Firstcash Holdings, Inc. · NASDAQ:FCFS
Firstcash — Investor Day (November 2018)
48 slides from Firstcash's investor day presentation, Nov 6, 2018
Slide 1: Analyst and Banker Day November 2018
EXHIBIT 99.1 ANALYST AND BANKER DAY NOVEMBER 2018
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: Recap of Third Quarter and YTD Operating Results
CORPUS CHRISTI, TEXAS RECAP OF THIRD QUARTER AND YTD OPERATING RESULTS AGUASCALIENTES, MEXICO
Slide 4: LatAm Segment Results ($ in millions)
LATAM SEGMENT RESULTS ($ IN MILLIONS) REVENUE NET REVENUE $150 $79 $142 $135 $74 $130 $129 $123 $69 $69 $114 $117 $67 $64 $62 $98 $60 $52 QTR 1 QTR 2 QTR 3 QTR 1 QTR 2 QTR 3 2017 2018 2018 CONSTANT CURRENCY 2017 2018 2018 CONSTANT CURRENCY 4
Slide 5: LatAm Segment Results: Retail Margin and Pre-Tax Operating Margin
LATAM SEGMENT RESULTS RETAIL MARGIN PRE-TAX OPERATING MARGIN 40% 30% 37% 36% 36% 35% 36% 25% 25% 35% 25% 23% 35% 22% 23% 36% 35% 23% 23% 22% 30% 20% LATAM SEGMENT LATAM SEGMENT 25% 15% LATAM EXCL. 2018 LATAM EXCL. 2018 ACQUISITIONS ACQUISTIONS 20% 10% 5
Slide 6: U.S. Segment Results ($ in millions)
U.S. SEGMENT RESULTS ($ IN MILLIONS) REVENUE NET REVENUE Pawn Consumer Loan Pawn Consumer Loan $21 $17 $15 $11 $19 $9 $18 $13 $10 $13 $13 $14 $328 $174 $312 $164 $288 $152 $154 $281 $276 $274 $149 $149 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 QTR 1 QTR 2 QTR 3 QTR 1 QTR 2 QTR 3 6
Slide 7: U.S. Segment Results: Retail Margin and Pre-Tax Operating Margin
U.S. SEGMENT RESULTS RETAIL MARGIN PRE-TAX OPERATING MARGIN 42% 40% 40% 40% 40% 39% 39% 39% 35% PRE-TAX SEGMENT INCOME FROM CORE PAWN OPERATIONS 38% 37% 37% 30% INCREASED 12% Y-O-Y 36% 35% 25% 34% 36% 20% 20% 34% 33% 35% 20% 34% 18% 19% 32% 15% 17% 30% 31% 10% 30% 28% 5% 0% CONSOLIDATED U.S. LEGACY
Slide 8: U.S. Net Revenue – Year-over-Year Change
U.S. NET REVENUE – YEAR-OVER-YEAR CHANGE $170 $2 $165 $7 3.4% INCREASE IN TOTAL $4 PAWN NET REVENUE ON SAME NUMBER OF STORES $160 $163 $162 $155 $150 Q3-2017 NET REVENUE MERCHANDISE GP PAWN FEES NET PAYDAY REVENUE Q3-2018 NET REVENUE 8
Slide 9: Consolidated Revenue ($ in millions)
CONSOLIDATED REVENUE ($ IN MILLIONS) $1,780 $1,780 CORE PAWN REVENUE NON-CORE REVENUE $218 $182 RETAIL SALES SCRAP SALES PAWN LOAN FEES CONSUMER LOAN/CREDIT SERVICES $1,088 $106 $713 $705 $1,562 $1,598 $85 $60 $982 $628 $645 2014 2015 2016 2017 TTM Q3-2018 9
Slide 10: Adjusted Earnings Per Share Guidance
ADJUSTED EARNINGS PER SHARE GUIDANCE RANGE2: $3.45 - $3.55 GUIDANCE AS PROVIDED ON OCTOBER 25, 2018 YOY GROWTH: $4.00 26% - 30% $3.50 $3.00 $2.74 $2.50 $2.42 $2.44 $2.00 $1.50 $1.00 $0.50 $0.00 2015 2016 2017 2018 1 ADJUSTED EARNINGS PER SHARE 2018 GUIDANCE GUIDANCE 1 Adjusted earnings measures may
Slide 11: FirstCash Fiscal 2018 Outlook
FIRSTCASH FISCAL 2018 OUTLOOK •UPDATED FISCAL FULL-YEAR 2018 GUIDANCE FOR ADJUSTED DILUTED EARNINGS PER SHARE TO BE IN THE RANGE OF $3.45 TO $3.551 – AT THE UPPER HALF OF THE PREVIOUS GUIDANCE OF $3.35 TO $3.55 – REPRESENTS EARNINGS PER SHARE GROWTH TO BE IN A RANGE OF 26% TO 30% •KEY ASSUMPTIONS: –
Slide 12: First Cash/Cash America Merger Recap
FIRST CASH/CASH AMERICA MERGER RECAP ESTIMATED AMOUNTS ACHIEVED AS OF EXPECTED RESULTS AT TIME OF MERGER (APRIL 2016) DECEMBER 2017 DEC 2018 ANNUAL • ~$45 MILLION PRIMARILY FROM • $43 MILLION IN 2017 OPERATING TECHNOLOGY, FINANCE AND OTHER AnnualOST operatingYNERGIES ADMINISTRATIVE SYNERGIES costC s
Slide 13: Merger Synergies (Pro Forma TTM Basis)
MERGER SYNERGIES (PRO FORMA TTM BASIS) INCLUDES DEPRECIATION AND AMORTIZATION TOTAL SYNERGIES OF ($ IN MILLIONS ON A TTM BASIS) $80 MILLION $250 $235 $228 $239 $213 $199 $200 $70 $189 $67 $177 $63 $169 $166 $59 $162 $159 $57 $150 $55 $52 $49 $45 $44 $100 $165 $161 $151 $140 $132 $122 $117 $117 $117
Slide 14: U.S. Admin Headcount Reductions Post Merger
U.S. ADMIN HEADCOUNT REDUCTIONS POST MERGER Domestic First Cash and Cash America Headcounts Pre-Merger FIELD SUPPORT 664 CORPORATE OFFICE 515 281 446 265 358 210 154 383 250 236 204 APR. 30 DEC. 31 DEC. 31 PROJECTED 2016 2016 2017 DEC. 31 2018 14
Slide 15: U.S. Store Expansion
GRAND PRAIRIE, TEXAS U.S. STORE EXPANSION LOCATIONS IN 25 STATES U.S. MONEY (2018 ACQUISITION) – ATHENS, TENNESSEE
Slide 16: Approximately 1,100 U.S. Locations in States
APPROXIMATELY 1,100 U.S. LOCATIONS IN 25 STATES LEGACY FIRST CASH LEGACY CASH AMERICA SHARED MARKETS Note: As of 10/31/2018 33 WA ME MT ND OR MN VT ID NH SD WI NY MA CT 2 MI RI WY IA PA UT 1 119 NJ 27 NE DC 27 33 DE 3 MD 7 30 OH IN WV NV KS IL CO 24 6 VA 29 25 KY CA MO NC 41 TN 53 31 NM 18 SC OK AR
Slide 17: U.S. Acquisitions – Last Years
U.S. ACQUISITIONS – LAST 3 YEARS ACQUIRED STORES BY YEAR ROWTH TRATEGY U.S. G S 22 • CONTINUE SCOUTING SMALL ACQUISITIONS 4 IN EXISTING STATES SUPERIOR PAWN • ORGANIC DEMAND AS UNBANKED AND U.S. MONEY SHOPS UNDERBANKED DEMOGRAPHICS CONTINUE TO SINGLE PAWN STORES 12 GROW Note: As of 10/31/2018 • 2018
Slide 18: Significant Presence in Fastest Growing U.S. Cities
SIGNIFICANT PRESENCE IN FASTEST GROWING U.S. CITIES RANKED BY ESTIMATED 2018 POPULATION Source: Business Insider 100 43% OF DOMESTIC STORES WITHIN 89 90 A 25 MILE RADIUS OF THE TOP 35 77 80 UP AND COMING U.S. CITIES TORES 70 S 60 ASH C IDENTIFIES MARKETS WITH SIGNIFICANT ZONING IRST 50 F AND LICENSI
Slide 19: Stable Regulatory Climate for Pawn
STABLE REGULATORY CLIMATE FOR PAWN • PAWN LOANS ARE DIFFERENT FROM TRADITIONAL CONSUMER LOAN PRODUCTS AND NOT SUBJECT TO THE CFPB SMALL DOLLAR LOAN RULES BECAUSE THEY: – ARE NON-RECOURSE LOANS – HAVE SIGNIFICANTLY SMALLER AVERAGE LOAN SIZES – DO NOT INVOLVE CREDIT CHECKS, COLLECTION ACTIVITIES, ACH
Slide 20: Wind-Down of U.S. Consumer Lending
WIND-DOWN OF U.S. CONSUMER LENDING PRO FORMA INCLUDING CASH AMERICA ($ 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% $76 281 5% 113 113 8 $60 5% $56 4% 112 4% $40 3% 3% 286 2% 222 209 $20 161 1% $0 0% 2015 201
Slide 21: Latin America Strategy
TECAMACHALCO, MEXICO LATIN AMERICA STRATEGY TAMPICO, MEXICO
Slide 22: FirstCash LatAm Market
FIRSTCASH LATAM MARKET MEXICO OPERATIONS – 1,312 STORES IN 32 STATES CENTRAL AND SOUTH AMERICA OPERATIONS – 56 STORES IDENTIFIES NEW COUNTRY FOR 2018 ONORA S CHIHUAHUA COAHUILA QUINTANA ROO DURANGO NUEVO LEON YUCATAN TAMAULIPAS GUATEMALA SAN LUIS POTOSI 39 EL SALVADOR BAJA CALIFORNIA 1,312 BAJA CALI
Slide 23: FirstCash Latin America Store Growth
FIRSTCASH LATIN AMERICA STORE GROWTH 1,368 999 955 663 309 737 308 674 597 130 538 101 447 54 386 46 329 17 269 17 17 690 705 207 607 647 17 543 573 1 430 492 312 369 206 252 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 AS OF 10/31/2018 NEW STORE OPENINGS ACQUISITIONS 23
Slide 24: Majority of Stores & Employees Based in LatAm
MAJORITY OF STORES & EMPLOYEES BASED IN LATAM; OVER 80% OF STORE INVESTMENTS IN LATAM STORE SEGMENT STORES1 EMPLOYEES1 INVESTMENTS2 CONTRIBUTION3 $98,301 $125,343 10,645 1,346 82% 34% 58% 55% 1,100 $21,774 7,694 45% $239,424 18% 42% 66% LatAm U.S. 1 As of 9/30/2018 2 TTM 9/30/2018 Store CapEx and Ac
Slide 25: Mexican Pawn Industry
MEXICAN PAWN INDUSTRY (BASED ON PROFECO REGISTRATION DATA) • APPROXIMATELY 7,000 TOTAL REGISTERED FIRSTCASH LARGE 19% OPERATORS STORES 12% • FIRSTCASH STILL HAS LESS THAN 20% OF THE EZPAWN NON- MARKET 4% PROFITS 11% • THERE ARE 11 OTHER LARGE OPERATORS (50 STORES OR MORE) THAT OWN OVER 800 LOCATIONS
Slide 26: New Store Openings
NEW STORE OPENINGS • 50 LARGE FORMAT DE NOVO LOCATIONS OPENED IN LATAM YTD 2018 – 40 IN MEXICO – 4 IN COLOMBIA – 6 IN GUATEMALA • UP TO 5 ADDITIONAL STORES OPENING IN NOVEMBER 2018 • AT LEAST 30-35 NEW STORES SET TO OPEN IN EARLY Q1 2019 BOGOTA, COLOMBIA Note: As of 10/31/2018 26
Slide 27: 2018 Marks Record Year for LatAm Acquisitions
2018 MARKS RECORD YEAR FOR LATAM ACQUISITIONS • MARCH - ACQUIRED 126 STORES IN CENTRAL MEXICO LATAM ACQUISITIONS • JUNE - ACQUIRED 62 STORES IN NORTHEASTERN/SOUTHEASTERN 400 YEAR-TO-DATE 2018 357 MEXICO 15 350 342 • AUGUST - ACQUIRED 97 STORES IN THE SOUTHERN GULF REGION OF MEXICO 300 • SEPTEMBER -
Slide 28: Pawn Collateral Mix
PAWN COLLATERAL MIX 100% 88% 87% 80% 80% 77% 80% 60% 2015 – 2016: YEAR-TO-DATE 2018: ACQUIRED 211 SMALLER FORMAT ACQUIRED 357 SMALLER FORMAT MAXI PRENDA STORES STORES 40% 20% 20% 20% 23% 12% 13% 0% 2014 2015 2016 2017 9/30/2018 LATAM - JEWELRY LATAM - GENERAL MERCHANDISE 28
Slide 29: Maxi Prenda Update – Early 2016 Acquisition
MAXI PRENDA UPDATE – EARLY 2016 ACQUISITION FIRST SMALLER FORMAT ACQUISITION IN LATAM PER STORE GROWTH RATES VERSUS FIRST YEAR • ACQUISITION RECAP 100% – 211 SMALLER FOOTPRINT STORES 85% • 166 IN MEXICO 80% 71% • 32 IN GUATEMALA 23% • 13 IN EL SALVADOR 60% 48% 27% • 7 STORES WERE CONSOLIDATED WITH F
Slide 30: Mexico City – Store Visits
MEXICO CITY – STORE VISITS DE NOVO FIRSTCASH STORE ACQUIRED MAXI PRENDA STORE 30
Slide 31: Mexico City – Store Visits
MEXICO CITY – STORE VISITS 31
Slide 32: Mexico City – Store Visits
MEXICO CITY – STORE VISITS 32
Slide 33: LatAm – Command Center
LATAM– COMMAND CENTER 33
Slide 34: Cash Flow and Shareholder Value
CASH FLOW AND SHAREHOLDER VALUE
Slide 35: Adjusted Net Income and Adjusted EBITDA
ADJUSTED NET INCOME AND ADJUSTED EBITDA ($ IN MILLIONS) $280 $280 $273 $240 $200 $180 $160 $153 $132 $131 $120 $85 $80 $68 $40 $0 2015 2016 2017 TTM Q3-2018 ADJUSTED NET INCOME ADJUSTED EBITDA Note: Adjusted Net Income and Adjusted EBITDA are non-GAAP financial measures. See appendix for reconciliat
Slide 36: Operating Cash Flow and Adjusted Free Cash Flow
OPERATING CASH FLOW AND ADJUSTED FREE CASH FLOW ($ IN MILLIONS) $246 $250 $242 $244 $220 $200 FCF YIELD1 7% $150 TTM 9/30/2018 $93 $97 $100 $81 $72 $50 $0 2015 2016 2017 TTM Q3-2018 CASH FLOW FROM OPERATING ACTIVITIES ADJUSTED FREE CASH FLOW Note: Adjusted Free Cash Flow is a non-GAAP financial meas
Slide 37: Post-Merger Cash Flows Support Investments and Shareholder Returns
POST-MERGER CASH FLOWS SUPPORT INVESTMENTS AND SHAREHOLDER RETURNS WITH MINIMAL ADDED LEVERAGE ($ IN MILLIONS) Post-Merger Investments & OUTSTANDING DEBT Shareholder Returns $605 $606 $600 $560 $600 $45 MILLION $92 $500 INCREASE $76 $305 $400 $400 $88 $360 $300 $200 $200 $350 $300 $100 $200 $0 $0 PO
Slide 38: Leverage Profile
LEVERAGE PROFILE Note: Net Debt Ratio is calculated using a non-GAAP financial measure. See Company’s Q3-2018 10-Q filing on October 31, 2018 for a calculation of the Net Debt Ratio. FCFS 2021 SR. NOTES FCFS 2024 SR. NOTES • AMENDED UNSECURED CREDIT FACILITY FCFS LINE OF CREDIT NET DEBT TO ADJ. EBIT
Slide 39: Financial Covenants – Line of Credit
FINANCIAL COVENANTS – LINE OF CREDIT FIXED CHARGE COVERAGE RATIO TOTAL LEVERAGE RATIO DOMESTIC LEVERAGE RATIO 2.5 3.5 4.5 2.2 2.1 4.0 3.0 2.0 3.5 1.8 3.2 1.7 2.5 2.9 2.2 3.0 1.5 2.0 2.0 2.5 2.4 1.8 2.2 1.5 1.5 2.0 1.0 1.5 1.0 1.0 0.5 0.5 0.5 0.0 0.0 0.0 9/30/2016 12/31/2016 12/31/2017 9/30/2018 9/30
Slide 40: Post Merger Share Repurchase Summary
POST MERGER SHARE REPURCHASE SUMMARY 4.7 MILLION SHARES REPURCHASED 5 50 49 0.5 ) 4 ) 48 ILLIONS 1.2 (M ILLIONS M ( 3 45 UTSTANDING 10% REDUCTION IN TOTAL 1.4 44 O EPURCHASED 2 R SHARES OUTSTANDING HARES SINCE MERGER 0.4 S HARES 43 S OTAL 1 T 0.7 0.3 - 0 0.2 40 Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-201
Slide 41: 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 42: Over $1.4 Billion in Cumulative Investments & Shareholder Payouts
OVER $1.4 BILLION IN CUMULATIVE INVESTMENTS & SHAREHOLDER PAYOUTS OVER THE LAST 10 YEARS Note: As of 9/30/2018 Cumulative Total $1,400 STOCK REPURCHASES & DIVIDENDS: $ Millions - 9,941,132 SPLIT-ADJUSTED SHARES REPURCHASED - $87 MILLION IN CUMULATIVE DIVIDENDS PAID $1,200 ACQUISITIONS SINCE 2009: $1
Slide 43: Appendix
Tasco, Meco APPENDIX FirstCasit
Slide 44: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION THE COMPANY USES CERTAIN FINANCIAL CALCULATIONS SUCH AS ADJUSTED NET INCOME, ADJUSTED DILUTED EARNINGS PER SHARE, ADJUSTED PRE-TAX PROFIT MARGIN, ADJUSTED NET INCOME MARGIN, EBITDA, ADJUSTED EBITDA, FREE CASH FLOW, ADJUSTED FREE CASH FLOW AND CONSTANT CURRENCY RESULTS
Slide 45: Reconciliation of Net Income to Adjusted Net Income
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME ($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) TTM ENDED YEAR ENDED DECEMBER 31, SEPT 30, 2015 2016 2017 2018 IN THOUSANDS PER SHARE IN THOUSANDS PER SHARE IN THOUSANDS PER SHARE IN THOUSANDS NET INCOME $60,710 $2.14 $60,127 $1.72 $143,892 $3.00 $172,8
Slide 46: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA ($ IN THOUSANDS) YEAR ENDED DECEMBER 31, TTM ENDED SEPT 30, 2015 2016 2017 2018 NET INCOME $60,710 $60,127 $143,892 $172,865 INCOME TAXES 26,971 33,320 28,420 26,303 DEPRECIATION AND AMORTIZATION1 17,446 31,865 55,233 45,514 INTEREST EXPENSE
Slide 47: Reconciliation of Cash Flow from Operating Activities to Free Cash Flow
RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW & ADJUSTED FREE CASH FLOW ($ IN THOUSANDS) YEAR ENDED DECEMBER 31, TTM ENDED SEPT 30, 2015 2016 2017 2018 CASH FLOW FROM OPERATING ACTIVITIES $92,749 $96,854 $220,357 $245,730 CASH FLOW FROM INVESTING ACTIVITIES: LOAN RECEIVABLE
Slide 48: Investor Contact Information
INVESTOR CONTACT INFORMATION INVESTOR RELATIONS GAR JACKSON INVESTORRELATIONS@FIRSTCASH.COM GLOBAL IR GROUP INVESTORS.FIRSTCASH.COM GAR@GLOBALIRGROUP.COM (817) 258-2650 (817) 886-6998 48