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First Cash Reports 16% Increase in Third Quarter Earnings Per Share to $0.67; Pawn Growth in Mexico Drives Record Earnings; Wit
First Cash Financial Services, Inc. (MM) (NASDAQ:FCFS)
Today : Wednesday 17 October 2012
First Cash Financial Services, Inc. (Nasdaq:FCFS) today announced record-setting revenue, net income and earnings per share for the three month period ended September 30, 2012. In addition, the Company announced that in September it completed the acquisition of 16 large format Fast Cash Pawn stores located in Denver, Colorado. The Company also noted that it was closing seven small format, payday-only stores located in Texas.
Earnings Highlights
Diluted earnings per share from continuing operations for the third quarter of 2012 were $0.67, compared to $0.58 in the third quarter of 2011, an increase of 16%. The third quarter results included non-recurring charges of approximately $0.02 per share related to acquisition expenses.
Year-to-date earnings per share from continuing operations increased 16% to $1.80, compared to $1.55 in the comparable prior-year period.
Revenue Highlights
Revenue growth rates are presented below on a constant currency basis, calculated by applying the currency exchange rate from the comparable prior-year period to the current year's Mexican peso-denominated revenue. The average exchange rate for the third quarter of 2012 was 13.2 Mexican pesos / U.S. dollar versus 12.3 Mexican pesos / U.S. dollar in the comparable prior-year period.
Consolidated third quarter revenue totaled $150 million, representing an increase of 16% on a constant currency basis compared to the third quarter of 2011. Revenue generated from operations in Mexico increased 19% on a constant currency basis and comprised 54% of total revenue.
Pawn fees, which the Company considers a core revenue stream, increased by 31% on a constant currency basis versus the prior-year third quarter, while in-store merchandise sales increased by 26%. Pawn fee growth in Mexico was particularly strong, up 35% compared to the same period last year.
While the average selling price for gold during the third quarter increased 8% compared to the prior-year quarter, the volume of scrap jewelry sold decreased 18% compared to the prior period. As a result, wholesale scrap jewelry revenues during the third quarter of 2012 decreased 12% compared to the same period last year. Scrap jewelry operations accounted for 8% of net revenue (gross profit) for the quarter.
The 12% decrease in scrap jewelry revenue caused consolidated same-store revenue (constant currency basis) to be flat in the third quarter. Excluding scrap jewelry sales, same-store revenue increased 9% in Mexico, 3% in the U.S. and 6% overall on a constant currency basis. The core revenue from same-store pawn service fees increased 12% on a consolidated basis, driven by 17% growth in Mexico and 7% growth in the U.S.
Short-term loan and credit services revenues (collectively, payday loan products) from the Company's stand-alone consumer loan stores that do not offer pawn loans, decreased 4% as compared to the prior-year period. Consolidated third quarter revenue from payday loan products increased 5%, primarily due to the acquisition of Mister Money, which offers payday loans as a minor ancillary product in their large format, full-service pawn stores. Including the acquisition of Mister Money, payday loan-related products comprised 9% of total revenue for the third quarter.
Pawn Metrics
Consolidated pawn receivables at September 30, 2012 totaled a record $108 million, an increase of 38% over the prior year (35% on a constant currency basis). In Mexico, pawn receivables increased 43% (36% on a constant currency basis), driven by 17% same-store receivable growth and the continued increase in store counts. Pawn receivables in the U.S. increased by 34% versus the prior year, primarily driven by store count growth and same-store receivable growth of 4%.
The consolidated gross margin on retail merchandise sales was 43% for the third quarter, compared to 41% in the prior-year quarter and 42% in the previous sequential quarter. The increase was driven by significantly improved retail margins in Mexico, which increased approximately 300 basis points versus the prior-year period. The consolidated gross margin on wholesale scrap jewelry was 27% for the quarter and 26% year-to-date, reflecting higher jewelry acquisition costs compared to the prior year.
Consolidated annualized inventory turns in the third quarter were 4.4 turns versus 3.9 turns during the comparable prior-year quarter, driven by improved inventory quality and retail demand.
On a consolidated basis, at September 30, 2012, 60% of total pawn loans were collateralized with hard goods (electronics, tools and appliances) with the remaining 40% collateralized by jewelry. In Mexico, 83% of the Company's pawns were collateralized with hard goods, and only 17% were collateralized with jewelry, compared to 77% and 23%, respectively, one year ago. In the U.S., jewelry comprised 64% of pawn collateral as of the quarter end, compared to a 66% jewelry mix last year.
Profitability and Return Metrics
The Company's return on equity for the trailing twelve months increased to 24% versus 22% in the comparable prior-year period.
Consolidated net operating margin (pre-tax income) was 20% for the trailing twelve month period, while store-level operating profit margins were 29% for the trailing twelve month period.
Acquisitions and New Store Openings
In total, the Company added 36 pawn store locations during the third quarter of 2012. Year-to-date, a total of 139 stores have been opened or acquired, compared to 69 additions at this point last year. The Company has completed the majority of its planned new store openings for 2012.
Pawn store openings in the third quarter included 18 new stores in Mexico. Year-to-date, a total of 89 Mexico stores have been added, which includes 60 new store openings and a 29-store acquisition in January 2012. As of September 30, 2012, First Cash had 536 stores in Mexico, of which 483 are large format, full-service stores. The Company has increased the number of large format pawn stores in Mexico by 94 locations, or 24%, over the past twelve months.
On September 14, 2012, the Company completed the acquisition of Fast Cash Pawn located in Denver, Colorado. The 16 acquired locations are all large format, full-service stores. Transaction costs and integration expenses associated with this and previously completed 2012 acquisitions reduced third quarter earnings by approximately $0.02 per share. The assets, liabilities and operating results were included in the Company's consolidated results as of the closing date. The Company has successfully completed the integration of the Fast Cash stores into its point-of-sale and management information systems.
U.S. pawn store openings in the third quarter also included two new store openings in Texas and South Carolina. Year-to-date, a total of 50 U.S. stores have been opened or acquired. As of September 30, 2012, First Cash had 274 stores in the U.S., of which 182 are large format, full-service pawn stores. The Company has increased the number of large format pawn stores in the U.S. by 58 locations, or 47%, over the past twelve months.
Financial Position & Liquidity
During the nine month period ended September 30, 2012, the Company utilized cash on-hand, operating cash flows and its credit facility to fund $108 million of pawn store acquisitions, repurchase $61 million of common stock and invest $16 million in capital expenditures.
EBITDA from continuing operations for the trailing twelve months was $126 million, an increase of 11% versus the comparable prior twelve-month period. EBITDA margins were 22% for the trailing twelve months versus 23% for the prior-year period. Free cash flow for the trailing twelve months increased to $42 million, compared to $34 million in the comparable prior-year period. EBITDA and free cash flow are defined in the detailed reconciliation of these non-GAAP financial measures provided elsewhere in this release.
In September 2012, the Company entered into an agreement to expand its bank credit facility. The number of commercial bank lenders participating in the facility increased from two to five lenders and the amount of the facility was increased from $100 million to $175 million. The facility bears interest at the prevailing LIBOR rate plus a fixed spread of 2.0% and matures in February 2015. The total interest rate on the facility is currently 2.25% annually. At September 30, 2012, the Company had $111 million outstanding on the facility.
Discontinued Payday Operations
During the third quarter, the Company elected to close seven stand-alone small format payday/consumer loan stores in the Texas cities of Austin and Dallas that were primarily focused on offering credit services products. The Company intends to continue to operate the 19 pawn stores in these markets that have pawn licenses and offer pawn products. A loss on disposal of the seven stores of $633,000 or $0.03 per share, net of tax, has been recorded in the third quarter of 2012 as a discontinued operation. The loss is primarily a non-cash charge associated with a goodwill write-down on the seven closed locations. The operating results from continuing operations have been reclassified to exclude these Texas stores' results in 2012 and comparative prior-year periods. Over the past five years, the Company has strategically divested or closed 68 payday/consumer lending locations in seven states as part of its strategy of focusing growth on large format pawn operations.
Fiscal 2012 Outlook
While the outlook for payday lending earnings has been reduced by approximately $0.04 per share, the Company expects full-year earnings to remain in a range of $2.70 to $2.75 per share based on the strength of its core pawn operations.
Approximately 91% to 92% of 2012 revenues are expected to be derived from growing pawn operations, with the remainder expected to come from consumer loan and credit services operations.
Commentary & Analysis
Mr. Rick Wessel, chief executive officer, commented on the third quarter results, "We are very pleased with our third quarter results, which continue to be driven by impressive growth in our core pawn business. We achieved several significant milestones during the quarter as we opened our 800th store, acquired an additional 16 pawn stores in the U.S. and continued our industry-leading record pace of large format de novo store growth in Mexico. Consolidated pawn receivables increased 35% over the prior year, topping $100 million for the first time in Company history. The growth in pawn receivables drove an impressive 31% increase in total pawn service fees for the quarter. This is a strong leading indicator for the future growth of pawn fees and positions us well for not only a strong finish to this year, but also a solid start to next year."
"We remain excited and encouraged by the strong pawn growth in Mexico, which saw a 36% increase in pawn receivables and 35% growth in pawn fees. These results demonstrate the consistency and profitability of our large format business model in Mexico, where our pawn operations are now almost entirely focused on hard good (non-gold) lending and retail sales. We have clearly differentiated ourselves in Mexico, where we have a dominant share of the large format, full-service retail pawn market."
"Regarding our payday and consumer loan businesses, the strategic decision made several years ago to focus our growth on large format retail pawn operations and reduce overall exposure to payday lending products has served us well. While we continue to see contraction in many of our payday lending-related operations due in part to regulatory challenges and product saturation from internet and other store-front providers, our pawn operations continue to grow. Although there is a marginal earnings impact as a result of our decision to reduce our exposure to the payday lending space, we continue to believe that this strategic direction is in the best interest of our shareholders over the long-term."
"The Company's strong operating cash flow and balance sheet provide us the ability to fund both organic growth and take advantage of acquisition opportunities as they arise. During the third quarter, we increased the size of our unsecured bank credit facility to $175 million to support continued store openings and potential future acquisitions. Even with the additional credit availability, we remain significantly under-levered and have ample capacity to fund continued growth both domestically and internationally."
"In summary, given our competitive strengths, growth platform and expanding customer base, we are excited about our ability to further grow our store count, revenues, margins and earnings. We believe our business model, coupled with our strong balance sheet, positions us to drive sustainable long-term growth in shareholder value."
Forward-Looking Information
This release may contain forward-looking statements about the business, financial condition and prospects of the Company. Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as "believes," "projects," "expects," "may," "estimates," "should," "plans," "targets," "intends," "could," or "anticipates," or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy or objectives. Forward-looking statements can also be identified by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Forward-looking statements in this release include, without limitation, the Company's expectations of earnings per share, earnings growth, expansion strategies, regulatory exposures, store openings, liquidity (including the availability of capital under existing credit facilities), cash flow, consumer demand for the Company's products and services, currency exchange rates and the impact thereof, completion of disposition transactions and expected gains or losses from the disposition of such operations, earnings from acquisitions, the ability to successfully integrate acquisitions and other performance results. These statements are made to provide the public with management's current assessment of the Company's business. Although the Company believes that the expectations reflected in forward-looking statements are reasonable, there can be no assurances that such expectations will prove to be accurate. Security holders are cautioned that such forward-looking statements involve risks and uncertainties. The forward-looking statements contained in this release speak only as of the date of this statement, and the Company expressly disclaims any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based. Certain factors may cause results to differ materially from those anticipated by some of the statements made in this release. Such factors are difficult to predict and many are beyond the control of the Company and may include changes in regional, national or international economic conditions, changes in the inflation rate, changes in the unemployment rate, changes in consumer purchasing, borrowing and repayment behaviors, changes in credit markets, the ability to renew and/or extend the Company's existing bank line of credit, credit losses, changes in the market value of pawn collateral and merchandise inventories, changes or increases in competition, the ability to locate, open and staff new stores, the availability or access to sources of inventory, inclement weather, the ability to successfully integrate acquisitions, the ability to hire and retain key management personnel, the ability to operate with limited regulation as a credit services organization, new federal, state or local legislative initiatives or governmental regulations (or changes to existing laws and regulations, including recently enacted ordinances in the Texas cities of Dallas, Austin and San Antonio) affecting consumer loan businesses, credit services organizations and pawn businesses (in both the United States and Mexico), changes in import/export regulations and tariffs or duties, changes in anti-money laundering regulations, unforeseen litigation, changes in interest rates, monetary inflation, changes in tax rates or policies, changes in gold prices, changes in energy prices, cost of funds, changes in foreign currency exchange rates, future business decisions, public health issues, changes in demand for the Company's services and products, changes in the Company's ability to satisfy its debt obligations or to obtain new capital to finance growth, a prolonged interruption in the Company's operations of its facilities, systems, and business functions, including its information technology and other business systems, the implementation of new, or changes in the interpretation of existing accounting principles or financial reportingrequirements, and other uncertainties. These and other risks, uncertainties and regulatory developments are further and more completely described in the Company's Annual Report on Form 10-K and updated in subsequent releases on Form 10-Q. These risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, in many cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements.
About First Cash
First Cash Financial Services, Inc. is a leading international specialty retailer and provider of consumer financial services. Its retail pawn locations buy and sell a wide variety of jewelry, electronics, tools and other merchandise, and make small customer loans secured by pledged personal property. The Company's focus is serving cash and credit constrained consumers through deep value retailing and offering small loans and other financial products. In total, the Company owns and operates 812 stores in twelve U.S. states and 24 states in Mexico.
First Cash was named by Fortune Magazine as one of America's 100 fastest growing companies for 2011. First Cash is also a component company in both the Standard & Poor's SmallCap 600 Index® and the Russell 2000 Index®. First Cash's common stock (ticker symbol "FCFS") is traded on the Nasdaq Global Select Market, which has the highest initial listing standards of any stock exchange in the world based on financial and liquidity requirements.
The First Cash Financial Services, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3365
STORE COUNT ACTIVITY
The following table details store openings for the three months ended September 30, 2012:
Pawn Locations Consumer
Large Small Loan Total
Format (1) Format (2) Locations (3) Locations
United States:
Total locations, beginning of period 164 27 72 263
New locations opened 2 -- -- 2
Locations acquired 16 -- -- 16
Discontinued consumer loan operations -- -- (7) (7)
Total locations, end of period 182 27 65 274
Mexico:
Total locations, beginning of period 465 19 34 518
New locations opened 18 -- -- 18
Total locations, end of period 483 19 34 536
Total:
Total locations, beginning of period 629 46 106 781
New locations opened 20 -- -- 20
Locations acquired 16 -- -- 16
Discontinued consumer loan operations -- -- (7) (7)
Total locations, end of period 665 46 99 810
(1) The large format locations include retail showrooms and accept a broad array of pawn collateral including jewelry, electronics, appliances, tools and other consumer hard goods. At September 30, 2012, 111 of the U.S. large format pawn stores also offered consumer loans or credit services products, which includes the 24 locations acquired from Mister Money.
(2) The small format locations typically have limited retail operations and primarily accept jewelry and small electronic items as pawn collateral. At September 30, 2012, all of the Texas and Mexico small format pawn stores also offered consumer loans or credit services products.
(3) The Company's U.S. free-standing, small format consumer loan locations offer a credit services product and are all located in Texas. The Mexico locations offer small, short-term consumer loans. In addition to stores shown on this chart, First Cash is also an equal partner in Cash & Go, Ltd., a joint venture, which owns and operates 38 check cashing and financial services kiosks located inside convenience stores in the state of Texas.
The following table details store openings for the nine months ended September 30, 2012:
Pawn Locations Consumer
Large Small Loan Total
Format (1) Format (2) Locations (3) Locations
United States:
Total locations, beginning of period 132 25 74 231
New locations opened 6 -- -- 6
Locations acquired 44 -- -- 44
Store format conversions -- 2 (2) --
Discontinued consumer loan operations -- -- (7) (7)
Total locations, end of period 182 27 65 274
Mexico:
Total locations, beginning of period 394 19 34 447
New locations opened 60 -- -- 60
Locations acquired 29 -- -- 29
Total locations, end of period 483 19 34 536
Total:
Total locations, beginning of period 526 44 108 678
New locations opened 66 -- -- 66
Locations acquired 73 -- -- 73
Store format conversions -- 2 (2) --
Discontinued consumer loan operations -- -- (7) (7)
Total locations, end of period 665 46 99 810
(1) The large format locations include retail showrooms and accept a broad array of pawn collateral including jewelry, electronics, appliances, tools and other consumer hard goods. At September 30, 2012, 111 of the U.S. large format pawn stores also offered consumer loans or credit services products, which includes the 24 locations acquired from Mister Money.
(2) The small format locations typically have limited retail operations and primarily accept jewelry and small electronic items as pawn collateral. At September 30, 2012, all of the Texas and Mexico small format pawn stores also offered consumer loans or credit services products.
(3) The Company's U.S. free-standing, small format consumer loan locations offer a credit services product and are all located in Texas. The Mexico locations offer small, short-term consumer loans. In addition to stores shown on this chart, First Cash is also an equal partner in Cash & Go, Ltd., a joint venture, which owns and operates 38 check cashing and financial services kiosks located inside convenience stores in the state of Texas.
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
(in thousands, except per share amounts)
Revenue:
Merchandise sales $ 96,006 $ 87,794 $ 269,204 $ 243,447
Pawn loan fees 39,768 31,741 108,612 91,277
Consumer loan and credit services fees 13,717 13,078 38,157 37,831
Other revenue 204 239 733 808
Total revenue 149,695 132,852 416,706 373,363
Cost of revenue:
Cost of goods sold 59,328 53,164 168,212 150,278
Consumer loan and credit services loss provision 4,397 3,908 9,587 8,587
Other cost of revenue 32 54 80 147
Total cost of revenue 63,757 57,126 177,879 159,012
Net revenue 85,938 75,726 238,827 214,351
Expenses and other income:
Store operating expenses 39,889 33,313 111,003 96,352
Administrative expenses 12,330 11,531 36,248 33,995
Depreciation and amortization 3,328 2,815 9,467 8,259
Interest expense 444 39 697 105
Interest income (30) (56) (147) (221)
Total expenses and other income 55,961 47,642 157,268 138,490
Income from continuing operations before income taxes 29,977 28,084 81,559 75,861
Provision for income taxes 10,341 9,832 28,138 26,554
Income from continuing operations 19,636 18,252 53,421 49,307
Income (loss) from discontinued operations, net of tax (747) 181 (671) 7,020
Net income $ 18,889 $ 18,433 $ 52,750 $ 56,327
Basic income per share:
Income from continuing operations $ 0.69 $ 0.60 $ 1.85 $ 1.59
Income (loss) from discontinued operations (0.03) -- (0.03) 0.23
Net income per basic share $ 0.66 $ 0.60 $ 1.82 $ 1.82
Diluted income per share:
Income from continuing operations $ 0.67 $ 0.58 $ 1.80 $ 1.55
Income (loss) from discontinued operations (0.03) 0.01 (0.03) 0.23
Net income per diluted share $ 0.64 $ 0.59 $ 1.77 $ 1.78
Weighted average shares outstanding:
Basic 28,616 30,348 28,951 30,915
Diluted 29,430 31,195 29,729 31,713
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
2012 2011 2011
(in thousands)
ASSETS
Cash and cash equivalents $ 25,744 $ 48,410 $ 70,296
Pawn loan fees and service charges receivable 15,888 11,472 10,842
Pawn loans 107,714 77,973 73,287
Consumer loans, net 2,027 929 858
Inventories 65,692 54,916 44,412
Other current assets 12,441 6,745 10,783
Total current assets 229,506 200,445 210,478
Property and equipment, net 89,621 68,620 73,451
Goodwill, net 162,675 68,704 69,695
Other non-current assets 6,418 3,504 3,472
Total assets $ 488,220 $ 341,273 $ 357,096
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of notes payable $ 3,184 $ 487 $ --
Accounts payable and accrued liabilities 35,707 31,140 25,629
Income taxes payable and deferred taxes payable -- 7,280 9,776
Total current liabilities 38,891 38,907 35,405
Revolving unsecured credit facility 111,000 -- --
Notes payable, net of current portion 9,165 1,018 --
Deferred income tax liabilities 12,278 5,461 6,319
Total liabilities 171,334 45,386 41,724
Stockholders' equity
Preferred stock -- -- --
Common stock 383 383 383
Additional paid-in capital 149,606 147,385 147,649
Retained earnings 386,273 312,068 333,523
Accumulated other comprehensive income (loss) from cumulative foreign currency translation adjustments (5,381) (11,229) (13,463)
Common stock held in treasury, at cost (213,995) (152,720) (152,720)
Total stockholders' equity 316,886 295,887 315,372
Total liabilities and stockholders' equity $ 488,220 $ 341,273 $ 357,096
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION
(UNAUDITED)
The following table details the components of revenue for the three months ended September 30, 2012, as compared to the three months ended September 30, 2011 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year results at prior year average exchange rates, which is more fully described elsewhere in this release.
Three Months Ended Increase/(Decrease)
September 30, Constant Currency
2012 2011 Increase/(Decrease) Basis
United States revenue:
Retail merchandise sales $ 25,801 $ 20,000 $ 5,801 29 % 29 %
Scrap jewelry sales 13,822 15,653 (1,831) (12)% (12)%
Pawn loan fees 16,747 13,452 3,295 24 % 24 %
Consumer loan and credit services fees 12,785 11,887 898 8 % 8 %
Other revenue 204 239 (35) (15)% (15)%
69,359 61,231 8,128 13 % 13 %
Mexico revenue:
Retail merchandise sales 44,137 38,157 5,980 16 % 24 %
Scrap jewelry sales 12,246 13,984 (1,738) (12)% (12)%
Pawn loan fees 23,021 18,289 4,732 26 % 35 %
Consumer loan and credit services fees 932 1,191 (259) (22)% (16)%
80,336 71,621 8,715 12 % 19 %
Total revenue:
Retail merchandise sales 69,938 58,157 11,781 20 % 26 %
Scrap jewelry sales 26,068 29,637 (3,569) (12)% (12)%
Pawn loan fees 39,768 31,741 8,027 25 % 31 %
Consumer loan and credit services fees 13,717 13,078 639 5 % 5 %
Other revenue 204 239 (35) (15)% (15)%
$ 149,695 $ 132,852 $ 16,843 13 % 16 %
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION (CONTINUED)
(UNAUDITED)
The following table details the components of revenue for the nine months ended September 30, 2012, as compared to the nine months ended September 30, 2011 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year results at prior year average exchange rates, which is more fully described elsewhere in this release.
Nine Months Ended Increase/(Decrease)
September 30, Constant Currency
2012 2011 Increase/(Decrease) Basis
United States revenue:
Retail merchandise sales $ 72,063 $ 59,182 $ 12,881 22 % 22 %
Scrap jewelry sales 40,588 39,969 619 2 % 2 %
Pawn loan fees 44,394 37,853 6,541 17 % 17 %
Consumer loan and credit services fees 35,275 34,170 1,105 3 % 3 %
Other revenue 733 806 (73) (9)% (9)%
193,053 171,980 21,073 12 % 12 %
Mexico revenue:
Retail merchandise sales 122,780 109,420 13,360 12 % 23 %
Scrap jewelry sales 33,773 34,876 (1,103) (3)% (3)%
Pawn loan fees 64,218 53,424 10,794 20 % 32 %
Consumer loan and credit services fees 2,882 3,661 (779) (21)% (13)%
Other revenue -- 2 (2) (100)% (100)%
223,653 201,383 22,270 11 % 21 %
Total revenue:
Retail merchandise sales 194,843 168,602 26,241 16 % 23 %
Scrap jewelry sales 74,361 74,845 (484) (1)% (1)%
Pawn loan fees 108,612 91,277 17,335 19 % 26 %
Consumer loan and credit services fees 38,157 37,831 326 1 % 2 %
Other revenue 733 808 (75) (9)% (9)%
$ 416,706 $ 373,363 $ 43,343 12 % 17 %
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION (CONTINUED)
(UNAUDITED)
The following table details customer loans and inventories held by the Company and active CSO credit extensions from an independent third-party lender as of September 30, 2012, as compared to September 30, 2011 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year balances at the prior year end-of-period exchange rate, which is more fully described elsewhere in this release.
Balance at Increase/(Decrease)
September 30, Constant Currency
2012 2011 Increase/(Decrease) Basis
United States:
Pawn loans $ 51,875 $ 38,791 $ 13,084 34 % 34 %
CSO credit extensions held by independent third-party (1) 14,048 12,226 1,822 15 % 15 %
Other consumer loans 1,194 41 1,153 2,812 % 2,812 %
67,117 51,058 16,059 31 % 31 %
Mexico:
Pawn loans 55,839 39,182 16,657 43 % 36 %
Other consumer loans 833 888 (55) (6)% (10)%
56,672 40,070 16,602 41 % 35 %
Total:
Pawn loans 107,714 77,973 29,741 38 % 35 %
CSO credit extensions held by independent third-party (1) 14,048 12,226 1,822 15 % 15 %
Other consumer loans 2,027 929 1,098 118 % 114 %
$ 123,789 $ 91,128 $ 32,661 36 % 33 %
Pawn inventories:
U.S. pawn inventories $ 29,649 $ 23,149 $ 6,500 28 % 28 %
Mexico pawn inventories 36,043 31,767 4,276 13 % 8 %
$ 65,692 $ 54,916 $ 10,776 20 % 17 %
(1) CSO amounts are comprised of the principal portion of active CSO extensions of credit by an independent third-party lender, which are not included on the Company's balance sheet, net of the Company's estimated fair value of its liability under the letters of credit guaranteeing the loans.
FIRST CASH FINANCIAL SERVICES, INC.
UNAUDITED NON-GAAP FINANCIAL INFORMATION
The Company uses certain financial calculations, such as free cash flow, EBITDA and constant currency results, which are not considered measures of financial performance under U.S. generally accepted accounting principles ("GAAP"). Items excluded from the calculation of free cash flow, EBITDA and constant currency results are significant components in understanding and assessing the Company's financial performance. Since free cash flow, EBITDA and constant currency results are not measures determined in accordance with GAAP and are thus susceptible to varying calculations, free cash flow, EBITDA and constant currency results, as presented, may not be comparable to other similarly titled measures of other companies. Free cash flow, EBITDA and constant currency results should not be considered as alternatives to net income, cash flow provided by or used in operating, investing or financing activities or other financial statement data presented in the Company's consolidated financial statements as indicators of financial performance or liquidity. Non-GAAP measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures.
Earnings Before Interest, Taxes, Depreciation and Amortization
EBITDA is commonly used by investors to assess a company's leverage capacity, liquidity and financial performance. The following table provides a reconciliation of income from continuing operations to EBITDA (in thousands):
Trailing Twelve Months Ended
September 30,
2012 2011
Income from continuing operations $ 74,825 $ 67,018
Adjustments:
Income taxes 38,841 36,260
Depreciation and amortization 12,177 11,107
Interest expense 727 149
Interest income (204) (273)
Earnings from continuing operations before interest, taxes, depreciation and amortization $ 126,366 $ 114,261
EBITDA margin calculated as follows:
Total revenue from continuing operations $ 562,696 $ 500,335
Earnings from continuing operations before interest, taxes, depreciation and amortization 126,366 114,261
EBITDA as a percentage of revenue 22% 23%
FIRST CASH FINANCIAL SERVICES, INC.
UNAUDITED NON-GAAP FINANCIAL INFORMATION (CONTINUED)
Free Cash Flow
For purposes of its internal liquidity assessments, the Company considers free cash flow, which is defined as cash flow from the operating activities of continuing and discontinued operations reduced by purchases of property and equipment and net cash outflow from pawn and consumer loans. Free cash flow is commonly used by investors as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, repurchase stock, or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company's ability to generate cash flow from business operations and the impact that this cash flow has on the Company's liquidity. The following table reconciles "net cash flow from operating activities" to "free cash flow" (in thousands):
Trailing Twelve Months Ended
September 30,
2012 2011
Cash flow from operating activities, including discontinued operations $ 80,233 $ 78,506
Cash flow from investing activities:
Pawn and consumer loans (13,793) (18,113)
Purchases of property and equipment (24,079) (26,540)
Free cash flow $ 42,361 $ 33,853
Constant Currency
Certain performance metrics discussed in this release are presented on a "constant currency" basis, which may be considered a non-GAAP financial measurement of financial performance under GAAP. The Company's management uses constant currency results to evaluate operating results of certain business operations in Mexico, which are transacted primarily in Mexican pesos. Pawn scrap jewelry in Mexico is sold in U.S. dollars and, accordingly, does not require a constant currency adjustment. Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in Mexican pesos using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons. For balance sheet items, the closing exchange rate at the end of the applicable prior-year period (September 30, 2011) of 13.5 to 1 was used, compared to the current end of period (September 30, 2012) exchange rate of 12.9 to 1. For income statement items, the average closing daily exchange rate for the appropriate period was used. The average exchange rate for the prior-year quarter ended September 30, 2011 was 12.3 to 1, compared to the current-quarter rate of 13.2 to 1. The average exchange rate for the prior-year nine-month period ended September 30, 2011 was 12.0 to 1, compared to the current year-to-date rate of 13.2 to 1.
CONTACT: Gar Jackson
Phone: (949) 873-2789
Email: gar@irsense.com
Rick Wessel, Chairman and Chief Executive Officer
Doug Orr, Executive Vice President and Chief Financial Officer
Phone: (817) 505-3199
Email: investorrelations@firstcash.com
Website: www.firstcash.com
Pink
12 years ago
First Cash Reports 17% Increase in Second Quarter Earnings Per Share to $0.56; Growth in Pawn Loans and Retail Merchandise Sales Drive Record Earnings
ARLINGTON, Texas, Jul 18, 2012 (GlobeNewswire via COMTEX) -- First Cash Financial Services, Inc. (Nasdaq:FCFS) today announced record-setting revenue, net income and earnings per share for the three months ended June 30, 2012.
Earnings Highlights
-- Diluted earnings per share from continuing operations for the second
quarter of 2012 were $0.56, an increase of 17% compared to $0.48 in the
second quarter of 2011.
-- Year-to-date earnings per share from continuing operations increased 16%
to $1.13, compared to $0.97 in the prior year.
-- Net income from continuing operations for the second quarter of 2012
increased to $16.3 million, up 8% over the prior-year quarter, while
year-to-date net income increased 9% to $33.9 million.
Revenue Highlights
-- Consolidated second quarter revenue increased 18% on a constant currency
basis to $133 million. Revenue growth rates are presented herein on a
constant currency basis, calculated by applying the currency exchange
rate from the comparable prior-year period to the current year's Mexican
peso-denominated revenue. The exchange rate for the second quarter of
2012 was 13.5 Mexican pesos / U.S. dollar versus 11.7 Mexican pesos /
U.S. dollar in the prior-year period.
-- Revenue from the Company's operations in Mexico increased by 22% on a
constant currency basis over the prior-year second quarter. U.S.
pawn-related revenues increased 15% versus the same period last year. By
country, 57% of second quarter revenue was generated in Mexico and 43%
was derived from domestic operations.
-- On a consolidated product-line basis, the primary driver of revenue
growth came from the Company's core store-based pawn operations. During
the second quarter, pawn fees increased by 21% on a constant currency
basis versus the prior-year second quarter, while pawn store merchandise
sales increased by 22%. Pawn fee growth in Mexico was particularly
strong, up 29%, and retail sales in Mexico, comprised primarily of
electronics, tools and appliances, increased 25% versus the same period
last year.
-- Wholesale scrap jewelry revenues during the second quarter of 2012
increased 13% compared to the same period last year. While the average
selling price for gold increased 12% over the prior-year quarter, volume
was essentially unchanged. Scrap jewelry operations accounted for only
7% of net revenue (gross profit) for the quarter.
-- Second quarter revenue from non-core short-term loan and credit services
(payday loan products) was flat compared to the prior-year quarter and
comprised only 9% of total revenue.
-- Consolidated same-store revenue increased by 6% (on a constant currency
basis) for the second quarter. By country, same-store revenue increased
5% in Mexico and 6% in the United States. On a regional basis in Mexico,
same store revenue increased by 13% in the interior markets, but was
partially offset by small declines in the border regions.
Pawn Metrics
-- Pawn loans in Mexico increased 22% (on a constant currency basis),
driven by continued growth in store counts and significant sequential
quarterly improvement in most border markets. Pawn receivables in the
U.S. increased by 17% versus the prior year, also driven by store count
growth and continued same-store revenue growth.
-- The consolidated gross margin on retail merchandise sales was 42% for
the second quarter, compared to 40% in the prior-year quarter. The
increase was driven by significantly improved retail margins in Mexico,
which increased 400 basis points versus the prior-year period. U.S.
retail margins remained consistent with the prior year. The consolidated
gross margin on wholesale scrap jewelry was 22% for the quarter and 25%
year-to-date, reflecting higher jewelry acquisition costs compared to
the prior year.
-- Consolidated annualized inventory turns continued to improve in the
second quarter to a record 4.5 turns versus 3.8 turns during the
comparable prior-year quarter, driven by improved inventory quality and
strong retail demand.
-- The overall composition of pawn collateral remained constant in both the
U.S. and Mexico. On a consolidated basis at June 30, 2012, 60% of total
loans were collateralized with hard goods (electronics, tools and
appliances) with the remainder collateralized by jewelry. In Mexico, 80%
of the Company's pawns were collateralized with hard goods, and only 20%
were collateralized with jewelry, compared to 78% and 22%, respectively,
one year ago. In the U.S., jewelry comprised 62% of pawn collateral as
of the quarter end, consistent with a 64% jewelry mix last year.
Profitability and Return Metrics
-- The Company's return on equity for the trailing twelve months increased
to a record 24% versus 21% in the respective prior-year period.
-- The return on assets over the trailing twelve months remained a
record-level 20% versus 18% in the respective prior-year period.
-- Consolidated net operating margin (pre-tax income) was 20% for the
trailing twelve month period, while store-level operating profit margins
were 29% for the trailing twelve month period.
Acquisitions and New Store Openings
-- In total, the Company added 49 pawn store locations during the second
quarter of 2012. Year-to-date, a total of 103 stores have been opened
or acquired, compared to 48 additions at this point last year.
-- In June 2012, the Company completed the acquisition of 24 pawn stores
located in the states of Colorado (13), Kentucky (7), Wyoming (3) and
Nebraska (1). The 24 acquired stores are all large format, full-service
stores. The Company also completed the acquisition of one large format
pawn store located in Maryland during the second quarter. Transaction
costs and integration expenses associated with these acquisitions
reduced second quarter earnings by approximately $0.01 per share.
-- U.S. pawn store openings in the second quarter also included two de novo
stores: one located in Texas and the other in Oklahoma. Year-to-date, a
total of 32 U.S. stores have been opened or acquired. As of June 30,
2012, First Cash had 263 stores in the U.S., of which 164 are large
format, full-service stores. The Company has increased the number of
large format pawn stores in the U.S. by 36% over the past twelve months.
-- Pawn store openings in the second quarter also included 22 de novo
stores in Mexico. Year-to-date, a total of 71 Mexico stores have been
added, which included 42 de novo openings and a 29-store acquisition in
January 2012. As of June 30, 2012, First Cash had 518 stores in Mexico,
of which 465 are large format, full-service stores. The Company has
increased the number of large format pawn stores in Mexico by 26% over
the past twelve months.
-- In June 2012, the Company increased its estimate of fiscal 2012 store
additions to be in the range of 125 to 135 total locations. All of the
2012 store additions are expected to be large format pawn stores.
Financial Position & Liquidity
-- EBITDA from continuing operations for the trailing twelve months was
$124 million, an increase of 16% versus the comparable prior
twelve-month period. EBITDA margins remained at a record 23% for the
trailing twelve months versus 22% for the prior-year period. Free cash
flow for the trailing twelve months increased to $55 million, compared
to $24 million in the comparable prior-year period. EBITDA and free cash
flow are defined in the detailed reconciliation of these non-GAAP
financial measures provided elsewhere in this release.
-- During the first half of 2012, the Company utilized cash on-hand,
operating cash flows and its credit facility to fund $71 million of pawn
store acquisitions, repurchase $61 million of common stock and invest
$10 million in capital expenditures.
-- In April 2012, the Company completed its 1,500,000 share buyback
authorization that was announced in December 2011. The 1,500,000 shares
were repurchased at a total cost of $61 million and at an average price
of $40.85 per share.
-- In June 2012, the Company expanded the term of its existing unsecured
bank credit facility from $50 million to $100 million. The facility
bears interest at the prevailing LIBOR rate plus a margin which varies
from 1.5% to 2.0%, depending on the Company's leverage ratio. The total
interest rate on the facility is currently 1.75% annually. At June 30,
2012, the Company had $72 million outstanding on the facility. Net debt
(outstanding debt less investable cash) remains less than 50% of EBITDA
for the trailing twelve-month period.
Fiscal 2012 Outlook
-- The Company is maintaining its current 2012 guidance for earnings per
diluted share of $2.70 to $2.75 which represents a 20% to 22% projected
earnings increase over fiscal 2011.
-- Approximately 91% to 92% of 2012 revenues are expected to be derived
from pawn operations, with the remainder expected to come from consumer
loan and credit services operations.
Commentary & Analysis
Mr. Rick Wessel, chief executive officer, commented on the second quarter results, "We are very pleased with our second quarter results, which were driven by strong growth in our core pawn business. We achieved several significant milestones during the quarter as we opened our 750th store, acquired 25 pawn stores in the U.S. and continued our de novo store growth in Mexico. During the quarter, we added operations in four additional states in the U.S. and one additional state in Mexico. We now operate in 24 of the 32 total states in Mexico."
"Customer demand in our full-service pawn stores remains robust. The consolidated 21% growth in pawn service fees was particularly impressive, as was the 22% increase in retail sales. Of particular importance is the 29% growth in pawn fees and the 25% growth in retail sales in Mexico. In addition, both retail margins and inventory turns improved significantly over the prior year, reflecting the continued strength of consumer demand, the quality of our inventory and the training and systems utilized by our sales associates. These results demonstrate the consistency and profitability of our business model across regions and business cycles, both in the U.S. and particularly in Mexico, where our pawn operations are now almost entirely focused on hard good (non-gold) lending and retail sales."
"The Company's strong operating cash flow and balance sheet provide us the ability to fund both organic growth and take advantage of acquisition opportunities as they arise. During the quarter, we doubled the size of our unsecured bank credit facility to $100 million, providing us with increased flexibility for growth. The significant pawn acquisitions that we completed this year position us well for the future. While we have invested over $70 million in acquisitions year-to-date and incurred associated non-recurring costs of approximately $0.02 per share, we believe that these acquisitions will become significantly accretive in 2013 and beyond."
"In summary, given our competitive strengths, growth platform and expanding customer base, we are excited about our ability to further grow our store count, revenues, margins and earnings. Our business model, coupled with our strong balance sheet, should position us to drive sustainable long-term growth in shareholder value."
Forward-Looking Information
This release may contain forward-looking statements about the business, financial condition and prospects of the Company. Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as "believes," "projects," "expects," "may," "estimates," "should," "plans," "targets," "intends," "could," or "anticipates," or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy or objectives. Forward-looking statements can also be identified by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Forward-looking statements in this release include, without limitation, the Company's expectations of earnings per share, earnings growth, expansion strategies, regulatory exposures, store openings, liquidity, cash flow, consumer demand for the Company's products and services, currency exchange rates, future share repurchases and the impact thereof, completion of disposition transactions and expected gains from the sale of such operations, earnings from acquisitions, the ability to successfully integrate acquisitions and other performance results. These statements are made to provide the public with management's current assessment of the Company's business. Although the Company believes that the expectations reflected in forward-looking statements are reasonable, there can be no assurances that such expectations will prove to be accurate. Security holders are cautioned that such forward-looking statements involve risks and uncertainties. The forward-looking statements contained in this release speak only as of the date of this statement, and the Company expressly disclaims any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based. Certain factors may cause results to differ materially from those anticipated by some of the statements made in this release. Such factors are difficult to predict and many are beyond the control of the Company and may include changes in regional, national or international economic conditions, changes in the inflation rate, changes in the unemployment rate, changes in consumer purchasing, borrowing and repayment behaviors, changes in credit markets, the ability to renew and/or extend the Company's existing bank line of credit, credit losses, changes in the market value of pawn collateral and merchandise inventories, changes or increases in competition, the ability to locate, open and staff new stores, the availability or access to sources of inventory, inclement weather, the ability to successfully integrate acquisitions, the ability to hire and retain key management personnel, the ability to operate with limited regulation as a credit services organization, new federal, state or local legislative initiatives or governmental regulations (or changes to existing laws and regulations) affecting consumer loan businesses, credit services organizations and pawn businesses (in both the United States and Mexico), changes in import/export regulations and tariffs or duties, changes in anti-money laundering regulations, unforeseen litigation, changes in interest rates, monetary inflation, changes in tax rates or policies, changes in gold prices, changes in energy prices, cost of funds, changes in foreign currency exchange rates, future business decisions, public health issues and other uncertainties. These and other risks, uncertainties and regulatory developments are further and more completely described in the Company's Annual Report on Form 10-K and updated in subsequent releases on Form 10-Q.
About First Cash
First Cash Financial Services, Inc. is a leading international specialty retailer and provider of consumer financial services. Its retail pawn locations buy and sell a wide variety of jewelry, electronics, tools and other merchandise, and make small customer loans secured by pledged personal property. The Company's focus is serving cash and credit constrained consumers through deep value retailing and offering small loans and other financial products. In total, the Company owns and operates 783 stores in twelve U.S. states and 24 states in Mexico.
First Cash was named by Fortune Magazine as one of America's 100 fastest growing companies for 2011. First Cash is also a component company in both the Standard & Poor's SmallCap 600 Index(R) and the Russell 2000 Index(R). First Cash's common stock (ticker symbol "FCFS") is traded on the Nasdaq Global Select Market, which has the highest initial listing standards of any stock exchange in the world based on financial and liquidity requirements.
The First Cash Financial Services, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3365
STORE COUNT ACTIVITY
The following table details store openings for the three months ended June 30, 2012:
Pawn Locations
----------------- Consumer
Large Small Loan Total
Format Format Locations
(1) (2) (3) Locations
--------- ------ --------- ---------
United States:
Total locations, beginning of
period 137 27 72 236
New locations opened 2 -- -- 2
Locations acquired 25 -- -- 25
--------- ------ --------- ---------
Total locations, end of period 164 27 72 263
========= ====== ========= =========
Mexico:
Total locations, beginning of
period 443 19 34 496
New locations opened 22 -- -- 22
Locations acquired -- -- -- --
--------- ------ --------- ---------
Total locations, end of period 465 19 34 518
========= ====== ========= =========
Total:
Total locations, beginning of
period 580 46 106 732
New locations opened 24 -- -- 24
Locations acquired 25 -- -- 25
--------- ------ --------- ---------
Total locations, end of period 629 46 106 781
========= ====== ========= =========
(1) The large format locations include retail showrooms and accept a broad
array of pawn collateral including jewelry, electronics, appliances, tools
and other consumer hard goods. At June 30, 2012, 109 of the U.S. large
format pawn stores also offered consumer loans or credit services products,
which includes the 24 locations acquired from Mister Money.
(2) The small format locations typically have limited retail operations and
primarily accept jewelry and small electronic items as pawn collateral. At
June 30, 2012, all of the Texas and Mexico small format pawn stores also
offered consumer loans or credit services products.
(3) The Company's U.S. free-standing, small format consumer loan locations
offer a credit services product and are all located in Texas. The Mexico
locations offer small, short-term consumer loans. In addition to stores
shown on this chart, First Cash is also an equal partner in Cash & Go,
Ltd., a joint venture, which owns and operates 38 check cashing and
financial services kiosks located inside convenience stores in the state of
Texas.
The following table details store openings for the six months ended June 30, 2012:
Pawn Locations
----------------- Consumer
Large Small Loan Total
Format Format Locations
(1) (2) (3) Locations
--------- ------ --------- ---------
United States:
Total locations, beginning
of period 132 25 74 231
New locations opened 4 -- -- 4
Locations acquired 28 -- -- 28
Store format conversions -- 2 (2) --
--------- ------ --------- ---------
Total locations, end of
period 164 27 72 263
========= ====== ========= =========
Mexico:
Total locations, beginning
of period 394 19 34 447
New locations opened 42 -- -- 42
Locations acquired 29 -- -- 29
--------- ------ --------- ---------
Total locations, end of
period 465 19 34 518
========= ====== ========= =========
Total:
Total locations, beginning
of period 526 44 108 678
New locations opened 46 -- -- 46
Locations acquired 57 -- -- 57
Store format conversions -- 2 (2) --
--------- ------ --------- ---------
Total locations, end of
period 629 46 106 781
========= ====== ========= =========
(1) The large format locations include retail showrooms and accept a
broad array of pawn collateral including jewelry, electronics,
appliances, tools and other consumer hard goods. At June 30, 2012,
109 of the U.S. large format pawn stores also offered consumer loans
or credit services products, which includes the 24 locations acquired
from Mister Money.
(2) The small format locations typically have limited retail
operations and primarily accept jewelry and small electronic items as
pawn collateral. At June 30, 2012, all of the Texas and Mexico small
format pawn stores also offered consumer loans or credit services
products.
(3) The Company's U.S. free-standing, small format consumer loan
locations offer a credit services product and are all located in
Texas. The Mexico locations offer small, short-term consumer loans.
In addition to stores shown on this chart, First Cash is also an
equal partner in Cash & Go, Ltd., a joint venture, which owns and
operates 38 check cashing and financial services kiosks located
inside convenience stores in the state of Texas.
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ----------------------
2012 2011 2012 2011
---------- --------- ---------- ----------
(in thousands, except per share amounts)
Revenue:
Merchandise sales $ 86,307 $ 77,358 $ 173,213 $ 155,663
Pawn loan fees 33,932 30,564 68,844 59,536
Consumer loan and credit
services fees 12,304 12,410 25,291 25,634
Other revenue 235 249 546 586
---------- --------- ---------- ----------
Total revenue 132,778 120,581 267,894 241,419
---------- --------- ---------- ----------
Cost of revenue:
Cost of goods sold 54,579 48,879 108,894 97,121
Consumer loan and credit
services loss provision 3,093 2,716 5,481 4,973
Other cost of revenue 33 52 53 98
---------- --------- ---------- ----------
Total cost of revenue 57,705 51,647 114,428 102,192
---------- --------- ---------- ----------
Net revenue 75,073 68,934 153,466 139,227
---------- --------- ---------- ----------
Expenses and other income:
Store operating expenses 35,240 31,778 71,559 63,496
Administrative expenses 11,612 10,971 23,918 22,503
Depreciation and amortization 3,119 2,821 6,155 5,468
Interest expense 176 40 253 66
Interest income (36) (66) (117) (165)
---------- --------- ---------- ----------
Total expenses and other
income 50,111 45,544 101,768 91,368
---------- --------- ---------- ----------
Income from continuing
operations before income taxes 24,962 23,390 51,698 47,859
Provision for income taxes 8,613 8,186 17,837 16,750
---------- --------- ---------- ----------
Income from continuing
operations 16,349 15,204 33,861 31,109
Income from discontinued
operations, net of tax (1) -- 134 -- 6,785
---------- --------- ---------- ----------
Net income $ 16,349 $ 15,338 $ 33,861 $ 37,894
========== ========= ========== ==========
Basic income per share:
Income from continuing
operations (basic) $ 0.57 $ 0.49 $ 1.16 $ 1.00
Income from discontinued
operations (basic) -- -- -- 0.21
---------- --------- ---------- ----------
Net income per basic share $ 0.57 $ 0.49 $ 1.16 $ 1.21
========== ========= ========== ==========
Diluted income per share:
Income from continuing
operations (diluted) $ 0.56 $ 0.48 $ 1.13 $ 0.97
Income from discontinued
operations (diluted) -- -- -- 0.21
---------- --------- ---------- ----------
Net income per diluted share $ 0.56 $ 0.48 $ 1.13 $ 1.18
========== ========= ========== ==========
Weighted average shares
outstanding:
Basic 28,658 31,087 29,119 31,199
Diluted 29,404 31,869 29,878 31,972
(1) Represents non-recurring gain on the sale of the discontinued
Illinois consumer loan stores in March 2011.
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December
June 30, 31,
---------------------- ----------
2012 2011 2011
---------- ---------- ----------
(in thousands)
ASSETS
Cash and cash equivalents $ 29,793 $ 68,259 $ 70,296
Pawn loan fees and service
charges receivable 13,159 11,862 10,842
Pawn loans 88,298 79,654 73,287
Consumer loans, net 2,035 1,072 858
Inventories 52,978 54,636 44,412
Other current assets 2,841 10,266 10,783
---------- ---------- ----------
Total current assets 189,104 225,749 210,478
Property and equipment, net 83,577 69,909 73,451
Goodwill, net 127,603 72,523 70,395
Other non-current assets 4,948 3,036 2,772
---------- ---------- ----------
Total assets $ 405,232 $ 371,217 $ 357,096
========== ========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current portion of notes
payable $ 1,605 $ 479 $ --
Accounts payable and accrued
liabilities 30,126 29,584 25,629
Income taxes payable and
deferred taxes payable 440 7,417 9,776
---------- ---------- ----------
Total current liabilities 32,171 37,480 35,405
Revolving unsecured credit
facility 71,600 -- --
Notes payable, net of current
portion 2,641 1,143 --
Deferred income tax liabilities 8,362 9,899 6,319
---------- ---------- ----------
Total liabilities 114,774 48,522 41,724
---------- ---------- ----------
Stockholders' equity
Preferred stock -- -- --
Common stock 383 383 383
Additional paid-in capital 148,474 147,204 147,649
Retained earnings 367,384 293,635 333,523
Accumulated other
comprehensive income (loss)
from cumulative foreign
currency translation
adjustments (11,788) 1,285 (13,463)
Common stock held in treasury,
at cost (213,995) (119,812) (152,720)
---------- ---------- ----------
Total stockholders' equity 290,458 322,695 315,372
---------- ---------- ----------
Total liabilities and
stockholders' equity $ 405,232 $ 371,217 $ 357,096
========== ========== ==========
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION
(UNAUDITED)
The following table details the components of revenue for the three months ended June 30, 2012, as compared to the three months ended June 30, 2011 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year results at prior year average exchange rates, which is more fully described elsewhere in this release.
Increase/
(Decrease
Three Months Ended )
June 30, Constant
---------------------- Currency
2012 2011 Increase/(Decrease) Basis
---------- ---------- --------------------------- ---------
United States revenue:
Retail merchandise
sales $ 21,200 $ 18,254 $ 2,946 16 % 16 %
Scrap jewelry sales 11,745 9,744 2,001 21 % 21 %
Pawn loan fees 13,108 11,894 1,214 10 % 10 %
Credit services fees 11,208 11,114 94 1 % 1 %
Consumer loan fees 147 31 116 374 % 374 %
Other revenue 235 247 (12)
---------- ---------- ------------------- (5)% (5)%
57,643 51,284 6,359
---------- ---------- ------------------- 12 % 12 %
Mexico revenue:
Retail merchandise
sales 41,061 37,836 3,225 9 % 25 %
Scrap jewelry sales 12,301 11,524 777 7 % 7 %
Pawn loan fees 20,824 18,670 2,154 12 % 29 %
Consumer loan fees 949 1,265 (316) (25)% (13)%
Other revenue -- 2 (2)
---------- ---------- ------------------- (100)% (100)%
75,135 69,297 5,838
---------- ---------- ------------------- 8 % 22 %
Total revenue:
Retail merchandise
sales 62,261 56,090 6,171 11 % 22 %
Scrap jewelry sales 24,046 21,268 2,778 13 % 13 %
Pawn loan fees 33,932 30,564 3,368 11 % 21 %
Credit services fees 11,208 11,114 94 1 % 1 %
Consumer loan fees 1,096 1,296 (200) (15)% (4)%
Other revenue 235 249 (14)
---------- ---------- ------------------- (6)% (6)%
$ 132,778 $ 120,581 $ 12,197
========== ========== =================== 10 % 18 %
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION (CONTINUED)
(UNAUDITED)
The following table details the components of revenue for the six months ended June 30, 2012, as compared to the six months ended June 30, 2011 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year results at prior year average exchange rates, which is more fully described elsewhere in this release.
Increase/
(Decrease
Six Months Ended )
June 30, Constant
---------------------- Currency
2012 2011 Increase/(Decrease) Basis
---------- ---------- --------------------------- ---------
United States revenue:
Retail merchandise
sales $ 46,262 $ 39,182 $ 7,080 18 % 18 %
Scrap jewelry sales 26,781 24,326 2,455 10 % 10 %
Pawn loan fees 27,647 24,401 3,246 13 % 13 %
Credit services fees 23,163 23,037 126 1 % 1 %
Consumer loan fees 178 127 51 40 % 40 %
Other revenue 546 584 (38)
---------- ---------- ------------------- (7)% (7)%
124,577 111,657 12,920
---------- ---------- ------------------- 12 % 12 %
Mexico revenue:
Retail merchandise
sales 78,643 71,263 7,380 10 % 23 %
Scrap jewelry sales 21,527 20,892 635 3 % 3 %
Pawn loan fees 41,197 35,135 6,062 17 % 31 %
Consumer loan fees 1,950 2,470 (520) (21)% (12)%
Other revenue -- 2 (2)
---------- ---------- ------------------- (100)% (100)%
143,317 129,762 13,555
---------- ---------- ------------------- 10 % 21 %
Total revenue:
Retail merchandise
sales 124,905 110,445 14,460 13 % 21 %
Scrap jewelry sales 48,308 45,218 3,090 7 % 7 %
Pawn loan fees 68,844 59,536 9,308 16 % 24 %
Credit services fees 23,163 23,037 126 1 % 1 %
Consumer loan fees 2,128 2,597 (469) (18)% (9)%
Other revenue 546 586 (40)
---------- ---------- ------------------- (7)% (7)%
$ 267,894 $ 241,419 $ 26,475
========== ========== =================== 11 % 17 %
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION (CONTINUED)
(UNAUDITED)
The following table details customer loans and inventories held by the Company and active CSO credit extensions from an independent third-party lender as of June 30, 2012, as compared to June 30, 2011 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year balances at the prior year end-of-period exchange rate, which is more fully described elsewhere in this release.
Increase/
(Decrease
Balance at )
June 30, Constant
--------------------- Currency
2012 2011 Increase/(Decrease) Basis
---------- --------- ---------------------------- ---------
United States:
Pawn loans $ 42,596 $ 36,383 $ 6,213 17 % 17 %
CSO credit extensions
held by independent
third-party (1) 13,462 12,167 1,295 11 % 11 %
Other consumer loans 1,242 46 1,196
---------- --------- ------------------- 2,600 % 2,600 %
57,300 48,596 8,704
---------- --------- ------------------- 18 % 18 %
Mexico:
Pawn loans 45,702 43,271 2,431 6 % 22 %
Other consumer loans 793 1,026 (233)
---------- --------- ------------------- (23)% (10)%
46,495 44,297 2,198
---------- --------- ------------------- 5 % 22 %
Total:
Pawn loans 88,298 79,654 8,644 11 % 20 %
CSO credit extensions
held by independent
third-party (1) 13,462 12,167 1,295 11 % 11 %
Other consumer loans 2,035 1,072 963
---------- --------- ------------------- 90 % 102 %
$ 103,795 $ 92,893 $ 10,902
========== ========= =================== 12 % 20 %
Pawn inventories:
U.S. pawn inventories $ 24,415 $ 20,030 $ 4,385 22 % 22 %
Mexico pawn inventories 28,563 34,606 (6,043)
---------- --------- ------------------- (17)% (4)%
$ 52,978 $ 54,636 $ (1,658)
========== ========= =================== (3)% 5 %
(1) CSO amounts are comprised of the principal portion of active CSO extensions of credit
by an independent third-party lender, which are not included on the Company's balance
sheet, net of the Company's estimated fair value of its liability under the letters of
credit guaranteeing the loans.
FIRST CASH FINANCIAL SERVICES, INC.
UNAUDITED NON-GAAP FINANCIAL INFORMATION
The Company uses certain financial calculations, such as free cash flow, EBITDA and constant currency results, which are not considered measures of financial performance under U.S. generally accepted accounting principles ("GAAP"). Items excluded from the calculation of free cash flow, EBITDA and constant currency results are significant components in understanding and assessing the Company's financial performance. Since free cash flow, EBITDA and constant currency results are not measures determined in accordance with GAAP and are thus susceptible to varying calculations, free cash flow, EBITDA and constant currency results, as presented, may not be comparable to other similarly titled measures of other companies. Free cash flow, EBITDA and constant currency results should not be considered as alternatives to net income, cash flow provided by or used in operating, investing or financing activities or other financial statement data presented in the Company's consolidated financial statements as indicators of financial performance or liquidity. Non-GAAP measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures.
Earnings Before Interest, Taxes, Depreciation and Amortization
EBITDA is commonly used by investors to assess a company's leverage capacity, liquidity and financial performance. The following table provides a reconciliation of income from continuing operations to EBITDA (in thousands):
Trailing Twelve Months
Ended
June 30,
----------------------
2012 2011
---------- ----------
Income from continuing operations $ 73,617 $ 62,091
Adjustments:
Income taxes 38,425 33,687
Depreciation and amortization 11,701 10,837
Interest expense 322 184
Interest income (230) (239)
---------- ----------
Earnings from continuing operations
before interest, taxes, depreciation
and amortization $ 123,835 $ 106,560
========== ==========
EBITDA margin calculated as follows:
Total revenue from continuing
operations $ 547,777 $ 475,008
Earnings from continuing operations
before interest, taxes, depreciation
and amortization 123,835 106,560
---------- ----------
EBITDA as a percentage of revenue 23% 22%
========== ==========
FIRST CASH FINANCIAL SERVICES, INC.
UNAUDITED NON-GAAP FINANCIAL INFORMATION (CONTINUED)
Free Cash Flow
For purposes of its internal liquidity assessments, the Company considers free cash flow, which is defined as cash flow from the operating activities of continuing and discontinued operations reduced by purchases of property and equipment and net cash outflow from pawn and consumer loans. Free cash flow is commonly used by investors as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, repurchase stock, or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company's ability to generate cash flow from business operations and the impact that this cash flow has on the Company's liquidity. The following table reconciles "net cash flow from operating activities" to "free cash flow" (in thousands):
Trailing Twelve
Months Ended
June 30,
--------------------
2012 2011
--------- ---------
Cash flow from operating activities,
including discontinued operations $ 84,693 $ 75,938
Cash flow from investing activities:
Pawn and consumer loans (5,620) (26,156)
Purchases of property and equipment (23,720) (25,872)
--------- ---------
Free cash flow $ 55,353 $ 23,910
========= =========
Constant Currency
Certain performance metrics discussed in this release are presented on a "constant currency" basis, which may be considered a non-GAAP financial measurement of financial performance under GAAP. The Company's management uses constant currency results to evaluate operating results of certain business operations in Mexico, which are transacted primarily in Mexican pesos. Pawn scrap jewelry in Mexico is sold in U.S. dollars and, accordingly, does not require a constant currency adjustment. Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in Mexican pesos using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons. For balance sheet items, the closing exchange rate at the end of the applicable prior-year period (June 30, 2011) of 11.8 to 1 was used, compared to the current end of period (June 30, 2012) exchange rate of 13.7 to 1. For income statement items, the average closing daily exchange rate for the appropriate period was used. The average exchange rate for the prior-year quarter ended June 30, 2011 was 11.7 to 1, compared to the current-quarter rate of 13.5 to 1. The average exchange rate for the prior-year six-month period ended June 30, 2011 was 11.9 to 1, compared to the current year-to-date rate of 13.3 to 1.
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: First Cash Financial Services, Inc.
(Logo: http://media.primezone.com/cache/8120/int/3774.jpg)
By Staff
CONTACT: CONTACT: Gar Jackson
Phone: (949) 873-2789
Email: gar@irsense.com
Rick Wessel, Chairman and Chief Executive Officer
Doug Orr, Executive Vice President and Chief Financial Officer
Phone: (817) 505-3199
Email: investorrelations@firstcash.com
Website: www.firstcash.com
(C) Copyright 2010 GlobeNewswire, Inc. All rights reserved.
-0-
INDUSTRY KEYWORD: Financial Services
SUBJECT CODE: EARNINGS
BANKING
Earnings Releases and Operating Results
Pink
13 years ago
First Cash Reports Record First Quarter Earnings Per Share of $0.58; Completes Share Repurchase Plan and Raises Fiscal 2012 E...
First Cash Financial Services, Inc. (MM) (NASDAQ:FCFS)
Today : Wednesday 18 April 2012
First Cash Financial Services, Inc. (Nasdaq:FCFS) today announced record-setting revenue, net income and earnings per diluted share for the three months ended March 31, 2012. Diluted earnings per share from continuing operations were $0.58, an increase of 16% over the prior year. The Company also announced the completion of the 1.5 million share buyback plan authorized in December 2011. In addition, the Company raised fiscal 2012 guidance for earnings per share to a range of $2.70 to $2.75, compared to the prior guidance range of $2.65 to $2.70. The increased guidance represents earnings growth of 20% to 22% over the prior year.
Earnings Highlights
Diluted earnings per share from continuing operations for the first quarter of 2012 were $0.58, an increase of 16% compared to $0.50 in the first quarter of 2011.
Net income from continuing operations increased to $17.5 million for the first quarter of 2012, compared to $15.9 million in the prior year.
Revenue Highlights
Consolidated first quarter revenue totaled $135 million and grew by 16% on a constant currency basis. Revenue growth rates presented on a constant currency basis are calculated by applying the currency exchange rate from the prior-year period to the current year's Mexican peso-denominated revenue.
Revenue growth was greatest in Mexico, driven in part by a 33% constant currency increase in pawn fees. This represents a significant sequential improvement versus the 9% constant currency increase achieved in the fourth quarter of 2011, the result of strong first quarter growth in pawn receivables.
On a consolidated product-line basis, first quarter pawn fees increased 26% in constant currency over the prior year. The consolidated storefront retail component of merchandise sales increased by 21% in constant currency terms.
Consolidated wholesale scrap jewelry revenues during the first quarter of 2012 were up slightly compared to the prior-year quarter. The average selling price for gold increased 21%, but was largely offset by the 19% decrease in volume when compared to the prior year. Scrap jewelry revenues now comprise only 18% of total revenue versus 20% in the prior year.
Consolidated same-store revenue increased by 5% on a constant currency basis for the first quarter of 2012. Based on strong pawn receivable loan growth during the quarter, the Company saw significant improvement in same-store sales as the quarter progressed. March 2012 same-store sales results were up over 7% on a consolidated basis and up over 10% in Mexico.
Key Profitability Metrics
The Company's return on equity for the trailing twelve months was 23%, compared to 20% in the respective prior-year period. In addition, the return on assets over the trailing twelve months was 20%, compared to 17% in the respective prior-year period.
Store-level operating profit margins were 30% for the trailing twelve month period. Consolidated net operating margin (pre-tax income) was 21% for the same period. These were at or above the prior year margins.
Pawn receivables in Mexico increased 23% (on a constant currency basis), while pawn receivables in the U.S. increased by 12% compared to the prior year. The significant growth in Mexico reflected a strong sequential increase in same-store receivables and the 29-store acquisition completed in January 2012.
The gross margin on retail merchandise sales was 41% for the first quarter, compared to 39% in the fourth quarter, and was in-line with the prior-year quarter. The sequential improvement in gross margin reflected steps taken in 2011 to optimize loan to value ratios on certain electronic items. Scrap jewelry gross margin was 28% for the quarter, as compared to 33% during the same period last year.
Annualized inventory turns improved in the first quarter of 2012 to 4.4 turns, compared to 3.9 turns during the comparable prior-year quarter.
Acquisitions and New Store Openings
In January 2012, the Company completed the acquisition of a 29-store chain of pawn locations in Mexico. The 29 acquired stores are all large format, full service stores located in two states in western Mexico.
In February and March 2012, the Company completed the acquisitions of three large format pawn stores located in Dallas, Texas.
New store openings in the first quarter included 20 de novo pawn stores in Mexico and two de novo stores in the U.S.
In total, 54 pawn stores were added during the first quarter of 2012, of which 49 were in Mexico and five were in the U.S.
Over the past twelve months, 92 large format pawn stores were added in Mexico and 18 were added in the U.S., with the resulting net year-over-year increase in large format pawn stores of 26% in Mexico and 16% in the U.S.
Financial Position & Liquidity
EBITDA from continuing operations for the trailing twelve months increased 23% over the comparable prior twelve-month period, totaling $122 million. EBITDA margins were 23% for the trailing twelve months, compared to 22% for the prior-year period. Free cash flow for the trailing twelve months was $49 million, compared to $33 million in the comparable prior-year period. EBITDA and free cash flow are defined in the detailed reconciliation of these non-GAAP financial measures provided elsewhere in this release.
During the quarter, the Company utilized cash on-hand, operating cash flows and its credit facility to invest $4 million in capital expenditures, repurchase $39 million of common stock and fund $44 million for pawn store acquisitions.
The Company completed its 1,500,000 share buyback authorization that was announced in December 2011, with a total of 963,000 shares of its common stock repurchased during the first quarter and additional repurchases of 537,000 shares subsequent to March 31, 2012. The shares repurchased this year were at an average price of $40.85 per share. Since April 2011, the Company has repurchased over 2,800,000 shares under all authorizations, representing approximately 9% of the outstanding shares as of April 2011.
In February 2012, the Company extended the term of its revolving unsecured credit facility though February 2015. The size of the facility was expanded from $25 million to $50 million, and can be further increased to a $100 million facility with lender approval. The facility bears interest at the prevailing LIBOR rate plus a margin which varies from 1.5% to 2.0%, depending on the Company's leverage ratio. The total interest rate on the facility is currently 1.75% annually. At March 31, 2012, the Company had $18 million outstanding on the facility.
Fiscal 2012 Outlook
The Company is increasing its fiscal 2012 guidance for earnings per share to a range of $2.70 to $2.75 per diluted share, which represents a 20% to 22% projected earnings increase over fiscal 2011.
For fiscal 2012, the Company anticipates opening or acquiring approximately 110 to 120 new stores, with approximately 100 of the expected additions in Mexico, and the remainder in the U.S. (primarily Texas). All of the 2012 store additions are expected to be large format pawn stores.
Approximately 91% to 92% of 2012 revenues will be derived from pawn operations, with the remainder expected to come from consumer loan and credit services operations.
Commentary & Analysis
Mr. Rick Wessel, chief executive officer, commented on the first quarter results, "We are off to a solid start in 2012. We achieved record sales and earnings and successfully integrated the 29-store acquisition in Mexico – the largest store acquisition in Company history. The acquired operation was one of the few large format competitors in Mexico and instantly provides First Cash a significant presence in two additional states in western Mexico. In addition to the acquisition, we opened 20 new stores in Mexico and added five in the U.S."
"Our competitive positioning remains strong as consumer demand for our lending and retail products continues to grow in both the U.S. and Mexico. First Cash has significant market share in Mexico, where competition from other full-format operators is extremely limited. We believe that Mexico is a large market with tremendous opportunities for continued growth. We are encouraged by the continued growth in revenues, pawn receivables and margins in Mexico and believe that it provides further confirmation of the validity of the large format store business in this market. We continue to believe that our model can support 800 or more stores in this large Latin American market."
While the competitive landscape in the U.S. is more mature, overall demand continues to increase as pawn stores continue to attract new customers. During the quarter, the Company acquired three stores in Dallas and opened two additional new stores in Texas. Since the beginning of 2010, First Cash has added a total of 38 U.S. locations through a combination of acquisitions and new store openings, bringing its total U.S. store count to 236 locations.
Mr. Wessel also commented on the strength of the Company's balance sheet and cash flows, "We are well capitalized to support the continued growth in pawn receivables, inventories and future store locations. We have also been active with significant repurchases of Company stock as evidenced by the $115 million of buybacks executed since April 2011. Additionally, we recently renewed and expanded our unsecured bank credit facility on very favorable terms to provide additional resources for growth."
"In summary, given our competitive strengths and expanding customer base, we remain optimistic about our ability to further grow revenues, margins and earnings. Coupled with our strong balance sheet, we are well-positioned to drive sustainable long-term growth in shareholder value."
Forward-Looking Information
This release may contain forward-looking statements about the business, financial condition and prospects of the Company. Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as "believes," "projects," "expects," "may," "estimates," "should," "plans," "targets," "intends," "could," or "anticipates," or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy or objectives. Forward-looking statements can also be identified by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Forward-looking statements in this release include, without limitation, the Company's expectations of earnings per share, earnings growth, expansion strategies, regulatory exposures, store openings, liquidity, cash flow, consumer demand for the Company's products and services, currency exchange rates, future share repurchases and the impact thereof, completion of disposition transactions and expected gains from the sale of such operations, earnings from acquisitions, the ability to successfully integrate acquisitions and other performance results. These statements are made to provide the public with management's current assessment of the Company's business. Although the Company believes that the expectations reflected in forward-looking statements are reasonable, there can be no assurances that such expectations will prove to be accurate. Security holders are cautioned that such forward-looking statements involve risks and uncertainties. The forward-looking statements contained in this release speak only as of the date of this statement, and the Company expressly disclaims any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based. Certain factors may cause results to differ materially from those anticipated by some of the statements made in this release. Such factors are difficult to predict and many are beyond the control of the Company and may include changes in regional, national or international economic conditions, changes in the inflation rate, changes in the unemployment rate, changes in consumer purchasing, borrowing and repayment behaviors, changes in credit markets, the ability to renew and/or extend the Company's existing bank line of credit, credit losses, changes or increases in competition, the ability to locate, open and staff new stores, the availability or access to sources of inventory, inclement weather, the ability to successfully integrate acquisitions, the ability to hire and retain key management personnel, the ability to operate with limited regulation as a credit services organization, new federal, state or local legislative initiatives or governmental regulations (or changes to existing laws and regulations) affecting consumer loan businesses, credit services organizations and pawn businesses (in both the United States and Mexico), changes in import/export regulations and tariffs or duties, changes in anti-money laundering regulations, unforeseen litigation, changes in interest rates, monetary inflation, changes in tax rates or policies, changes in gold prices, changes in energy prices, cost of funds, changes in foreign currency exchange rates, future business decisions, public health issues and other uncertainties. These and other risks, uncertainties and regulatory developments are further and more completely described in the Company's Annual Report on Form 10-K and updated in subsequent releases on Form 10-Q.
About First Cash
First Cash Financial Services, Inc. is a leading international specialty retailer and provider of consumer financial services. Its 626 retail pawn locations buy and sell a wide variety of jewelry, electronics, tools and other merchandise, and make small customer loans secured by pledged personal property. The Company's 106 consumer loan locations provide various combinations of financial services products, including consumer loans, check cashing and credit services. In total, the Company owns and operates 732 stores in eight U.S. states and 23 states in Mexico.
First Cash was named by Fortune Magazine as one of America's 100 fastest growing companies for 2011. First Cash is also a component company in both the Standard & Poor's SmallCap 600 Index® and the Russell 2000 Index®. First Cash's common stock (ticker symbol "FCFS") is traded on the Nasdaq Global Select Market, which has the highest initial listing standards of any stock exchange in the world based on financial and liquidity requirements.
The First Cash Financial Services, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3365
STORE COUNT ACTIVITY
The following table details store openings for the three months ended March 31, 2012:
Pawn Locations Consumer
Large Small Loan Total
Format (1) Format (2) Locations (3) Locations
United States:
Total locations, beginning of period 132 25 74 231
New locations opened 2 -- -- 2
Locations acquired 3 -- -- 3
Store format conversions -- 2 (2) --
Total locations, end of period 137 27 72 236
Mexico:
Total locations, beginning of period 394 19 34 447
New locations opened 20 -- -- 20
Locations acquired 29 -- -- 29
Total locations, end of period 443 19 34 496
Total:
Total locations, beginning of period 526 44 108 678
New locations opened 22 -- -- 22
Locations acquired 32 -- -- 32
Store format conversions -- 2 (2) --
Total locations, end of period 580 46 106 732
(1) The large format locations include retail showrooms and accept a broad array of pawn collateral including jewelry, electronics, appliances, tools and other consumer hard goods. At March 31, 2012, 84 of the U.S. large format pawn stores also offered consumer loans or credit services products.
(2) The small format locations typically have limited retail operations and primarily accept jewelry and small electronic items as pawn collateral. At March 31, 2012, all of the Texas and Mexico small format pawn stores also offered consumer loans or credit services products.
(3) The U.S. consumer loan locations offer a credit services product and are all located in Texas. The Mexico locations offer small, short-term consumer loans. In addition to stores shown on this chart, First Cash is also an equal partner in Cash & Go, Ltd., a joint venture, which owns and operates 38 check cashing and financial services kiosks located inside convenience stores in the state of Texas.
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended March 31,
2012 2011
(in thousands, except per share amounts)
Revenue:
Merchandise sales $ 86,906 $ 78,305
Pawn loan fees 34,912 28,972
Consumer loan and credit services fees 12,987 13,224
Other revenue 311 337
Total revenue 135,116 120,838
Cost of revenue:
Cost of goods sold 54,315 48,242
Consumer loan and credit services loss provision 2,388 2,257
Other cost of revenue 20 46
Total cost of revenue 56,723 50,545
Net revenue 78,393 70,293
Expenses and other income:
Store operating expenses 36,319 31,718
Administrative expenses 12,306 11,532
Depreciation and amortization 3,036 2,647
Interest expense 77 26
Interest income (81) (99)
Total expenses and other income 51,657 45,824
Income from continuing operations before income taxes 26,736 24,469
Provision for income taxes 9,224 8,564
Income from continuing operations 17,512 15,905
Income from discontinued operations, net of tax -- 6,651
Net income $ 17,512 $ 22,556
Basic income per share:
Income from continuing operations (basic) $ 0.59 $ 0.51
Income from discontinued operations (basic) -- 0.21
Net income per basic share $ 0.59 $ 0.72
Diluted income per share:
Income from continuing operations (diluted) $ 0.58 $ 0.50
Income from discontinued operations (diluted) -- 0.20
Net income per diluted share $ 0.58 $ 0.70
Weighted average shares outstanding:
Basic 29,580 31,311
Diluted 30,353 32,075
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, December 31,
2012 2011 2011
(in thousands)
ASSETS
Cash and cash equivalents $ 30,449 $ 98,169 $ 70,296
Pawn loan fees and service charges receivable 12,151 10,631 10,842
Pawn loans 80,996 71,580 73,287
Consumer loans, net 928 1,071 858
Inventories 47,106 48,884 44,412
Other current assets 4,529 10,826 10,783
Total current assets 176,159 241,161 210,478
Property and equipment, net 83,061 62,969 73,451
Goodwill, net 112,544 72,214 70,395
Other non-current assets 4,061 2,945 2,772
Total assets $ 375,825 $ 379,289 $ 357,096
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of notes payable $ 1,593 $ 472 $ --
Accounts payable and accrued liabilities 31,926 27,799 25,629
Income taxes payable and deferred taxes payable 8,184 12,775 9,776
Total current liabilities 41,703 41,046 35,405
Revolving unsecured credit facility 18,000 -- --
Notes payable, net of current portion 3,047 1,265 --
Deferred income tax liabilities 10,885 10,580 6,319
Total liabilities 73,635 52,891 41,724
Stockholders' equity
Preferred stock -- -- --
Common stock 383 382 383
Additional paid-in capital 148,149 146,208 147,649
Retained earnings 351,035 278,297 333,523
Accumulated other comprehensive income (loss) from cumulative foreign currency translation adjustments (5,906) 184 (13,463)
Common stock held in treasury, at cost (191,471) (98,673) (152,720)
Total stockholders' equity 302,190 326,398 315,372
Total liabilities and stockholders' equity $ 375,825 $ 379,289 $ 357,096
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION
(UNAUDITED)
The following table details the components of revenue for the three months ended March 31, 2012, as compared to the three months ended March 31, 2011 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year results at prior year average exchange rates, which is more fully described elsewhere in this release.
Three Months Ended Increase/(Decrease)
March 31, Constant Currency
2012 2011 Increase/(Decrease) Basis
United States revenue:
Retail merchandise sales $ 25,062 $ 20,928 $ 4,134 20 % 20 %
Scrap jewelry sales 15,036 14,582 454 3 % 3 %
Pawn loan fees 14,539 12,507 2,032 16 % 16 %
Credit services fees 11,955 11,923 32 -- --
Consumer loan fees 31 96 (65) (68)% (68)%
Other revenue 311 337 (26) (8)% (8)%
66,934 60,373 6,561 11 % 11 %
Mexico revenue:
Retail merchandise sales 37,582 33,427 4,155 12 % 21 %
Scrap jewelry sales 9,226 9,368 (142) (2)% (2)%
Pawn loan fees 20,373 16,465 3,908 24 % 33 %
Consumer loan fees 1,001 1,205 (204) (17)% (11)%
68,182 60,465 7,717 13 % 20 %
Total revenue:
Retail merchandise sales 62,644 54,355 8,289 15 % 21 %
Scrap jewelry sales 24,262 23,950 312 1 % 1 %
Pawn loan fees 34,912 28,972 5,940 21 % 26 %
Credit services fees 11,955 11,923 32 -- --
Consumer loan fees 1,032 1,301 (269) (21)% (15)%
Other revenue 311 337 (26) (8)% (8)%
$ 135,116 $ 120,838 $ 14,278 12 % 16 %
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION (CONTINUED)
(UNAUDITED)
The following table details customer loans and inventories held by the Company and active CSO credit extensions from an independent third-party lender as of March 31, 2012, as compared to March 31, 2011 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year balances at the prior year end-of-period exchange rate, which is more fully described elsewhere in this release.
Balance at Increase/(Decrease)
March 31, Constant Currency
2012 2011 Increase/(Decrease) Basis
United States:
Pawn loans $ 34,295 $ 30,744 $ 3,551 12 % 12 %
CSO credit extensions held by independent third-party (1) 11,407 10,523 884 8 % 8 %
Other 46 36 10 28 % 28 %
45,748 41,303 4,445 11 % 11 %
Mexico:
Pawn loans 46,701 40,836 5,865 14 % 23 %
Other 882 1,035 (153) (15)% (8)%
47,583 41,871 5,712 14 % 22 %
Total:
Pawn loans 80,996 71,580 9,416 13 % 18 %
CSO credit extensions held by independent third-party (1) 11,407 10,523 884 8 % 8 %
Other 928 1,071 (143) (13)% (7)%
$ 93,331 $ 83,174 $ 10,157 12 % 17 %
Pawn inventories:
U.S. pawn inventories $ 19,676 $ 16,985 $ 2,691 16 % 16 %
Mexico pawn inventories 27,430 31,899 (4,469) (14)% (7)%
$ 47,106 $ 48,884 $ (1,778) (4)% 1 %
(1) CSO amounts are comprised of the principal portion of active CSO extensions of credit by an independent third-party lender, which are not included on the Company's balance sheet, net of the Company's estimated fair value of its liability under the letters of credit guaranteeing the loans.
FIRST CASH FINANCIAL SERVICES, INC.
UNAUDITED NON-GAAP FINANCIAL INFORMATION
The Company uses certain financial calculations, such as free cash flow, EBITDA and constant currency results, which are not considered measures of financial performance under U.S. generally accepted accounting principles ("GAAP"). Items excluded from the calculation of free cash flow, EBITDA and constant currency results are significant components in understanding and assessing the Company's financial performance. Since free cash flow, EBITDA and constant currency results are not measures determined in accordance with GAAP and are thus susceptible to varying calculations, free cash flow, EBITDA and constant currency results, as presented, may not be comparable to other similarly titled measures of other companies. Free cash flow, EBITDA and constant currency results should not be considered as alternatives to net income, cash flow provided by or used in operating, investing or financing activities or other financial statement data presented in the Company's consolidated financial statements as indicators of financial performance or liquidity. Non-GAAP measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures.
Earnings Before Interest, Taxes, Depreciation and Amortization
EBITDA is commonly used by investors to assess a company's leverage capacity, liquidity and financial performance. The following table provides a reconciliation of income from continuing operations to EBITDA (in thousands):
Trailing Twelve Months Ended
March 31,
2012 2011
Income from continuing operations $ 72,472 $ 57,167
Adjustments:
Income taxes 37,998 31,296
Depreciation and amortization 11,403 10,580
Interest expense 186 277
Interest income (260) (192)
Earnings from continuing operations before interest, taxes, depreciation and amortization $ 121,799 $ 99,128
EBITDA margin calculated as follows:
Total revenue from continuing operations $ 535,580 $ 449,440
Earnings from continuing operations before interest, taxes, depreciation and amortization 121,799 99,128
EBITDA as a percentage of revenue 23% 22%
FIRST CASH FINANCIAL SERVICES, INC.
UNAUDITED NON-GAAP FINANCIAL INFORMATION (CONTINUED)
Free Cash Flow
For purposes of its internal liquidity assessments, the Company considers free cash flow, which is defined as cash flow from the operating activities of continuing and discontinued operations reduced by purchases of property and equipment and net cash outflow from pawn and consumer loans. Free cash flow is commonly used by investors as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, repurchase stock, or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company's ability to generate cash flow from business operations and the impact that this cash flow has on the Company's liquidity. The following table reconciles "net cash flow from operating activities" to "free cash flow" (in thousands):
Trailing Twelve Months Ended
March 31,
2012 2011
Cash flow from operating activities, including discontinued operations $ 84,386 $ 78,735
Cash flow from investing activities:
Pawn and consumer loans (7,591) (25,208)
Purchases of property and equipment (27,497) (20,540)
Free cash flow $ 49,298 $ 32,987
Constant Currency
Certain performance metrics discussed in this release are presented on a "constant currency" basis, which may be considered a non-GAAP financial measurement of financial performance under GAAP. The Company's management uses constant currency results to evaluate operating results of certain business operations in Mexico, which are transacted primarily in Mexican pesos. Pawn scrap jewelry in Mexico is sold in U.S. dollars and, accordingly, does not require a constant currency adjustment. Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in Mexican pesos using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons. For balance sheet items, the closing exchange rate at the end of the applicable prior-year period (March 31, 2011) of 11.9 to 1 was used, compared to the current end of period (March 31, 2012) exchange rate of 12.8 to 1. For income statement items, the average closing daily exchange rate for the appropriate period was used. The average exchange rate for the prior-year quarter ended March 31, 2011 was 12.1 to 1, compared to the current-quarter rate of 13.0 to 1.
Pink
13 years ago
First Cash Reports Fiscal 2011 Earnings of $2.25 per Share; Net Income Increases 38% Over Prior Year
Today : Wednesday 25 January 2012
First Cash Financial Services, Inc. (Nasdaq:FCFS) today announced record-setting revenue, net income and earnings per share for the three months and year ended December 31, 2011. Diluted earnings per share from continuing operations were $0.70 for the fourth quarter and $2.25 for the full fiscal year. Net income from continuing operations increased 21% and 38% for the respective fourth quarter and full-year periods. As a reminder, the Company announced on January 17, 2012, together with its acquisition of 29 full-service pawn stores in Mexico, that guidance for fiscal 2012 earnings from continuing operations is expected to be in the range of $2.65 to $2.70 per share, an increase of 18% to 20% over fiscal 2011.
Earnings Highlights
Diluted earnings per share from continuing operations for fiscal 2011 were $2.25, a 36% increase compared to $1.65 in 2010.
Net income from continuing operations for the year increased 38%, totaling $70.9 million, compared to $51.4 million in the prior year.
Diluted earnings per share from continuing operations for the fourth quarter of 2011 were $0.70, an increase of 25% compared to $0.56 in the fourth quarter of 2010.
Net income from continuing operations increased by 21% to $21.5 million for the fourth quarter of 2011, compared to $17.8 million in the prior year.
Total diluted earnings per share, including income from discontinued operations, were $0.70 for the fourth quarter of 2011 and $2.47 for the full year.
Revenue Highlights
Consolidated 2011 revenue was $521 million, an increase of 23% over the prior year. Fourth quarter revenue increased by 15% over the comparable prior-year period. On a constant currency basis, revenues grew by 22% for the year and 20% for the fourth quarter. Revenue growth rates presented on a constant currency basis are calculated by applying the currency exchange rate from the prior year period to the current year's Mexican peso-denominated revenue.
Consolidated same-store revenue increased by 13% during 2011. By country, same-store revenue increased by 14% in Mexico and 12% in the United States during fiscal 2011.
On a product-line basis, fiscal 2011 merchandise sales increased by 28% over the prior year and comprised 66% of total revenues, while revenue from pawn fees increased 20% and comprised 23% of revenue. The store-front retail component of merchandise sales increased by 26% overall for fiscal 2011, led by 31% retail sales growth in Mexico.
Wholesale scrap jewelry revenues during fiscal 2011 were up 33%, driven primarily by a 26% increase in the average selling price for gold, which averaged $1,511 per ounce during the year, compared to an average of $1,200 per ounce in the prior year. The total volume of gold scrap jewelry sold in fiscal 2011 increased approximately 2%. The average cost per ounce was $1,124, an increase of 33% over the prior year.
Key Profitability Metrics
The consolidated net operating margin (pre-tax income) for fiscal 2011 was 21%, compared to 19% for the comparable prior-year period. This is a record fiscal year operating margin for the Company and reflects strong revenue growth coupled with further leveraging of operating expenses.
Store-level operating profit margins were also at record levels, achieving 30% for fiscal 2011, compared to 29% in the prior year.
The Company's return on equity for fiscal 2011 was 22%, while its return on assets was 20%. This compares to returns of 20% and 17% in the respective prior-year periods. These represent unlevered returns, as the Company had no outstanding bank debt at year end.
The growth in pawn receivables of 10% (on a constant currency basis), was partially affected during the second half of 2011 by results in Mexico, where the Company maintained conservative loan-to-value ratios on certain electronic items and continued to limit loan-to-value ratios on gold items relative to local competition. On a regional basis, year-over-year constant currency loan balance increases of almost 20% in the interior markets of Mexico were offset by decreases of over 8% in northern border markets. The Company attributes much of this regional loan weakness to the effects of currency fluctuations on customer behavior in these markets and reduced overall consumer traffic patterns in northern Mexico.
The gross margin on retail merchandise sales was 39% for the fourth quarter and 40% for fiscal 2011. The margin on wholesale scrap jewelry was 35% for the fourth quarter and 34% for fiscal 2011.
Inventory turns increased slightly to approximately 4.2 times over the past twelve months of fiscal 2011, compared to 4.1 turns in the prior year. Overall inventory levels as a percentage of pawn receivables were in line with historical norms.
Aged inventories, defined as items held in inventory for more than one year, represented 2% of total inventories at December 31, 2011, and was consistent with the prior year.
Acquisitions
In November, the Company completed the acquisition of a five-store chain of retail pawn locations in Indianapolis, Indiana. Combined with a previous acquisition in this market earlier in 2011, the Company now has a total of nine stores in Indiana.
On January 17, 2012 (fiscal 2012), the Company announced the acquisition of a 29-store chain of pawn locations in Mexico. The 29 acquired stores are all large format, full service stores located in two states in western Mexico.
The Company believes that both acquisitions will be accretive to earnings in 2012. Transaction costs of approximately $0.01 per share associated with the acquisitions were expensed in the fourth quarter of 2011. The Company expects additional transaction and integration costs of approximately $0.01 per share in the first quarter of 2012.
New Store Openings
A total of 13 pawn stores were added during the fourth quarter of 2011. For the full year, 82 pawn stores were added, of which 61 were in Mexico and 21 were in the U.S. As of December 31, 2011, the Company operated a total of 678 stores, of which 570 were pawn stores.
During the first three weeks of 2012, the Company opened 14 new stores and completed the 29-store acquisition in Mexico, resulting in 43 year-to-date additions. Including these fiscal 2012 additions, the Company now operates 721 stores, of which 489 are in Mexico and 232 are in the U.S.
Financial Position & Liquidity
EBITDA from continuing operations totaled $119 million for fiscal 2011, an increase of 31% over the comparable prior-year period. EBITDA margins were 23% for fiscal 2011 compared to 21% in the prior year. Free cash flow for fiscal 2011 was $46.2 million, compared to $31.6 million in the prior year. EBITDA and free cash flow are defined in the detailed reconciliation of these non-GAAP financial measures provided elsewhere in this release.
Cash balances increased to $70 million at December 31, 2011, compared to $67 million at the same time last year. During the year, the Company utilized operating cash flows to invest $29.0 million in capital expenditures, repurchased 1.4 million shares of Company common stock for $55.3 million, and paid $7.8 million for pawn store acquisitions.
On December 15, 2011, the Company announced that its Board of Directors authorized a new program for the repurchase of up to 1.5 million shares of common stock. Under previously completed share repurchase programs over the past seven years, the Company has repurchased a total of 8.2 million shares.
At December 31, 2011, the Company had no amounts outstanding on its $25 million unsecured revolving credit facility, and no other interest-bearing debt was outstanding.
On a year-over-year basis, total shareholder equity increased by 6% and total assets increased by 4%. The ratio of total liabilities to stockholders' equity was 0.1 to 1.
Fiscal 2012 Outlook
On January 17, 2012, the Company issued its fiscal 2012 earnings outlook. The Company anticipates earnings from continuing operations to be in the range of $2.65 to $2.70 per diluted share, representing an 18% to 20% projected earnings increase over fiscal 2011.
For fiscal 2012, the Company anticipates opening approximately 80 to 90 new stores in addition to the 29 stores already acquired this month, for a total full-year increase of approximately 110 to 120 stores. Over 100 of the expected fiscal 2012 additions will be in Mexico, with the remainder in the U.S. (primarily Texas). All of the anticipated 2012 store openings will be large format pawn stores. Due to the large number of new store openings in early 2012 versus the prior year, the Company expects an incremental earnings reduction of approximately $0.04 per diluted share. As a reminder, new store openings are dilutive to earnings for approximately six to nine months from the store opening date.
The earnings guidance for fiscal 2012 also assumes a Mexican peso to U.S. dollar exchange rate of approximately 13.7 to 1, which is reflective of the current exchange rate environment, compared to the fiscal 2011 average rate of 12.4 to 1. This change in the exchange rate effectively reduced the fiscal 2012 earnings per share guidance by approximately $0.05 to $0.06 per share.
Approximately 91% to 92% of 2012 revenues will be derived from pawn operations, with the remainder expected to be derived from consumer loan and credit services operations.
Commentary & Analysis
Mr. Rick Wessel, First Cash's Chief Executive Officer, commented on the Company's financial and operating results, "We are pleased to announce our 2011 results, a year in which we posted record revenues, earnings per share and a 38% increase in net income. We are proud of these accomplishments, which are a result of our focused strategy and the ability of our store associates, managers and support staff to deliver these outstanding results."
First Cash achieved several important milestones in 2011. Among them, the Company's consolidated revenues exceeded $500 million for the first time in history. Similarly, EBITDA and pre-tax income both exceeded $100 million for the first time at $119 million and $108 million, respectively. The Company also achieved record profit margins in 2011, as store level profits attained 30% for the first time, while the pre-tax operating margin reached a record 21%. Additionally, the Company's return on assets reached 20% for the first time in 2011.
With the addition of 82 stores, unit growth during 2011 was also at a record level. Including the 29-store acquisition completed in early January of fiscal 2012, the Company surpassed the 700-store mark. The current store count of 721 locations has increased 20% since the beginning of 2011. Finally, the Company achieved another significant milestone in 2011 with its market capitalization exceeding $1 billion for the first time in Company history.
In further discussing the full year and fourth quarter results, Mr. Wessel noted, "The fundamental demand for micro credit products for credit-constrained consumers remains strong, as does the demand for buying and selling value-priced electronics, tools and jewelry. The important fourth quarter merchandise sales results were solid and in line with our expectations. Year-over-year growth in pawn revenue and receivables remained especially strong in the U.S., and we remain very positive on the long-term product demand and our ability to command market share in the U.S. and Mexico. In addition, we maintained our cost controls as fourth quarter store operating expenses declined from 25% in 2010 to 23% in 2011 as a percentage of revenue."
Mr. Wessel also discussed the recently completed 29-store acquisition, stating, "We are excited about entering new markets with the addition of these stores, as we further advance our significant leadership position in Mexico. The acquired operation has a strong presence in each of its operating territories and provides us a valuable entry point into these additional markets in western Mexico. All of the stores are large format locations, similar to our existing First Cash stores, which support both lending and retail operations for jewelry and a wide variety of hard good items.
The significant investment in acquisitions and new stores continues to be funded primarily through operating cash flows, and we have increased earnings growth despite the additional expense from the accelerated store additions. The Company's balance sheet and cash flows continue to be strong. Even with the funding for the significant growth in pawn loans and store additions, the Company repurchased over $55 million of its stock during 2011."
In summary, Mr. Wessel said, "We believe that First Cash remains well-positioned to deliver continued profitability and earnings growth. Our business model has proven to be profitable across business cycles and our operating cash flows should continue to support growth through accelerating store expansion and acquisition activity. In addition, our significant liquidity provides us tremendous strategic flexibility, including the ability to further invest in growth. We are optimistic about our future and remain committed to increasing shareholder value."
Forward-Looking Information
This release may contain forward-looking statements about the business, financial condition and prospects of the Company. Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as "believes," "projects," "expects," "may," "estimates," "should," "plans," "targets," "intends," "could," or "anticipates," or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy or objectives. Forward-looking statements can also be identified by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Forward-looking statements in this release include, without limitation, the Company's expectations of earnings per share, earnings growth, expansion strategies, regulatory exposures, store openings, liquidity, cash flow, consumer demand for the Company's products and services, currency exchange rates, future share repurchases and the impact thereof, completion of disposition transactions and expected gains from the sale of such operations, earnings from acquisitions, the ability to successfully integrate acquisitions and other performance results. These statements are made to provide the public with management's current assessment of the Company's business. Although the Company believes that the expectations reflected in forward-looking statements are reasonable, there can be no assurances that such expectations will prove to be accurate. Security holders are cautioned that such forward-looking statements involve risks and uncertainties. The forward-looking statements contained in this release speak only as of the date of this statement, and the Company expressly disclaims any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based. Certain factors may cause results to differ materially from those anticipated by some of the statements made in this release. Such factors are difficult to predict and many are beyond the control of the Company and may include changes in regional, national or international economic conditions, changes in the inflation rate, changes in the unemployment rate, changes in consumer purchasing, borrowing and repayment behaviors, changes in credit markets, the ability to renew and/or extend the Company's existing bank line of credit, credit losses, changes or increases in competition, the ability to locate, open and staff new stores, the availability or access to sources of inventory, inclement weather, the ability to successfully integrate acquisitions, the ability to hire and retain key management personnel, the ability to operate with limited regulation as a credit services organization, new federal, state or local legislative initiatives or governmental regulations (or changes to existing laws and regulations) affecting consumer loan businesses, credit services organizations and pawn businesses (in both the United States and Mexico), changes in import/export regulations and tariffs or duties, changes in anti-money laundering regulations, unforeseen litigation, changes in interest rates, monetary inflation, changes in tax rates or policies, changes in gold prices, changes in energy prices, cost of funds, changes in foreign currency exchange rates, future business decisions, public health issues and other uncertainties. These and other risks, uncertainties and regulatory developments are further and more completely described in the Company's Annual Report on Form 10-K and updated in subsequent releases on Form 10-Q.
About First Cash
First Cash Financial Services, Inc. is a leading international specialty retailer and provider of consumer financial services. Its 613 retail pawn locations buy and sell a wide variety of jewelry, electronics, tools and other merchandise, and make small customer loans secured by pledged personal property. The Company's 108 consumer loan locations provide various combinations of financial services products, including consumer loans, check cashing and credit services. In total, the Company owns and operates 721 stores in eight U.S. states and 23 states in Mexico.
First Cash was named by Fortune Magazine as one of America's 100 fastest growing companies for 2011. First Cash is also a component company in both the Standard & Poor's SmallCap 600 Index® and the Russell 2000 Index®. First Cash's common stock (ticker symbol "FCFS") is traded on the Nasdaq Global Select Market, which has the highest initial listing standards of any stock exchange in the world based on financial and liquidity requirements.
The First Cash Financial Services, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3365
Pink
13 years ago
First Cash Acquires 29-Store Chain of Pawn Stores; Pre-Announces 2011 Earnings Per Share and Initiates 2012 Guidance
Today : Tuesday 17 January 2012
First Cash Financial Services, Inc. (Nasdaq:FCFS) today announced the acquisition of a 29-store chain of pawn stores located in Mexico. In addition, the Company announced that expected earnings per share from continuing operations were $0.70 for the quarter ending December 31, 2011 and $2.25 for all of fiscal 2011. The full earnings release for fourth quarter and full year results for 2011 is scheduled for January 25, 2012. In addition, the Company is initiating its fiscal 2012 earnings per share guidance to be in a range of $2.65 to $2.70 per share, an increase of 18% to 20% over the prior year.
Pawn Acquisition
The Company acquired 100% of the ownership equity in a 29-store Mexico-based pawn operation per a purchase agreement, which was signed and closed on January 10, 2012. The 29 acquired stores are all large format, full service stores located in two states in western Mexico. In addition, the Company has an exclusive option until January 2015 to purchase up to eight additional stores located in a third state in western Mexico. The effective purchase price, net of cash acquired, was approximately $46.7 million and was paid in a combination of cash and a $4.9 million note payable to the seller. The operations and earnings of the acquired stores will be consolidated effective January 10, 2012, and the Company believes the transaction will be accretive to its earnings in 2012.
Rick Wessel, chief executive officer of First Cash, stated, "This is an important strategic acquisition which will further expand our market-leading position in Mexico. The acquired operation has a strong presence in each of its operating territories and provides us a valuable entry point into these additional markets in western Mexico. All of the stores are large format locations, similar to our existing First Cash stores, which support both lending and retail operations for jewelry and a wide variety of hardgood items. With the average age of the acquired stores being less than four years, and one-third of the locations being opened within the past 30 months, we believe that the stores have the capacity to generate additional revenues and profits as they mature. We are excited about the addition of these stores as we further advance our significant leadership position in Mexico."
Store Growth
With the acquisition and including 2012 store openings to date, First Cash now operates 720 stores in total, of which 488 are in Mexico and 232 are in the U.S. During the first two weeks of 2012, the Company completed the 29-store acquisition and opened an additional 13 new stores for a total of 42 year-to-date additions. For fiscal 2011, a total of 82 new store locations were opened or acquired.
For 2012, the Company anticipates opening approximately 81 to 91 new stores in addition to the 29 stores just acquired, for a total full-year increase of 110 to 120 stores. Over 100 of the expected 2012 additions will be in Mexico and the remainder will be in the U.S., primarily in Texas. All of the anticipated 2012 store openings will be large format pawn stores.
2011 Earnings Results
The Company announced preliminary diluted earnings per share from continuing operations for the quarter and year ended December 31, 2011. It expects net income from continuing operations of $2.25 per share for the full year of 2011, which represents an increase of 36% over the prior year earnings of $1.65 per share. For the quarter ended December 31, 2011, earnings are projected at $0.70 per share, compared to $0.56 per share in the prior-year quarter. The regular fiscal 2011 earnings announcement is scheduled for release before the market opens on Wednesday, January 25, 2012.
2012 Earnings Forecast
The Company is initiating its fiscal 2012 guidance for diluted earnings per share from continuing operations to be in a range of $2.65 to $2.70, an 18% to 20% increase over expected 2011 earnings. The 2012 guidance includes expected earnings accretion from the 29-store acquisition, but also reflects approximately $0.05 to $0.06 of earnings drag from the weaker Mexican peso, which is currently 13.6 to 1, compared to the average exchange rate of 12.4 to 1 in fiscal 2011.
Forward-Looking Information
This release may contain forward-looking statements about the business, financial condition and prospects of the Company. Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as "believes," "projects," "expects," "may," "estimates," "should," "plans," "targets," "intends," "could," or "anticipates," or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy or objectives. Forward-looking statements can also be identified by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Forward-looking statements in this release include, without limitation, the Company's expectations of earnings per share, earnings growth, expansion strategies, regulatory exposures, store openings, liquidity, cash flow, consumer demand for the Company's products and services, future share repurchases and the impact thereof, completion of disposition transactions and expected gains from the sale of such operations, earnings from acquisitions, and other performance results. These statements are made to provide the public with management's current assessment of the Company's business. Although the Company believes that the expectations reflected in forward-looking statements are reasonable, there can be no assurances that such expectations will prove to be accurate. Security holders are cautioned that such forward-looking statements involve risks and uncertainties. The forward-looking statements contained in this release speak only as of the date of this statement, and the Company expressly disclaims any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based. Certain factors may cause results to differ materially from those anticipated by some of the statements made in this release. Such factors are difficult to predict and many are beyond the control of the Company and may include changes in regional, national or international economic conditions, changes in the inflation rate, changes in the unemployment rate, changes in consumer purchasing, borrowing and repayment behaviors, changes in credit markets, the ability to renew and/or extend the Company's existing bank line of credit, credit losses, changes or increases in competition, the ability to locate, open and staff new stores, the availability or access to sources of inventory, inclement weather, the ability to successfully integrate acquisitions, the ability to hire and retain key management personnel, the ability to operate with limited regulation as a credit services organization, new federal, state or local legislative initiatives or governmental regulations (or changes to existing laws and regulations) affecting consumer loan businesses, credit services organizations and pawn businesses (in both the United States and Mexico), changes in import/export regulations and tariffs or duties, changes in anti-money laundering regulations, unforeseen litigation, changes in interest rates, monetary inflation, changes in tax rates or policies, changes in gold prices, changes in energy prices, cost of funds, changes in foreign currency exchange rates, future business decisions, public health issues and other uncertainties. These and other risks, uncertainties and regulatory developments are further and more completely described in the Company's Annual Report on Form 10-K and updated in subsequent releases on Form 10-Q.
About First Cash
First Cash Financial Services, Inc. is a leading international specialty retailer and provider of consumer financial services. Its 612 retail pawn locations buy and sell a wide variety of jewelry, electronics, tools and other merchandise, and make small customer loans secured by pledged personal property. The Company's 108 consumer loan locations provide various combinations of financial services products, including consumer loans, check cashing and credit services. In total, the Company owns and operates 720 stores in eight U.S. states and 23 states in Mexico.
First Cash was named by Fortune Magazine as one of America's 100 fastest growing companies for 2011. First Cash is also a component company in both the Standard & Poor's SmallCap 600 Index® and the Russell 2000 Index®. First Cash's common stock (ticker symbol "FCFS") is traded on the Nasdaq Global Select Market, which has the highest initial listing standards of any stock exchange in the world based on financial and liquidity requirements.
The First Cash Financial Services, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3365
Pink
13 years ago
First Cash Reports Third Quarter EPS of $0.59, Up 37%; Raises 2011 Earnings Guidance and Announces Indiana Acquisition
First Cash Financial Services, Inc. (MM) (NASDAQ:FCFS)
Intraday Stock Chart
Today : Wednesday 19 October 2011
First Cash Financial Services, Inc. (Nasdaq:FCFS) today announced record-setting revenue, net income and earnings per share for the three months ended September 30, 2011. Diluted earnings per share from continuing operations for the third quarter of 2011 were $0.59, an increase of 37% over the prior-year third quarter. Based on the strength of these results, the Company increased its full year 2011 earnings per share guidance to a range of $2.23 to $2.25. This represents an increase of $0.05 per share over the top end of the previous guidance of $2.16 to $2.20 per share. In addition, the Company announced an agreement to acquire a five-store chain of U.S. pawn stores located in the state of Indiana and raised its estimate for 2011 store additions by five stores to an updated forecast of 85 to 90 total store additions.
Earnings Highlights
Diluted earnings per share from continuing operations were $0.59 for the third quarter of 2011, an increase of 37%, compared to $0.43 in the third quarter of 2010.
Net income from continuing operations in the third quarter was $18.3 million, which increased 38% over the prior-year quarter.
Year-to-date earnings per share from continuing operations increased 43% for the nine months ended September 30, 2011, to $1.56, as compared to the prior year.
Net income from continuing operations for the nine-month period ended September 30, 2011 increased 47% to $49.4 million, and for the trailing twelve months increased 46% to $67.1 million.
Revenue Highlights
Consolidated third quarter revenue increased by 26% over the prior-year quarter, while year-to-date revenue increased 27%. Revenue for the trailing twelve months totaled $502 million, a 24% increase over the prior year.
Same-store revenue increased 17% for both the third quarter and year-to-date periods. By country, same-store sales increased in the current quarter by 20% in Mexico and 13% in the United States, due to the continued maturation of newer stores in Mexico and strong same-store sales in mature U.S. pawn stores.
Revenue continued to be diversified by market, with 54% of third quarter revenue being generated by international operations in Mexico and 46% derived from domestic operations. Revenue from the Company's operations in Mexico increased by 32% over the prior-year quarter, reflecting strong same-store sales growth and the addition of 68 new stores in the past twelve months. U.S. pawn revenues increased by 26% in the third quarter, also the result of strong same-store revenue growth and contributions from 20 new pawn stores added in the last year.
On a product-line basis, third quarter merchandise sales increased by 33% over the prior-year quarter and comprised 66% of total revenues, while revenue from pawn fees increased 20% and comprised 24% of revenue. The store-front retail component of merchandise sales improved by 28% overall for the quarter, led by 36% growth of retail sales in Mexico. Wholesale scrap jewelry revenues during the third quarter were up 44%, helped in part by a 26% increase in the average selling price for gold of $1,540 per ounce in the third quarter, compared to $1,224 per ounce in the prior-year quarter.
Key Profitability Metrics
The consolidated net operating margin (pre-tax income) for the trailing twelve months ended September 30, 2011 was 21%, compared to 18% for the comparable prior-year period. This is a record operating margin for the Company for any twelve month period and reflects strong revenue growth coupled with further leveraging of operating expenses.
Store-level operating profit margins were also at record levels, achieving 30% for the trailing twelve months ended September 30, 2011, compared to 28% in the prior trailing twelve month period.
The Company's return on equity for the trailing twelve months was 22%, while its return on assets was 19%. This compares to returns of 19% and 16% in the respective prior-year periods.
The growth in pawn receivables of 13% (on a constant currency basis), was partially affected during the third quarter by limiting increases of loan-to-value ratios on gold items and lowering loan-to-value ratios on certain electronic items. The Company continually adjusts loan-to-value ratios based on inventory levels, projected retail demand and target margins. On a regional basis, trends in cross-border traffic patterns along the Texas/Mexico border indicated a net migration of customer demand from the Company's large base of stores in Northern Mexico into its significant store base in South Texas. As a result, loan balance decreases in Northern Mexico during the third quarter were offset by stronger than expected loan growth in South Texas.
The gross margin on retail merchandise sales was 41% for the third quarter and 40% year-to-date, while the margin on wholesale scrap jewelry was 37% for the third quarter and 34% year-to-date. The comparative prior year-to-date margin for retail sales was 42% and for scrap sales was 34%.
Aged inventories, defined as items held in inventory for more than a year, represented 2% of total inventories at September 30, 2011, and was consistent with the prior year. Inventory turns were approximately 3.9 times over the past twelve months.
New Store Openings & Acquisitions
A total of 21 pawn stores were added during the third quarter of 2011, bringing the year-to-date total to 69 additions. Over the past twelve months, a total of 88 stores have been opened or acquired. As of September 30, 2011, the Company operated a total of 667 stores, of which 557 were pawn stores.
Pawn store openings in the third quarter included 19 de novo stores in Mexico, while year-to-date, a total of 56 Mexico stores have been added. As of September 30, 2011, First Cash had 442 stores in Mexico, of which 389 are large format, full-service stores. The Company has increased the number of large format pawn stores in Mexico by 21% over the past twelve months.
The Company increased the number of U.S. pawn locations by two stores in the third quarter of 2011 and by 13 stores year-to-date. There are now 124 large format pawn stores in the U.S., representing a 19% increase over the comparable store count one year ago.
In October, the Company signed an agreement to acquire a chain of five retail pawn locations in Indianapolis, Indiana. Combined with a previous acquisition in this market earlier in 2011, the Company will have a total of nine stores in Indiana. The cash purchase price for the five stores is approximately $4.0 million and the Company expects to close on the transaction during the fourth quarter of 2011.
Financial Position & Liquidity
EBITDA from continuing operations for the trailing twelve months increased 38% over the comparable prior twelve-month period, totaling $115 million. The EBITDA margin was 23% for the trailing twelve months, compared to 21% for the prior twelve-month period. EBITDA is defined in the detailed reconciliation of this non-GAAP financial measure provided elsewhere in this release.
Free cash flow for the trailing twelve months was $33.9 million. During this period, the Company utilized operating cash flows to invest $26.5 million in capital expenditures, repurchased $55.3 million of Company stock, grew net customer loans by $5.8 million, increased inventories by $10.9 million, reduced debt by $532,000 and paid $4.0 million for pawn store acquisitions.
In August 2011, the Company completed a share buyback authorization to repurchase 3,000,000 shares of its common stock. Since the commencement of the program in November 2007, First Cash repurchased the shares at an average cost of $24.10 per share. In 2011, First Cash repurchased 1,359,581 shares at an average price of $40.68 per share to complete the repurchase program. The 2011 repurchases, which totaled $55,308,000, were funded through operating cash flows and existing cash balances; no debt was incurred to fund the repurchases.
Cash balances increased to $48 million at September 30, 2011, compared to $33 million at the same point last year. The Company had no amounts outstanding on its $25 million unsecured revolving credit facility and only $1.5 million of other interest-bearing debt is currently outstanding.
On a twelve-month-over-twelve-month basis, total shareholder equity increased by 14% and total assets increased by 13%. The ratio of total liabilities to stockholders' equity was 0.2 to 1.
Fiscal 2011 Outlook
The Company is increasing its fiscal 2011 guidance for diluted earnings per share from continuing operations to a range of $2.23 to $2.25, compared to the previous guidance of $2.16 to $2.20 per share. The guidance represents 35% to 36% projected earnings growth over fiscal 2010 earnings of $1.65 per share.
With the addition of 69 stores in the first nine months of 2011 and the announced fourth quarter Indiana acquisition, the Company now expects to add 85 to 90 stores for the full year, of which approximately 70 are projected to be in Mexico. The previous estimate was 80 to 85 store additions. At the top end of the updated 2011 estimate, this represents a 29% increase over total store additions for 2010. All of the anticipated 2011 store openings will be pawn stores.
The weakening of the Mexican peso during the latter half of the third quarter had minimal impact on net earnings for the third quarter and year-to-date periods. The Company's earnings guidance for the remainder of 2011 assumes an exchange rate of approximately 13.5 to 1, compared to the year-to-date rate of 12.0 to 1, which reduced earnings per share guidance by approximately $0.02 for the fourth quarter.
The Company has forward sales agreements for most of its expected fourth quarter scrap gold sales at an average selling price of $1,607 per ounce, compared to an average of $1,540 per ounce in the third quarter of 2011.
The majority of 2011 revenues will be derived from pawn operations, with only 9% to 10% of revenues expected to be from U.S. consumer loan and credit services operations.
Commentary & Analysis
Mr. Rick Wessel, First Cash's Chief Executive Officer, commented on the Company's third quarter results, "We are again very pleased with our operating results as demonstrated by both record revenue and earnings, which resulted in us again raising earnings guidance for 2011. As we begin the fourth quarter, the Company continues to see strength from its existing pawn operations, coupled with expectations for future revenue and earnings growth from its significant pipeline of new store additions in 2011."
"During the third quarter, revenue growth in both the U.S. and Mexico continued to reflect strong customer traffic patterns across all of the Company's markets. Our merchandise sales and margins were especially strong during the quarter, and at the same time our lending products keep us well positioned to provide needed credit to the growing number of consumers who are not effectively served by traditional bank and credit card lenders. Our geographic diversification continues to serve us well, as demonstrated by the ongoing dynamics of the U.S./Mexico border markets, where we are able to capture traffic and demand on either side of the border."
During the first nine months of 2011, the Company added 69 new pawn locations, compared to 51 openings in the first nine months of last year. Mr. Wessel noted, "We have demonstrated our ability to execute a meaningful, pawn-focused growth strategy through de novo store openings and strategic acquisitions. We are pleased to announce the acquisition of five additional stores in Indianapolis. We previously entered this market in the first quarter of 2011 with the acquisition of four stores and their results to date have exceeded our expectations. This latest acquisition fits well with the existing Indiana footprint and provides critical mass for achieving long-term success in this market."
"The significant investment in acquisitions and new stores continues to be funded through operating cash flows, and we have increased earnings growth despite the additional expense from the accelerated store additions. While we estimate that the increased pace of store openings in 2011 created approximately $0.02 per share of additional earnings drag in the first nine months of 2011, the increased expense was more than offset by strong earnings in our existing stores. Most importantly though, we believe that the expected contributions from the new stores added in 2011 will further drive revenue and earnings growth in future periods."
Mr. Wessel further commented on the Company's growth strategy, noting that, "The most significant long-term driver of revenue and earnings growth for the Company continues to be in Mexico, where First Cash now has 442 locations and is the clear market leader in the large, full-service pawn store format. Our new stores continue to track revenue and loan growth at or above our historical results. The Company's significant market position and substantial operating scale provide large and sustainable competitive advantages."
The Company's balance sheet and cash flows continue to be strong. Even with the funding for the significant growth in pawn loans and store additions, the Company utilized excess cash flows to repurchase over $55 million of its stock this year. Net of the buybacks, the Company still has over $48 million of cash on hand at September 30, 2011.
In summary, Mr. Wessel said, "We believe that First Cash remains well-positioned to deliver continued profitability and earnings growth. Our business model has proven to be profitable across business cycles and our operating cash flows should continue to support growth through accelerating store expansion and acquisition activity. In addition, our significant liquidity provides us tremendous strategic flexibility, including the ability to further invest in growth. We are optimistic about our future and remain committed to increasing shareholder value."
Forward-Looking Information
This release may contain forward-looking statements about the business, financial condition and prospects of the Company. Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as "believes," "projects," "expects," "may," "estimates," "should," "plans," "targets," "intends," "could," or "anticipates," or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy or objectives. Forward-looking statements can also be identified by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Forward-looking statements in this release include, without limitation, the Company's expectations of earnings per share, earnings growth, expansion strategies, regulatory exposures, store openings, liquidity, cash flow, consumer demand for the Company's products and services, future share repurchases and the impact thereof, completion of disposition transactions and expected gains from the sale of such operations, earnings from acquisitions, and other performance results. These statements are made to provide the public with management's current assessment of the Company's business. Although the Company believes that the expectations reflected in forward-looking statements are reasonable, there can be no assurances that such expectations will prove to be accurate. Security holders are cautioned that such forward-looking statements involve risks and uncertainties. The forward-looking statements contained in this release speak only as of the date of this statement, and the Company expressly disclaims any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based. Certain factors may cause results to differ materially from those anticipated by some of the statements made in this release. Such factors are difficult to predict and many are beyond the control of the Company and may include changes in regional, national or international economic conditions, changes in the inflation rate, changes in the unemployment rate, changes in consumer purchasing, borrowing and repayment behaviors, changes in credit markets, the ability to renew and/or extend the Company's existing bank line of credit, credit losses, changes or increases in competition, the ability to locate, open and staff new stores, the availability or access to sources of inventory, inclement weather, the ability to successfully integrate acquisitions, the ability to hire and retain key management personnel, the ability to operate with limited regulation as a credit services organization, new federal, state or local legislative initiatives or governmental regulations (or changes to existing laws and regulations) affecting consumer loan businesses, credit services organizations and pawn businesses (in both the United States and Mexico), changes in import/export regulations and tariffs or duties, changes in anti-money laundering regulations, unforeseen litigation, changes in interest rates, monetary inflation, changes in tax rates or policies, changes in gold prices, changes in energy prices, cost of funds, changes in foreign currency exchange rates, future business decisions, public health issues and other uncertainties. These and other risks, uncertainties and regulatory developments are further and more completely described in the Company's 2010 Annual Report on Form 10-K and updated in subsequent releases on Form 10-Q.
About First Cash
First Cash Financial Services, Inc. is a leading international specialty retailer and provider of consumer financial services. Its 557 retail pawn locations buy and sell a wide variety of jewelry, electronics, tools and other merchandise, and make small customer loans secured by pledged personal property. The Company's 110 consumer loan locations provide various combinations of financial services products, including consumer loans, check cashing, and credit services. In total, the Company owns and operates 667 stores in eight U.S. states and 22 states in Mexico.
First Cash was named by Fortune Magazine as one of America's 100 fastest growing companies for 2011. First Cash is also a component company in both the Standard & Poor's SmallCap 600 Index® and the Russell 2000 Index®. First Cash's common stock (ticker symbol "FCFS") is traded on the Nasdaq Global Select Market, which has the highest initial listing standards of any stock exchange in the world based on financial and liquidity requirements.
The First Cash Financial Services, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3365
STORE COUNT ACTIVITY
The following table details store openings and closings for the three months ended September 30, 2011:
Pawn Locations Consumer
Large Small Loan Total
Format (1) Format (2) Locations (3) Locations
United States:
Total locations, beginning of period 121 25 77 223
New locations opened or acquired 2 -- -- 2
Store format conversions 1 -- (1) --
Total locations, end of period 124 25 76 225
Mexico:
Total locations, beginning of period 370 20 33 423
New locations opened or acquired 19 -- -- 19
Store format conversions -- (1) 1 --
Total locations, end of period 389 19 34 442
Total:
Total locations, beginning of period 491 45 110 646
New locations opened or acquired 21 -- -- 21
Store format conversions 1 (1) -- --
Total locations, end of period 513 44 110 667
(1) The large format locations include retail showrooms and accept a broad array of pawn collateral including jewelry, electronics, appliances, tools and other consumer hard goods. At September 30, 2011, 77 of the U.S. large format pawn stores also offered consumer loans or credit services products.
(2) The small format locations typically have limited retail operations and accept primarily jewelry and small electronic items as pawn collateral. At September 30, 2011, all of the Texas and Mexico small format pawn stores also offered consumer loans or credit services products.
(3) The U.S. consumer loan locations offer a credit services product and are all located in Texas. The Mexico locations offer small, short-term consumer loans. In addition to stores shown on this chart, First Cash is also an equal partner in Cash & Go, Ltd., a joint venture, which owns and operates 39 check cashing and financial services kiosks located inside convenience stores in the state of Texas.
The following table details store openings and closings for the nine months ended September 30, 2011:
Pawn Locations Consumer
Large Small Loan Total
Format (1) Format (2) Locations (3) Locations
United States:
Total locations, beginning of period 111 24 91 226
New locations opened or acquired 12 1 -- 13
Store format conversions 1 -- (1) --
Locations closed or consolidated -- -- (4) (4)
Discontinued operations -- -- (10) (10)
Total locations, end of period 124 25 76 225
Mexico:
Total locations, beginning of period 333 20 33 386
New locations opened or acquired 56 -- -- 56
Store format conversions -- (1) 1 --
Total locations, end of period 389 19 34 442
Total:
Total locations, beginning of period 444 44 124 612
New locations opened or acquired 68 1 -- 69
Store format conversions 1 (1) -- --
Locations closed or consolidated -- -- (4) (4)
Discontinued operations -- -- (10) (10)
Total locations, end of period 513 44 110 667
(1) The large format locations include retail showrooms and accept a broad array of pawn collateral including jewelry, electronics, appliances, tools and other consumer hard goods. At September 30, 2011, 77 of the U.S. large format pawn stores also offered consumer loans or credit services products.
(2) The small format locations typically have limited retail operations and accept primarily jewelry and small electronic items as pawn collateral. At September 30, 2011, all of the Texas and Mexico small format pawn stores also offered consumer loans or credit services products.
(3) The U.S. consumer loan locations offer a credit services product and are all located in Texas. The Mexico locations offer small, short-term consumer loans. In addition to stores shown on this chart, First Cash is also an equal partner in Cash & Go, Ltd., a joint venture, which owns and operates 39 check cashing and financial services kiosks located inside convenience stores in the state of Texas.
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
(in thousands, except per share amounts)
Revenue:
Merchandise sales $ 87,802 $ 65,937 $ 243,465 $ 186,309
Pawn loan fees 31,741 26,378 91,277 72,718
Consumer loan and credit services fees 13,559 13,535 39,193 35,961
Other revenue 247 233 833 768
Total revenue 133,349 106,083 374,768 295,756
Cost of revenue:
Cost of goods sold 53,169 38,993 150,290 112,543
Consumer loan and credit services loss provision 4,093 4,384 9,066 9,530
Other cost of revenue 57 39 155 121
Total cost of revenue 57,319 43,416 159,511 122,194
Net revenue 76,030 62,667 215,257 173,562
Expenses and other income:
Store operating expenses 33,538 29,375 97,034 83,887
Administrative expenses 11,550 10,296 34,053 29,224
Depreciation and amortization 2,825 2,505 8,293 7,587
Interest expense 39 74 105 347
Interest income (56) (22) (221) (45)
Total expenses and other income 47,896 42,228 139,264 121,000
Income from continuing operations before income taxes 28,134 20,439 75,993 52,562
Provision for income taxes 9,850 7,209 26,600 18,940
Income from continuing operations 18,284 13,230 49,393 33,622
Income from discontinued operations, net of tax 149 1,007 6,934 4,480
Net income $ 18,433 $ 14,237 $ 56,327 $ 38,102
Basic income per share:
Income from continuing operations (basic) $ 0.60 $ 0.44 $ 1.60 $ 1.12
Income from discontinued operations (basic) -- 0.03 0.22 0.15
Net income per basic share $ 0.60 $ 0.47 $ 1.82 $ 1.27
Diluted income per share:
Income from continuing operations (diluted) $ 0.59 $ 0.43 $ 1.56 $ 1.09
Income from discontinued operations (diluted) -- 0.03 0.22 0.14
Net income per diluted share $ 0.59 $ 0.46 $ 1.78 $ 1.23
Weighted average shares outstanding:
Basic 30,348 30,253 30,915 30,118
Diluted 31,195 31,041 31,713 30,855
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
2011 2010 2010
(in thousands)
ASSETS
Cash and cash equivalents $ 48,410 $ 32,694 $ 67,240
Pawn loan fees and service charges receivable 11,472 10,713 10,446
Pawn loans 77,973 72,012 70,488
Consumer loans, net 929 1,041 995
Inventories 54,916 44,018 47,406
Other current assets 6,745 8,239 8,423
Total current assets 200,445 168,717 204,998
Property and equipment, net 68,620 55,653 58,425
Goodwill, net 69,404 68,409 68,595
Other non-current assets 2,804 2,530 2,668
Non-current assets of discontinued operations -- 7,760 7,760
Total assets $ 341,273 $ 303,069 $ 342,446
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of notes payable $ 487 $ 458 $ 465
Accounts payable and accrued liabilities 31,140 27,327 27,730
Income taxes payable and deferred taxes payable 7,280 6,617 6,427
Total current liabilities 38,907 34,402 34,622
Notes payable, net of current portion 1,018 1,505 1,386
Deferred income tax liabilities 5,461 6,822 8,434
Total liabilities 45,386 42,729 44,442
Stockholders' equity 295,887 260,340 298,004
Total liabilities and stockholders' equity $ 341,273 $ 303,069 $ 342,446
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION
(UNAUDITED)
The following table details the components of revenue for the three months ended September 30, 2011, as compared to the three months ended September 30, 2010 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year results at prior year average exchange rates, which is more fully described elsewhere in this release.
Three Months Ended Increase/(Decrease)
September 30, Constant Currency
2011 2010 Increase/(Decrease) Basis
United States revenue:
Retail merchandise sales $ 20,000 $ 17,199 $ 2,801 16 % 16 %
Scrap jewelry sales 15,661 10,891 4,770 44 % 44 %
Pawn loan fees 13,452 11,022 2,430 22 % 22 %
Credit services fees 12,336 12,341 (5) -- --
Consumer loan fees 32 24 8 33 % 33 %
Other revenue 247 232 15 6 % 6 %
61,728 51,709 10,019 19 % 19 %
Mexico revenue:
Retail merchandise sales 38,157 28,135 10,022 36 % 30 %
Scrap jewelry sales 13,984 9,712 4,272 44 % 44 %
Pawn loan fees 18,289 15,356 2,933 19 % 14 %
Consumer loan fees 1,191 1,170 21 2 % (2)%
Other revenue -- 1 (1) (100)% (100)%
71,621 54,374 17,247 32 % 27 %
Total revenue:
Retail merchandise sales 58,157 45,334 12,823 28 % 25 %
Scrap jewelry sales 29,645 20,603 9,042 44 % 44 %
Pawn loan fees 31,741 26,378 5,363 20 % 18 %
Credit services fees 12,336 12,341 (5) -- --
Consumer loan fees 1,223 1,194 29 2 % (2)%
Other revenue 247 233 14 6 % 6 %
$ 133,349 $ 106,083 $ 27,266 26 % 23 %
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION (CONTINUED)
(UNAUDITED)
The following table details the components of revenue for the nine months ended September 30, 2011, as compared to the nine months ended September 30, 2010 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year results at prior year average exchange rates, which is more fully described elsewhere in this release.
Nine Months Ended Increase/(Decrease)
September 30, Constant Currency
2011 2010 Increase/(Decrease) Basis
United States revenue:
Retail merchandise sales $ 59,182 $ 51,037 $ 8,145 16 % 16 %
Scrap jewelry sales 39,987 29,296 10,691 36 % 36 %
Pawn loan fees 37,853 31,596 6,257 20 % 20 %
Credit services fees 35,373 32,434 2,939 9 % 9 %
Consumer loan fees 159 162 (3) (2)% (2)%
Other revenue 831 756 75 10 % 10 %
173,385 145,281 28,104 19 % 19 %
Mexico revenue:
Retail merchandise sales 109,420 76,811 32,609 42 % 35 %
Scrap jewelry sales 34,876 29,165 5,711 20 % 20 %
Pawn loan fees 53,424 41,122 12,302 30 % 23 %
Consumer loan fees 3,661 3,365 296 9 % 3 %
Other revenue 2 12 (10) (83)% (84)%
201,383 150,475 50,908 34 % 28 %
Total revenue:
Retail merchandise sales 168,602 127,848 40,754 32 % 27 %
Scrap jewelry sales 74,863 58,461 16,402 28 % 28 %
Pawn loan fees 91,277 72,718 18,559 26 % 22 %
Credit services fees 35,373 32,434 2,939 9 % 9 %
Consumer loan fees 3,820 3,527 293 8 % 3 %
Other revenue 833 768 65 8 % 8 %
$ 374,768 $ 295,756 $ 79,012 27 % 24 %
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION (CONTINUED)
(UNAUDITED)
The following table details customer loans and inventories held by the Company and active CSO credit extensions from an independent third-party lender as of September 30, 2011, as compared to September 30, 2010 (in thousands). Constant currency results exclude the effects of foreign currency translation and are calculated by translating current year balances at the prior year end-of-period exchange rate, which is more fully described elsewhere in this release.
Balance at Increase/(Decrease)
September 30, Constant Currency
2011 2010 Increase/(Decrease) Basis
United States:
Pawn loans $ 38,791 $ 32,665 $ 6,126 19 % 19 %
CSO credit extensions held by independent third-party (1) 12,763 12,446 317 3 % 3 %
Other 41 36 5 14 % 14 %
51,595 45,147 6,448 14 % 14 %
Mexico:
Pawn loans 39,182 39,347 (165) -- 7 %
Other 888 1,005 (117) (12)% (5)%
40,070 40,352 (282) (1)% 7 %
Total:
Pawn loans 77,973 72,012 5,961 8 % 13 %
CSO credit extensions held by independent third-party (1) 12,763 12,446 317 3 % 3 %
Other 929 1,041 (112) (11)% (4)%
$ 91,665 $ 85,499 $ 6,166 7 % 11 %
Pawn inventories:
U.S. pawn inventories $ 23,149 $ 17,527 $ 5,622 32 % 32 %
Mexico pawn inventories 31,767 26,491 5,276 20 % 29 %
$ 54,916 $ 44,018 $ 10,898 25 % 30 %
(1) CSO amounts are comprised of the principal portion of active CSO extensions of credit by an independent third-party lender, which are not included on the Company's balance sheet, net of the Company's estimated fair value of its liability under the letters of credit guaranteeing the loans.
FIRST CASH FINANCIAL SERVICES, INC.
UNAUDITED NON-GAAP FINANCIAL INFORMATION
The Company uses certain financial calculations, such as free cash flow, EBITDA and constant currency results, which are not considered measures of financial performance under U.S. generally accepted accounting principles ("GAAP"). Items excluded from the calculation of free cash flow, EBITDA and constant currency results are significant components in understanding and assessing the Company's financial performance. Since free cash flow, EBITDA and constant currency results are not measures determined in accordance with GAAP and are thus susceptible to varying calculations, free cash flow, EBITDA and constant currency results, as presented, may not be comparable to other similarly titled measures of other companies. Free cash flow, EBITDA and constant currency results should not be considered as alternatives to net income, cash flow provided by or used in operating, investing or financing activities or other financial statement data presented in the Company's consolidated financial statements as indicators of financial performance or liquidity. Non-GAAP measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures.
Earnings Before Interest, Taxes, Depreciation and Amortization
EBITDA is commonly used by investors to assess a company's leverage capacity, liquidity and financial performance. The following table provides a reconciliation of income from continuing operations to EBITDA (in thousands):
Trailing Twelve Months Ended
September 30,
2011 2010
Income from continuing operations $ 67,145 $ 45,875
Adjustments:
Income taxes 36,328 26,552
Depreciation and amortization 11,157 10,249
Interest expense 149 510
Interest income (273) (52)
Earnings from continuing operations before interest, taxes, depreciation and amortization $ 114,506 $ 83,134
EBITDA margin calculated as follows:
Total revenue from continuing operations $ 502,274 $ 403,909
Earnings from continuing operations before interest, taxes, depreciation and amortization 114,506 83,134
EBITDA as a percentage of revenue 23% 21%
FIRST CASH FINANCIAL SERVICES, INC.
UNAUDITED NON-GAAP FINANCIAL INFORMATION (CONTINUED)
Free Cash Flow
For purposes of its internal liquidity assessments, the Company considers free cash flow, which is defined as cash flow from the operating activities of continuing and discontinued operations reduced by purchases of property and equipment and net cash outflow from pawn and consumer loans. Free cash flow is commonly used by investors as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, repurchase stock, or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company's ability to generate cash flow from business operations and the impact that this cash flow has on the Company's liquidity. The following table reconciles "net cash flow from operating activities" to "free cash flow" (in thousands):
Trailing Twelve Months Ended
September 30,
2011 2010
Cash flow from operating activities, including discontinued operations $ 78,505 $ 85,747
Cash flow from investing activities:
Pawn and consumer loans (18,113) (13,157)
Purchases of property and equipment (26,540) (17,767)
Free cash flow $ 33,852 $ 54,823
Constant Currency
Certain performance metrics discussed in this release are presented on a "constant currency" basis, which may be considered a non-GAAP financial measurement of financial performance under GAAP. The Company's management uses constant currency results to evaluate operating results of certain business operations in Mexico, which are transacted primarily in Mexican pesos. Pawn scrap jewelry in Mexico is sold in U.S. dollars and, accordingly, does not require a constant currency adjustment. Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in Mexican pesos using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons. For balance sheet items, the closing exchange rate at the end of the applicable prior-year period (September 30, 2010) of 12.5 to 1 was used, compared to the current end of period (September 30, 2011) exchange rate of 13.5 to 1. For income statement items, the average closing daily exchange rate for the appropriate period was used. The average exchange rate for the prior-year quarter ended September 30, 2010 was 12.8 to 1, compared to the current-quarter rate of 12.3 to 1. The average exchange rate for the prior-year nine-month period ended September 30, 2010 was 12.7 to 1, compared to the current year-to-date rate of 12.0 to 1.
CONTACT: Rick Wessel, Chairman and Chief Executive Officer
Doug Orr, Executive Vice President and Chief Financial Officer
Phone: (817) 505-3199
Email: investorrelations@firstcash.com
Website: www.firstcash.com
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