UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 21, 2009
First Cash Financial Services, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-19133 |
75-2237318 |
|
| (Commission File Number) | (IRS Employer Identification No.) |
690 East Lamar Blvd., Suite 400, Arlington, Texas |
76011 |
|
| (Address of principal executive offices) | (Zip Code) |
(817) 460-3947
Registrant's telephone number, including area code:
NA
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Item 2.02. Results of Operations and Financial Condition.
First Cash Financial Services, Inc. has issued a press release announcing its financial results for the three month and six month periods ended June 30, 2009. The Company's press release dated July 21, 2009 announcing the results is attached hereto as Exhibit 99.1 and is incorporated by reference in its entirety into this Item 2.02.
The information provided in this Item 2.02 shall not be deemed "filed" for purposes of the Securities Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by the specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
99.1
Press Release dated July 21, 2009 announcing the Company's financial results for the three month and six month periods ended June 30, 2009.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| First Cash Financial Services, Inc.
(Registrant) |
||
| July 21, 2009
(Date) |
/s/ R. DOUGLAS ORR
R. Douglas Orr Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
EXHIBIT INDEX
| Exhibit Number | Document | |
| 99.1 | Press release dated July 21, 2009 |
EXHIBIT 99.1
First Cash Posts Record Second Quarter Earnings; Reaffirms Guidance and Accelerated Second-Half Earnings Growth
ARLINGTON, Texas, July 21, 2009 (GLOBE NEWSWIRE) -- First Cash Financial Services, Inc. (Nasdaq:FCFS) today announced revenue, net income and earnings per share for the quarter ended June 30, 2009. The Company reported record second quarter earnings from continuing operations of $0.31 per share, which exceeded prior year earnings and consensus forecasts. The Company reaffirmed its full year earnings guidance of $1.36 to $1.38 per share.
Earnings per Share
-- Total diluted earnings per share, including discontinued
operations, were $0.38 for the second quarter of 2009, a 65%
increase over total diluted earnings per share of $0.23 in the
prior-year quarter. Year-to-date diluted earnings per share of
$0.76 were up 73% over the prior year. Earnings per share from
discontinued operations were $0.07 for the second quarter of
2009, and $0.13 year-to-date, primarily the result of strong cash
collections of Auto Master customer receivables held by the
Company as a discontinued asset.
-- Diluted earnings per share from continuing operations for the
second quarter of 2009 were $0.31, compared to $0.30 in the
second quarter of 2008. Net income from continuing operations for
the second quarter of 2009 was $9.4 million, compared to $9.0
million in the prior-year quarter.
-- Year-to-date diluted earnings per share from continuing
operations were $0.63, compared to $0.62 in the six months ended
June 30, 2008. Net income from continuing operations for the six
months ended June 30, 2009 was $19.0 million, compared to $18.9
million in the prior year.
Revenue Highlights
-- Revenue from continuing operations for the second quarter of 2009
was $84.2 million, compared to $78.8 million in 2008.
Consolidated revenue increased by 13% on a constant currency
basis, determined by applying the currency exchange rate from the
second quarter of the prior year to the current quarter's Mexican
peso results. Year-to-date revenue on a constant currency basis
increased by 14%. Pawn-related revenue represented 82% of total
year-to-date revenue.
-- From the Company's Mexico operations, total revenue for the
quarter was $40.2 million and $75.7 million for the year-to-date
period. On a constant currency basis, Mexico pawn revenues grew
by 31% for the quarter and 34% year-to-date. U.S. pawn revenue,
which is derived from a significantly more mature store base, was
$30.1 million for the quarter and $62.6 million year-to-date,
increases of 4% and 3%, respectively, over the prior year.
Short-term/payday loan revenue in the U.S. decreased by 10% for
the quarter and year-to-date, primarily the result of an
intentional contraction of unit growth, increased competition and
general economic conditions.
-- Year-to-date same-store sales increased by 5% in the Company's
U.S. and Mexico pawn stores on a constant currency basis. In
Mexico, same-store sales increased by 8% on a constant currency
basis. Same-store sales for the year declined by 16% in the
Company's U.S. short-term/payday loan stores for the reasons
previously identified.
Key Profitability Metrics
-- Consolidated store-level operating margins were 28% for the
trailing twelve months, consistent with the prior-year
comparative period.
-- The Company saw significant acceleration of growth in pawn
receivable balances during the second quarter, with
year-over-year increases of 13% in the U.S. and 18% in Mexico. On
a constant currency basis, pawn loans grew by 38% in Mexico and
25% overall. By comparison, the year-over-year growth in pawn
receivables at March 31, 2009 (the previous sequential quarter)
was only 3% in the U.S. and 27% (on a constant currency basis) in
Mexico.
-- The gross margin on retail pawn merchandise sales was 43% for
both the quarter and year-to-date periods, compared to the
prior-year margin of 46% for the quarter and 45% year-to-date.
The Company anticipated this slight margin contraction in light
of the weaker economic environment in the U.S. and Mexico. The
margin on wholesale scrap jewelry sales was 36% for the quarter
and 39% year-to-date, compared to the prior-year margin of 38%
for the quarter and 40% year-to-date. Inventory turns improved
for the trailing twelve months, to 4.0x compared to 3.6x a year
ago.
-- The short-term/payday loan credit loss provision improved during
the current quarter to 27% of related loan revenue, compared to
28% in the second quarter of 2008. The year-to-date provision
improved to 22%, compared to 25% in the prior year.
New Locations
-- A total of 18 new store locations were added during the second
quarter of 2009, comprised of 15 pawn store openings in Mexico
and three pawn store additions in the U.S. The Company operated
539 total stores as of June 30, 2009, a net store-count increase
of 18% over the past twelve months.
-- With a total of 30 year-to-date store openings in Mexico, the
Company is on pace to meet its target of 55 to 60 new store
openings in Mexico during 2009. In Mexico, the Company now
operates 299 total store locations, which represents a
year-over-year increase of 24%.
-- The three U.S. pawn stores added in the second quarter included a
new store opening in South Texas and the June acquisition of two
mature stores in the Dallas market. The Company now operates a
total of 97 U.S. pawn stores.
Financial Position & Liquidity
-- The Company reduced outstanding interest-bearing debt by $30
million, or 35%, during the first half of 2009. The outstanding
balance on the Company's bank credit facility, which matures in
April 2010, was $43.5 million at quarter end.
-- Free cash flow (defined as cash flow from continuing and
discontinued operations, reduced by purchases of property and
equipment and net cash outflow from pawn and short-term/payday
loan customer receivables) for the trailing twelve months ended
June 30, 2009 was $38.3 million, a significant increase over the
comparable $4.5 million amount in the prior year. A detailed
reconciliation of this non-GAAP financial measure is provided
elsewhere in this release.
-- Earnings before interest, taxes, depreciation and amortization
(EBITDA) from continuing operations totaled $73.1 million for the
trailing twelve months, an increase of 7% over the comparable
prior-year period. The EBITDA margin for the same periods was 21%
and 22%, respectively. A detailed reconciliation of this non-GAAP
financial measure is provided elsewhere in this release.
Foreign Currency
-- The average value of the Mexican peso to the U.S. dollar
decreased from 10.4 to 1 in the second quarter of 2008 to 13.3 to
1 in the current quarter. Year-to-date, the exchange rate
averaged 13.9 to 1, compared to 10.6 to 1 in the prior year. The
exchange rate was 13.2 to 1 at June 30, 2009, compared to 10.3 to
1 at June 30, 2008. As noted above, the translated revenue
results of the Mexican operations into U.S. dollars were
diminished by this currency rate fluctuation, especially in the
Company's interior (off-border) stores where the majority of
transactions are conducted in pesos. While the weakening of the
Mexican peso negatively affected the translated dollar-value of
peso-denominated revenue from Mexico stores located in the
interior of the country, the Company benefited from the
translation of peso-denominated expenses across all stores in
Mexico, in the form of lower reported expenses on a U.S. dollar
basis. As a result of this and other natural currency hedges
maintained by the Company, the impact of the currency rate
fluctuation on second quarter and year-to-date net income and
earnings per share was minimal.
-- The Company continues to reinvest peso-denominated cash generated
by the Mexican operations into the opening of new stores, the
expansion of existing stores and loan portfolio growth in Mexico.
As a result, fluctuations in currency exchange rates have had no
material cash flow impact on the consolidated operations of the
Company.
Discontinued Operations
-- After-tax net income from the discontinued Auto Master operation
during the second quarter was $2.5 million, or $0.08 per share.
Year-to-date, income from Auto Master was $4.8 million, or $0.16
per share. As previously reported, the Company discontinued its
Auto Master buy-here/pay-here automotive operation in the third
quarter of 2008 and subsequently sold the inventory and retail
operations to a third party. Under a related services agreement,
the purchaser is collecting the Company's outstanding Auto Master
customer notes receivable, which are being reported by the
Company as a discontinued asset held for sale. The earnings per
share of $0.08 realized in the current quarter, and $0.16
year-to-date, reflect the excess of the amounts collected in the
current year over anticipated collections based on the assumed
liquidation fair value methodology utilized in the Company's
third-quarter 2008 write-down of these same assets. During the
current quarter, the Company realized net cash collections of
$6.2 million on these accounts and recorded a pre-tax benefit of
approximately $4.2 million from these cash collections as
compared to the estimated fair value of the receivables carried
on the Company's books. Year-to-date, the Company realized net
cash collections of $13.2 million and a pre-tax benefit of
approximately $8.6 million. Based on these first half results,
the Company believes cash collections of these Auto Master
receivables will generate additional positive results in the
second half of 2009, although at a declining rate compared to the
first half of the year, as the receivable balances are collected
or written-off. At June 30, 2009, the remaining Auto Master gross
customer receivables reflected as outstanding on the Company's
books totaled approximately $37 million which the Company is
carrying at an estimated fair value of $5.6 million in accordance
with generally accepted accounting principles. Any amounts
collected in excess of this estimated fair value amount will be
reflected in future quarters as additional income from
discontinued operations.
-- Consistent with the Company's strategy of regularly evaluating
individual store profitability and market trends, the Company has
closed or is preparing to close certain underperforming
short-term/payday loan stores. Accordingly, the Company
anticipates completing the sale of eight short-term/payday loan
stores in Michigan to another operator in the third quarter of
2009 and closing the remaining three stores in Michigan as well.
The majority of these dispositions and closings, including all of
the Michigan locations, will be accounted for as discontinued
operations. Associated with these store closings, the Company
expects a total charge in 2009 to discontinued operations, net of
tax, of $0.04 to $0.05 per share, of which $0.02 was previously
recorded in the first quarter and $0.01 was recorded in the
current quarter as a reduction against the $0.16 in year-to-date
discontinued earnings from Auto Master. With the closing and
disposition of the Michigan stores, the only remaining U.S.
states where the Company has significant store-front
short-term/payday loan operations are Texas, Illinois and
California.
2009 Outlook
-- The Company is maintaining its current 2009 guidance for diluted
earnings from continuing operations of $1.36 to $1.38 per share.
This guidance implies a 9% to 12% earnings growth rate in the
second half of 2009, as compared to the same period in 2008.
-- The Company remains on target to open 55 to 60 new stores in
Mexico and a limited number of new pawn stores in the U.S. during
2009. The Company does not currently anticipate opening any new
U.S. short-term/payday loan stores in the remaining quarters of
2009 or thereafter.
Commentary & Analysis
Rick Wessel, Chief Executive Officer of First Cash, commented on the Company's second quarter operating results, "We continue to be pleased with our 2009 operating results and the anticipated further acceleration of earnings growth over the balance of the year. Despite a difficult economy in both the U.S. and Mexico, which has particularly dampened short-term/payday loan revenues and profits, we met or exceeded our first-half earnings targets because of cost controls and the continued strength of our core pawn businesses in the U.S. and Mexico. Moreover, we experienced very significant growth compared to expectations in our pawn receivable portfolio during the second quarter, which solidly positions us to meet our second half growth targets as well."
Regarding the Company's Mexico operations, Mr. Wessel noted, "With almost 300 stores, we continue to gain market share and build on the Company's significant competitive advantage in Mexico. We believe that our longevity, experience and personnel strengths in this key market will allow us to continue to grow faster and more efficiently and effectively than our competitors. In addition, 48% of the Company's Mexican stores are less than three years old. As a result, revenue and earnings in these new stores should continue to grow at a rapid pace.
"The Company continues to generate record free cash flow, both from continuing operations and cash collections on the remaining Auto Master receivables. Our balance sheet is strong and liquid and will become even less levered as we utilize future expected free cash to further reduce debt."
In summary, Mr. Wessel added, "We believe that our core pawn business remains well-positioned for continued near-term and long-term growth and stability. We continue to see strong demand for our pawn loan and value-priced consumer retail products, in part because of the reduced availability of traditional consumer credit and diminished purchasing power for many of our customers. In addition, the further maturing of our large existing store base in Mexico will be a strong source of revenue and profit growth for the next several years. We expect that our aggressive store expansion program will continue to be self-funded from operating cash flow. Strong cash flow and a highly conservative debt position should allow us to pursue other strategic opportunities that might become available. For all of these reasons, we remain excited about our ability to generate significant long-term earnings growth and value for our shareholders."
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 C ompany's expectations of earnings per share, earnings growth, income and losses related to discontinued operations, collections results, future tax benefits, expansion strategies, store openings, liquidity, cash flow, credit losses and related provisions, debt repayments, consumer demand for the Company's products and services, competition, regulatory risks, 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 refle ct any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based. Certain factors may cause results to differ materially from those anticipated by some of the statements made in this release. Such factors are difficult to predict and many are beyond the control of the Company and may include changes in regional, national or international economic conditions, changes in the inflation rate, changes in the unemployment rate, changes in consumer purchasing, borrowing and repayment behaviors, changes in credit markets, the ability to renew and/or extend the Company's existing bank line of credit, credit losses, changes or increases in competition, the ability to locate, open and staff new stores, the availability or access to sources of inventory, inclement weather, the ability to successfully integrate acquisitions, the ability to 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 short-term/payday loan businesses, credit services organizations, pawn businesses and buy-here/pay-here automotive businesses in both the U.S. and Mexico, unforeseen litigation, changes in interest rates, changes in tax rates or policies, changes in gold prices, changes in energy prices, changes in used-vehicle 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 2008 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 specialty retailer and provider of consumer financial services. Its pawn stores make small loans secured by pledged personal property, retail a wide variety of jewelry, electronics, tools and other merchandise, and in many locations, provide other short-term loans and credit services products. The Company's short-term loan locations provide various combinations of short-term loan products, installment loans, check cashing, credit services and other financial services products. The Company owns and operates over 539 stores in eleven U.S. states and 18 states in Mexico. First Cash is also an equal partner in Cash & Go, Ltd., a joint venture, which owns and operates 39 check cashing and financial services kiosks located inside convenience stores.
First Cash is a component company in both the Standard & Poor's SmallCap 600 Index(r) and the Russell 2000 Index(r). First Cash's common stock (ticker symbol "FCFS") is traded on the Nasdaq Global Select Market, which has the highest initial listing standards of any stock exchange in the world based on financial and liquidity requirements.
The First Cash Financial Services, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3365
FIRST CASH FINANCIAL SERVICES, INC.
STORE COUNT ACTIVITY
The following table details store openings and closings for the
three and six months ended June 30, 2009:
Mexico
U.S. Locations Locations
------------------ ----------
Pawn/
Short-Term Short-Term
Pawn Loan Loan Total
Stores Stores Stores Locations
------ ---------- ---------- ---------
Three Months Ended
June 30, 2009
Total locations,
beginning of period 94 147 284 525
New locations opened 1 -- 15 16
Locations acquired 2 -- -- 2
Discontinued short-term
loan operations -- (4) -- (4)
------ ---------- ---------- ---------
Total locations, end of
period 97 143 299 539
====== ========== ========== =========
Six Months Ended
June 30, 2009
Total locations,
beginning of period 94 162 269 525
New locations opened 1 3 30 34
Locations acquired 2 -- -- 2
Locations closed or
consolidated -- (1) -- (1)
Discontinued short-term
loan operations -- (21) -- (21)
------ ---------- ---------- ---------
Total locations, end of
period 97 143 299 539
====== ========== ========== =========
For the three and six months ended June 30, 2009, the Company's 50% owned joint venture, Cash & Go, Ltd., operated a total of 39 check cashing and short-term/payday loan kiosks located inside convenience stores, which are not included in the above table.
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
(unaudited)
(in thousands, except per share amounts)
Revenue:
Pawn merchandise sales $ 50,470 $ 45,555 $100,101 $ 89,558
Pawn service fees 18,843 17,119 36,456 33,572
Short-term loan and
credit services fees 14,088 15,251 28,511 30,902
Other 766 882 1,704 1,907
-------- -------- -------- --------
84,167 78,807 166,772 155,939
-------- -------- -------- --------
Cost of revenue:
Cost of goods sold 30,023 25,942 58,581 50,686
Short-term loan and
credit services loss
provision 3,807 4,236 6,216 7,750
Other 75 76 130 184
-------- -------- -------- --------
33,905 30,254 64,927 58,620
-------- -------- -------- --------
Net revenue 50,262 48,553 101,845 97,319
-------- -------- -------- --------
Expenses and other income:
Store operating expenses 25,079 24,056 50,694 47,829
Administrative expenses 7,597 7,478 15,683 13,918
Depreciation 2,483 2,585 4,961 5,224
Interest expense 192 161 428 426
Interest income (7) (12) (57) (30)
-------- -------- -------- --------
35,344 34,268 71,709 67,367
-------- -------- -------- --------
Income from continuing
operations before
income taxes 14,918 14,285 30,136 29,952
Provision for income
taxes 5,499 5,278 11,098 11,055
-------- -------- -------- --------
Income from continuing
operations 9,419 9,007 19,038 18,897
Income (loss) from
discontinued
operations, net of
tax 2,131 (2,305) 3,755 (5,500)
-------- -------- -------- --------
Net income $ 11,550 $ 6,702 $ 22,793 $ 13,397
======== ======== ======== ========
Basic income per share:
Income from continuing
operations $ 0.32 $ 0.31 $ 0.65 $ 0.63
Income (loss) from
discontinued
operations 0.07 (0.08) 0.13 (0.18)
-------- -------- -------- --------
Net income per basic
share $ 0.39 $ 0.23 $ 0.78 $ 0.45
======== ======== ======== ========
Diluted income per share:
Income from continuing
operations $ 0.31 $ 0.30 $ 0.63 $ 0.62
Income (loss) from
discontinued
operations 0.07 (0.07) 0.13 (0.18)
-------- -------- -------- --------
Net income per diluted
share $ 0.38 $ 0.23 $ 0.76 $ 0.44
======== ======== ======== ========
Weighted average shares
outstanding:
Basic 29,338 29,233 29,298 29,910
Diluted 30,117 29,837 30,011 30,471
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, Dec. 31,
--------------------- ---------
2009 2008 2008
--------- --------- ---------
(unaudited)
(in thousands)
ASSETS
Cash and cash equivalents $ 22,206 $ 13,558 $ 29,006
Service charges receivable 8,321 7,428 7,173
Pawn receivables 52,685 45,588 44,170
Short-term loan receivables,
net of allowance 5,032 5,334 5,188
Inventories 30,748 28,755 28,738
Prepaid expenses and other
current assets 4,108 4,796 7,393
Current assets of discontinued
operations 8,570 39,400 9,189
--------- --------- ---------
Total current assets 131,670 144,859 130,857
Property and equipment, net 42,669 39,079 39,186
Goodwill, net 76,530 53,237 75,191
Other 1,491 1,300 1,191
Long-term assets of
discontinued operations 13,330 59,582 18,918
--------- --------- ---------
Total assets $ 265,690 $ 298,057 $ 265,343
========= ========= =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current portion of notes
payable $ 4,612 $ 2,250 $ 7,048
Revolving credit facility 43,500 -- --
Accounts payable 1,799 1,081 2,280
Accrued liabilities 17,122 13,755 21,380
Income taxes payable 5,744 2,957 --
Current liabilities of
discontinued operations 819 3,568 2,110
--------- --------- ---------
Total current liabilities 73,596 23,611 32,818
Revolving credit facility -- 63,400 68,500
Notes payable, net of current
portion 7,067 2,813 9,389
Deferred income tax liabilities 1,328 9,753 186
--------- --------- ---------
Total liabilities 81,991 99,577 110,893
Stockholders' equity:
Common stock 366 361 361
Additional paid-in capital 116,282 112,279 112,750
Retained earnings 171,112 183,252 148,319
Accumulated other
comprehensive income (loss) (6,649) -- (9,568)
Common stock held in treasury (97,412) (97,412) (97,412)
--------- --------- ---------
Total stockholders' equity 183,699 198,480 154,450
--------- --------- ---------
Total liabilities and
stockholders' equity $ 265,690 $ 298,057 $ 265,343
========= ========= =========
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION
The following table details the components of revenue for the three
months ended June 30, 2009, as compared to the three months ended
June 30, 2008 (unaudited, 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.
Increase/
Three Months Ended (Decrease)
June 30, Constant
------------------ Currency
2009 2008 Increase/(Decrease) Basis
-------- -------- ------------------ ---------
Domestic revenue:
Pawn retail
merchandise
sales $ 15,042 $ 14,915 $ 127 1% 1%
Pawn scrap jewelry
sales 6,556 5,861 695 12% 12%
Pawn service fees 8,471 8,044 427 5% 5%
Short-term loan
and credit
services fees 13,212 14,620 (1,408) (10%) (10%)
Other 736 882 (146) (17%) (17%)
-------- -------- -------
44,017 44,322 (305) (1%) (1%)
-------- -------- -------
Foreign revenue:
Pawn retail
merchandise sales 19,013 15,005 4,008 27% 48%
Pawn scrap
jewelry sales 9,859 9,774 85 1% 1%
Pawn service fees 10,372 9,075 1,297 14% 34%
Short-term loan
and credit
services fees 876 631 245 39% 61%
Other 30 -- 30 -- --
-------- -------- -------
40,150 34,485 5,665 16% 31%
-------- -------- -------
Total revenue:
Pawn retail
merchandise sales 34,055 29,920 4,135 14% 25%
Pawn scrap
jewelry sales 16,415 15,635 780 5% 5%
Pawn service fees 18,843 17,119 1,724 10% 20%
Short-term loan
and credit
services fees 14,088 15,251 (1,163) (8%) (7%)
Other 766 882 (116) (13%) (12%)
-------- -------- -------
$ 84,167 $ 78,807 $ 5,360 7% 13%
======== ======== =======
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION (CONTINUED)
The following table details the components of revenue for the six
months ended June 30, 2009, as compared to the six months ended
June 30, 2008 (unaudited, 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.
Increase/
Six Months Ended (Decrease)
June 30, Constant
------------------ Currency
2009 2008 Increase/(Decrease) Basis
-------- -------- ------------------ ---------
Domestic revenue:
Pawn retail
merchandise sales $ 32,128 $ 31,639 $ 489 2% 2%
Pawn scrap
jewelry sales 13,337 12,469 868 7% 7%
Pawn service fees 17,173 16,463 710 4% 4%
Short-term loan
and credit
services fees 26,824 29,795 (2,971) (10%) (10%)
Other 1,650 1,907 (257) (13%) (13%)
-------- -------- -------
91,112 92,273 (1,161) (1%) (1%)
-------- -------- -------
Foreign revenue:
Pawn retail
merchandise
sales 35,640 27,095 8,545 32% 56%
Pawn scrap
jewelry sales 18,996 18,355 641 3% 3%
Pawn service fees 19,283 17,109 2,174 13% 33%
Short-term loan
and credit
services fees 1,687 1,107 580 52% 78%
Other 54 -- 54 -- --
-------- -------- -------
75,660 63,666 11,994 19% 35%
-------- -------- -------
Total revenue:
Pawn retail
merchandise sales 67,768 58,734 9,034 15% 26%
Pawn scrap
jewelry sales 32,333 30,824 1,509 5% 5%
Pawn service fees 36,456 33,572 2,884 9% 17%
Short-term loan
and credit
services fees 28,511 30,902 (2,391) (8%) (7%)
Other 1,704 1,907 (203) (11%) (10%)
-------- -------- -------
$166,772 $155,939 $10,833 7% 14%
======== ======== =======
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION (CONTINUED)
The following table details pawn receivables, short-term loan
receivables, and active CSO loans outstanding from an independent
third-party lender as of June 30, 2009, as compared to June 30,
2008 (unaudited, 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.
Increase/
(Decrease)
Balance at June 30, Constant
------------------ Currency
2009 2008 Increase/(Decrease) Basis
-------- -------- ------------------ ---------
Domestic customer
receivables and
CSO loans
outstanding:
Pawn receivables $ 28,056 $ 24,785 $ 3,271 13% 13%
Short-term loan
receivables, net
of allowance 4,197 4,707 (510) (11%) (11%)
CSO short-term
loans held by
independent
third-party (1) 10,910 11,631 (721) (6%) (6%)
-------- -------- -------
43,163 41,123 2,040 5% 5%
-------- -------- -------
Foreign customer
receivables:
Pawn receivables 24,629 20,803 3,826 18% 38%
Short-term loan
receivables, net
of allowance 835 627 208 33% 57%
-------- -------- -------
25,464 21,430 4,034 19% 39%
-------- -------- -------
Total customer
receivables and
CSO loans
outstanding:
Pawn receivables 52,685 45,588 7,097 16% 25%
Short-term loan
receivables, net
of allowance 5,032 5,334 (302) (6%) (3%)
CSO short-term
loans held by
independent
third-party (1) 10,910 11,631 (721) (6%) (6%)
-------- -------- -------
$ 68,627 $ 62,553 $ 6,074 10% 18%
======== ======== =======
(1) CSO short-term loans outstanding are comprised of the principal
portion of active CSO loans outstanding from 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, 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 and EBITDA are significant components in understanding and assessing the Company's financial performance. Since free cash flow and EBITDA are not measures determined in accordance with GAAP and are thus susceptible to varying calculations, free cash flow and EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. Free cash flow and EBITDA 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 substi tute for, GAAP financial measures.
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 short-term/payday loan customer receivables. 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" (unaudited, in thousands):
Trailing Twelve Months Ended June 30,
-------------------------------------
2009 2008
-------- --------
Cash flow from operating
activities $ 67,283 $ 36,709
Cash flow from investing
activities:
Pawn and short-term loan
receivables (11,457) (11,493)
Purchases of property and
equipment (17,477) (20,734)
-------- --------
Free cash flow $ 38,349 $ 4,482
======== ========
EBITDA
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 (unaudited, in thousands):
Trailing Twelve Months Ended
June 30,
----------------------------
2009 2008
-------- --------
Income from continuing operations $ 39,185 $ 36,470
Adjustments:
Income taxes 23,084 21,014
Depreciation and amortization 10,128 10,205
Interest expense 795 730
Interest income (82) (70)
-------- --------
Earnings from continuing
operations before interest,
income taxes, depreciation and
amortization $ 73,110 $ 68,349
======== ========
EBITDA margin calculated as follows:
Total revenue from continuing
operations $341,425 $306,552
Earnings from continuing
operations before interest,
income taxes, depreciation and
amortization 73,110 68,349
-------- --------
EBITDA as a percent of revenue 21% 22%
======== ========
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 in Mexican pesos. 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, 2008) of 10.3 to 1 was used, compared to the current end of period (June 30, 2009) exchange rate of 13.2 to 1. For income statement items, the average closing daily ex change rate for the appropriate period was used. The average exchange rate for the prior-year quarter ended June 30, 2008 was 10.4 to 1, compared to the current quarter rate of 13.3 to 1. The average exchange rate for the prior-year six-month period ended June 30, 2008 was 10.6 to 1, compared to the current year-to-date rate of 13.9 to 1.
CONTACT: First Cash Financial Services, Inc.
Rick Wessel, Vice Chairman and Chief Executive Officer
Doug Orr, Executive Vice President and Chief
Financial Officer
(817) 505-3199
investorrelations@firstcash.com
www.firstcash.com