Firstcash Holdings, Inc. · NASDAQ:FCFS
Firstcash — Investor Presentation (June 2020)
40 slides from Firstcash's investor presentation, Jun 23, 2020
Slide 1: Investor Presentation June 2020
EXHIBIT 99.1 1 INVESTOR PRESENTATION JUNE 2020
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS 2 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: COVID-19 Update
3 COVID-19 UPDATE DURING THESE UNPRECEDENTED TIMES RELATED TO THE COVID-19 PANDEMIC, WE ARE FOCUSED ON ENSURING THE HEALTH AND SAFETY OF OUR EMPLOYEES AND CUSTOMERS. FIRSTCASH ALSO REMAINS COMMITTED TO PROVIDING ESSENTIAL FINANCIAL SERVICES AND AFFORDABLE CONSUMER PRODUCTS TO OUR CUSTOMERS, ESPECIAL
Slide 4: Second Quarter Results
4 SECOND QUARTER RESULTS SECOND QUARTER BUSINESS: PAWN LOAN BALANCES DECLINED IN THE U.S. AND LATAM PRIMARILY DUE TO REDUCED LEVELS OF PERSONAL SPENDING DURING THE QUARTER – U.S. PAWN LOAN BALANCES FURTHER IMPACTED BY STIMULUS PAYMENTS, FORBEARANCE PROGRAMS AND ENHANCED UNEMPLOYMENT BENEFITS – LEN
Slide 5: Second Half of 2020 Key Business Drivers
5 SECOND HALF OF 2020 KEY BUSINESS DRIVERS FOR THE SECOND HALF: PAWN RECEIVABLE GROWTH – PAWN FEE REVENUE IN THE SECOND HALF WILL BE CORRELATED TO THE LEVEL OF PAWN RECEIVABLES – WHILE WE EXPECT PAWN ORIGINATIONS TO CONTINUE REBOUNDING WITH THE RE-OPENING OF THE ECONOMY, THE TIMING AND SLOPE OF REC
Slide 6: Second Quarter Trends – U.S. Same-Store Results
SECOND QUARTER TRENDS – U.S. 6 SAME-STORE RESULTS PAWN RECEIVABLES AND LOAN ORIGINATION ACTIVITY BY WEEK RETAIL SALES AND MARGINS 200% 45% 100% 42% 43% 41% 180% 40% 80% 160% 38% 37% 38% 35% 65.1% PY 140% +44% 30% 60% 120% PY 59.9% 25% +18% ARGIN OMPARED TO 100% M C +10% 40% 20% ETAIL ALES OMPARED TO
Slide 7: Second Quarter Trends – Mexico Same-Store Results
SECOND QUARTER TRENDS –MEXICO 7 SAME-STORE RESULTS PAWN RECEIVABLES AND LOAN ORIGINATION ACTIVITY BY WEEK RETAIL SALES AND MARGINS 1 1 100% 200% 42% 38% 180% 37% 35% 36% 80% 160% 36% 35% 68.7% 34% 140% 30% PY 60% PY 63.3% 120% +32% 24% ARGIN OMPARED TO 100% M C 40% +2% 18% ETAIL ALES OMPARED TO R S
Slide 8: Who We Are
8 U.S. OPERATIONS – 1,052 STORES IN 24 STATES AND THE DISTRICT OF COLUMBIA WHO WE ARE LEADING INTERNATIONAL PAWN OPERATOR WITH MORE THAN 2,700 RETAIL PAWN LOCATIONS AND 20,000 EMPLOYEES IN 5 COUNTRIES 1,052 PAWN-FOCUSED BUSINESS MODEL SMALL SECURED PAWN LOANS TO UNBANKED AND CENTRAL + SOUTH AMERICA
Slide 9: Why Invest in FirstCash?
WHY INVEST IN FIRSTCASH? 9 ATTRACTIVE INDUSTRY DYNAMICS –CUSTOMER BASE IS UNDERSERVED – MOST LENDERS DO NOT OFFER LOANS OF $150 OR LESS 1 –STABLE REGULATORY ENVIRONMENT –PAWN LENDING PERFORMED WELL IN PAST CONSUMER CREDIT CONTRACTION CYCLES ROBUST SHAREHOLDER RETURNS –RISING DIVIDEND 3 –SHARE REPURC
Slide 10: FirstCash Timeline
FIRSTCASH TIMELINE 10 1988 – BEGAN 2015 – 2016 PERATIONS IN EXAS O T MAXI PRENDA ACQUISITION – FIRST STORES IN GUATEMALA & EL SALVADOR Q1–2020 U.S. ROLL-UPS STORE COUNT ~ 100 STORES CONTINUED U.S. GROWTH 2,740 2018 – FIRST DE NOVO THROUGH ACQUISITIONS STORES IN COLOMBIA 1988 1999 2015 2019 2020 10 E
Slide 11: Largest Pawn Operator in the Americas
LARGEST PAWN OPERATOR IN THE AMERICAS 11 – PAWN OPERATIONS REPRESENT 99% OF REVENUE – ALMOST $2 BILLION IN TOTAL REVENUE 1% 1% 5% 1% 55% 30% TOTAL REVENUE GROSS PROFIT $1.9 BILLION $1.0 BILLION 64% 43% 1 RETAIL SALES PAWN FEES SCRAP JEWELRY SALES CONSUMER LOAN/SERVICE FEES 1Consumer lending operatio
Slide 12: Pawn Loan Product Overview
PAWN LOAN PRODUCT OVERVIEW 12 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. $182 ~25% - 30% ~70% - 75% LATAM
Slide 13: Pawn Collateral and Inventory Composition
PAWN COLLATERAL AND INVENTORY COMPOSITION 13 U.S. SEGMENT LATAM SEGMENT 13% 30% 69% 53% 6% 3% PAWN COLLATERAL 6% PAWN COLLATERAL 3% 2% 2% 2% 11% 15% 46% 58% 38% 10% INVENTORY INVENTORY 3% 10% 2% 4% 2% 11% 1% JEWELRY ELECTRONICS TOOLS SPORTING GOODS MUSICAL INSTRUMENTS OTHER Results as of 03/31/2020
Slide 14: Pawn Revenue Growth Across Economic Cycles
PAWN REVENUE GROWTH ACROSS ECONOMIC CYCLES LEGACY FIRST CASH U.S. AND LATAM CORE GROSS PROFIT1 PER STORE 14 FINANCIAL CRISIS POST CRISIS RECOVERY CURRENT CYCLE $900 $817 $774 $804 $784 $770 $732 $732 $763 $750 $710 $705 $606 $647 $600 $450 U.S. $300 $150 $0 2008 2009 2010 2011 2012 2013 2014 2015 20
Slide 15: Pawnshops Serve Unbanked and Underbanked Consumers
PAWNSHOPS SERVE UNBANKED AND UNDERBANKED CONSUMERS 15 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, AFFORDABLE
Slide 16: Environmentally Friendly Business Model
16 ENVIRONMENTALLY FRIENDLY BUSINESS MODEL 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 SERVICE
Slide 17: Latin America Overview
LATIN AMERICA OVERVIEW FirstCasit
Slide 18: FirstCash LatAm Growth – Revenue and Store Count
FIRSTCASH LATAM GROWTH –REVENUE AND STORE COUNT 18 REVENUE GROWTH STORE COUNT 1,623 1,688 1,379 $803 ACQUISITIONS 862 999 828 955 672 DE NOVO OPENINGS $666 737 308 309 130 $573 795 826 607 647 690 707 $485 2015 2016 2017 2018 2019 Q1-2020 $368 $671 STORE ADDITIONS BY YEAR $557 $487 418 $417 $368 ACQ
Slide 19: Almost 1,700 LatAm Locations in Countries
ALMOST 1,700 LATAM LOCATIONS IN 4 COUNTRIES 19 LATIN AMERICA CONTINUES TO BE THE PRIMARY STORE GROWTH VEHICLE -SIGNIFICANT UNTAPPED POTENTIAL IN THE REGION SUBSTANTIAL INFRASTRUCTURE AND CASH FLOWS TO MEXICO OPERATIONS – 1,608 STORES IN 32 STATES ACCOMPLISH NEW ACQUISITIONS AND DE NOVO EXPANSION P
Slide 20: Prendamex Acquisitions
20 PRENDAMEX ACQUISITIONS 529 ACQUIRED PRENDAMEX STORES IN 2018 AND 2019 – MOSTLY SMALLER FORMAT LOCATIONS (TYPICALLY LESS THAN 2,500 FT2) IN HIGH TRAFFIC AREAS – FOCUSED ON JEWELRY AND SMALL ELECTRONICS SIMILAR TO THE SUCCESSFUL MAXI PRENDA ACQUISITION IN MEXICO IN EARLY 2016 – POTENTIAL TO INCREAS
Slide 21: Proven New Store Opening Process and Rapid Payback Model
PROVEN NEW STORE OPENING PROCESS UNDEVELOPED SITE 21 AND RAPID PAYBACK MODEL NEW STORE TYPICAL MEXICO NEW STORE RAMP 1 ($ 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 22: United States Overview
UNITED STATES OVERVIEW FirstCasit
Slide 23: Over 1,000 U.S. Locations
OVER 1,000 U.S. LOCATIONS IN 24 STATES 23 AND THE DISTRICT OF COLUMBIA OPERATIONS FOCUSED IN STATES WITH: – GROWING POPULATIONS 32 WA – FAVORABLE DEMOGRAPHICS – STABLE REGULATIONS 2 SIGNIFICANT UNDERBANKED DEMOGRAPHICS WY 27 1 OH 3DC NV 6 NE 27 29 67 29 IN 29MD ONTINUE COUTING MALL CQUISITIONS UT
Slide 24: U.S. Operating Trends Through March 2020
U.S. OPERATING TRENDS (THROUGH MARCH 2020): 24 RETURN ON EARNING ASSETS $1,000 NET REVENUE (GROSS PROFIT) FROM PAWN 156% 148% 160.0% SCRAP GP 138% OPERATIONS CONTINUES TO INCREASE: $750 122% 120.0% RETAIL GP –EXCLUDING CONSUMER LENDING AND WHOLESALE SCRAP SALES, $500 PAWN FEES Q1-2020 GROSS PROFIT
Slide 25: Stable Regulatory Climate for Pawn
STABLE REGULATORY CLIMATE FOR PAWN 25 PAWN LOANS ARE DIFFERENT FROM TRADITIONAL CONSUMER LOAN PRODUCTS AND NOT SUBJECT TO THE CFPB SMALL DOLLAR LOAN RULES BECAUSE THEY: — ARE COLLATERALIZED WITH TANGIBLE ASSET — ARE NON-RECOURSE LOANS — HAVE SIGNIFICANTLY SMALLER AVERAGE LOAN SIZES — DO NOT INVOLVE
Slide 26: Wind-Down of Non-Core Consumer Lending Products and Stores
WIND-DOWN OF NON-CORE CONSUMER LENDING PRODUCTS AND STORES 26 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 $40 3% 335 3% 2% 271 258
Slide 27: Financial Highlights
FINANCIAL HIGHLIGHTS FirstCasit
Slide 28: Revenue and Earnings Growth
REVENUE AND EARNINGS GROWTH 28 ($ IN MILLIONS) REVENUE PROFITABILITY $1,864 $1,863 $1,780 $1,781 $168 $304 $20 $11 $165 $158 $284 $77 $56 $153 $273 $144 $131 $1,088 $180 $44 $1,844 $1,852 $85 $1,703 $1,725 $60 $1,045 2016 2017 2018 2019 TTM NET INCOME ADJUSTED NET INCOME1ADJUSTED EBITDA 1 Q1-2020 PA
Slide 29: Earnings Per Share
EARNINGS PER SHARE 29 $4.50 $4.00 $3.81 $3.89 $3.53 $3.50 $3.41 $3.00 $3.00 $2.74 $2.50 $2.44 $2.00 $1.72 $1.50 $1.00 $0.50 $0.00 2016 2017 2018 2019 EARNINGS PER SHARE ADJUSTED EARNINGS PER SHARE1 1 Non-GAAP financial measure. See reconciliation of non-GAAP financial measures elsewhere in this pres
Slide 30: Dividend Growth
DIVIDEND GROWTH 30 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 $0.60 $0.57 $0.25 $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 $0.19 $0.22
Slide 31: Share Repurchases Since Merger
SHARE REPURCHASES 31 SINCE MERGER REPRESENTS 15% OF SHARE COUNT AT MERGER $300 7.2 8.0 $275 MILLION SHARES 7.0 $250 6.3 MILLION SHARES 6.0 ) ) $200 ILLIONS M ( ILLIONS 5.0 5.0 M ( MILLION SHARES OUNT C $150 4.0 EPURCHASES R EPURCHASE $114 R HARE 3.0 S $100 $93 $80 UMULATIVE 2.0 C 1.6 $50 MILLION SHA
Slide 32: Post-Merger Cash Flows Support Investments and Shareholder Returns
POST-MERGER CASH FLOWS SUPPORT INVESTMENTS AND 32 SHAREHOLDER RETURNS WITH MINIMAL ADDED LEVERAGE CAPITAL ALLOCATION POST MERGER ACTIVITY OUTSTANDING DEBT 10/01/2016 TO 03/31/2020 AT MERGER – 09/30/2016 TO 03/31/2020 $1,200 $1,121 LINE OF CREDIT 2021 SR. NOTES 2024 SR. NOTES MEXICO LOC $124 $700 $65
Slide 33: $1.9 Billion in Growth Investments & Shareholder Payouts
$1.9 BILLION IN GROWTH INVESTMENTS & SHAREHOLDER PAYOUTS 33 THE LAST 10 YEARS (SINCE 2009) ($ IN MILLIONS) CUMULATIVE TOTAL $1.9 BILLION $2,000 STOCK REPURCHASES & DIVIDENDS: ACQUISITIONS: - 12,456,087 SPLIT-ADJUSTED SHARES REPURCHASED - 215 STORES ACQUIRED IN U.S. $1,800 - $153 MILLION IN CUMULATIV
Slide 34: Investment Recap
34 INVESTMENT RECAP PAWN-FOCUSED BUSINESS MODEL ‒ SMALL SECURED PAWN LOANS TO UNBANKED AND UNDERBANKED CONSUMERS WITH LIMITED ACCESS TO TRADITIONAL CREDIT PRODUCTS ‒ FULL-SERVICE LENDING AND RETAIL MODEL IS A SIGNIFICANT COMPETITIVE ADVANTAGE WITH STRONG MARGINS AND CASH FLOWS ‒ RECESSION-RESISTANT
Slide 35: Appendix
35 APPENDIX
Slide 36: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION 36 THE COMPANY USES CERTAIN FINANCIAL CALCULATIONS SUCH AS ADJUSTED NET INCOME, ADJUSTED DILUTED EARNINGS PER SHARE, EBITDA, ADJUSTED EBITDA, FREE CASH FLOW, ADJUSTED FREE CASH FLOW AND CONSTANT CURRENCY RESULTS AS FACTORS IN THE MEASUREMENT AND EVALUATION OF THE COMPA
Slide 37: Reconciliation of Net Income to Adjusted Net Income
RECONCILIATION OF NET INCOME TO ADJUSTED 37 NET INCOME ($ 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 $3.81 ADJUSTMENTS, NET OF TAX: MERGER AND OT
Slide 38: Reconciliation of Net Income to EBITDA and Free Cash Flow
38 RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES ($ IN THOUSANDS) TO FREE CASH FLOW & ADJUSTED FREE CASH FLOW YEAR ENDED DECEMBER 31, TTM ($ IN THOUSANDS) YEAR ENDED DECEMBER 31, TTM 2017 2018 2019 Q1-2020 2017 2018 2019 Q1-2020 NET
Slide 39: Constant Currency
CONSTANT CURRENCY 39 CERTAIN PERFORMANCE METRICS DISCUSSED IN THIS RELEASE 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, WH
Slide 40: Get in Touch With Us
40 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