Firstcash Holdings, Inc. · NASDAQ:FCFS
Firstcash — Investor Presentation (May 2020)
36 slides from Firstcash's investor presentation, May 6, 2020
Slide 1: Investor Presentation May 2020
EXHIBIT 99.1 1 INVESTOR PRESENTATION MAY 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 As of Press Release 04/22/2020 “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 TO OUR CUSTOMERS WHO DEPEND
Slide 4: Who We Are
4 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 5: Why FirstCash?
WHY FIRSTCASH? 5 ATTRACTIVE INDUSTRY DYNAMICS 1 –PAWN LENDING PERFORMED WELL IN PAST CYCLES OF CONSUMER CREDIT CONTRACTION –CUSTOMER BASE IS UNDERSERVED – MOST LENDERS DO NOT OFFER LOANS OF $150 OR LESS –STABLE REGULATORY ENVIRONMENT SHAREHOLDER RETURNS & 3 STOCK REPURCHASES STRONG GROWTH METRICS –R
Slide 6: FirstCash Timeline
FIRSTCASH TIMELINE 6 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 6 EXP
Slide 7: Largest Pawn Operator in the Americas
LARGEST PAWN OPERATOR IN THE AMERICAS 7 – PAWN OPERATIONS REPRESENT 99% OF REVENUE – ALMOST $2 BILLION IN TOTAL REVENUE 1% 1% 5% 1% 55% 30% TOTAL REVENUE NET REVENUE $1.9 BILLION $1.0 BILLION 64% 43% 1 RETAIL SALES PAWN FEES SCRAP JEWELRY SALES CONSUMER LOAN/SERVICE FEES 1Consumer lending operations
Slide 8: Pawn Loans Are Small, Affordable and With No Credit Risk
PAWN LOANS ARE SMALL, AFFORDABLE AND WITH NO CREDIT RISK 8 ✓ 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
Slide 9: Pawn Collateral and Inventory Composition
PAWN COLLATERAL AND INVENTORY COMPOSITION 9 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 10: Pawn Revenue Growth Across Economic Cycles
PAWN REVENUE GROWTH ACROSS ECONOMIC CYCLES LEGACY FIRST CASH U.S. AND LATAM CORE GROSS PROFIT1 PER STORE 10 FINANCIAL CRISIS POST CRISIS RECOVERY CURRENT CYCLE $900 $817 $804 $774 $770 $763 $784 $750 $710 $732 $705 $732 $606 $647 $600 $450 U.S. $300 $150 $0 2008 2009 2010 2011 2012 2013 2014 2015 20
Slide 11: Pawnshops Serve Unbanked and Underbanked Consumers
PAWNSHOPS SERVE UNBANKED AND UNDERBANKED CONSUMERS 11 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, AFFORDA
Slide 12: Environmental Sustainability
12 ENVIRONMENTAL SUSTAINABILITY 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 SERVICES SAFE ENVI
Slide 13: Latin America
13 LATIN AMERICA OVERVIEW li First@asht
Slide 14: FirstCash LatAm Growth – Revenue and Store Count
FIRSTCASH LATAM GROWTH – REVENUE AND STORE COUNT 14 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 $368 AC
Slide 15: Almost 1,700 LatAm Locations
ALMOST 1,700 LATAM LOCATIONS IN 4 COUNTRIES 15 LATIN AMERICA CONTINUES TO BE THE PRIMARY STORE GROWTH VEHICLE - SIGNIFICANT UNTAPPED POTENTIAL IN THE REGION ✓ SUBSTANTIAL INFRASTRUCTURE AND CASH FLOWS TO MEXICO OPERATIONS – 1,608 STORES IN 32 STATES ACCOMPLISH NEW ACQUISITIONS AND DE NOVO EXPANSION
Slide 16: Prendamex Acquisitions
16 PRENDAMEX ACQUISITIONS 529 ACQUIRED PRENDAMEX STORES IN 2018 AND 2019 – MOSTLY SMALLER FORMAT LOCATIONS (TYPICALLY LESS THAN 2,500 FT2) IN HIGH TRAFFIC AREAS – FOCUSED ON JEWELRY AND SMALL ELECTRONICS MANY SIMILARITIES TO THE SUCCESSFUL MAXI PRENDA ACQUISITION IN MEXICO IN EARLY 2016 – POTENTIAL
Slide 17: Proven New Store Opening Process and Rapid Payback Model
PROVEN NEW STORE OPENING PROCESS UNDEVELOPED SITE 17 AND RAPID PAYBACK MODEL NEW STORE TYPICAL MEXICO NEW STORE RAMP ($ IN USD) 1 REVENUE INVESTMENT (USD $) $600 CAP EX $181,000 $500 ◼ OPENED FIRST STORES IN MEXICO IN 1999 - LEASEHOLD IMPROVEMENTS & $400 FIXTURES ◼ EXPERIENCED REAL ESTATE DEVELOPMEN
Slide 18: United States
18 UNITED STATES OVERVIEW |Ii! First€asht
Slide 19: Over 1,000 U.S. Locations
OVER 1,000 U.S. LOCATIONS IN 24 STATES 19 AND THE DISTRICT OF COLUMBIA ✓OPERATIONS FOCUSED IN STATES WITH: – GROWING POPULATIONS 32 WA – STABLE AND FAVORABLE REGULATIONS ✓SIGNIFICANT UNDERBANKED DEMOGRAPHICS 2 WY 27 1 OH 3DC ✓CONTINUE SCOUTING SMALL ACQUISITIONS NV 6 NE 27 29 67 29 IN 29MD UT IL 6 V
Slide 20: U.S. Operating Trends: Return on Earning Assets
U.S. OPERATING TRENDS: 20 RETURN ON EARNING ASSETS $1,000 156% 148% 160.0% SCRAP GP ✓NET REVENUE FROM PAWN OPERATIONS 138% $750 122% CONTINUES TO INCREASE: 120.0% RETAIL GP $500 PAWN FEES – EXCLUDING CONSUMER LENDING AND WHOLESALE SCRAP SALES, 80.0% Q1-2020 GROSS PROFIT FROM CORE PAWN OPERATIONS GP
Slide 21: Stable Regulatory Climate for Pawn
STABLE REGULATORY CLIMATE FOR PAWN 21 ✓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 22: Wind-Down of Non-Core Consumer Lending Products and Stores
WIND-DOWN OF NON-CORE CONSUMER LENDING PRODUCTS AND STORES 22 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 $40 3% 335 3% 2% 271 258
Slide 23: Financial Highlights
FINANCIAL HIGHLIGHTS First@ash
Slide 24: Revenue and Earnings Growth
REVENUE AND EARNINGS GROWTH 24 ($ 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 INCOME1 ADJUSTED EBITDA1 Q1-2020 PA
Slide 25: Earnings Per Share
EARNINGS PER SHARE 25 $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 26: Dividend Growth
DIVIDEND GROWTH 26 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 27: Share Repurchases
SHARE REPURCHASES 27 REPRESENTS 15% OF SHARE COUNT SINCE 2016 MERGER $300 8.0 $275 7.2 7.0 $250 6.3 ) 6.0 ) ILLIONS $200 M 5.0 ( 5.0 ILLIONS M ( OUNT C $150 4.0 $114 EPURCHASES 3.0 EPURCHASE R R $100 $93 HARE $80 S 2.0 1.6 UMULATIVE C $50 1.0 $0 0.0 2017 2018 2019 Q1-2020 SHARES REPURCHASED – CUMULA
Slide 28: Post-Merger Cash Flows Support Investments and Shareholder Returns
POST-MERGER CASH FLOWS SUPPORT INVESTMENTS AND 28 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 $
Slide 29: $1.9 Billion in Growth Investments & Shareholder Payouts
$1.9 BILLION IN GROWTH INVESTMENTS & SHAREHOLDER PAYOUTS 29 THE LAST 10 YEARS (SINCE 2009) ($ 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 - $153 MILLION IN CUMULATIV
Slide 30: Investment Recap
30 INVESTMENT RECAP PAWN-FOCUSED BUSINESS MODEL ‒ SMALL SECURED PAWN LOANS TO UNBANKED AND UNDERBANKED CONSUMERS WITH LIMITED ACCESS TO TRADITIONAL CREDIT PRODUCTS ‒ FULL-SERVICE LENDING AND RETAIL MODEL IS A SIGNIFICANT COMPETITIVE ADVANTAGE WITH STRONG MARGINS AND CASH FLOWS ‒ RECESSION-RESISTANT
Slide 31: Appendix
APPENDIX First@asht
Slide 32: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION 32 THE COMPANY USES CERTAIN FINANCIAL CALCULATIONS SUCH AS ADJUSTED NET INCOME, ADJUSTED DILUTED EARNINGS PER SHARE, EBITDA, ADJUSTED EBITDA, FREE CASH FLOW, ADJUSTED FREE CASH FLOW AND CONSTANT CURRENCY RESULTS AS FACTORS IN THE MEASUREMENT AND EVALUATION OF THE COMPA
Slide 33: Reconciliation of Net Income to Adjusted Net Income
RECONCILIATION OF NET INCOME TO ADJUSTED 33 NET INCOME ($ 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 $3.81 ADJUSTMENTS, NET OF TAX: MERGER AND OT
Slide 34: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
34 RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA ($ IN THOUSANDS) YEAR ENDED DECEMBER 31, TTM 2017 2018 2019 Q1-2020 RECONCILIATION OF CASH FLOW FROM OPERATING ACTIVITIES NET INCOME $143,892 $153,206 $164,618 $154,881 TO FREE CASH FLOW & ADJUSTED FREE CASH FLOW ($ IN THOUSANDS) INCOME T
Slide 35: Constant Currency
CONSTANT CURRENCY 35 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 36: Get in Touch With Us
36 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