Document
 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
[ X ]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018
OR
[    ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________

Commission file number 001-10960
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12522062&doc=12
FIRSTCASH, INC.
(Exact name of registrant as specified in its charter)
Delaware
75-2237318
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1600 West 7th Street, Fort Worth, Texas
76102
(Address of principal executive offices)
(Zip Code)

(817) 335-1100
(Registrant’s telephone number, including area code)

NONE
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     xYes   o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     xYes   o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
x  Large accelerated filer
o  Accelerated filer
o  Non-accelerated filer
o  Smaller reporting company
 
o  Emerging growth company



 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     oYes   x No

As of October 25, 2018, there were 43,832,215 shares of common stock outstanding.





 
 

FIRSTCASH, INC.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2018

INDEX

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



 
 

CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS

Forward-Looking Information

This quarterly report contains forward-looking statements about the business, financial condition and prospects of FirstCash, Inc. and its wholly owned subsidiaries (together, the “Company”). Forward-looking statements, as that term is defined in the Private Securities 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,” “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 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.

These forward-looking statements are made to provide the public with management’s current assessment of the Company’s business. Although 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 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 quarterly report. Such factors may include, without limitation, the risks, uncertainties and regulatory developments discussed and described in (i) the Company’s 2017 annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 20, 2018, including the risks described in Part 1, Item 1A, “Risk Factors” thereof, (ii) in this quarterly report on Form 10-Q, and (iii) 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 quarterly report speak only as of the date of this quarterly report, 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.




 
 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
FIRSTCASH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
 
 
 
 
 
 
 
September 30,
 
December 31,
 
 
2018
 
2017
 
2017
ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 
$
57,025

 
$
93,411

 
$
114,423

Fees and service charges receivable
 
49,141

 
45,134

 
42,736

Pawn loans
 
387,733

 
371,367

 
344,748

Consumer loans, net
 
17,804

 
24,515

 
23,522

Inventories
 
277,438

 
308,683

 
276,771

Income taxes receivable
 
1,065

 
27,867

 
19,761

Prepaid expenses and other current assets
 
18,396

 
23,818

 
20,236

Total current assets
 
808,602

 
894,795

 
842,197

 
 
 
 
 
 
 
Property and equipment, net
 
250,088

 
234,309

 
230,341

Goodwill
 
906,322

 
834,883

 
831,145

Intangible assets, net
 
88,900

 
95,991

 
93,819

Other assets
 
50,635

 
59,054

 
54,045

Deferred tax assets
 
11,933

 
12,694

 
11,237

Total assets
 
$
2,116,480

 
$
2,131,726

 
$
2,062,784

 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
103,223

 
$
94,769

 
$
84,331

Customer deposits
 
35,874

 
37,626

 
32,019

Income taxes payable
 
279

 
3,763

 
4,221

Total current liabilities
 
139,376

 
136,158

 
120,571

 
 
 
 
 
 
 
Revolving unsecured credit facility
 
305,000

 
140,000

 
107,000

Senior unsecured notes
 
295,722

 
294,961

 
295,243

Deferred tax liabilities
 
52,149

 
73,203

 
47,037

Other liabilities
 
12,505

 
19,725

 
17,600

Total liabilities
 
804,752

 
664,047

 
587,451

 
 
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
 
Preferred stock
 

 

 

Common stock
 
493

 
493

 
493

Additional paid-in capital
 
1,222,947

 
1,219,589

 
1,220,356

Retained earnings
 
569,691

 
436,159

 
494,457

Accumulated other comprehensive loss
 
(97,970
)
 
(88,445
)
 
(111,877
)
Common stock held in treasury, at cost
 
(383,433
)
 
(100,117
)
 
(128,096
)
Total stockholders’ equity
 
1,311,728

 
1,467,679

 
1,475,333

Total liabilities and stockholders’ equity
 
$
2,116,480

 
$
2,131,726

 
$
2,062,784

 
 
 
 
 
 
 
The accompanying notes are an integral part
of these condensed consolidated financial statements.

1

 
 

FIRSTCASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share amounts)
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2018
 
2017
 
2018
 
2017
Revenue:
 
 
 
 
 
 
 
 
Retail merchandise sales
 
$
256,417

 
$
246,334

 
$
782,000

 
$
750,150

Pawn loan fees
 
134,613

 
132,545

 
387,418

 
383,428

Wholesale scrap jewelry sales
 
24,650

 
37,528

 
86,850

 
107,285

Consumer loan and credit services fees
 
14,198

 
19,005

 
43,382

 
58,754

Total revenue
 
429,878

 
435,412

 
1,299,650

 
1,299,617

 
 
 
 
 
 
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
 
Cost of retail merchandise sold
 
163,287

 
161,350

 
501,358

 
483,458

Cost of wholesale scrap jewelry sold
 
23,859

 
36,831

 
80,430

 
102,370

Consumer loan and credit services loss provision
 
5,474

 
6,185

 
13,095

 
15,419

Total cost of revenue
 
192,620

 
204,366

 
594,883

 
601,247

 
 
 
 
 
 
 
 
 
Net revenue
 
237,258

 
231,046

 
704,767

 
698,370

 
 
 
 
 
 
 
 
 
Expenses and other income:
 
 
 
 
 
 
 
 
Store operating expenses
 
141,755

 
138,966

 
417,899

 
412,780

Administrative expenses
 
29,977

 
29,999

 
87,699

 
93,542

Depreciation and amortization
 
10,850

 
13,872

 
33,085

 
42,804

Interest expense
 
7,866

 
6,129

 
20,593

 
17,827

Interest income
 
(495
)
 
(418
)
 
(2,216
)
 
(1,138
)
Merger and other acquisition expenses
 
3,222

 
911

 
5,574

 
3,164

Loss on extinguishment of debt
 

 
20

 

 
14,114

Total expenses and other income
 
193,175

 
189,479

 
562,634

 
583,093

 
 
 
 
 
 
 
 
 
Income before income taxes
 
44,083

 
41,567

 
142,133

 
115,277

 
 
 
 
 
 
 
 
 
Provision for income taxes
 
10,758

 
13,293

 
37,002

 
39,119

 
 
 
 
 
 
 
 
 
Net income
 
$
33,325

 
$
28,274

 
$
105,131

 
$
76,158

 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
Basic
 
$
0.76

 
$
0.59

 
$
2.33

 
$
1.58

Diluted
 
$
0.76

 
$
0.59

 
$
2.33

 
$
1.58

 
 
 
 
 
 
 
 
 
Dividends declared per common share
 
$
0.22

 
$
0.19

 
$
0.66

 
$
0.57

 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part
of these condensed consolidated financial statements.

2

 
 

FIRSTCASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in thousands)
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2018
 
2017
 
2018
 
2017
Net income
 
$
33,325

 
$
28,274

 
$
105,131

 
$
76,158

Other comprehensive income:
 
 
 
 
 
 
 
 
Currency translation adjustment
 
16,698

 
(4,981
)
 
13,907

 
31,361

Comprehensive income
 
$
50,023

 
$
23,293

 
$
119,038

 
$
107,519

 
 
 
 
 
 
 
 
 
 The accompanying notes are an integral part
of these condensed consolidated financial statements.

FIRSTCASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accum-
ulated
Other
Compre-
hensive
Loss
 
Common Stock
Held in Treasury
 
Total
Stock-
holders’
Equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
 
 
Shares
 
Amount
 
 
Balance at 12/31/2017
 

 
$

 
49,276

 
$
493

 
$
1,220,356

 
$
494,457

 
$
(111,877
)
 
2,362

 
$
(128,096
)
 
$
1,475,333

Shares issued under share-based com-pensation plan
 

 

 

 

 
(1,240
)
 

 

 
(22
)
 
1,240

 

Exercise of stock options
 

 

 

 

 
(294
)
 

 

 
(10
)
 
694

 
400

Share-based compensa-tion expense
 

 

 

 

 
4,125

 

 

 

 

 
4,125

Net income
 

 

 

 

 

 
105,131

 

 

 

 
105,131

Dividends paid
 

 

 

 

 

 
(29,897
)
 

 

 

 
(29,897
)
Currency translation adjustment
 

 

 

 

 

 

 
13,907

 

 

 
13,907

Purchases of treasury stock
 

 

 

 

 

 

 

 
3,114

 
(257,271
)
 
(257,271
)
Balance at 9/30/2018
 

 
$

 
49,276

 
$
493

 
$
1,222,947

 
$
569,691

 
$
(97,970
)
 
5,444

 
$
(383,433
)
 
$
1,311,728

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part
of these condensed consolidated financial statements.

3

 
 

FIRSTCASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
CONTINUED
(unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred
Stock
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accum-
ulated
Other
Compre-
hensive
Loss
 
Common Stock
Held in Treasury
 
Total
Stock-
holders’
Equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
 
 
Shares
 
Amount
 
 
Balance at 12/31/2016
 

 
$

 
49,276

 
$
493

 
$
1,217,969

 
$
387,401

 
$
(119,806
)
 
769

 
$
(36,071
)
 
$
1,449,986

Shares issued under share-based com-pensation plan
 

 

 

 

 
(440
)
 

 

 
(10
)
 
440

 

Exercise of stock options
 

 

 

 

 
(242
)
 

 

 
(13
)
 
549

 
307

Share-based compensa-tion expense
 

 

 

 

 
2,302

 

 

 

 

 
2,302

Net income
 

 

 

 

 

 
76,158

 

 

 

 
76,158

Dividends paid
 

 

 

 

 

 
(27,400
)
 

 

 

 
(27,400
)
Currency translation adjustment
 

 

 

 

 

 

 
31,361

 

 

 
31,361

Purchases of treasury stock
 

 

 

 

 

 

 

 
1,182

 
(65,035
)
 
(65,035
)
Balance at 9/30/2017
 

 
$

 
49,276

 
$
493

 
$
1,219,589

 
$
436,159

 
$
(88,445
)
 
1,928

 
$
(100,117
)
 
$
1,467,679

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part
of these condensed consolidated financial statements.

4

 
 

FIRSTCASH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 
 
Nine Months Ended
 
 
September 30,
 
 
2018
 
2017
Cash flow from operating activities:
 
 
 
 
Net income
 
$
105,131

 
$
76,158

Adjustments to reconcile net income to net cash flow provided by operating activities:
 
 
 
 
Non-cash portion of credit loss provision
 
7,101

 
10,012

Share-based compensation expense
 
4,125

 
2,302

Depreciation and amortization expense
 
33,085

 
42,804

Amortization of debt issuance costs
 
1,448

 
1,322

Amortization of favorable/(unfavorable) lease intangibles, net
 
(341
)
 
(744
)
Loss on extinguishment of debt
 

 
14,114

Deferred income taxes, net
 
4,953

 
11,137

Changes in operating assets and liabilities, net of business combinations:
 
 
 
 
Fees and service charges receivable
 
(3,988
)
 
(3,017
)
Inventories
 
3,227

 
5,206

Prepaid expenses and other assets
 
(10
)
 
7,819

Accounts payable, accrued liabilities and other liabilities
 
4,857

 
(21,036
)
Income taxes
 
14,631

 
2,769

Net cash flow provided by operating activities
 
174,219

 
148,846

Cash flow from investing activities:
 
 
 
 
Loan receivables, net of cash repayments
 
(13,055
)
 
5,261

Purchases of property and equipment
 
(40,754
)
 
(26,595
)
Acquisitions of pawn stores, net of cash acquired
 
(88,387
)
 
(1,141
)
Net cash flow used in investing activities
 
(142,196
)
 
(22,475
)
Cash flow from financing activities:
 
 
 
 
Borrowings from revolving unsecured credit facility
 
357,500

 
181,000

Repayments of revolving unsecured credit facility
 
(159,500
)
 
(301,000
)
Issuance of senior unsecured notes
 

 
300,000

Repurchase/redemption of senior unsecured notes
 

 
(200,000
)
Repurchase/redemption premiums paid on senior unsecured notes
 

 
(10,895
)
Debt issuance costs paid
 

 
(5,342
)
Purchases of treasury stock
 
(258,545
)
 
(65,035
)
Proceeds from exercise of share-based compensation awards
 
400

 
307

Dividends paid
 
(29,897
)
 
(27,400
)
Net cash flow used in financing activities
 
(90,042
)
 
(128,365
)
Effect of exchange rates on cash
 
621

 
5,450

Change in cash and cash equivalents
 
(57,398
)
 
3,456

Cash and cash equivalents at beginning of the period
 
114,423

 
89,955

Cash and cash equivalents at end of the period
 
$
57,025

 
$
93,411

 
 
 
 
 
The accompanying notes are an integral part
of these condensed consolidated financial statements.

5

 
 

FIRSTCASH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 1 - Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated balance sheet at December 31, 2017, which is derived from audited financial statements, and the unaudited condensed consolidated financial statements, including the notes thereto, include the accounts of FirstCash, Inc. and its wholly-owned subsidiaries (together, the “Company”). The Company regularly makes acquisitions and the results of operations for the acquired stores have been consolidated since the acquisition dates. All significant intercompany accounts and transactions have been eliminated.

These unaudited consolidated financial statements are condensed and do not include all disclosures and footnotes required by generally accepted accounting principles (“GAAP”) in the United States of America for complete financial statements. These interim period financial statements should be read in conjunction with the Company’s consolidated financial statements, which are included in the Company’s annual report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission (the “SEC”) on February 20, 2018. The condensed consolidated financial statements as of September 30, 2018 and 2017, and for the three month and nine month periods ended September 30, 2018 and 2017, are unaudited, but in management’s opinion include all adjustments (consisting of only normal recurring adjustments) considered necessary to present fairly the financial position, results of operations and cash flow for such interim periods. Operating results for the periods ended September 30, 2018 are not necessarily indicative of the results that may be expected for the full fiscal year.

The Company has significant operations in Latin America, where in Mexico, Guatemala and Colombia the functional currency is the Mexican peso, Guatemalan quetzal and Colombian peso, respectively. Accordingly, the assets and liabilities of these subsidiaries are translated into U.S. dollars at the exchange rate in effect at each balance sheet date, and the resulting adjustments are accumulated in other comprehensive income (loss) as a separate component of stockholders’ equity. Revenues and expenses are translated at the average exchange rates occurring during the three month and nine month periods ended September 30, 2018 and 2017. The Company also has operations in El Salvador where the reporting and functional currency is the U.S. dollar.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 is a comprehensive revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the Financial Accounting Standards Board issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606),” which delayed the effective date of ASU 2014-09 by one year. In addition, between March 2016 and December 2016, the Financial Accounting Standards Board issued ASU No. 2016-08, “Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting revenue gross versus net)” (“ASU 2016-08”), ASU No. 2016-10, “Identifying Performance Obligations and Licensing” (“ASU 2016-10”), ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”), and ASU No. 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” (“ASU 2016-20”). ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 clarify certain aspects of ASU 2014-09 and provide additional implementation guidance. ASU 2014-09, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 (collectively, “ASC 606”) became effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2017 for public companies. Entities are permitted to adopt ASC 606 using one of two methods: (a) full retrospective adoption, meaning the standard is applied to all periods presented, or (b) modified retrospective adoption, meaning the cumulative effect of applying the new standard is recognized as an adjustment to the opening retained earnings balance.

The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective method. The adoption of ASC 606 did not impact the Company’s revenue recognition for pawn loan fees, consumer loan fees or credit services fees, as each of these revenue streams is outside the scope of ASC 606. Further, the Company has not identified any impacts to its consolidated financial statements that were material as a result of the adoption of ASC 606 for its retail merchandise sales or wholesale scrap jewelry sales revenue streams. The Company has not changed the presentation of its consolidated financial statements for assets, liabilities, or revenues from contracts with customers, nor has the Company recognized any cumulative effect adjustment as a result of the adoption of ASC 606.

6

 
 

In February 2016, the Financial Accounting Standards Board issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 requires a lessee to recognize, in the statement of financial position, a liability to make lease payments (the lease liability) and a right-to-use asset representing its right to use the underlying asset for the lease term. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. Lessor accounting remains largely unchanged. In July 2018, the Financial Accounting Standards Board issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”) which updates narrow aspects of the guidance issued in ASU 2016-02. In July 2018, the Financial Accounting Standards Board issued ASU No. 2018-11, “Leases (Topic 842) Targeted Improvements” (“ASU 2018-11”) which provides an optional transition method that allows entities to initially apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restating prior periods. ASU 2016-02, ASU 2018-10 and ASU 2018-11 are effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, with early adoption permitted. The Company is currently assessing the potential impact of ASU 2016-02, ASU 2018-10 and ASU 2018-11 on its consolidated financial statements, though the adoption will result in a material increase in the assets and liabilities reflected on its consolidated balance sheets.

In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. ASU 2016-13 is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently assessing the potential impact of ASU 2016-13 on its consolidated financial statements.

In August 2016, the Financial Accounting Standards Board issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. ASU 2016-15 became effective for public entities for fiscal years beginning after December 15, 2017. The adoption of ASU 2016-15 did not have a material effect on the Company’s consolidated financial statements or financial statement disclosures.

In January 2017, the Financial Accounting Standards Board issued ASU No. 2017-01, “Business Combinations (Topic 805) - Clarifying the Definition of a Business” (“ASU 2017-01”). ASU 2017-01 provides amendments to clarify the definition of a business and affects all companies and other reporting organizations that must determine whether they have acquired or sold a business. The amendments are intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance became effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years and should be applied prospectively as of the beginning of the period of adoption. The adoption of ASU 2017-01 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In January 2017, the Financial Accounting Standards Board issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). These amendments eliminate step 2 from the goodwill impairment test. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017 and should be adopted on a prospective basis. The Company does not expect ASU 2017-04 to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In March 2018, the Financial Accounting Standards Board issued ASU No 2018-05, “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118” (“ASU 2018-05”), which became effective immediately. ASU 2018-05 adds various SEC paragraphs pursuant to the issuance of the December 2017 SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”). See Note 6 for additional information regarding the adoption of ASU 2018-05.

In June 2018, the Financial Accounting Standards Board issued ASU No. 2018-07, “Compensation-Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). ASU 2018-07 simplifies the accounting for nonemployee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. ASU 2018-07 is effective for public entities for fiscal years beginning after December 15, 2018,

7

 
 

with early adoption permitted, but no earlier than a company’s adoption of ASC 606. The Company does not expect ASU 2018-07 to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In July 2018, the Financial Accounting Standards Board issued ASU No. 2018-09, “Codification Improvements” (“ASU 2018-09”). ASU 2018-09 does not prescribe any new accounting guidance, but instead makes minor improvements and clarifications of several different Financial Accounting Standards Board Accounting Standards Codification areas based on comments and suggestions made by various stakeholders. Certain updates are applicable immediately while others provide for a transition period to adopt in fiscal years beginning after December 15, 2018. The Company does not expect ASU 2018-09 to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In August 2018, the Financial Accounting Standards Board issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The Company does not expect ASU 2018-13 to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

Note 2 - Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2018
 
2017
 
2018
 
2017
Numerator:
 
 
 
 
 
 
 
 
Net income
 
$
33,325

 
$
28,274

 
$
105,131

 
$
76,158

 
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
 
Weighted-average common shares for calculating basic earnings per share
 
43,981

 
47,628

 
45,107

 
48,090

Effect of dilutive securities:
 
 
 
 
 
 
 
 
Stock options and nonvested common stock awards
 
135

 
40

 
97

 
27

Weighted-average common shares for calculating diluted earnings per share
 
44,116

 
47,668

 
45,204

 
48,117

 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
Basic
 
$
0.76

 
$
0.59

 
$
2.33

 
$
1.58

Diluted
 
$
0.76

 
$
0.59

 
$
2.33

 
$
1.58



8

 
 

Note 3 - Acquisitions

Consistent with the Company’s strategy to continue its expansion of pawn stores in selected markets, during the nine months ended September 30, 2018, the Company acquired 342 pawn stores in Mexico in four separate transactions and 18 pawn stores located in the U.S. in seven separate transactions. The all-cash aggregate purchase price for these acquisitions was $105.0 million, net of cash acquired and subject to future post-closing adjustments. The purchases were composed of $88.4 million in cash paid during the nine months ended September 30, 2018 and remaining payables to the sellers of approximately $16.6 million. The purchase price of each acquisition was allocated to assets and liabilities acquired based upon their estimated fair market values at the date of acquisition. The excess purchase price over the estimated fair market value of the net assets acquired and liabilities assumed has been recorded as goodwill. The goodwill arising from these acquisitions consists largely of the synergies and economies of scale expected from combining the operations of the Company and the pawn stores acquired.

The estimated fair value of the assets acquired and liabilities assumed are preliminary, as the Company is gathering information to finalize the valuation of these assets and liabilities. The preliminary allocation of the aggregate purchase price of the Company’s individually immaterial acquisitions during the nine months ended September 30, 2018 is as follows (in thousands):

Pawn loans
$
18,714

Pawn loan fees receivable
1,866

Inventory
9,534

Other current assets
863

Property and equipment
3,717

Goodwill (1)
70,957

Intangible assets (2)
871

Other non-current assets
168

Current liabilities
(1,657
)
Aggregate purchase price
$
105,033


(1) 
Goodwill associated with the U.S. operations segment and the Latin America operations segment was $5.2 million and $65.8 million, respectively. Substantially all of the goodwill is expected to be deductible for respective U.S. and Mexico income tax purposes.

(2) 
Intangible assets primarily consist of customer relationships, which are generally amortized over 5 years.

The results of operations for the acquired stores have been consolidated since the respective acquisition dates. During the nine months ended September 30, 2018, revenue from the acquired stores was $21.0 million and the net loss from the combined acquisitions since the acquisition dates (including approximately $3.6 million of transaction and integration costs) was approximately $1.9 million.

Historical pre-acquisition financial statements of the four separate Mexico acquisitions were created in local country GAAP and the Company did not obtain pre-acquisition financial statements prepared in accordance with U.S. GAAP. As a result and due to the insignificance of these acquisitions, it is impractical for the Company to adequately present supplemental pro forma information.

9

 
 

Note 4 - Long-Term Debt

The following table details the Company’s long-term debt at the respective principal amounts, net of unamortized debt issuance costs (in thousands):

 
September 30,
 
December 31,
 
2018
 
2017
 
2017
5.375% senior unsecured notes due 2024 (1)
$
295,722

 
$
294,961

 
$
295,243

Revolving unsecured credit facility, maturing 2022
305,000

 
140,000

 
107,000

Total long-term debt
$
600,722

 
$
434,961

 
$
402,243


(1)
As of September 30, 2018, September 30, 2017 and December 31, 2017, deferred debt issuance costs of $4.3 million, $5.0 million and $4.8 million, respectively, are included as a direct deduction from the carrying amount of the senior unsecured notes due 2024 in the accompanying condensed consolidated balance sheets.

Senior Unsecured Notes

On May 30, 2017, the Company issued $300.0 million of 5.375% senior unsecured notes due on June 1, 2024 (the “Notes”), all of which are currently outstanding. Interest on the Notes is payable semi-annually in arrears on June 1 and December 1. The Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by all of the Company's existing and future domestic subsidiaries that guarantee its revolving unsecured credit facility. The Notes will permit the Company to make restricted payments, such as purchasing shares of its stock and paying cash dividends, in an unlimited amount if, after giving pro forma effect to the incurrence of any indebtedness to make such payment, the Company's consolidated total debt ratio (“Net Debt Ratio”) is less than 2.25 to 1. The Net Debt Ratio is defined generally in the indenture governing the Notes as the ratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelve months EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement period.

The Company used the proceeds from the offering of the Notes to repurchase, or otherwise redeem, its previously outstanding $200.0 million6.75% senior unsecured notes due 2021 (the “2021 Notes”). As a result, during the nine months ended September 30, 2017, the Company recognized a $14.1 million loss on extinguishment of debt related to the repurchase or redemption of the 2021 Notes.

Revolving Unsecured Credit Facility

At September 30, 2018, the Company maintained an unsecured line of credit with a group of U.S. based commercial lenders (the “Credit Facility”) in the amount of $400.0 million, which matures on September 2, 2022. At September 30, 2018, the Company had $305.0 million in outstanding borrowings and $3.2 million in outstanding letters of credit under the Credit Facility, leaving $91.8 million available for future borrowings. The Credit Facility bears interest, at the Company’s option, at either (i) the prevailing London Interbank Offered Rate (“LIBOR”) (with interest periods of 1 week or 1, 2, 3 or 6 months at the Company’s option) plus a fixed spread of 2.5% or (ii) the prevailing prime or base rate plus a fixed spread of 1.5%. The agreement has a LIBOR floor of 0%. Additionally, the Company is required to pay an annual commitment fee of 0.50% on the average daily unused portion of the Credit Facility commitment. The weighted-average interest rate on amounts outstanding under the Credit Facility at September 30, 2018 was 4.66% based on 1 week LIBOR. Under the terms of the Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Credit Facility also contains customary restrictions on the Company’s ability to incur additional debt, grant liens, make investments, consummate acquisitions and similar negative covenants with customary carve-outs and baskets. The Company was in compliance with the requirements and covenants of the Credit Facility as of September 30, 2018. During the nine months ended September 30, 2018, the Company received net proceeds of $198.0 million from borrowings pursuant to the Credit Facility.

On October 4, 2018, the Company amended and extended the Credit Facility. The total lender commitment under the amended facility increased from $400.0 million to $425.0 million and the term was extended to October 4, 2023. Certain financial covenants in the facility were amended, including an increase in the permitted consolidated leverage ratio from 2.75 to 3.0 times EBITDA adjusted for certain items as defined in the Credit Facility and an increase in the permitted domestic leverage ratio from 3.5 to 4.0 times domestic EBITDA adjusted for certain items as defined in the Credit Facility. The Credit Facility remains unsecured and continues to bear interest, at the Company’s option, at either (i) the prevailing LIBOR (with interest periods of 1 week or 1, 2, 3

10

 
 

or 6 months at the Company’s option) plus a fixed spread of 2.5% or (ii) the prevailing prime or base rate plus a fixed spread of 1.5%.

Note 5 - Fair Value of Financial Instruments

The fair value of financial instruments is determined by reference to various market data and other valuation techniques, as appropriate. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The three fair value levels are (from highest to lowest):

Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.

Recurring Fair Value Measurements

As of September 30, 2018, 2017 and December 31, 2017, the Company did not have any financial assets or liabilities measured at fair value on a recurring basis.

Fair Value Measurements on a Nonrecurring Basis

The Company measures non-financial assets and liabilities, such as property and equipment and intangible assets, at fair value on a nonrecurring basis or when events or circumstances indicate that the carrying amount of the assets may be impaired.

Financial Assets and Liabilities Not Measured at Fair Value

The Company’s financial assets and liabilities as of September 30, 2018, 2017 and December 31, 2017 that are not measured at fair value in the condensed consolidated balance sheets are as follows (in thousands):

 
 
Carrying Value
 
Estimated Fair Value
 
 
September 30,
 
September 30,
 
Fair Value Measurements Using
 
 
2018
 
2018
 
Level 1
 
Level 2
 
Level 3
Financial assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
57,025

 
$
57,025

 
$
57,025

 
$

 
$

Fees and service charges receivable
 
49,141

 
49,141

 

 

 
49,141

Pawn loans
 
387,733

 
387,733

 

 

 
387,733

Consumer loans, net
 
17,804

 
17,804

 

 

 
17,804

 
 
$
511,703

 
$
511,703

 
$
57,025

 
$

 
$
454,678

 
 
 
 
 
 
 
 
 
 
 
Financial liabilities:
 
 
 
 
 
 
 
 
 
 
Revolving unsecured credit facility
 
$
305,000

 
$
305,000

 
$

 
$
305,000

 
$

Senior unsecured notes (outstanding principal)
 
300,000

 
300,000

 

 
300,000

 

 
 
$
605,000

 
$
605,000

 
$

 
$
605,000

 
$



11

 
 

 
 
Carrying Value
 
Estimated Fair Value
 
 
September 30,
 
September 30,
 
Fair Value Measurements Using
 
 
2017
 
2017
 
Level 1
 
Level 2
 
Level 3
Financial assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
93,411

 
$
93,411

 
$
93,411

 
$

 
$

Fees and service charges receivable
 
45,134

 
45,134

 

 

 
45,134

Pawn loans
 
371,367

 
371,367

 

 

 
371,367

Consumer loans, net
 
24,515

 
24,515

 

 

 
24,515

 
 
$
534,427

 
$
534,427

 
$
93,411

 
$

 
$
441,016

 
 
 
 
 
 
 
 
 
 
 
Financial liabilities:
 
 
 
 
 
 
 
 
 
 
Revolving unsecured credit facility
 
$
140,000

 
$
140,000

 
$

 
$
140,000

 
$

Senior unsecured notes (outstanding principal)
 
300,000

 
314,000

 

 
314,000

 

 
 
$
440,000

 
$
454,000

 
$

 
$
454,000

 
$


 
 
Carrying Value
 
Estimated Fair Value
 
 
December 31,
 
December 31,
 
Fair Value Measurements Using
 
 
2017
 
2017
 
Level 1
 
Level 2
 
Level 3
Financial assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
114,423

 
$
114,423

 
$
114,423

 
$

 
$

Fees and service charges receivable
 
42,736

 
42,736

 

 

 
42,736

Pawn loans
 
344,748

 
344,748

 

 

 
344,748

Consumer loans, net
 
23,522

 
23,522

 

 

 
23,522

 
 
$
525,429

 
$
525,429

 
$
114,423

 
$

 
$
411,006

 
 
 
 
 
 
 
 
 
 
 
Financial liabilities:
 
 
 
 
 
 
 
 
 
 
Revolving unsecured credit facility
 
$
107,000

 
$
107,000

 
$

 
$
107,000

 
$

Senior unsecured notes (outstanding principal)
 
300,000

 
314,000

 

 
314,000

 

 
 
$
407,000

 
$
421,000

 
$

 
$
421,000

 
$


As cash and cash equivalents have maturities of less than three months, the carrying value of cash and cash equivalents approximates fair value. Due to their short-term maturities, the carrying value of pawn loans and fees and service charges receivable approximate fair value. Consumer loans, net are carried net of the allowance for estimated loan losses, which is calculated by applying historical loss rates combined with recent default trends to the gross consumer loan balance. The unobservable inputs used to calculate the fair value of these loans include historical loss rates, recent default trends and estimated remaining loan terms. Therefore, the carrying value approximates the fair value.

The carrying value of the revolving unsecured credit facility approximates fair value as of September 30, 2018, 2017 and December 31, 2017. The fair value of the revolving unsecured credit facility is estimated based on market values for debt issuances with similar characteristics or rates currently available for debt with similar terms. In addition, the revolving unsecured credit facility has a variable interest rate based on a fixed spread over LIBOR and reprices with any changes in LIBOR. The fair value of the senior unsecured notes is estimated based on quoted prices in markets that are not active.


12

 
 

Note 6 - Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted into law. The Tax Act significantly changed U.S. corporate income tax law by, among other things, reducing the U.S. corporate income tax rate from 35% to 21% starting in 2018 and creating a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. corporations.

The Company’s consolidated effective tax rate for the nine months ended September 30, 2018 was 26.0% compared to 33.9% for the nine months ended September 30, 2017. The decrease in the effective tax rate for the nine months ended September 30, 2018 reflects the reduced U.S. corporate income tax rate as a result of the passage of the Tax Act, blended with the statutory tax rates of the Company’s foreign subsidiaries which are 30%, 25%, 30% and 37% in Mexico, Guatemala, El Salvador and Colombia, respectively.

In December 2017, the SEC issued SAB 118 to address concerns about reporting entities’ ability to timely comply with the accounting requirements to recognize all of the effects of the Tax Act in the period of enactment. SAB 118 allows disclosure that timely determination of some or all of the income tax effects from the Tax Act are incomplete by the due date of the financial statements and if possible to provide a reasonable estimate. As a result of the Tax Act, the Company recorded a provisional net income tax benefit of $27.3 million in the fourth quarter of 2017. As of September 30, 2018, no material adjustments to the estimates used to determine the provisional net tax benefit have been made. Any adjustments will be included in the provision for income taxes in the reporting period in which any such adjustments are determined, which will be no later than the fourth quarter of 2018. See Note 11 in the accompanying notes to the consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2017 for further information on the provisional income tax benefit.


13

 
 

Note 7 - Segment Information

The Company organizes its operations into two reportable segments as follows:

U.S. operations - Includes all pawn and consumer loan operations in the U.S.
Latin America operations - Includes all pawn and consumer loan operations in Latin America, which currently includes operations in Mexico, Guatemala, El Salvador and Colombia. Effective June 30, 2018, the Company no longer offers an unsecured consumer loan product in Latin America.

The following tables present reportable segment information for the three and nine month periods ended September 30, 2018 and 2017 (in thousands):

 
 
Three Months Ended September 30, 2018
 
 
U.S.
Operations
 
Latin America
Operations
 
Corporate
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
Retail merchandise sales
 
$
162,001

 
$
94,416

 
$

 
$
256,417

Pawn loan fees
 
93,344

 
41,269

 

 
134,613

Wholesale scrap jewelry sales
 
18,804

 
5,846

 

 
24,650

Consumer loan and credit services fees
 
14,082

 
116

 

 
14,198

Total revenue
 
288,231

 
141,647

 

 
429,878

 
 
 
 
 
 
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
 
Cost of retail merchandise sold
 
102,370

 
60,917

 

 
163,287

Cost of wholesale scrap jewelry sold
 
17,595

 
6,264

 

 
23,859

Consumer loan and credit services loss provision
 
5,420

 
54

 

 
5,474

Total cost of revenue
 
125,385

 
67,235

 

 
192,620

 
 
 
 
 
 
 
 
 
Net revenue
 
162,846

 
74,412

 

 
237,258

 
 
 
 
 
 
 
 
 
Expenses and other income:
 
 
 
 
 
 
 
 
Store operating expenses
 
102,955

 
38,800

 

 
141,755

Administrative expenses
 

 

 
29,977

 
29,977

Depreciation and amortization
 
5,285

 
2,915

 
2,650

 
10,850

Interest expense
 

 

 
7,866

 
7,866

Interest income
 

 

 
(495
)
 
(495
)
Merger and other acquisition expenses
 

 

 
3,222

 
3,222

Total expenses and other income
 
108,240

 
41,715

 
43,220

 
193,175

 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
 
$
54,606

 
$
32,697

 
$
(43,220
)
 
$
44,083


14

 
 

 
 
Three Months Ended September 30, 2017
 
 
U.S.
Operations
 
Latin America
Operations
 
Corporate
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
Retail merchandise sales
 
$
160,598

 
$
85,736

 
$

 
$
246,334

Pawn loan fees
 
95,266

 
37,279

 

 
132,545

Wholesale scrap jewelry sales
 
32,397

 
5,131

 

 
37,528

Consumer loan and credit services fees
 
18,525

 
480

 

 
19,005

Total revenue
 
306,786

 
128,626

 

 
435,412

 
 
 
 
 
 
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
 
Cost of retail merchandise sold
 
107,561

 
53,789

 

 
161,350

Cost of wholesale scrap jewelry sold
 
31,518

 
5,313

 

 
36,831

Consumer loan and credit services loss provision
 
6,068

 
117

 

 
6,185

Total cost of revenue
 
145,147

 
59,219

 

 
204,366

 
 
 
 
 
 
 
 
 
Net revenue
 
161,639

 
69,407

 

 
231,046

 
 
 
 
 
 
 
 
 
Expenses and other income:
 
 
 
 
 
 
 
 
Store operating expenses
 
104,555

 
34,411

 

 
138,966

Administrative expenses
 

 

 
29,999

 
29,999

Depreciation and amortization
 
5,919

 
2,704

 
5,249

 
13,872

Interest expense
 

 

 
6,129

 
6,129

Interest income
 

 

 
(418
)
 
(418
)
Merger and other acquisition expenses
 

 

 
911

 
911

Loss on extinguishment of debt
 

 

 
20

 
20

Total expenses and other income
 
110,474

 
37,115

 
41,890

 
189,479

 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
 
$
51,165

 
$
32,292

 
$
(41,890
)
 
$
41,567



15

 
 

 
 
Nine Months Ended September 30, 2018
 
 
U.S.
Operations
 
Latin America
Operations
 
Corporate
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
Retail merchandise sales
 
$
514,494

 
$
267,506

 
$

 
$
782,000

Pawn loan fees
 
277,411

 
110,007

 

 
387,418

Wholesale scrap jewelry sales
 
70,394

 
16,456

 

 
86,850

Consumer loan and credit services fees
 
42,522

 
860

 

 
43,382

Total revenue
 
904,821

 
394,829

 

 
1,299,650

 
 
 
 
 
 
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
 
Cost of retail merchandise sold
 
328,258

 
173,100

 

 
501,358

Cost of wholesale scrap jewelry sold
 
64,203

 
16,227

 

 
80,430

Consumer loan and credit services loss provision
 
12,874

 
221

 

 
13,095

Total cost of revenue
 
405,335

 
189,548

 

 
594,883

 
 
 
 
 
 
 
 
 
Net revenue
 
499,486

 
205,281

 

 
704,767

 
 
 
 
 
 
 
 
 
Expenses and other income:
 
 
 
 
 
 
 
 
Store operating expenses
 
310,963

 
106,936

 

 
417,899

Administrative expenses
 

 

 
87,699

 
87,699

Depreciation and amortization
 
15,877

 
8,364

 
8,844

 
33,085

Interest expense
 

 

 
20,593

 
20,593

Interest income
 

 

 
(2,216
)
 
(2,216
)
Merger and other acquisition expenses
 

 

 
5,574

 
5,574

Total expenses and other income
 
326,840

 
115,300

 
120,494

 
562,634

 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
 
$
172,646

 
$
89,981

 
$
(120,494
)
 
$
142,133



16

 
 

 
 
Nine Months Ended September 30, 2017
 
 
U.S.
Operations
 
Latin America
Operations
 
Corporate
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
Retail merchandise sales
 
$
519,116

 
$
231,034

 
$

 
$
750,150

Pawn loan fees
 
287,338

 
96,090