Firstcash Holdings, Inc. · NASDAQ:FCFS
Firstcash — Investor Presentation (February 2018)
44 slides from Firstcash's investor presentation, Feb 13, 2018
Slide 1: Investor Presentation February 2018
INVESTOR PRESENTATION FEBRUARY 2018 EXHIBIT 99.1
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 Liti
Slide 3: At a Glance
3 $132 $180 $273 2015 2016 2017 $705 $1,088 $1,780 2015 2016 2017 ADJUSTED EBITDA(1) OVERVIEW REVENUE 1 See “Non-GAAP Financial Information” and “Reconciliation of Net Income to EBITDA and Adjusted EBITDA in the Appendix. Source: Company filings. ($ IN MILLIONS) • Leading pawn operator with over 2,1
Slide 4: Largest Pawn Operator in the Americas
LARGEST PAWN OPERATOR IN THE AMERICAS OVER 2,100 STORES IN FOUR COUNTRIES 4 MEXICO OPERATIONS – 953 STORES IN 32 STATESU.S. OPERATIONS – 1,112 STORES IN 26 STATES CENTRAL AMERICA OPERATIONS – 46 STORES 33 11 27 6 35 7 412 18 25 25 35 119 26 43 40 27 448 76 25 2 30 1 6 28 3 WA ID CA NV OR AZ CO MT NM
Slide 5: Pawn-Focused Product Mix
PAWN-FOCUSED PRODUCT MIX TRAILING TWELVE MONTHS (TTM) 5 59% 29% 4% 8% TOTAL REVENUE NET REVENUE 39% 54% 6% 1% $1.8 BILLION $0.9 BILLION Note: As of 12/31/2017 PAWN STORE RETAIL SALES PAWN FEES SCRAP JEWELRY SALES CONSUMER LOAN/ SERVICE FEES CONSOLIDATED GROSS MARGIN BY PRODUCT TYPE 35% 100% 6% 74%
Slide 6: Typical Pawn Transaction Cycle
TYPICAL PAWN TRANSACTION CYCLE TOTAL TRANSACTION TIME LESS THAN 15 MINUTES 6 ~20% ~80% CUSTOMER ENTERS STORE WITH PERSONAL ASSET PAWN SERVICE FEES MONTHLY YIELD = 12% - 13% CUSTOMER REPAYS LOAN & PAWN SERVICE FEE ~25% ~75% SELLS ASSET TO COMPANY PAWN LOAN* (COLLATERALIZED WITH ASSET) AVERAGE LOAN =
Slide 7: Cash America Merger Update
CASH AMERICA MERGER UPDATE • TRANSFORMATIONAL MERGER WITH CASH AMERICA CLOSED IN SEPTEMBER 2016 – 100% STOCK-FOR-STOCK TAX FREE TRANSACTION, 0.840X FCFS SHARES FOR EACH CSH SHARE – COMPLETED HEADQUARTERS CONSOLIDATION OF CORPORATE OPERATIONS INTO CASH AMERICA OWNED BUILDING IN FORT WORTH, TEXAS IN Q
Slide 8: Merger Synergies Drive Additional Accretion
MERGER SYNERGIES DRIVE ADDITIONAL ACCRETION 8 Annual operating cost synergies ESTIMATED AMOUNTS AT TIME OF MERGER ACHIEVED AS OF DECEMBER 2017 • ~$45 MILLION PRIMARILY FROM TECHNOLOGY, FINANCE AND OTHER ADMINISTRATIVE SYNERGIES ACHIEVED BY MID 2018 • MINIMAL STORE CLOSINGS • UP TO ~$28 MILLION • APP
Slide 9: Annualized TTM Admin and D&A Expenses
ANNUALIZED TTM ADMIN AND D&A EXPENSES 9 Note: Excludes merger related expenses ($ IN MILLIONS ON A TTM BASIS) $165 $161 $151 $140 $132 $122 $70 $67 $63 $59 $57 $55 $235 $228 $213 $199 $189 $177 $239 $- $50 $100 $150 $200 $250 Q3-2016 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Proforma Admin Exp. Profor
Slide 10: Latin America Overview
LATIN AMERICA OVERVIEW MEXICO, GUATEMALA, EL SALVADOR AND COLOMBIA
Slide 11: Almost 1,000 Latin America Locations
ALMOST 1,000 LATIN AMERICA LOCATIONS 11 705 909 953 32 46 46 4 29 60 100 130 157 207 269 329 386 447 538 597 674 737 955 999 0 100 200 300 400 500 600 700 800 900 1,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Mexico Central America TOTAL LATIN AMERICA LOC
Slide 12: LatAm Revenue Growth & Currency Impact
$101 $141 $175 $222 $281 $322 $363 $388 $368 $417 $487 $101 $143 $206 $250 $312 $378 $419 $468 $527 $688 $812 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total Revenue, USD CC Revenue, 2007 MXN @ 10.94 LATAM REVENUE GROWTH & CURRENCY IMPACT
Slide 13: LatAm Segments Significant % of Consolidated Operations
13 LATAM SEGMENTS REPRESENT A SIGNIFICANT % OF FIRSTCASH’S CONSOLIDATED OPERATIONS 7,931 47% 8,942 53% Employee Count1 LatAm U.S. 1,112 53% 999 47% 1,711,019 62% 1,062,837 38% Store Count1 Number of Pawn Loans Outstanding1 1 As of: 12/31/2017
Slide 14: LatAm Operating Trends: Q4-2017
LATAM OPERATING TRENDS: Q4-2017 14 • STRONG GROWTH IN TOTAL REVENUE IN THE FOURTH QUARTER – UP 22% ON A USD $ TRANSLATED BASIS – UP 16% ON A CONSTANT CURRENCY BASIS • CONTINUED ACCELERATION OF SAME- STORE GROWTH METRICS • 36% RETAIL MARGINS REMAINED STRONG GIVEN HIGH CONCENTRATION OF GENERAL MERCHAN
Slide 15: LatAm Pawn and Inventory Composition
LATAM PAWN AND INVENTORY COMPOSITION 15 LATAM OPERATIONS SEGMENT 20% 62% 12% 2% 2% 2% PAWN COLLATERAL 25% 60% 10% 1% 2% 2% INVENTORY Note: As of 12-31-17 JEWELRY ELECTRONICS TOOLS SPORTING GOODS MUSICAL INSTRUMENTS OTHER
Slide 16: LatAm Growth Strategy
LATAM GROWTH STRATEGY EXISTING LATIN AMERICAN GROWTH PROFILE REMAINS IN PLACE SUBSTANTIAL INFRASTRUCTURE AND CASH FLOWS TO ACCOMPLISH NEW ACQUISITIONS AND DE NOVO EXPANSION SIGNIFICANT RUNWAY FOR CONTINUED STORE OPENINGS AND STRATEGIC ACQUISITIONS IN MEXICO & GUATEMALA FIRST STORES IN COLOMB
Slide 17: Credit Penetration of Select Countries
0% 40% 80% 120% 160% 200% Loans % of GDP CREDIT PENETRATION OF SELECT COUNTRIES 17 1 Mexico ranks amongst the lowest within LatAm countries with 22.2% of GDP Source: J.P. Morgan and Central Bank of Brazil
Slide 18: Rationale for Colombia Expansion
0 50 100 150 200 250 300 350 400 1990 2000 2010 2016 Bil lio ns Colombia GDP (Current USD $) Population mid-2017 (millions) mid-2030 mid-2050 Brazil 207.9 223.9 231.1 Colombia 49.3 55.4 61.5 Argentina 44.3 49.0 54.1 Peru 31.8 36.4 41.2 Venezuela 31.4 36.1 40.5 Chile 18.4 20.0 21.1 Ecuador 16.8 19.7
Slide 19: Proven New Store Opening Process
PROVEN NEW STORE OPENING PROCESS 19 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 DELIVERE
Slide 20: Mexico New Store Investment – Proven Rapid Payback Model
Year 1 Year 2 Year 3 Year 4 Year 5 Op Margin (4%) 17% 22% 24% 26% $0 $40 $80 $120 $160 $200 $0 $100 $200 $300 $400 $500 Year 1 Year 2 Year 3 Year 4 Year 5 St o re -l e ve l p ro fi t U SD $ ( Th o us an d s) R e ve n u e U SD $ ( Th o u sa n d s) Revenue Store-level Profit MEXICO NEW STORE USD $ INV
Slide 21: United States Overview
UNITED STATES OVERVIEW LOCATIONS IN 26 STATES
Slide 22: U.S. – Over 1,100 Locations in States
U.S. – Over 1,100 LOCATIONS IN 26 STATES 22 SHARED MARKETS 33 11 27 6 35 7 412 18 25 25 35 119 26 43 40 27 448 76 25 2 30 1 6 28 3 WA ID CA NV OR AZ CO MT NM UT WY TX KS OK IL IN IA MN NE ND SD WI MS AL AR KY LA MO FL GA NC SC VA OH CT ME MI NH NY PA VT MA NJ MD WV RI DE TN AK DC HI Note: As of 12-3
Slide 23: U.S. Operating Trends: Q4-2017
U.S. OPERATING TRENDS: Q4-2017 23 • LEGACY FIRST CASH STORES CONTINUE TO SEE SOLID SAME-STORE INCREASES: – SAME-STORE PAWN LOANS UP 6% – SAME-STORE PAWN FEE REVENUE UP 3% • INVENTORIES LEVELS REFLECTED SIGNIFICANT REDUCTIONS IN AGED INVENTORIES – ESPECIALLY IN CASH AMERICA LOCATIONS WHERE AGED INVEN
Slide 24: U.S. Pawn and Inventory Composition
24 U.S. PAWN AND INVENTORY COMPOSITION U.S. OPERATIONS SEGMENT PAWN COLLATERAL INVENTORY Note: As of 12-31-17 JEWELRY ELECTRONICS TOOLS SPORTING GOODS MUSICAL INSTRUMENTS OTHER 58% 18% 9% 3% 8% 4% 65% 17% 6% 3% 6% 3%
Slide 25: U.S. Earnings Growth Strategy
U.S. EARNINGS GROWTH STRATEGY 25 •CONTINUE SCOUTING ACQUISITIONS IN EXISTING STATES – ORGANIC DEMAND AS UNBANKED AND UNDERBANKED DEMOGRAPHICS CONTINUE TO GROW – CONTINUED OPPORTUNITIES FOR SMALLER “TUCK-IN” ACQUISITIONS •DRIVE FURTHER MERGER SYNERGIES & MARGIN IMPROVEMENT – ADDITIONAL SYNERGIES EXPE
Slide 26: Stable Regulatory Climate for Pawn
STABLE REGULATORY CLIMATE FOR PAWN 26 • 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, A
Slide 27: Limited Exposure to CFPB Rules for Payday Lending
98% 2% LIMITED EXPOSURE TO CFPB RULES FOR PAYDAY LENDING 27 TARGET REVENUE MIX (NEXT 3-5 YEARS) 96% 4% CONSUMER LENDING PAWN OPERATIONS Q4-2017 TTM REVENUE MIX IS PRIMARILY PAWN RELATED • IN OCTOBER 2017, THE CFPB RELEASED ITS SMALL-DOLLAR LOAN RULE (THE “SDL RULE”), WHICH IS SCHEDULED TO TAKE EFFEC
Slide 28: Financial Highlights
~ “I AL | | ee. FURST sy = MPENO Y joveRiq FINANCIAL HIGHLIGHTS First¢asit
Slide 29: Adjusted Net Income and Adjusted EBITDA
ADJUSTED NET INCOME AND ADJUSTED EBITDA 29 ($ IN MILLIONS) Note: Adjusted Net Income and Adjusted Net EBITDA are non-GAAP numbers. See appendix for reconciliation to Net Income. $68 $85 $131$132 $180 $273 $0 $40 $80 $120 $160 $200 $240 $280 2015 2016 2017 Adjusted Net Income Adjusted EBITDA
Slide 30: Operating Cash Flow and Adjusted Free Cash Flow
OPERATING CASH FLOW AND ADJUSTED FREE CASH FLOW 30 ($ IN MILLIONS) Note: Adjusted Free Cash Flow is a non-GAAP number. See appendix for reconciliation to Adjusted Free Cash Flow from Operating Activities. $93 $97 $220 $68 $68 $231 $0 $40 $80 $120 $160 $200 $240 2015 2016 2017 Operating Activities Ca
Slide 31: Adjusted Earnings Per Share
31 ADJUSTED EARNINGS PER SHARE 1 Adjusted earnings measures for 2017 exclude the impact of the Tax Act, merger and acquisition related expenses and the loss on extinguishment of debt from the senior notes refinancing, which are further described, along with the adjustments for 2016 results, in the d
Slide 32: FirstCash Fiscal 2018 Outlook
FIRSTCASH FISCAL 2018 OUTLOOK 32 •THE COMPANY IS INITIATING ITS FISCAL FULL-YEAR 2018 GUIDANCE FOR ADJUSTED DILUTED EARNINGS PER SHARE TO BE IN THE RANGE OF $3.15 TO $3.351 •REPRESENTS ADJUSTED EARNINGS PER SHARE GROWTH TO BE IN A RANGE OF 15% TO 22% •KEY ASSUMPTIONS: •AN ESTIMATED EXCHANGE RATE OF
Slide 33: Dividends, Share Repurchases and Payout Ratio
33 ($ IN MILLIONS) DIVIDENDS, SHARE REPURCHASES AND PAYOUT RATIO $93 $37 $39 $44 $40 $20 $130 47% 55% 58% 23% 99% 0% 20% 40% 60% 80% 100% $0 $20 $40 $60 $80 $100 $120 $140 2013 2014 2015 2016 2017 Share Repurchases Dividends Payout Ratio, Adjusted Net Income PAYOUT RATIO DEFINED AS TOTAL DIVIDENDS A
Slide 34: Dividends Continue to Grow
$0.125 $0.19 $0.22 $0.125 $0.19 $0.22 $0.125 $0.19 $0.22 $0.19 $0.20 $0.22 $0.57 $0.77 $0.88 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 2016 2017 2018 Projected Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 34 DIVIDENDS CONTINUE TO GROW PER SHARE AMOUNTS 2018 GUIDANCE: ★ IDENTIFIES SEQUENTIAL QUARTER- OVER-QUARTER DIVIDEND
Slide 35: Balance Sheet
BALANCE SHEET ($ IN MILLIONS) 35 $1,209 $1,138 $936 $925 $2,145 $2,063 $0 $500 $1,000 $1,500 $2,000 12/31/2016 Assets 12/31/2017 Assets Operating Assets Intangibles $1,450 $1,475 $460 $407 $235 $181 $2,145 $2,063 $0 $500 $1,000 $1,500 $2,000 12/31/2016 Liabilities and Equity 12/31/2017 Liabilities a
Slide 36: Leverage Profile – Post Merger
$200 $200 $200 $300 $300 $300 $360 $260 $137 $97 $140 $107 $560 $460 $337 $397 $440 $407 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 $0 $200 $400 $600 9/30/2016 12/31/2016 3/31/2017 6/30/2017 9/30/2017 12/31/2017 Ne t D eb t to Ad jus ted EB ITD A R ati o FCFS 2021 Sr. Notes FCFS 2024 Sr. Notes FCFS Line of
Slide 37: Over $1.2 Billion in Cumulative Investments & Shareholder Payouts
$0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Stock Repurchases & Dividends Acquisitions Capital Expenditures Outstanding Debt Cumulative Total $ Millions $487 $306 $415 Stock Repurchases & Dividends: - 13,6
Slide 38: Investment Recap
38 • PAWN-FOCUSED BUSINESS MODEL ⦁ FOCUSED ON SMALL SECURED LOANS TO UNDERBANKED CONSUMERS WITH LIMITED ACCESS TO TRADITIONAL CREDIT PRODUCTS ⦁ FOCUS ON LARGE FORMAT, FULL-SERVICE MODEL IS A SIGNIFICANT COMPETITIVE ADVANTAGE ⦁ STRONG MARGINS & CASH FLOWS ALLOW FOR DIVIDEND AND SHARE BUYBACKS • PROVE
Slide 39: Appendix
APPENDIX First¢asht
Slide 40: Top 10 Shareholders and Shareholders Breakdown
40% 13% 47% Top 25 Shareholder Breakdown Index EM/INTL Focus U.S. Focus TOP 10 SHAREHOLDERS AND SHAREHOLDERS BREAKDOWN 40 EM/INTL Focus represents 22% of actively managed shareholders Note: As of 9/30/2017 Shares (FCFS) % S/O (FCFS) l BlackRock Fund Advisors 5,474,255 11.6 Index l l The Vanguard Gro
Slide 41: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION 41 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 (collectively "Non-GAAP Measures"), which are not considered m
Slide 42: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA 42 YEAR ENDED DECEMBER 31, 20151 2016 2017 NET INCOME $60,710 $60,127 $143,892 INCOME TAXES 26,971 33,320 28,420 DEPRECIATION AND AMORTIZATION 17,446 31,865 55,233 INTEREST EXPENSE 16,887 20,320 24,035 INTEREST INCOME (1,566) (751) (1,597) E
Slide 43: Reconciliation of Cash Flow from Operating Activities to Free Cash Flow
RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW & ADJUSTED FREE CASH FLOW 43 YEAR ENDED DECEMBER 31, 2015 2016 2017 CASH FLOW FROM OPERATING ACTIVITIES $92,749 $96,854 $220,357 CASH FLOW FROM INVESTING ACTIVITIES: LOAN RECEIVABLES, NET OF CASH REPAYMENTS (3,716) (16,072) 40,7
Slide 44: Investor Contact Information
INVESTOR CONTACT INFORMATION 44 INVESTOR RELATIONS GAR JACKSON INVESTORRELATIONS@FIRSTCASH.COM GLOBAL IR GROUP IR.FIRSTCASH.COM GAR@GLOBALIRGROUP.COM (817) 258-2650 (949) 873-2789