Firstcash Holdings, Inc. · NASDAQ:FCFS
Firstcash — Investor Presentation (August 2020)
39 slides from Firstcash's investor presentation, Aug 3, 2020
Slide 1: Investor Presentation August 2020
EXHIBIT 99.1 1 INVESTOR PRESENTATION AUGUST 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
COVID-19 UPDATE 3 “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, ESPECIA
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 ASSOCIATED WITH COVID-19 LOCKDOWNS – U.S. PAWN LOAN BALANCES FURTHER IMPACTED BY STIMULUS PAYMENTS, FORBEARANCE PROGRAMS AND ENHANCED UNEMPLOYMENT
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 LOWER LEVEL OF PAWN RECEIVABLES AT JULY 1, 2020 – WHILE WE EXPECT PAWN ORIGINATIONS TO CONTINUE REBOUNDING WITH THE RE-OPENING OF THE ECONOMY, THE T
Slide 6: Who We Are
6 U.S. OPERATIONS – 1,035 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 APPROXIMATELY 19,000 EMPLOYEES IN 5 COUNTRIES 1,035 PAWN-FOCUSED BUSINESS MODEL SMALL SECURED PAWN LOANS TO UNBANKED AND CENTRAL +
Slide 7: Why Invest in FirstCash?
WHY INVEST IN FIRSTCASH? 7 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 R
Slide 8: FirstCash Timeline
FIRSTCASH TIMELINE 8 1988 – BEGAN 2015 – 2016 PERATIONS IN EXAS O T MAXI PRENDA ACQUISITION – FIRST STORES IN GUATEMALA & EL SALVADOR Q2–2020 U.S. ROLL-UPS STORE COUNT ~ 100 STORES CONTINUED U.S. GROWTH 2,745 2018 – FIRST DE NOVO THROUGH ACQUISITIONS STORES IN COLOMBIA 1988 1999 2015 2019 2020 8 EXP
Slide 9: Largest Pawn Operator in the Americas
LARGEST PAWN OPERATOR IN THE AMERICAS 9 – ALMOST $2 BILLION IN TOTAL REVENUE – 2,745 STORE LOCATIONS 0% 1% 5% 1% 29% 53% TOTAL REVENUE GROSS PROFIT $1.8 BILLION $1.0 BILLION 66% 45% RETAIL SALES PAWN FEES SCRAP JEWELRY SALES OTHER TTM results as of 06/30/2020
Slide 10: Pawn Loan Product Overview
PAWN LOAN PRODUCT OVERVIEW 10 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. $190 ~25% - 30% ~70% - 75% LATAM
Slide 11: Pawn Collateral and Inventory Composition
PAWN COLLATERAL AND INVENTORY COMPOSITION 11 U.S. SEGMENT LATAM SEGMENT 13% 69% 48% 34% 6% 2% PAWN COLLATERAL 7% PAWN COLLATERAL 3% 2% 2% 11% 3% 10% 45% 62% 8% 39% 3% INVENTORY INVENTORY 14% 3% 2% 2% 11% 1% JEWELRY ELECTRONICS TOOLS SPORTING GOODS MUSICAL INSTRUMENTS OTHER Results as of 06/30/2020
Slide 12: Pawn Revenue Growth Across Economic Cycles
PAWN REVENUE GROWTH ACROSS ECONOMIC CYCLES LEGACY FIRST CASH U.S. AND LATAM CORE GROSS PROFIT1 PER STORE 12 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 13: Pawnshops Serve Unbanked and Underbanked Consumers
PAWNSHOPS SERVE UNBANKED AND UNDERBANKED CONSUMERS 13 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 14: Environmentally Friendly Business Model
14 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 15: Latin America Overview
LATIN AMERICA OVERVIEW FirstCasit
Slide 16: FirstCash LatAm Growth – Revenue and Store Count
FIRSTCASH LATAM GROWTH –REVENUE AND STORE COUNT 16 REVENUE GROWTH STORE COUNT 1,710 1,623 1,379 $803 ACQUISITIONS 864 999 828 955 672 DE NOVO OPENINGS $666 737 308 309 130 $573 795 846 607 647 690 707 $485 2015 2016 2017 2018 2019 Q2-2020 $368 $671 STORE ADDITIONS BY YEAR $557 $487 418 $417 $368 ACQ
Slide 17: Q2 Latin America Operating Trends
Q2 LATIN AMERICA OPERATING TRENDS: 17 RETAIL SALES: LATAM RETURN ON EARNING ASSETS –RETAIL SALES DEMAND AND MARGINS IN LATIN AMERICA, WHILE $500 250% STRONG FOR “ESSENTIAL” GENERAL MERCHANDISE CATEGORIES, WERE SCRAP GP 195.6% NEGATIVELY IMPACTED BY EXTENDED STORE CLOSURES IN CERTAIN $400 184.9% 177
Slide 18: Over 1,700 LatAm Locations
OVER 1,700 LATAM LOCATIONS IN 4 COUNTRIES 18 LATIN AMERICA CONTINUES TO BE THE PRIMARY STORE GROWTH VEHICLE -SIGNIFICANT UNTAPPED POTENTIAL IN THE REGION SUBSTANTIAL INFRASTRUCTURE AND CASH FLOWS TO MEXICO OPERATIONS – 1,628 STORES IN 32 STATES ACCOMPLISH NEW ACQUISITIONS AND DE NOVO EXPANSION POP
Slide 19: Prendamex Acquisitions
19 PRENDAMEX ACQUISITIONS 533 ACQUIRED PRENDAMEX STORES IN 2018–2020 – MOSTLY SMALLER FORMAT LOCATIONS (TYPICALLY LESS THAN 2,500 FT2) IN HIGH TRAFFIC AREAS – FOCUSED ON JEWELRY AND SMALL ELECTRONICS SIMILAR TO THE SUCCESSFUL MAXI PRENDA ACQUISITION IN MEXICO IN EARLY 2016 – POTENTIAL TO INCREASE RE
Slide 20: Proven New Store Opening Process and Rapid Payback Model
PROVEN NEW STORE OPENING PROCESS UNDEVELOPED SITE 20 AND RAPID PAYBACK MODEL NEW STORE TYPICAL MEXICO NEW STORE RAMP 1 ($ 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 21: United States Overview
UNITED STATES OVERVIEW FirstCasit
Slide 22: Over 1,000 U.S. Locations
OVER 1,000 U.S. LOCATIONS IN 24 STATES 22 AND THE DISTRICT OF COLUMBIA OPERATIONS FOCUSED IN STATES WITH: – GROWING POPULATIONS 31 WA – FAVORABLE DEMOGRAPHICS – STABLE REGULATIONS 1 SIGNIFICANT UNDERBANKED DEMOGRAPHICS WY 27 1 OH 3DC NV 6 NE 27 24 65 28 IN 29MD ONTINUE COUTING MALL CQUISITIONS UT
Slide 23: Q2 U.S. Operating Trends
Q2 U.S. OPERATING TRENDS: 23 RETURN ON EARNING ASSETS REVENUE GROWTH: $1,000 167.4% 180% –REVENUES FROM PAWN OPERATIONS INCREASED 6% 148.4% SCRAP GP 137.9% $750 121.9% –RETAIL SALES INCREASE OF 24% OFFSET LOWER PAWN FEES DUE TO 120% RETAIL GP IMPACT OF COVID-19 $500 PAWN FEES 60% GP RETURN ON RETA
Slide 24: Stable Regulatory Climate for Pawn
STABLE REGULATORY CLIMATE FOR PAWN 24 PAWN LOANS ARE DIFFERENT FROM TRADITIONAL CONSUMER LOAN PRODUCTS AND NOT SUBJECT TO THE CFPB SMALL DOLLAR LOAN RULES BECAUSE THEY: — ARE COLLATERALIZED WITH A TANGIBLE ASSET — ARE NON-RECOURSE LOANS — HAVE SIGNIFICANTLY SMALLER AVERAGE LOAN SIZES — DO NOT INVOL
Slide 25: Wind-Down of Non-Core Consumer Lending Products and Stores
WIND-DOWN OF NON-CORE CONSUMER LENDING PRODUCTS AND STORES 25 PRO FORMA INCLUDING CASH AMERICA ($ IN MILLIONS) 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 $40 3% 33
Slide 26: Financial Highlights
FINANCIAL HIGHLIGHTS sii FirstCasit
Slide 27: Revenue and Earnings History
REVENUE AND EARNINGS HISTORY 27 ($ IN MILLIONS) REVENUE PROFITABILITY $1,864 $1,780 $1,781 $1,830 $168 $304 $20 $165 $289 $6 $158 $284 $156 $77 $56 $153 $273 $148 $144 $131 $1,088 $44 $1,844 $1,725 $1,824 $705 $1,703 $28 $1,045 $677 2015 2016 2017 2018 2019 TTM NET INCOME ADJUSTED NET INCOME1 ADJUST
Slide 28: Earnings Per Share
EARNINGS PER SHARE 28 $4.50 $4.00 $3.81 $3.89 $3.69 $3.53 $3.48 $3.50 $3.41 $3.00 $3.00 $2.74 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2017 2018 2019 TTM Q2-2020 EARNINGS PER SHARE ADJUSTED EARNINGS PER SHARE1 1 Non-GAAP financial measure. See reconciliation of non-GAAP financial measures elsewhere in th
Slide 29: Dividend Growth
DIVIDEND GROWTH 29 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 30: Strong Liquidity Used to Reduce Debt
STRONG LIQUIDITY IN SECOND QUARTER OF 2020 30 USED TO REDUCE DEBT CASH FLOW FROM OPERATING ACTIVITIES 1 OUTSTANDING DEBT AND FREE CASH FLOW CASH FLOW FROM OPERATING ACTIVITIES FREE CASH FLOW LINES OF CREDIT 2024 SENIOR NOTES $350 $800 4.0 $301 $700 3.5 $300 $640 $640 $635 $656 $243 $600 3.0 $250 $23
Slide 31: $2.0 Billion in Growth Investments & Shareholder Payouts
$2.0 BILLION IN GROWTH INVESTMENTS & SHAREHOLDER PAYOUTS 31 THE LAST 10 YEARS (SINCE 2009) ($ IN MILLIONS) CUMULATIVE TOTAL $2.0 BILLION $2,000 STOCK REPURCHASES & DIVIDENDS: ACQUISITIONS: - 12,456,087 SPLIT-ADJUSTED SHARES REPURCHASED - 215 STORES ACQUIRED IN U.S. $1,800 - $164 MILLION IN CUMULATIV
Slide 32: Investment Recap
32 INVESTMENT RECAP PAWN EXCLUSIVE BUSINESS MODEL ‒ SMALL SECURED PAWN LOANS TO UNBANKED AND UNDERBANKED CONSUMERS WITH LIMITED ACCESS TO TRADITIONAL CREDIT PRODUCTS ‒ FULL-SERVICE LENDING AND RETAIL MODEL IS A SIGNIFICANT COMPETITIVE ADVANTAGE WITH STRONG MARGINS AND CASH FLOWS ‒ RECESSION-RESISTAN
Slide 33: Appendix
33 APPENDIX
Slide 34: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION 34 THE COMPANY USES CERTAIN FINANCIAL CALCULATIONS SUCH AS ADJUSTED NET INCOME, ADJUSTED DILUTED EARNINGS PER SHARE, EBITDA, ADJUSTED EBITDA, FREE CASH FLOW, ADJUSTED FREE CASH FLOW AND CONSTANT CURRENCY RESULTS AS FACTORS IN THE MEASUREMENT AND EVALUATION OF THE COMPA
Slide 35: Reconciliation of Net Income to Adjusted Net Income
RECONCILIATION OF NET INCOME TO ADJUSTED 35 NET INCOME ($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) YEAR ENDED DECEMBER 31, TRAILING SIX MONTHS TRAILING TWELVE MONTHS 2017 2018 2019 JUNE 30, 2020 JUNE 30, 2020 IN THOUSANDS PER SHARE IN THOUSANDS PER SHARE IN THOUSANDS PER SHARE IN THOUSANDS PER SHARE
Slide 36: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA 36 ($ IN THOUSANDS) YEAR ENDED DECEMBER 31, TTM 2017 2018 2019 Q2-2020 NET INCOME $143,892 $153,206 $164,618 $147,706 INCOME TAXES 28,420 52,103 59,993 55,682 DEPRECIATION AND AMORTIZATION 55,233 42,961 41,904 42, 518 INTEREST EXPENSE 24,035
Slide 37: Reconciliation of Cash Flow from Operating Activities to Free Cash Flow
37 RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW & ADJUSTED FREE CASH FLOW ($ IN THOUSANDS) THREE MONTHS ENDED SIX MONTHS ENDED TTM ENDED YEAR ENDED DECEMBER 31, JUNE 30, JUNE 30, JUNE 30, 2017 2018 2019 2019 2020 2019 2020 2019 2020 CASH FLOW FROM OPERATING ACTIVITIES $220
Slide 38: Constant Currency
CONSTANT CURRENCY 38 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 39: Get in Touch With Us
39 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