FirstCash Reports Record Third Quarter Operating Results; Strength in U.S. Pawn Segment Drives Record Revenue and Earnings; Declares Quarterly Cash Dividend

FORT WORTH, Texas, Oct. 24, 2024 (GLOBE NEWSWIRE) -- FirstCash Holdings, Inc. ("FirstCash” or the "Company”) (Nasdaq: FCFS), the leading international operator of more than 3,000 retail pawn stores and a leading provider of retail point-of-sale ("POS”) payment solutions through American First Finance ("AFF”), today announced operating results for the three and nine month periods ended September 30, 2024. The Company also announced that the Board of Directors declared a quarterly cash dividend of $0.38 per share, which will be paid in November 2024.

Mr. Rick Wessel, chief executive officer, stated, "FirstCash achieved record revenue and earnings results for both the third quarter and year-to-date periods. Impressive third quarter achievements also included a fifth consecutive quarter of double-digit growth in same-store pawn receivables for the U.S. pawn segment. The LatAm pawn segment also saw continued growth in local currency pawn revenues and receivables, while AFF recorded a 14% increase in third quarter gross origination volumes driven primarily by 25% growth in new merchant locations.

"Expansion of retail pawn locations continues to be robust as well, with the opening of 16 new pawn stores in the third quarter and the combined opening and acquisition of 83 total stores during the first nine months of this year. Growth in the number of stores and earning assets, coupled with consistent shareholder returns through dividends and share repurchases, continue to be funded primarily through operating cash flows.”

This release contains adjusted financial measures, which exclude certain non-operating and/or non-cash income and expenses, that are non-GAAP financial measures. Please refer to the descriptions and reconciliations to GAAP of these and other non-GAAP financial measures at the end of this release.

• Gross revenues totaled $837 million in the third quarter, an increase of 6% on a U.S. dollar basis and 9% on a constant currency basis compared to the prior-year quarter. Year-to-date revenues totaled $2.5 billion, an increase of 9%, in both dollars and constant currency, compared to the prior-year period.
• Diluted earnings per share for the third quarter increased 14% over the prior-year quarter on a GAAP basis while adjusted diluted earnings per share increased 7% compared to the prior-year quarter. Year-to-date diluted earnings per share increased 19% over the prior-year period on a GAAP basis while adjusted diluted earnings per share increased 14% compared to the prior-year period.
• Net income for the third quarter increased 13% over the prior-year quarter on a GAAP basis while adjusted net income increased 6% compared to the prior-year quarter. Year-to-date, net income totaled $175 million on a GAAP basis while adjusted net income was $207 million. 
• For the trailing twelve month period ended September 30, 2024:
  • Revenues totaled a record $3.4 billion
  • Net income totaled $245 million on a GAAP basis while adjusted net income was $300 million
  • Adjusted EBITDA was $554 million
  • Operating cash flows were $441 million and adjusted free cash flows were $217 million

• Pawn Stores - 16 new pawn locations were added in the third quarter through acquisitions and new store openings. Year-to-date through September 30, 2024, a total of 83 pawn locations have been added:
  • One U.S. store was acquired in Georgia during the third quarter. Year-to-date through September 30, 2024, a total of 29 new locations have opened or been acquired in the U.S.
  • There were 15 new store openings in Latin America in the third quarter which included 11 locations in Mexico and four locations in Guatemala. Year-to-date through September 30, 2024, a total of 54 new locations have opened in Latin America.
  • As of September 30, 2024, the Company had 3,025 locations, comprised of 1,201 U.S. locations and 1,824 locations in Latin America.
• Retail POS Payment Solutions (AFF) Merchant Partnerships - At September 30, 2024, there were approximately 13,500 active retail and e-commerce merchant partner locations, representing a 25% increase in the number of active merchant locations compared to a year ago.

• Segment pre-tax operating income in the third quarter of 2024 was a record $98 million, an increase of $14 million, or 16%, compared to the prior-year quarter. The resulting segment pre-tax operating margin was 25% for the third quarter of 2024 which is consistent with the margin for the prior-year quarter.
• Year-to-date segment pre-tax operating income increased by $48 million, or 20%, compared to the prior-year period. The pre-tax operating margin increased to 25% for the year-to-date period, as compared to the 24% margin for the prior-year period.
• Pawn receivables continued to grow to record levels, increasing 12% in total at September 30, 2024 compared to the prior year. The increase in total pawn receivables was driven by a 4% increase in the weighted-average U.S. store count coupled with an impressive 10% same-store increase. The same-store increase was driven by a 7% increase in average loan size and a 3% increase in the number of loans outstanding.
• Pawn loan fees increased 13% for the third quarter and 18% year-to-date, while on a same-store basis, pawn loan fee revenue increased 8% for the quarter and 11% year-to-date compared to the respective prior-year periods. The increased pawn loan fee revenue reflected both store growth and continued growth in demand for pawn loans.

• Retail merchandise sales increased 15% in the third quarter of 2024 compared to the prior-year quarter, while same-store retail sales increased 7% compared to the prior-year quarter.
• Retail sales margins were 43% for the third quarter, improving sequentially over the second quarter and in-line with the prior-year margins. Year-to-date margins were 42% compared to 43% in the prior-year period.
• Annualized inventory turnover was 2.8 times for the trailing twelve months ended September 30, 2024, which equaled the prior-year annualized inventory turnover. Inventories aged greater than one year at September 30, 2024 remained low at 2% of total inventories.
• Operating expenses for the third quarter increased 12% in total due to the 4% weighted-average store count growth over the past year and increased same-store expenses of 6% compared to the prior-year period.

Note: Certain growth rates below are calculated on a constant currency basis, a non-GAAP financial measure defined at the end of this release. The average Mexican peso to U.S. dollar exchange rate for the third quarter of 2024 was 18.9 pesos / dollar, an unfavorable change of 11% versus the comparable prior-year period, and for the nine month period ended September 30, 2024 was 17.7 pesos / dollar, a favorable change of 1% versus the prior-year period.

• Third quarter segment pre-tax operating income totaled $38 million, a 6% decline on a U.S. dollar-basis compared to the prior year due primarily to an 11% decline in the Mexican peso exchange rate. On a constant currency basis, segment income increased 2% for the quarter. The resulting pre-tax operating margin was 19% compared to 20% in the prior-year quarter.
• Year-to-date segment pre-tax operating income totaled $107 million, a 4% decline on a U.S. dollar-basis compared to the prior-year period due primarily to increased labor costs and store expansion expenses as described further below. The year-to-date pre-tax operating margin was 18% compared to 19% in the prior-year period.
• While total and same-store pawn loan fees in the third quarter decreased 4% on a U.S. dollar-basis, they increased 6% on a constant currency basis compared to the prior-year quarter. Year-to-date pawn loan fees increased 7%, or 6% on a constant currency basis, compared to the prior-year period. Same-store pawn loan fees were up 6%, both in total and on a constant currency basis, compared to the prior year-to-date period.
• While total and same-store receivables at September 30, 2024 were down 4% on a U.S. dollar basis, they increased 6% on a constant currency basis compared to the prior year.
• Both total and same-store retail merchandise sales in the third quarter of 2024 decreased 3% on a U.S. dollar basis, but increased 7% on a constant currency basis compared to the prior-year quarter. Year-to-date retail merchandise sales increased 4% in total and on a constant currency basis while same-store retail merchandise sales increased 4%, or 3% on a constant currency basis.
• Retail margins were 35% for the third quarter of 2024 compared to 36% in the prior-year quarter. Annualized inventory turnover was 4.2 times for the trailing twelve months ended September 30, 2024 compared to 4.3 times in the prior-year period. Inventories aged greater than one year at September 30, 2024 remained extremely low at 1%.
• Operating expenses decreased 1% in total and 2% on a same-store basis compared to the prior-year quarter. On a constant currency basis, they increased 8% in total and on a same-store basis. The increase in constant currency expenses from all stores reflected increased store counts, accelerated store opening activity and higher labor costs (due primarily to further increases in the federal minimum wage and other mandated benefit programs), along with other inflationary impacts.

• Third quarter segment pre-tax operating income totaled $30 million compared to $39 million in the prior-year quarter, as a significant $35 million dollar increase in gross transaction origination volume over the same quarter last year drove an increase in up-front lifetime lease and loan loss provisioning of approximately $10 million.
• Year-to-date segment pre-tax operating income totaled $89 million, a 1% increase over the prior-year period which was also generally consistent with year-to-date gross origination activity.
• Segment revenues for the quarter, comprised of lease-to-own ("LTO”) fees and interest and fees on finance receivables, were flat compared to the prior-year quarter while increasing 4% year-to-date.
• Gross transaction volume of lease and loan originations during the third quarter increased $35 million, or 14%, compared to last year, driven primarily by the 25% increase in active merchant door counts and continued growth in non-furniture verticals. Excluding furniture, third quarter origination volume increased approximately 35%. For the year-to-date period, overall gross transaction volume increased 5% over the same prior-year period and was up 23% excluding furniture.
• Combined gross leased merchandise and finance receivables outstanding at September 30, 2024 increased 1% compared to the September 30, 2023 balances.
• The combined lease and loan loss provision as a percentage of the total gross transaction volume originated was 28% for the third quarter of 2024, compared to the 29% provisioning rate in the third quarter of 2023. The resulting allowance on combined leased merchandise and finance receivables at September 30, 2024 was 44% of gross leased merchandise and receivables, which was consistent with the prior year.
• The average monthly net charge-off ("NCO”) rate for combined leased merchandise and finance receivable products was 5.8% for the third quarter of 2024 and 5.2% for the year-to-date period. While slightly above the prior year, charge-offs remain within the range of forecast expectations.
• Operating expenses were flat compared to the prior-year quarter and the year-to-date period, which was reflective of continued realization of operating synergies.

• Each of the Company's business segments generated significant operating cash flows during the twelve month period ended September 30, 2024. Consolidated operating cash flows for the twelve month period ended September 30, 2024 totaled $441 million and adjusted free cash flows (a non-GAAP measure) were $217 million.
• The operating cash flows helped fund significant growth in earning assets and continued investments in the store platform over the past twelve months with a nominal increase in net debt:
  • A total of 36 pawn stores were acquired for a combined purchase price of $82 million.
  • 64 new, or de novo, pawn stores were added with a combined investment of $20 million in fixed assets and working capital.
  • Investments in real estate totaled $78 million as the Company purchased the underlying real estate at 63 of its existing pawn stores, bringing the number of owned properties to over 380 locations.
• In August 2024, the Company amended its U.S. revolving commercial bank credit facility to increase the total lender commitment from $640 million to $700 million with two new banks added to the commercial bank lending group. The term of the facility was extended through August 8, 2029. In addition, the permitted consolidated leverage ratio was increased to 3.25 times adjusted EBITDA for the full term of the agreement, while the other financial covenants remain substantially unchanged.
• Over $1.5 billion of the Company's long-term financing remains fixed rate debt with favorable interest rates ranging from 4.625% to 6.875% and maturity dates that do not begin until 2028 and continue into 2032.
• Based on trailing twelve month results, the net debt to adjusted EBITDA ratio was 2.96x at September 30, 2024.

• The Board of Directors declared a $0.38 per share fourth quarter cash dividend, which will be paid on November 27, 2024 to stockholders of record as of November 15, 2024. This represents an annualized dividend of $1.52 per share. Any future dividends are subject to approval by the Company's Board of Directors.
• Year-to-date, the Company has repurchased $85 million of common stock. The Company has $115 million available under the $200 million share repurchase program authorized in July 2023. Future share repurchases are subject to expected liquidity, acquisitions and other investment opportunities, debt covenant restrictions, market conditions and other relevant factors.
• The Company generated a 12% return on equity and a 6% return on assets for the twelve months ended September 30, 2024. Using adjusted net income for the twelve months ended September 30, 2024, the adjusted return on equity was 15% while the adjusted return on assets was 7%.

The outlook for the remainder of 2024 continues to be highly positive, with expected year-over-year growth in consolidated revenue and earnings driven by the continued growth in earning asset balances coupled with store additions. Anticipated conditions and trends for the fourth quarter include the following:

Pawn Operations:

• Pawn operations are expected to remain the primary earnings driver in 2024 as the Company expects segment income from the combined U.S. and Latin America pawn segments to be over 80% of total segment level pre-tax income for the full year.
• The company is targeting the addition of approximately 90 total pawn locations for 2024 through a combination of new store openings and acquisitions.

• Pawn receivables were up 12% at September 30, 2024 compared to a year ago, with October balances to date up similarly. Resulting pawn fees are expected to increase in the range of 10% to 12%.
• Retail sales growth is expected to remain in-line with the inventory growth of 10% at the most recent quarter end while retail margins are projected to remain consistent with the year-to-date results.

• Latin America results in the fourth quarter are expected to be negatively impacted by the lower exchange rate for the Mexican peso which has recently been in a range of 19 to 20 pesos per U.S. dollar.
• Pawn loan growth to-date in October is up approximately 8% on a constant currency basis, although down 2% on a U.S. dollar basis as compared to the prior year assuming the current exchange rate. A similar result is projected for constant currency fourth quarter pawn fees.
• Retail sales in Latin America are also expected to increase in-line with inventory growth of 9% on a constant currency basis and are expected to be roughly flat to the prior year on a U.S. dollar basis, assuming the current exchange rate, with consistent retail margins.

• While weakness in the macro furniture retail environment continues to negatively impact performance from many of its merchant retail partners in the furniture retail vertical, year-over-year growth in gross transaction volumes is still projected for the full year and fourth quarter of 2024, driven by increasing active merchant doors and further expansion of non-furniture verticals. Resulting full year gross revenues for 2024 are expected to remain at or above the prior-year level. AFF now expects furniture to account for less than 40% of 2024 originations compared to almost 50% in 2023.
• The origination and revenue outlook takes into consideration the previously announced bankruptcy filing of Conn's Home Plus which now assumes minimal originations from November 2024 forward from this merchant relationship.
• Anticipated provision rates (combined provision for lease and loan losses as a percentage of the total gross transaction volume originated) are expected to range between 25% and 28% in the fourth quarter of the year.

• Interest expense for the fourth quarter is expected to be consistent with the prior year.
• The full year 2024 effective income tax rate under current tax codes in the U.S. and Latin America is expected to range from 24.5% to 25.5%.
• Each full point change in the exchange rate of the Mexican peso represents an annual earnings impact of approximately $0.10 per share.

Mr. Wessel provided additional insights on the Company's third quarter results and outlook for the remainder of 2024, "Our results continue to demonstrate strong fundamental product demand trends which we expect to drive future revenue and earnings growth.

"The U.S. pawn segment again saw continued record levels of demand for pawn loans and record per store loan balances. The 10% growth in same-store pawn receivables is especially strong given that the comparative prior-year comp was 11%. On a stacked, two-year basis, same-store pawn loans are up 21% compared to the third quarter of 2022, illustrating tremendous, continued momentum in the business. Demand trends in October remain strong and we believe lending volumes should continue to also benefit from increased gold prices while our inventories are well positioned for the holiday sales season.

"In Latin America, currency adjusted pawn receivables and pawn fees continued to show impressive growth in the third quarter, with further acceleration to date in October, while third quarter retail sales grew even faster. While the volatility of the Mexican peso slightly impacted third quarter earnings results by approximately $0.04 per share, there is minimal impact on cash flows as we continue to reinvest a large portion of our cash flows in Latin America. We believe in the long term opportunity for Latin America, driven by near-shore manufacturing expansion and the use of pawn loans being an integral part of the economy for our customer base.

"Unit growth in both pawn segments remains exceptional. We have now added 83 stores this year and a total of 240 stores since the beginning of 2023. Looking ahead, we continue to see and evaluate expansion opportunities across markets in both the U.S. and Latin America.

"AFF's gross transaction volumes in the third quarter improved both sequentially and year-over-year (even when excluding Conn's Home Plus third quarter closeout volume) with significant contributions from both new doors and expanding non-furniture verticals driven largely by robust productivity from our field sales channel. Excluding furniture, third quarter origination volume increased approximately 35%. This growth has led to a further decrease in large merchant concentration risk, with the largest merchant partner now representing approximately 12% of current total gross transaction volume. Additionally, combined lease and loan losses remain well within our target metrics while the combined reserve remains consistent at over 40% of the total portfolio.

"All of FirstCash's business segments continue to generate strong cash flows while its balance sheet remains highly liquid. Over 60% of pawn loans are collateralized with jewelry, which is primarily gold and very liquid, while almost 50% of retail inventories are comprised of jewelry that typically has the highest margins. Our balance sheet maintains favorable unsecured financing featuring long-dated maturities at attractive rates. Accordingly, we believe that we are well positioned to drive continued shareholder value through organic store growth, strategic acquisitions, dividends and share repurchases,” concluded Mr. Wessel.

About FirstCash

FirstCash is the leading international operator of pawn stores focused on serving cash and credit-constrained consumers. FirstCash's more than 3,000 pawn stores in the U.S. and Latin America buy and sell a wide variety of jewelry, electronics, tools, appliances, sporting goods, musical instruments and other merchandise, and make small non-recourse pawn loans secured by pledged personal property. FirstCash's pawn segments in the U.S. and Latin America currently account for approximately 80% of segment earnings, with the remainder provided by its wholly owned subsidiary, AFF, which provides lease-to-own and retail finance payment solutions for consumer goods and services.

FirstCash is a component company in both the Standard & Poor's MidCap 400 Index® and the Russell 2000 Index®. FirstCash's common stock (ticker symbol "FCFS”) is traded on the Nasdaq, the creator of the world's first electronic stock market. For additional information regarding FirstCash and the services it provides, visit FirstCash's websites located at http://www.firstcash.com and http://www.americanfirstfinance.com.

Forward-Looking Information     

This release contains forward-looking statements about the business, financial condition, outlook and prospects of FirstCash Holdings, Inc. and its wholly owned subsidiaries (together, the "Company”), including the Company's outlook for 2024. 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 "outlook,” "believes,” "projects,” "expects,” "may,” "estimates,” "should,” "plans,” "targets,” "intends,” "could,” "would,” "anticipates,” "potential,” "confident,” "optimistic,” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, guidance, expectations, outlook and future plans. Forward-looking statements can also be identified by the fact 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.

While the Company believes the expectations reflected in forward-looking statements are reasonable, there can be no assurances such expectations will prove to be accurate. Security holders are cautioned that such forward-looking statements involve risks and uncertainties. Certain factors may cause results to differ materially from those anticipated by the forward-looking statements made in this release. Such factors may include, without limitation, risks related to the extensive regulatory environment in which the Company operates; risks associated with the legal and regulatory proceedings that the Company is a party to or may become a party to in the future, including the Consumer Financial Protection Bureau (the "CFPB”) lawsuit filed against the Company; risks related to the Company's acquisitions, including the failure of the Company's acquisitions to deliver the estimated value and benefits expected by the Company and the ability of the Company to continue to identify and consummate acquisitions on favorable terms, if at all; potential changes in consumer behavior and shopping patterns which could impact demand for the Company's pawn loan, retail, lease-to-own ("LTO”) and retail finance products; labor shortages and increased labor costs; a deterioration in the economic conditions in the United States and Latin America, including as a result of inflation, elevated interest rates and higher gas prices, which potentially could have an impact on discretionary consumer spending and demand for the Company's products; currency fluctuations, primarily involving the Mexican peso; competition the Company faces from other retailers and providers of retail payment solutions; the ability of the Company to successfully execute on its business strategies; contraction in sales activity at merchant partners of the Company's retail POS payment solutions business; impact of store closures, financial difficulties or even bankruptcies at the merchant partners of the Company's retail POS payment solutions business; and other risks discussed and described in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC”), including the risks described in Part 1, Item 1A, "Risk Factors” thereof, and other reports filed with the SEC. Many of 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. The forward-looking statements contained in this release speak only as of the date of this release, 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, except as required by law.