Firstcash Holdings, Inc. · NASDAQ:FCFS
Firstcash — Investor Presentation (June 2017)
48 slides from Firstcash's investor presentation, June 2017
Slide 1: Investor Presentation June 2017
Investor Presentation June 2017
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS “This presentation contains “forward-looking statements” (as defined in the Securities Litigation Reform Act of 1995) regarding, among other things, future events or the future financial performance of FirstCash. Words such as “believes,” “projects,” “expects,” “may,” “est
Slide 3: FirstCash at a Glance
FIRSTCASH AT A GLANCE Overview Revenue • A leading pawn operator with over 2,000 store ($ in millions) $1,757 locations in 26 U.S. states and Latin America, including Mexico, Guatemala and El Salvador $1,088 • Retailer of pre-owned consumer products including: $705 – Consumer electronics & appliance
Slide 4: Recap of Recent Cash America Merger
RECAP OF RECENT CASH AMERICA MERGER Transaction • 100% stock-for-stock tax free transaction, which creates $2.4bn Overview market capitalization pawn operator ($1.4bn for FCFS, $1.0bn (September 2016) for CSH) • 0.840x FCFS shares for each CSH share • Merged company renamed FirstCash, Inc. and headq
Slide 5: Largest Pawn Operator in the Americas
LARGEST PAWN OPERATOR IN THE AMERICAS Combined entity has over 2,000 stores − 1,124 stores across 26 states in the U.S. with 966 stores in Latin America U.S. operations – 26 states Mexico operations – all states First Cash States Cash America States Shared States Sonora Chihuahua Coahuila Quintana R
Slide 6: Pawn Transaction Cycle
PAWN TRANSACTION CYCLE Customer Enters Store ~20% ~80% Pawn Loan Sells Asset to Company (Collateralized with Asset) Avg. Loan = $154 in U.S. $62 in LatAm ~25% ~75% Customer Does Not Customer Repays Loan Repay & Fee Retail Sales Pawn Service Fees Avg. Margin = 36% Monthly Yield = 12%-13% Note: As of
Slide 7: Product Mix
PRODUCT MIX Pro forma 2016 results include Cash America for the full 12 month period Total Revenue Net Revenue 7% 1% 7% 5% 30% $1.8 Billion $1.0 Billion 38% 54% 58% Gross Margin: Merchandise Sales Pawn Fees Consumer Loans / Credit Services Fees Scrap Jewelry Sales 36% 100% 75% 6% 7
Slide 8: Limited Impact from Internet Competition
LIMITED IMPACT FROM INTERNET COMPETITION • Collateral requirements generally limit Internet pawn lending to high value jewelry items • In addition, internet lending platforms require customer to have a bank account • Most of our retail sales are made to our core customer base in their local markets
Slide 9: Integration Update
INTEGRATION UPDATE Corporate Office – Completed headquarters consolidation of the First Cash Arlington, Texas operations into Cash America owned building in Fort Worth, Texas in Q1 2017 – Expect to reduce existing footprint in Fort Worth office and increase leasable space for income generating tenan
Slide 10: Significant Synergies Drive Additional Accretion
SIGNIFICANT SYNERGIES DRIVE ADDITIONAL ACCRETION Estimated Amounts Achieved to Date Expected Opportunities • ~$45 million primarily from • $12 million achieved • ~$45 million of run rate technology, finance and other in 2016 synergies expected to be Annual Annual administrative synergies achieved ac
Slide 11: Estimated Administrative Cost Synergies
ESTIMATED ADMINISTRATIVE COST SYNERGIES ($/millions) Excludes depreciation and amortization Guidance Range: $50 $33-$37 $45 $40 $37 $30 $33 $20 $12 $10 $0 2016 Estimated 2017 Estimated Full Run Rate Admin Cost Synergies (Mid 2018) 11
Slide 12: EBITDA Growth Opportunity
EBITDA GROWTH OPPORTUNITY MD&A Adjusted EBITDA(2) • Adjusted EBITDA(2) has continued to grow on both a dollar 18.8% 16.6% 16.3% and margin basis as a result of the Cash America merger 15.3% 15.9% and associated synergies • Adjusted EBITDA Increased from $62mm(1)(2) or 13.6% of revenue in PF Q1 2016
Slide 13: Significant Cash Flow Generation Supports Deleveraging Post Merger
SIGNIFICANT CASH FLOW GENERATION SUPPORTS DELEVERAGING POST MERGER Long-Term Debt ($ in millions) $560 $100 $460 $436 $4 $305 $123 $360 CSH – Credit $337 Facility $181 $181 $260 CSH – Senior $137 Notes $51 FCFS – Credit Facility FCFS – Senior $200 $200 $200 $200 Notes Q2 2016 Repayment of Merger Q3
Slide 14: FirstPawn Technology Platform
FIRSTPAWN TECHNOLOGY PLATFORM Proven, Propriety Pawn Store Operating System Pawn Transactions Retail Ops • Collateral Valuation • Retail POS • Pawn Contracts • Pricing • Customer Loan Disbursements • Inventory Management & Repayments • Layaways • Collateral Storage • Compliance Customers Merchandise
Slide 15: Technology Integration Plan
TECHNOLOGY INTEGRATION PLAN All Stores Will Standardize On The FirstCash FirstPawn System Benefits at the store – Improved transaction times and system reliability – Proprietary real-time pricing look-ups to determine optimum loan to value ratio – Improved on-demand reporting of key performance indi
Slide 16: U.S. Overview
U.S. Overview FirstCash
Slide 17: Domestic Locations
DOMESTIC LOCATIONS Store Count at End of Period 1,178 1,190 1,160 1,107 1,130 1,124 57 65 42 25 982 979 1,007 65 40 39 21 25 951 930 937 20 20 67 83 99 74 252 266 296 293 293 86 102 103 86 88 211 96 135 157 295 304 248 97 95 94 94 748 829 820 801 792 786 641 682 697 475 485 486 2006 2007 2008 2009 2
Slide 18: Q1 U.S. Segment Results
Q1 U.S. SEGMENT RESULTS $400 4.5% Thousands $349 4% $350 4.0% $300 3.5% 3.0% $250 2.5% $200 2.0% $150 1.5% $89 $100 $77 1.0% $50 $22 0.5% $0 0.0% Total Revenue Segment Income1 Same-Store PLB2 CY PY YoY 1 Segment pre-tax operating income; 2 Year-over-year change % in same-store Pawn Loan Balance 18
Slide 19: Pawn and Inventory Composition
PAWN AND INVENTORY COMPOSITION U.S. Operations Segment Pawn Collateral Pawn Inventory 18% 20% 6% 64% 56% 9% 3% 6% 5% 3% 7% 3% Jewelry Electronics Tools Sporting Goods Musical Instruments Other As of 3-31-17 19
Slide 20: Limited Exposure to Gold Price Movement
LIMITED EXPOSURE TO GOLD PRICE MOVEMENT • Lending values on gold can be Reduced Reliance on Scrap ($ in millions, except gold prices) adjusted rapidly $120 186 200 – Loans are typically only 30 days in 180 duration $100 160 – Significant cushion provided by $17 140 conservative loan to value ratios
Slide 21: Stable Regulatory Climate for Pawn
STABLE REGULATORY CLIMATE FOR PAWN • Traditional pawn loans differentiated from most consumer loan products subject to the proposed rules because they are: – Non-recourse loans – Have significantly smaller average loan sizes – Do not involve collection activities, ACH transactions or negative credit
Slide 22: Limited Exposure to New CFPB Rules for Payday Lending
LIMITED EXPOSURE TO NEW CFPB RULES FOR PAYDAY LENDING • On June 2, 2016, the U.S. Consumer Financial Protection Bureau (CFPB) released its proposed rules that affect payday loans, auto title loans, deposit advance products and certain high-cost installment and open-end loans – The proposed rules inc
Slide 23: Population Growth by U.S. State
POPULATION GROWTH BY U.S. STATE Top 15 States by 2015 Population 2015 Store Store % of 2015 Pop. Growth Rank Banked Quartile Pop. Rank Count Dom. TOT vs. 2014 vs. 2013 Un- Under- CA 1 11 1.0% 3 2 Q3 Q2 TX 2 417 37.0% 1 1 Q4 Q4 FL 3 77 6.8% 2 3 Q3 Q2 NY 4 0 0.0% 15 11 Q3 Q4 IL 5 25 2.2% 51 51 Q3 Q1 P
Slide 24: Latin America Operations
Latin America Operations -Firsttasir
Slide 25: Latin America Locations
966 LATIN AMERICA LOCATIONS Latin American Store Additions by Year Acquired 166 stores in Mexico and 13 stores in El Salvador Acquired 47 Mexico 250 Cash America stores 220 Store Additions 200 Acquired 32 stores in Guatemala 150 179 100 91 68 78 70 61 29 8 47 50 32 62 60 13 31 38 41 0 2011 2012 2013
Slide 26: LatAm Revenue Growth & Currency Impact
LATAM REVENUE GROWTH & CURRENCY IMPACT ($/millions) $800 10 Year CAGR 22% $714 $688 $700 $600 $527 $500 $468 $419 $378 $400 $312 $300 $250 $206 $200 $417 $421 $143 $363 $388 $368 $322 $101 $281 $100 $222 $175 $141 $101 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 T12M Q1-2017 Total Revenue,
Slide 27: Q1 LatAm Segment Results
Q1 LATAM SEGMENT RESULTS $120 11% 12.0% $110 Thousands $98 $100 $94 10.0% $80 8.0% $60 6.0% $40 3% 4.0% $21 $23 $21 $20 2.0% $0 0.0% Total Revenue Segment Income1 Same-Store PLB2 CY Constant Currency PY YoY YoY Constant Currency 1 Segment pre-tax operating income; 2 Year-over-year change % in same-s
Slide 28: LatAm Segments Represent a Significant % of Consolidated Operations
LATAM SEGMENTS REPRESENT A SIGNIFICANT % OF FIRSTCASH’S CONSOLIDATED OPERATIONS Number of Pawn Loans Employee Count1 Store Count2 Outstanding 2 1,139,400 8,201 966 42% 51% 46% 8,001 1,124 49% 54% 1,599,265 58% LatAm U.S. 1 As of 12/31/2016 2 As of 3/31/2017 28
Slide 29: Pawn and Inventory Composition
PAWN AND INVENTORY COMPOSITION LatAm Operations Segment Pawn Collateral Pawn Inventory 10% 9% 2% 1% 2% 2% 65% 2% 60% 2% 19% 26% Jewelry Electronics Tools Sporting Goods Musical Instruments Other As of 3-31-17 29
Slide 30: Ongoing Growth Strategy
ONGOING GROWTH STRATEGY • Latin America will be the primary store growth vehicle - significant untapped potential in the region Latin America Existing Latin American growth profile growth strategy remains in place Existing country presence Mexico Substantial infrastructure and cash flows to Near
Slide 31: Mexico and Central America Economic Overview
MEXICO AND CENTRAL AMERICA ECONOMIC OVERVIEW Benefits Include: Mexico • Large unbanked and under-banked populations Metric Stat •GDP (USD) $1.1 Trillion • Limited competition from large •Population/Growth 129 million/1.3% format operators •Area 758,000 Sq. Mi. • Solid and stable economics •Currency
Slide 32: Rationale for Colombia Expansion
RATIONALE FOR COLOMBIA EXPANSION Population Growth for South America 2015 Pop. Pop. Projections* GUYANA (millions) 2030 2050 VENEZUELA SURINAME FRENCH GUIANA Brazil 206.1 223.1 226.3 COLOMBIA* Colombia 48.8 53.3 55.0 ECUADOR Argentina 43.6 49.1 55.2 Peru 31.5 35.9 40.1 BRAZIL Venezuela 31.0 36.1 40.
Slide 33: Proven Mexico New Store Opening Process
PROVEN MEXICO NEW STORE OPENING PROCESS Opened first stores in Mexico in 1999 Experienced real estate development team Proven site selection strategy Standardized store layouts, fixtures and equipment State of the art security technology Consistent process ensures the new stores are deli
Slide 34: Mexico New Store Peso Investment
MEXICO NEW STORE PESO INVESTMENT Proven Rapid Payback Model ($/MXN) Typical Mexico New Store Ramp New Store Cash Flow Year 1 Year 2 Year 3 Year 4 Year 5 Store Investment (MXN $) Op Margin (3%) 18% 22% 25% 26% Cap Ex $3,200,000 $10,000 $5,000 - Leasehold improvements & fixtures $8,000 $4,000 - Comput
Slide 35: Financial Information
Financial Information -Firsttasir
Slide 36: Revenue Growth
REVENUE GROWTH ($/millions) $2,000 $1,770 $1,800 $1,600 $1,400 $1,200 $1,088 Revenue $1,353 $1,000 $800 $661 $713 $705 $671 $600 $298 $325 $337 $400 $200 $363 $388 $368 $417 $417 $0 2013 2014 2015 2016 *2016 LatAm U.S. Proforma *2016 proforma includes Cash America’s revenue for the full 12 months of
Slide 37: Adjusted EBITDA Growth
ADJUSTED EBITDA GROWTH ($/millions) Guidance Range: $266-$277 $300 $277 $250 $200 Adjusted EBITDA $150 $266 $100 $180 $148 $132 $50 $0 2014 2015 2016 *2017 2 Adj. EBITDA 1 Guidance 1Adjusted EBITDA is a non-GAAP number. See appendix for reconciliation to Net Income. 2The guidance, announced on 4/27/
Slide 38: FirstCash 2017 Guidance
FIRSTCASH 2017 GUIDANCE* • Fiscal full-year 2017 guidance for adjusted earnings per share, a non- GAAP measure that excludes merger and other acquisition expenses, to be in the range of $2.50 to $2.65 – The guidance for the second quarter of 2017 is $0.42 to $0.47 of adjusted earnings per share. – 2
Slide 39: Balance Sheet
BALANCE SHEET ($/millions) Liabilities to Equity Liabilities to Equity Ratio 71.6% Ratio 37.4% $2,500 $2,500 $2,044 $2,044 $2,000 $2,000 $220 $337 $937 $1,500 $1,500 $1,000 $754 $1,000 $754 $75 $1,487 $500 $240 $322 $1,107 $500 $439 $432 $0 $0 Q1-2016 Q1-2017 Q1-2016 Q1-2017 Liabilities and Equity L
Slide 40: Leverage Profile
LEVERAGE PROFILE ($/millions) $600 $560 $500 $436 $460 $4 $400 $360 $337 $181 $260 $300 $137 $51 $200 $100 $200 $200 $200 $200 $0 6/30/2016 9/30/2016 12/31/2016 3/31/2017 FCFS Senior Notes CSH Notes FCFS Line of Credit CSH Line of Credit 40
Slide 41: New Bond Offering & Share Repurchase Authorization
NEW BOND OFFERING & SHARE REPURCHASE AUTHORIZATION • In May of 2017 FirstCash issued $300 million of senior notes due in 2024. The Notes pay interest semi-annually at a rate of 5.375% per annum and will be unsecured senior obligations of the Company. • The Company intends to use the net proceeds fro
Slide 42: Over $1 Billion in Cumulative Investments & Shareholder Payouts
OVER $1 BILLION IN CUMULATIVE INVESTMENTS & SHAREHOLDER PAYOUTS Cumulative Total $1,100 $ Millions Stock Repurchases & Dividends: $1,000 - 12,279,339 split-adjusted shares repurchased - $29.0 million in cumulative dividends paid $900 Acquisitions Since 2004: $800 - 161 stores acquired in U.S. $377 -
Slide 43: Top Shareholders and Shareholder Breakdown
TOP 10 SHAREHOLDERS AND SHAREHOLDER BREAKDOWN Institution Name Shares (FCFS) % S/O (FCFS) Dominant Style l BlackRock Fund Advisors (U.S.) 5,488,603 11.36 Index l l The Vanguard Group, Inc. (U.S.) 4,147,634 8.59 Index l l Fiduciary Management, Inc. (U.S.) 3,029,034 6.27 Value l l Dimensional Fund Adv
Slide 44: FirstCash Investment Recap
FIRSTCASH INVESTMENT RECAP • International pawn-focused business model ⦁ Focused on small secured loans to underbanked consumers with limited access to traditional credit products ⦁ Focus on large format, full-service model is a significant competitive advantage ⦁ Strong margins & cash flows allow f
Slide 45: Appendix
— Appendix -Firsttasir
Slide 46: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION The Company uses certain financial calculations, such as adjusted net income, adjusted net income per share, adjusted EBITDA, free cash flow and constant currency results (collectively "Non-GAAP Measures"), which are not considered measures of financial performance und
Slide 47: Reconciliation of Net Income to Adjusted EBITDA
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA ($/millions) Year Ended December 31, 2016 2015 2014 Net Income $60,127 $60,710 $85,166 Income taxes 33,320 26,971 31,542 Depreciation and amortization (1) 31,865 17,446 17,476 Interest expense 20,320 16,887 13,527 Interest Income (751) (1,566) (682) EB
Slide 48: Investor Contact Information
INVESTOR CONTACT INFORMATION Investor Relations Gar Jackson [email protected] Global IR Group ir.firstcash.com [email protected] (817) 258-2650 (949) 873-2789 48