Firstcash Holdings, Inc. · NASDAQ:FCFS
Firstcash — Investor Presentation (November 2017)
46 slides from Firstcash's investor presentation, Nov 3, 2017
Slide 1: Investor Presentation November 2017
INVESTOR PRESENTATION NOVEMBER 2017 EXHIBIT 99.1
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS 2 “This release 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 Litigatio
Slide 3: FirstCash at a Glance
FIRSTCASH AT A GLANCE 3 $132 $180 $270 2015 2016 Q3 17 LTM $705 $1,088 $1,762 2015 2016 Q3 17 LTM Adjusted EBITDA(2) Overview Revenue 1Merger with Cash America closed on September 1, 2016. Includes Cash America results for the last four months of 2016. 2 See “Non-GAAP disclaimer” and the Appendix he
Slide 4: Largest Pawn Operator in the Americas
LARGEST PAWN OPERATOR IN THE AMERICAS Combined entity has over 2,100 stores • 1,117 stores across 26 states in the U.S. with 989 stores in Latin America Mexico operations – all statesU.S. operations – 26 states Central America operations 33 11 27 6 35 7 415 18 25 25 36 119 26 43 40 27 448 77 25 2 30
Slide 5: Pawn Transaction Cycle
PAWN TRANSACTION CYCLE 5 ~20% ~80% Customer Enters Store Pawn Service Fees Monthly Yield = 12%-13% Customer Does Not Repay Customer Repays Loan & Fee ~25% ~75% Sells Asset to Company Pawn Loan (Collateralized with Asset) Avg. Loan = $152 in U.S. $67 in LatAm Retail Sales Avg. Margin = 36% Note: As o
Slide 6: Product Mix
PRODUCT MIX Last Twelve Months (LTM) 6 59% 29% 5% 7% Total Revenue Net Revenue 39% 54% 6% 1% Pawn Fees Consumer Loans / Credit Services FeesRetail Sales Scrap Jewelry Sales $1.8 Billion $1.0 Billion 36% 7%73%100% Gross Margin: Note: As of 9/30/2017
Slide 7: Limited Impact from Internet Competition
LIMITED IMPACT FROM INTERNET COMPETITION 7 • Collateral requirements generally limit internet pawn lending to high value jewelry items • In addition, internet lending platforms require customer to have a bank account •Most of our retail sales are made to our core customer base in their local markets
Slide 8: Recap of Cash America Merger
RECAP OF CASH AMERICA MERGER 8 • Enhanced scale and geographic reach: creates leading operator of more than 2,100 retail pawn stores in the United States and Latin America with operations in four countries • Strong cash flow and financial flexibility − Financial strength to enhance expansion plans i
Slide 9: Integration Update
INTEGRATION UPDATE Corporate Office – Completed headquarters consolidation of the First Cash Arlington, Texas operations into Cash America owned building in Fort Worth, Texas in Q1 2017 – Expect to reduce existing footprint in Fort Worth office and increase leasable space for income generating tenan
Slide 10: Significant Synergies Drive Additional Accretion
SIGNIFICANT SYNERGIES DRIVE ADDITIONAL ACCRETION 10 Annual operating cost synergies Estimated Amounts Achieved to Date • ~$45 million primarily from technology, finance and other administrative synergies achieved by Mid 2018 • Minimal store closings • Up to ~$28 million • $19 million incurred to dat
Slide 11: FirstPawn Technology Platform
FIRSTPAWN TECHNOLOGY PLATFORM Proven, Propriety Pawn Store Operating System Human Resources • Scheduling • Time Keeping • Performance Management • Incentive Comp Financial Data • Reporting & Analysis • Internal Controls & Audit Support •Management Alerts Retail Operations • Retail POS • Pricing • In
Slide 12: Technology Integration Plan
TECHNOLOGY INTEGRATION PLAN All Stores Will Standardize On The FirstCash FirstPawn System by Year-End Benefits at the store – Improved transaction times and system reliability – Proprietary real-time pricing look-ups to determine optimum loan-to-value ratio – Improved on-demand reporting of key perf
Slide 13: Latin America Operations
Ss — LATIN AMERICA OPERATIONS ————
Slide 14: Latin America Locations
989 LATIN AMERICA LOCATIONS 14 62 60 31 38 41 32 29 8 47 32 179 5 61 91 68 78 70 220 37 0 50 100 150 200 250 2011 2012 2013 2014 2015 2016 YTD-Sep 2017 St o re A d d it io n s New Stores Acquired Stores 5 5 4 29 60 100 130 157 207 269 329 386 447 538 597 674 737 955 989 0 200 400 600 800 1,000 1,200
Slide 15: LatAm Revenue Growth & Currency Impact
$101 $141 $175 $222 $281 $322 $363 $388 $368 $417 $462 $101 $143 $206 $250 $312 $378 $419 $468 $527 $688 $778 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 T12M Q3-2017 Total Revenue, USD CC Revenue, 2007 MXN @ 10.94* LATAM REVENUE GROWTH & CURRENC
Slide 16: Q3 LatAm Segment Results
Q3 LATAM SEGMENT RESULTS 16 1 Year-over-year change % in same-store Core Revenue and Pawn Loan Balance $129 $123 $103 23% 22% 17% 14% 10% 11% 0% 5% 10% 15% 20% 25% $0 $20 $40 $60 $80 $100 $120 $140 Thou sand s Current Year (CY) Constant Currency Prior Year (PY) YoY CY CY YoY Constant Currency PY YoY
Slide 17: LatAm Segments Represent a Significant % of Consolidated Operations
17 LATAM SEGMENTS REPRESENT A SIGNIFICANT % OF FIRSTCASH’S CONSOLIDATED OPERATIONS 8,001 49% 8,201 51% Employee Count1 LatAm U.S. 1,117 53% 989 47% 1,848,003 58% 1,348,180 42% Store Count2 Number of Pawn Loans Outstanding 2 1 As of 12/31/2016 2 As of 9/30/2017
Slide 18: LatAm Pawn and Inventory Composition
LATAM PAWN AND INVENTORY COMPOSITION 18 LatAm Operations Segment 18% 65% 11% 2% 2% 2% Pawn Collateral 25% 61% 9% 1% 2% 2% Pawn Inventory Note: As of 9-30-17 Jewelry Electronics Tools Sporting Goods Musical Instruments Other
Slide 19: Ongoing Growth Strategy
ONGOING 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 Colo
Slide 20: Credit Penetration of Select Countries
0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200% Loans % of GDP CREDIT PENETRATION OF SELECT COUNTRIES 20 1 Mexico ranks amongst the lowest within LatAm countries with 22.2% of GDP Source: J.P. Morgan and Central Bank of Brazil
Slide 21: Financial Inclusion in Select LatAm Countries
FINANCIAL INCLUSION IN SELECT LATAM COUNTRIES 21 1 According to the World Bank, Mexico has one of the lowest credit card penetration rates in LatAm, as only 14% of the population has one. Source: World Bank 0% 10% 20% 30% 40% 50% 60% Mexico Brazil Chile Colombia Peru % of Population with a Bank Acco
Slide 22: New Market Update: Rationale for Colombia Expansion
NEW MARKET UPDATE Rational for Colombia Expansion 22 FRENCH GUIANA BRAZIL ARGENTINA CHILE URUGUAY VENEZUELA COLOMBIA1 SURINAME ECUADOR PERU BOLIVIA PARAGUAY GUYANA Note: 1Early 2018 planned market entry Population mid-2017 (millions) mid-2030 mid-2050 Brazil 207.9 223.9 231.1 Colombia 49.3 55.4 61.5
Slide 23: Proven Mexico New Store Opening Process
PROVEN MEXICO NEW STORE OPENING PROCESS 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 delivered
Slide 24: Mexico New Store Peso Investment – Proven Rapid Payback Model
Year 1 Year 2 Year 3 Year 4 Year 5 Op Margin (3%) 18% 22% 25% 26% $0 $1,000 $2,000 $3,000 $4,000 $5,000 $0 $2,000 $4,000 $6,000 $8,000 $10,000 Year 1 Year 2 Year 3 Year 4 Year 5 St o re -l e ve l p ro fi t M X N $ (T h o us an d s) R e ve n u e M X N $ (T h o u sa n d s) Revenue Store-level Profit *
Slide 25: U.S. Overview
= ~— U.S. OVERVIEW ————
Slide 26: U.S. Domestic Locations
26 U.S. DOMESTIC LOCATIONS Store Count at End of Period 475 485 486 641 682 697 748 829 820 801 792 783 95 94 94 97 135 157 211 252 266 296 293 290 295 304 248 96 88 86 83 40 39 21 20 20 86 99 102 103 74 67 65 57 65 42 25 24 951 982 930 937 979 1,007 1,107 1,178 1,190 1,160 1,130 1,117 2006 2007 200
Slide 27: Q3 U.S. Segment Results
27 Q3 U.S. SEGMENT RESULTS 1 Year-over-year change % in same-store Core Revenue and Pawn Loan Balance $307 $158 1% 5% 1% -3% -4% -2% 0% 2% 4% 6% $0 $50 $100 $150 $200 $250 $300 $350 Th ou san ds Current Year (CY) Prior Year (PY) YoY CY YoY PY Total Revenue ($/millions) Same-Store PLB1 Same-Store Cor
Slide 28: U.S. Pawn and Inventory Composition
28 U.S. PAWN AND INVENTORY COMPOSITION U.S. Operations Segment Pawn Collateral Pawn Inventory Note: As of 9-30-17 Jewelry Electronics Tools Sporting Goods Musical Instruments Other 57% 21% 8% 3% 8% 3% 64% 18% 6% 3% 6% 3%
Slide 29: Limited Exposure to Gold Price Movement
$81 $33 $12 $8 $1 $17 $7 $4 $2 $4 186 119 111 74 83 0 20 40 60 80 100 120 140 160 180 200 $0 $20 $40 $60 $80 $100 $120 2012 2013 2014 2015 2016 CSH FCFS Total gold oz. ($ in millions, except gold prices) LIMITED EXPOSURE TO GOLD PRICE MOVEMENT 29 Reduced Reliance on Scrap Sc ra p G o ld O u n ce s S
Slide 30: Stable Regulatory Climate for Pawn
STABLE REGULATORY CLIMATE FOR PAWN 30 • 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 31: Limited Exposure to New CFPB Rules for Payday Lending
LIMITED EXPOSURE TO NEW CFPB RULES FOR PAYDAY LENDING 31 Target Revenue Mix (next 3-5 years) 95% 5% 98% 2% Consumer Lending Pawn Operations Q3-2017 TTM Revenue Mix is Primarily Pawn Related • On October 5, 2017, the CFPB released its small-dollar loan rule (the “SDL Rule”), which is scheduled to tak
Slide 32: Financial Information
= ~— FINANCIAL INFORMATION ————
Slide 33: Revenue Growth
REVENUE GROWTH 33 ($/millions) $363 $388 $368 $417 $462 $298 $325 $337 $671 $1,300 $661 $713 $705 $1,088 $1,762 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 2013 2014 2015 2016 TTM 9/30/17 Re ven ue LatAm U.S. Note: Merger with Cash America closed on September 1, 2016. Includes C
Slide 34: Adjusted EBITDA Growth
ADJUSTED EBITDA GROWTH 34 ($/millions) 1Adjusted EBITDA is a non-GAAP number. See appendix for reconciliation to Net Income. 2The guidance, announced on 10/26/2017, for fiscal 2017 is presented on a non-GAAP basis, as it does not include the impact of merger and other acquisition expenses or the los
Slide 35: Adjusted Free Cash Flow
ADJUSTED FREE CASH FLOW 35 ($/millions) $71 $68 $68 $195 $0 $25 $50 $75 $100 $125 $150 $175 $200 2014 2015 2016 TTM 9/30/2017 Adj. Free Cash Flow1 1Adjusted Free Cash Flow is a non-GAAP number. See appendix for reconciliation to Adjusted Free Cash Flow from Operating Activities.
Slide 36: FirstCash 2017 Guidance
FIRSTCASH 2017 GUIDANCE* 36 • Fiscal full-year 2017 guidance for adjusted earnings per share, a non-GAAP measure that excludes merger related expenses and the loss on extinguishment of debt, to be in the range of $2.60 to $2.70 – 2017 adjusted net income, a non-GAAP measure, is projected to be in th
Slide 37: Balance Sheet
BALANCE SHEET ($/millions) 37 Liabilities to Equity Ratio 58.9% Liabilities to Equity Ratio 45.2% $1,306 $1,201 $972 $931 $2,278 $2,132 $0 $500 $1,000 $1,500 $2,000 $2,500 Q3-2016 Assets Q3-2017 Assets Operating Assets Intangibles $1,433 $1,468 $560 $440 $285 $224 $2,278 $2,132 $0 $500 $1,000 $1,500
Slide 38: Leverage Profile
LEVERAGE PROFILE ($/millions) 38 $200 $200 $200 $300 $300 $360 $260 $137 $97 $140 $560 $460 $337 $397 $440 $0 $100 $200 $300 $400 $500 $600 9/30/2016 12/31/2016 3/31/2017 6/30/2017 9/30/2017 FCFS 2021 Sr. Notes FCFS 2024 Sr. Notes FCFS Line of Credit Net Debt Net Debt Ratio (Net Debt/TTM Adjusted EB
Slide 39: Over $1.1 Billion in Cumulative Investments & Shareholder Payouts
OVER $1.1 BILLION IN CUMULATIVE INVESTMENTS & SHAREHOLDER PAYOUTS 39 $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 Q3-17 $ M ill io ns Stock Repurchases & Dividends Acquisitions Capital Expenditures Outstanding D
Slide 40: Top Shareholders and Shareholders Breakdown
TOP 10 SHAREHOLDERS AND SHAREHOLDERS BREAKDOWN 40 Shares (FCFS) % S/O (FCFS) l BlackRock Fund Advisors (U.S.) 5,417,993 11.4 Index l l The Vanguard Group, Inc. (U.S.) 4,199,210 8.8 Index l l Fiduciary Management, Inc. (U.S.) 3,026,526 6.3 Value l l Dimensional Fund Advisors, L.P. (U.S.) 2,160,845 4.
Slide 41: FirstCash Investment Recap
FIRSTCASH INVESTMENT RECAP 41 • International 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 allo
Slide 42: Appendix
= ~— APPENDIX ————
Slide 43: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION 43 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 44: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA 44 Year Ended December 31, TTM 9/30/2017 2016 2015 2014 Net Income $112,850 $60,127 $60,710 $85,166 Income taxes 58,544 33,320 26,971 31,542 Depreciation and amortization(1) 57,504 31,865 17,446 17,476 Interest expense 24,288 20,320 16,887 1
Slide 45: Reconciliation of Cash Flow from Operating Activities to Free Cash Flow
RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES TO FREE CASH FLOW & ADJUSTED FREE CASH FLOW 45 ($/millions) 2013 2014 2015 2016 2017 2016 Cash flow from operating activities $ 106,718 $ 97,679 $ 92,749 $ 96,854 $ 205,226 $ 68,101 Cash flow from investing activities: Loan receivables, net of ca
Slide 46: Investor Contact Information
INVESTOR CONTACT INFORMATION 46 Investor Relations Gar Jackson investorrelations@firstcash.com Global IR Group ir.firstcash.com gar@globalirgroup.com (817) 258-2650 (949) 873-2789