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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 15, 2004
First Cash Financial Services, Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
0-19133 75-2237318
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(Commission File Number) (IRS Employer Identification No.)
690 East Lamar Blvd., Suite 400, Arlington, Texas 76011
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(Address of principal executive offices, including zip code)
(817) 460-3947
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(Registrant's telephone number, including area code)
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired. Inapplicable.
(b) Pro Forma Financial Information. Inapplicable.
(c) Exhibits
Exhibit Number Exhibit Description
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99.1 Press Release dated July 15, 2004
Item 9. Regulation FD Disclosure
First Cash Financial Services, Inc. has reported its financial results for
its quarter ended June 30, 2004. The Company's press release dated July
15, 2004 announcing the results is attached as Exhibit 99.1. All
information in the press release is furnished but not filed. This
information is being provided under Item 12.
Item 12. Results of Operations and Financial Condition
First Cash Financial Services, Inc. has reported its financial results for
its quarter ended June 30, 2004. The Company's press release dated July
15, 2004 announcing the results is attached as Exhibit 99.1. All
information in the press release is furnished but not filed.
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.
Dated: July 15, 2004 FIRST CASH FINANCIAL SERVICES, INC.
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(Registrant)
/s/ R. DOUGLAS ORR
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R. Douglas Orr
Chief Accounting Officer
2
Exhibit 99.1
First Cash Financial Services Reports 25% Increase in
Second Quarter Earnings Per Share; 27 New Stores Opened to Date in 2004
ARLINGTON, Texas, July 15 /PRNewswire-FirstCall/ -- First Cash Financial
Services, Inc. (Nasdaq: FCFS) today announced revenues, net income and
earnings per share for the three months ended June 30, 2004. Based on the
positive impact of these results and projected trends for the remainder of
2004, the Company confirmed its estimate that fiscal 2004 earnings per share
will be at the upper end of the previously forecast range of $1.17 to $1.22
per share, which represents an increase of 21% to 26% over 2003 results.
Earnings
-- Diluted earnings per share for the quarter ending June 30, 2004 were
$0.25. This represents an increase of 25% compared to $0.20 diluted
earnings per share for the second quarter of 2003.
-- Net income for the second quarter was $4.2 million. This represents
a 40% increase over second quarter 2003 net income of $3.0 million.
-- For the six months ended June 30, 2004, diluted earnings per share
were $0.55, an increase of 25% compared to $0.44 for the comparative
period in 2003.
-- Year-to-date net income was $9.4 million, compared to $6.5 million
for the first half of 2003, which represents a 45% increase.
-- For the trailing twelve months ended June 30, 2004, diluted earnings
per share from continuing operations were $1.08, an increase of 27%
over $0.85 for the trailing twelve months ended June 30, 2003.
Revenues
-- Total revenues for the second quarter were $40.3 million, compared to
$33.4 million for the same quarter of 2003, an increase of 21%.
Year-to-date revenues were $82.2 million, up from $67.7 million in
the comparative period last year, which represents a 21% increase.
-- Same store revenues for the second quarter of 2004 increased by 10%
over the comparable prior-year period. For the six months ending
June 30, 2004, same store revenues increased by 9% compared to the
same period last year.
-- Non-retail sales of scrap jewelry merchandise increased from
$2.2 million in the second quarter of 2003 to $3.0 million in the
second quarter of 2004.
Growth and Operating Metrics
-- The Company added 13 new stores during the second quarter, bringing
the year-to-date store openings to 27 for the first half of 2004.
The Company opened 22 stores in the first half of 2003.
-- As of June 30, 2004, the Company's total store count was 260. This
represents a 23% increase over the unit count from one year ago. In
addition, the Company has 40 financial services kiosks located inside
convenience stores.
-- Total receivables from pawn loans and short-term advances increased
26%, from $32.1 million at June 30, 2003 to $40.3 million at
June 30, 2004.
-- Profit margins on total merchandise sales, both retail and non-
retail, for the second quarter of 2004 were 43%, compared to 42%
margins during the same quarter a year ago. Retail merchandise
margins, which do not include bulk jewelry scrap sales, were 46%
during the second quarter, which was consistent with the prior year.
-- Net bad debt expense on short-term advances was significantly
improved over the prior year. The net expense as a percentage of
short-term advance service charges decreased from 21% for the first
six months of 2003 to 18% for the first half of 2004.
-- The operating margin, calculated based on income before taxes as a
percentage of revenues, was 16.8% for the quarter, compared to 14.7%
for the same period of 2003. For the six months ended June 30 the
operating margin improved from 15.5% in 2003 to 18.2% in 2004.
Financial Position & Liquidity
-- As of June 30, 2004, total stockholders' equity was $137 million.
This compares to June 30, 2003, when total stockholders' equity was
$98 million.
-- Total equity was 9.7 times total liabilities at June 30, 2004.
-- The company had no outstanding interest-bearing debt after
February 2004.
-- Current assets exceeded current liabilities by a ratio of 10.8 to 1
at June 30, 2004. Included in current assets was approximately
$8 million of invested cash reserves.
2004 Outlook
-- Management previously forecast diluted earnings per share in a range
of $1.17 to $1.22 (split-adjusted) for 2004. Based on the results of
the first half and expected trends for the remainder of the year, the
Company projects that 2004 earnings will be at the upper end of the
forecast range.
-- With 27 new stores opened through June 30 and a significant number of
new sites under lease and in the construction pipeline, the Company
is on target to open a total of at least 50 stores during 2004,
consistent with earlier forecast numbers. The Company expects to
continue to fund its aggressive expansion through operating cash
flow. All pre-opening costs and start-up losses are expensed as
incurred.
Commentary & Analysis
Rick Powell, Chairman and Chief Executive Officer of First Cash Financial
Services, commented on the Company's operating results, "Our second quarter
results were outstanding as we again attained record levels of revenues and
profitability. The strength and consistency of the Company's financial
performance is tremendously exciting -- this marks First Cash's 14th
consecutive quarter of double-digit EPS growth. These results reflect the
success of our expansion strategy and our focus on day-to-day operating
fundamentals."
The Company's growth continues to be fueled by openings of both new pawn
stores and check cashing/short-term advance stores. Of the 260 current First
Cash locations, a total of 126, or almost 50%, have been open for 36 months or
less, an almost doubling of the store count over the three-year period.
According to Mr. Powell, "We are very pleased with the success of our new
stores, and importantly, management continues to identify and develop many new
locations, primarily in proven expansion markets such as Texas and Mexico.
With 27 new stores already opened in the first half of 2004, the Company is
well on track to meet or exceed its goal of opening at least 50 new stores
during the year."
The contributions of new stores are again a significant factor in First
Cash's revenue and profitability growth for the current year. Same-store
revenue growth contributed significantly to these increases. Looking ahead,
management notes that pawn and short-term advance balances as of June 30, 2004
are at record levels, including those at the Company's more mature stores.
The Company anticipates further significant continued growth from stores it
opened in 2001, 2002 and 2003.
The Company continues to exceed its targeted performance metrics. With a
margin of 46%, second quarter retail (non-scrap) gross profits were again at
record levels for First Cash. Net bad debt expense on short-term advances
continues to trend at lower levels compared to 2002 and 2003. The Company
tightly controls its other operating expenses as evidenced by the continued
significant improvement in the operating margin. Mr. Powell stated, "We
attribute these positive results to our focus on key operating fundamentals
such as loan-to-value ratios, inventory optimization and collections
management. This focus is further leveraged by our significant investments in
information technology systems and training programs. In addition, the
Company's controlled expansion strategy has allowed it to create greater
economies of scale within the administrative support functions."
Even with the significant growth, First Cash continues to strengthen its
balance sheet and overall financial position. The Company has no outstanding
debt and all expansion and loan receivable growth is being funded from
operating cash flows. Because it is debt free, the Company expects to see
little, if any, negative impact from rising interest rates on its
profitability and key performance metrics. Total stockholders' equity at
June 30, 2004 was $137 million, an increase of almost $40 million, or 40%,
since June 30, 2003.
In accordance with a new accounting pronouncement related to variable
interest entities, the consolidated financial statements for the first six
months of 2004 include the revenues, operating expenses and balance sheet
accounts of Cash & Go, Ltd., the Company's 50% owned joint venture, which owns
and operates financial service kiosks located inside convenience stores. For
the three-month and six-month periods ended June 30, 2004, Cash & Go, Ltd. had
revenues of $1,450,000 and $2,873,000, respectively. Total short-term advance
receivables, including accrued interest, of Cash & Go, Ltd. at June 30, 2004
were $1,590,000. The operating results of Cash & Go, Ltd. were accounted for
using the equity method during the comparable first half period of 2003.
In summarizing the first half results and expectations for the balance of
2004, Mr. Powell said, "We remain excited about every aspect of our
operations. We are rapidly opening new stores and they are quickly becoming
profitable. With our strong balance sheet, we are well-positioned to fund
significant future growth with limited financial risk. Given our track record
of consistent performance, our disciplined growth formula, and our solid
financial position, we believe strongly that the market will continue to
reward our shareholders with increased value as we move forward."
Business Description
First Cash Financial Services, Inc. is engaged in the operation of pawn
and check cashing/short-term advance stores, which lend money on the
collateral of pledged personal property, retail previously-owned merchandise
acquired through loan forfeitures, and provide short-term loans, check cashing
and other financial services. The Company currently owns and operates over
260 pawn and check cashing/short-term advance stores in eleven states and
Mexico. First Cash Financial Services is also an equal partner in Cash & Go,
Ltd., a joint venture, which owns and operates 40 financial services kiosks
located inside convenience stores. First Cash's common stock is traded on the
Nasdaq Stock Market under the ticker symbol "FCFS" and it is a component
company in the Russell 2000 Index.
First Cash was recently ranked 25th by Fortune Small Business magazine on
the "FSB 100: America's Fastest-Growing Small Public Companies." In addition,
First Cash has been recognized for two consecutive years by Forbes magazine as
one of the "200 Best Small Companies." The 2003 ranking, which is based on a
combination of profitability and growth performance measures over the most
current one and five year periods, placed First Cash 73rd out of
3,500 companies evaluated by Forbes.
Forward-Looking Statements
This release may contain forward-looking statements about the business,
financial condition and prospects of First Cash Financial Services, Inc.
Forward-looking statements can be identified by the use of forward-looking
terminology such as "believes," "projects," "expects," "may," "estimates,"
"should," "plans," "intends," or "anticipates" or the negative thereof, or
other variations thereon, or comparable terminology, or by discussions of
strategy. Forward-looking statements in this release include, without
limitation, the earnings per share discussion, the expectations of revenue
growth and increased profitability, the expectation for additional store
openings, and the expectation for future operating cash flows. These
statements are made to provide the public with management's 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 release any updates or revisions to any such
statement to reflect any change in the Company's expectations or any change in
events, conditions or circumstance 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, but may include
changes in regional, national or international economic conditions, the
ability to open and integrate new stores, the ability to maintain favorable
banking relationships as it relates to short-term lending products, changes in
governmental regulations, unforeseen litigation, changes in interest rates,
changes in tax rates or policies, changes in gold prices, changes in foreign
currency exchange rates, future business decisions, and other uncertainties.
SELECTED OPERATING INFORMATION
The following table details store openings and closings for the three and
six-month periods ended June 30, 2004:
Quarter Ended Six Months Ended
June 30, 2004 June 30, 2004
Check Cashing/ Check Cashing/
Short-term Short-term
Pawn Advance Total Pawn Advance Total
Stores Stores Stores Stores Stores Stores
Beginning of
period count 170 77 247 160 75 235
New stores opened 10 3 13 22 5 27
Closed stores --- --- --- (2) --- (2)
Store count at
June 30, 2004 180 80 260 180 80 260
For the quarter and six months ended June 30, 2004, the Company's 50%
owned joint venture, Cash & Go, Ltd., operated a total of 40 kiosks located
inside convenience stores in the state of Texas, which are not included in the
above chart. No kiosks were opened or closed during the six-month period
ended June 30, 2004.
CONDENSED INCOME STATEMENTS
Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
(unaudited)
(thousands, except per share amounts)
Revenues:
Merchandise sales $18,626 $15,550 $39,097 $32,703
Service charges 20,683 16,923 40,820 32,936
Check cashing fees 723 667 1,633 1,439
Other 286 278 618 584
40,318 33,418 82,168 67,662
Cost of goods sold 10,657 8,978 22,727 19,325
Operating expenses 17,666 14,914 33,905 28,825
Interest expense --- 122 43 304
Interest income (18) (151) (32) (334)
Depreciation 988 686 1,909 1,348
Administrative expenses 4,250 3,962 8,662 7,696
33,543 28,511 67,214 57,164
Income before income
taxes 6,775 4,907 14,954 10,498
Provision for income
taxes 2,529 1,906 5,530 3,999
Net income $4,246 $3,001 $9,424 $6,499
Net income per share:
Basic $0.26 $0.22 $0.60 $0.49
Diluted $0.25 $0.20 $0.55 $0.44
Earnings per share amounts reflect the Company's three-for-two stock split
on April 6, 2004.
CONDENSED BALANCE SHEETS
June 30,
2004 2003
(unaudited)
(in thousands)
ASSETS:
Cash & cash equivalents $20,083 $12,511
Pawn receivables, including accrued interest 25,837 20,858
Short-term loan receivables, including
accrued interest 14,503 11,274
Inventories 16,471 13,248
Prepaid expenses and other current assets 1,114 523
Income taxes receivable 3,044 457
Total current assets 81,052 58,871
Property & equipment, net 16,104 12,454
Goodwill 53,237 53,194
Receivable from Cash & Go, Ltd. --- 5,155
Other 739 537
$151,132 $130,211
LIABILITIES & STOCKHOLDERS' EQUITY:
Accounts payable and other current liabilities $7,524 $9,974
Total current liabilities 7,524 9,974
Revolving credit facility --- 17,000
Deferred income taxes payable 6,555 5,524
Total liabilities 14,079 32,498
Stockholders' Equity 137,053 97,713
$151,132 $130,211
SOURCE First Cash Financial Services, Inc.
-0- 07/15/2004
/CONTACT: Rick Wessel, President, or Doug Orr, Chief Financial Officer,
both of First Cash Financial Services, Inc., +1-817-460-3947, or
investorrelations@firstcash.com /
/Web site: http://www.firstcash.com /
(FCFS)
CO: First Cash Financial Services, Inc.
ST: Texas
IN: FIN REA
SU: ERN ERP