First Cash Reports 17% Increase in Second Quarter Earnings Per Share to $0.56; Growth in Pawn Loans and Retail Merchandise Sales
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, July 18, 2012 (GLOBE NEWSWIRE) -- 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
o 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.
o Year-to-date earnings per share from continuing operations increased 16%
to $1.13, compared to $0.97 in the prior year.
o 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
o 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.
o 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.
o 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.
o 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
o The Company's return on equity for the trailing twelve months increased to
a record 24% versus 21% in the respective prior-year period.
o The return on assets over the trailing twelve months remained a
record-level 20% versus 18% in the respective prior-year period.
o 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
o 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.
o 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.
o 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.
o 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.
o 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
o 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.
o 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.
o 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.
o 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 750^th 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^® 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 June 30,
2012:
Pawn Locations Consumer
Large Small Loan Total
Format (1) Format (2) Locations (3) Locations
United States:
Total locations, 137 27 72 236
beginning of period
New locations opened 2 -- -- 2
Locations acquired 25 -- -- 25
Total locations, end 164 27 72 263
of period
Mexico:
Total locations, 443 19 34 496
beginning of period
New locations opened 22 -- -- 22
Locations acquired -- -- -- --
Total locations, end 465 19 34 518
of period
Total:
Total locations, 580 46 106 732
beginning of period
New locations opened 24 -- -- 24
Locations acquired 25 -- -- 25
Total locations, end 629 46 106 781
of period
(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 (1) Format (2) Locations (3) Locations
United States:
Total locations, 132 25 74 231
beginning of period
New locations opened 4 -- -- 4
Locations acquired 28 -- -- 28
Store format -- 2 (2) --
conversions
Total locations, end 164 27 72 263
of period
Mexico:
Total locations, 394 19 34 447
beginning of period
New locations opened 42 -- -- 42
Locations acquired 29 -- -- 29
Total locations, end 465 19 34 518
of period
Total:
Total locations, 526 44 108 678
beginning of period
New locations opened 46 -- -- 46
Locations acquired 57 -- -- 57
Store format -- 2 (2) --
conversions
Total locations, end 629 46 106 781
of period
(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 12,304 12,410 25,291 25,634
services fees
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 3,093 2,716 5,481 4,973
services loss provision
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 50,111 45,544 101,768 91,368
income
Income from continuing
operations before income 24,962 23,390 51,698 47,859
taxes
Provision for income taxes 8,613 8,186 17,837 16,750
Income from continuing 16,349 15,204 33,861 31,109
operations
Income from discontinued -- 134 -- 6,785
operations, net of tax (1)
Net income $ 16,349 $ 15,338 $ 33,861 $ 37,894
Basic income per share:
Income from continuing $ 0.57 $ 0.49 $ 1.16 $ 1.00
operations (basic)
Income from discontinued -- -- -- 0.21
operations (basic)
Net income per basic share $ 0.57 $ 0.49 $ 1.16 $ 1.21
Diluted income per share:
Income from continuing $ 0.56 $ 0.48 $ 1.13 $ 0.97
operations (diluted)
Income from discontinued -- -- -- 0.21
operations (diluted)
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)
June 30, December 31,
2012 2011 2011
(in thousands)
ASSETS
Cash and cash equivalents $ 29,793 $ 68,259 $ 70,296
Pawn loan fees and service charges 13,159 11,862 10,842
receivable
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 440 7,417 9,776
payable
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 (11,788) 1,285 (13,463)
translation adjustments
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.
Three Months Ended Increase/(Decrease)
June 30, Constant Currency
2012 2011 Increase/(Decrease) Basis
United States
revenue:
Retail
merchandise $ 21,200 $ 18,254 $ 2,946 16 % 16 %
sales
Scrap jewelry 11,745 9,744 2,001 21 % 21 %
sales
Pawn loan fees 13,108 11,894 1,214 10 % 10 %
Credit services 11,208 11,114 94 1 % 1 %
fees
Consumer loan 147 31 116 374 % 374 %
fees
Other revenue 235 247 (12) (5)% (5)%
57,643 51,284 6,359 12 % 12 %
Mexico revenue:
Retail
merchandise 41,061 37,836 3,225 9 % 25 %
sales
Scrap jewelry 12,301 11,524 777 7 % 7 %
sales
Pawn loan fees 20,824 18,670 2,154 12 % 29 %
Consumer loan 949 1,265 (316) (25)% (13)%
fees
Other revenue -- 2 (2) (100)% (100)%
75,135 69,297 5,838 8 % 22 %
Total revenue:
Retail
merchandise 62,261 56,090 6,171 11 % 22 %
sales
Scrap jewelry 24,046 21,268 2,778 13 % 13 %
sales
Pawn loan fees 33,932 30,564 3,368 11 % 21 %
Credit services 11,208 11,114 94 1 % 1 %
fees
Consumer loan 1,096 1,296 (200) (15)% (4)%
fees
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.
Six Months Ended Increase/(Decrease)
June 30, Constant Currency
2012 2011 Increase/(Decrease) Basis
United States
revenue:
Retail
merchandise $ 46,262 $ 39,182 $ 7,080 18 % 18 %
sales
Scrap jewelry 26,781 24,326 2,455 10 % 10 %
sales
Pawn loan fees 27,647 24,401 3,246 13 % 13 %
Credit services 23,163 23,037 126 1 % 1 %
fees
Consumer loan 178 127 51 40 % 40 %
fees
Other revenue 546 584 (38) (7)% (7)%
124,577 111,657 12,920 12 % 12 %
Mexico revenue:
Retail
merchandise 78,643 71,263 7,380 10 % 23 %
sales
Scrap jewelry 21,527 20,892 635 3 % 3 %
sales
Pawn loan fees 41,197 35,135 6,062 17 % 31 %
Consumer loan 1,950 2,470 (520) (21)% (12)%
fees
Other revenue -- 2 (2) (100)% (100)%
143,317 129,762 13,555 10 % 21 %
Total revenue:
Retail
merchandise 124,905 110,445 14,460 13 % 21 %
sales
Scrap jewelry 48,308 45,218 3,090 7 % 7 %
sales
Pawn loan fees 68,844 59,536 9,308 16 % 24 %
Credit services 23,163 23,037 126 1 % 1 %
fees
Consumer loan 2,128 2,597 (469) (18)% (9)%
fees
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.
Balance at Increase/(Decrease)
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 13,462 12,167 1,295 11 % 11 %
by independent
third-party (1)
Other consumer 1,242 46 1,196 2,600 % 2,600 %
loans
57,300 48,596 8,704 18 % 18 %
Mexico:
Pawn loans 45,702 43,271 2,431 6 % 22 %
Other consumer 793 1,026 (233) (23)% (10)%
loans
46,495 44,297 2,198 5 % 22 %
Total:
Pawn loans 88,298 79,654 8,644 11 % 20 %
CSO credit
extensions held 13,462 12,167 1,295 11 % 11 %
by independent
third-party (1)
Other consumer 2,035 1,072 963 90 % 102 %
loans
$ 103,795 $ 92,893 $ 10,902 12 % 20 %
Pawn
inventories:
U.S. pawn $ 24,415 $ 20,030 $ 4,385 22 % 22 %
inventories
Mexico pawn 28,563 34,606 (6,043) (17)% (4)%
inventories
$ 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 $ 123,835 $ 106,560
interest, taxes, depreciation and amortization
EBITDA margin calculated as follows:
Total revenue from continuing operations $ 547,777 $ 475,008
Earnings from continuing operations before 123,835 106,560
interest, taxes, depreciation and amortization
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 $ 84,693 $ 75,938
discontinued operations
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.
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
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