARE $5.00 GUIDANCE RANGE $4.05 - $4.25 $4.00 $3.81 $3.89 $3.53 $3.41 $3.00 $3.00 $2.74 $2.44 $2.00 $1.72 $1.00 $0.00 2016 2017 2018 2019 20202020 GUIDANCEGUIDANCE EARNINGS PER SHARE ADJUSTED EARNINGS PER SHARE1 Guidance as of press release 01/29/2020 1Adjusted earnings per share ex
Slide 27: Fiscal 2020 Outlook
FISCAL 2020 OUTLOOK 27 INITIAL FULL-YEAR 2020 GUIDANCE FOR ADJUSTED DILUTED EARNINGS PER SHARE EXPECTED TO IN THE RANGE OF $4.05 TO $4.25 – GUIDANCE REPRESENTS ADJUSTED EARNINGS PER SHARE GROWTH TO BE IN A RANGE OF 6% TO 12% OVER THE PRIOR-YEAR GAAP BASIS DILUTED EARNINGS PER SHARE OF $3.81 – EXCLUD
Slide 28: Dividends Continue to Grow
DIVIDENDS CONTINUES TO GROW 28 ANNUALIZED DIVIDEND INCREASED 8% TO $1.20 $1.08 PER SHARE BEGINNING Q4-2019 $1.08 IDENTIFIES DIVIDEND INCREASE $1.02 $1.00 $0.91 $0.27 $0.27 $0.80 $0.77 $0.25 $0.20 $0.27 $0.25 $0.60 $0.57 $0.22 $0.19 $0.19 $0.40 $0.27 $0.25 $0.125 $0.22 $0.19 $0.20 $0.125 $0.25 $0.27
Slide 29: Post-Merger Cash Flows Support Investments and Shareholder Returns
POST-MERGER CASH FLOWS SUPPORT INVESTMENTS AND SHAREHOLDER RETURNS WITH MINIMAL ADDED LEVERAGE 29 CAPITAL ALLOCATION POST MERGER ACTIVITY OUTSTANDING DEBT 10/01/2016 - 12/31/2019 AT MERGER – 09/30/2016 TO 12/31/2019 LINE OF CREDIT 2021 SR. NOTES 2024 SR. NOTES $1,040 $700 $1,000 $635 5.0 $114 CAP EX
Slide 30: $1.8 Billion in Growth Investments & Shareholder Payouts
$1.8 BILLION IN GROWTH INVESTMENTS & SHAREHOLDER PAYOUTS 30 THE LAST 10 YEARS (SINCE 2009) ($ IN MILLIONS) $2,000 STOCK REPURCHASES & DIVIDENDS: ACQUISITIONS: CUMULATIVE TOTAL $1.8 BILLION - 11,474,523 SPLIT-ADJUSTED SHARES REPURCHASED - 215 STORES ACQUIRED IN U.S. $1,800 - $141 MILLION IN CUMULATIV
Slide 31: Investment Recap
31 INVESTMENT RECAP PAWN-FOCUSED BUSINESS MODEL ‒ SMALL SECURED PAWN LOANS TO UNBANKED AND UNDERBANKED CONSUMERS WITH LIMITED ACCESS TO TRADITIONAL CREDIT PRODUCTS ‒ FULL-SERVICE LENDING AND RETAIL MODEL IS A SIGNIFICANT COMPETITIVE ADVANTAGE WITH STRONG MARGINS AND CASH FLOWS ‒ RECESSION-RESISTANT
Slide 32: Appendix
APPENDIX First@asir
Slide 33: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION 33 THE COMPANY USES CERTAIN FINANCIAL CALCULATIONS SUCH AS ADJUSTED NET INCOME, ADJUSTED DILUTED EARNINGS PER SHARE, EBITDA, ADJUSTED EBITDA, FREE CASH FLOW, ADJUSTED FREE CASH FLOW, CONSTANT CURRENCY RESULTS AND ADJUSTED SEGMENT PRE-TAX OPERATING INCOME AS FACTORS IN
Slide 34: Reconciliation of Net Income to Adjusted Net Income
34 RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME ($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) YEAR ENDED DECEMBER 31, 2017 2018 2019 IN THOUSANDS PER SHARE IN THOUSANDS PER SHARE IN THOUSANDS PER SHARE NET INCOME $143,892 $3.00 $153,206 $3.41 $164,618 $3.81 ADJUSTMENTS, NET OF TAX: MERGER AND OT
Slide 35: Reconciliation of Net Income to EBITDA and Free Cash Flow
35 RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW & ADJUSTED FREE CASH FLOW ($ IN THOUSANDS) YEAR ENDED DECEMBER 31, ($ IN THOUSANDS) YEAR ENDED DECEMBER 31, 2017 2018 2019 2017 2018 2019 NET INCOME $143,892 $153,206
Slide 36: Constant Currency
CONSTANT CURRENCY 36 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 AMERIC
Slide 37: Get In Touch With Us
37 GET IN TOUCH WITH US INVESTOR RELATIONS INVESTORRELATIONS@FIRSTCASH.COM INVESTORS.FIRSTCASH.COM 817 258 2650 GAR JACKSON GLOBAL IR GROUP GAR@GLOBALIRGROUP.COM 817 886 6998