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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): April 20, 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
(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 April 20, 2004
Item 9. Regulation FD Disclosure
First Cash Financial Services, Inc. has reported its financial results for
its quarter ended March 31, 2004. The Company's press release dated April
20, 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 March 31, 2004. The Company's press release dated April
20, 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: April 20, 2004 FIRST CASH FINANCIAL SERVICES, INC.
(Registrant)
/s/ R. DOUGLAS ORR
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R. Douglas Orr Chief
Accounting Officer
2
Exhibit 99.1
First Cash Financial Services Reports 48% Increase in First Quarter Net
Income; Earnings Per Share Exceed Forecast
ARLINGTON, Texas, April 20 /PRNewswire-FirstCall/ -- First Cash Financial
Services, Inc. (Nasdaq: FCFS) today announced revenues, net income and
earnings per share for the three months ended March 31, 2004. Based on the
positive impact of these results and projected trends for the remainder of
2004, the Company now estimates that 2004 earnings per share will be at the
upper end of the previously forecast range of $1.17 to $1.22 per share.
Note: Unless indicated otherwise, all outstanding shares and earnings per
share amounts included in this release have been adjusted to reflect a three-
for-two stock split effective April 6, 2004.
Earnings
-- Net income for the quarter ending March 31, 2004 was $5.2 million.
This represents a 48% increase over first quarter 2003 net income of
$3.5 million.
-- First quarter 2004 diluted earnings per share were $0.30, an
increase of 25% compared to $0.24 diluted earnings per share for the
first quarter of 2003. Diluted earnings per share exceeded the
Company's original forecast of $0.27 to $0.29 per share.
-- Diluted earnings per share for the trailing twelve months ended
March 31, 2004 were $1.02, an increase of 28% over $0.80 for the
trailing twelve months ended March 31, 2003.
-- Before giving effect to the three-for-two stock split, the Company's
forecast for first quarter 2004 diluted earnings per share was
$0.41 to $0.44. First quarter diluted earnings per share on a pre-
split basis were $0.45, compared to prior year earnings per share of
$0.36.
Revenues
-- Total revenues for the first quarter of 2004 were $41.9 million,
compared to $34.2 million for the first quarter of 2003, an increase
of 22%.
-- Same-store revenues for the first quarter of 2004 increased by 12%
over the comparable prior year period.
-- Revenues excluding non-retail sales of scrap jewelry merchandise
increased by 21%, from $31.9 million in the first quarter of 2003
compared to $38.4 million for the first quarter of 2004. Non-retail
sales of scrap jewelry merchandise increased from $2.3 million in
the first quarter of 2003 to $3.5 in the first quarter of 2004.
Growth and Operating Metrics
-- The Company opened 14 new stores during the first quarter of 2004,
bringing the total store count at March 31, 2004 to 247 units. In
addition, the Company has 40 financial services kiosks located
inside convenience stores.
-- The Company has opened 50 new stores over the past twelve months and
the total store count has increased by 23% over the same time
period.
-- Total receivables from pawn loans and short-term advances increased
27%, from $26.9 million at March 31, 2003 to $34.1 million at
March 31, 2004. This increase reflects increased lending activities
at existing stores, loan growth at new locations and the
consolidation of the Cash & Go, Ltd. joint venture.
-- Profit margins on total merchandise sales, both retail and non-
retail, for the first quarter of 2004 were 41%, compared to 40%
margins during the same quarter a year ago. Retail merchandise
margins, which do not include bulk jewelry scrap sales, were 45% for
the current quarter and the same quarter last year.
-- The operating margin, calculated based on income before taxes as a
percentage of revenues, was 19.5% for the quarter, compared to 16.3%
for the same period last year.
Financial Position & Liquidity
-- Stockholders' equity stands at $128 million at March 31, 2004. This
represents an increase of $38 million, or 42%, compared to total
equity at March 31, 2003.
-- The Company utilized operating cash flows during the first quarter
of 2004 to complete repayment of the entire amount owed under its
revolving credit facility. As of March 31, 2004, the Company has no
interest-bearing debt outstanding.
-- With total assets of $141 million and total liabilities of
$13 million as of March 31, 2004, the ratio of total assets to
liabilities is 11 to 1. The current ratio, current assets divided
by current liabilities, at quarter end is also 11 to 1.
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 quarter and expected trends for the remainder of the
year, the Company projects that 2004 earnings will be at the upper
end of the previously forecast range.
-- With 14 stores opened through March 31, the Company projects that it
will open a total of 50 stores during 2004.
Commentary & Analysis
Rick Powell, Chairman and Chief Executive Officer of First Cash Financial
Services, commented on the first quarter highlights, "Our operating results in
2004 have been outstanding as we continue to post large gains in our key
growth metrics. This marks the 13th consecutive quarter in which First Cash
has recorded a double-digit increase in earnings per share as compared to the
same period of the previous year. In addition, we achieved several
significant milestones this quarter, including the repayment of all
outstanding debt and the first stock split in the history of the Company."
The Company's revenue growth resulted primarily due to the new stores
opened in the past twelve months and from significant same-store sales
increases in stores open for more than a year. Increased profitability in the
Company's maturing stores and additional economies of scale enabled the
Company to increase its overall operating profit margin. Mr. Powell noted,
"Our first quarter results exceeded our estimates primarily due to our newer
stores achieving profitability levels at a rate that exceeded our projections.
We are especially pleased to see the continued trend of revenue increasing at
a faster rate than our expenses. In addition, the consistency of our net
income and earnings per share growth each quarter indicates that we are
growing a loyal customer base in both our mature and expansion markets."
Expansion during the first quarter included additions of both pawnshops
and check cashing/short-term advance stores. By opening 14 stores in the
first quarter, the Company is on track to meet its target of opening 50 stores
in 2004, which will represent a 21% increase in the total store count. The
capital expenditures, working capital requirements and start-up expenses
associated with new stores will continue to be funded from operating cash
flows. "The ability to absorb the start-up expenses associated with the
opening of these stores and simultaneously grow earnings is a tremendously
positive factor in the long-term outlook for First Cash," according to Mr.
Powell.
In assessing the current liquidity and financial position of the Company,
Mr. Powell stated that, "Our cash flows and balance sheet have never been
stronger. We are debt free, and in fact, we have accumulated approximately
$7 million in excess cash reserves as of March 31, 2004." Even with the
significant funding required by the store expansion program and same-store
loan growth, the Company expects to generate additional free cash flows during
2004 that will add to its cash reserves.
In accordance with a new accounting pronouncement related to variable
interest entities, the consolidated financial statements for the first quarter
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 services kiosks located inside convenience stores. For the
three months ended March 31, 2004, Cash & Go, Ltd. had revenues of $1,423,000
and operating income before income taxes of $172,000. Total short-term
advance receivables of Cash & Go, Ltd. at March 31, 2004 were $1,382,000. The
operating results of Cash & Go, Ltd. were accounted for using the equity
method during the comparable first quarter period of 2003.
In summarizing the first quarter results and expectations for the balance
of 2004, Mr. Powell said, "We are extremely pleased with our first quarter
results. Our ability to achieve our aggressive expansion targets for the
quarter and to realize a 48% increase in net income over the prior year is
exciting. First Cash is very optimistic about its prospects for 2004 and
beyond."
About First Cash
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 250
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".
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,"
"will," "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
Quarter Ended
March 31, March 31,
2004 2003
(unaudited)
(in thousands, except per share amounts)
Revenues:
Merchandise sales $20,471 $17,153
Service charges 20,137 16,013
Check cashing fees 910 772
Other 332 306
41,850 34,244
Cost of goods sold 12,070 10,347
Operating expenses 16,239 13,911
Interest expense 43 182
Interest income (14) (183)
Depreciation 921 662
Administrative expenses 4,412 3,734
33,671 28,653
Income before income taxes 8,179 5,591
Provision for income taxes 3,001 2,093
Net income $5,178 $3,498
Net income per share:
Basic $0.34 $0.26
Diluted $0.30 $0.24
Earnings per share amounts reflect three-for-two stock split on
April 6, 2004.
CONDENSED BALANCE SHEETS
March 31,
2004 2003
(unaudited)
(in thousands)
ASSETS:
Cash & cash equivalents $19,482 $13,106
Receivables 34,130 26,925
Inventories 14,467 12,330
Prepaid expenses and other current
assets 900 960
Income taxes receivable 3,141 ---
Total current assets 72,120 53,321
Property & equipment, net 15,012 11,963
Intangible assets, net 53,237 53,194
Receivable from Cash & Go, Ltd. --- 4,853
Other 737 624
$141,106 $123,955
LIABILITIES & STOCKHOLDERS' EQUITY:
Accounts payable and other current
liabilities $6,574 $10,437
Long-term debt, current portion --- 600
Total current liabilities 6,574 11,037
Revolving credit facility --- 17,000
Long-term debt, net of current
portion --- 575
Deferred income taxes payable 6,255 5,223
Total liabilities 12,829 33,835
Stockholders' Equity 128,277 90,120
$141,106 $123,955
SOURCE First Cash Financial Services, Inc.
-0- 04/20/2004
/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