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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
October 19, 2004
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(Date of Report - Date of Earliest Event Reported)
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)
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 quarter ended September 30, 2004. The
Company's press release dated October 19, 2004 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
(c) Exhibits:
99.1 Press Release dated October 19, 2004 announcing the Company's
financial results for the quarter ended September 30, 2004.
2
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: October 19, 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
3
Exhibit 99.1
First Cash Financial Services Reports Record Quarter for Net Income and EPS;
Same-Store Sales Increase 14%
ARLINGTON, Texas, Oct. 19 /PRNewswire-FirstCall/ -- First Cash Financial
Services, Inc. (Nasdaq: FCFS) today announced revenues, net income and
earnings per share for the three months ended September 30, 2004. Both the
net income and earnings per share amounts recorded in the third quarter
represent all-time records for any quarter in the history of First Cash.
Earnings
-- Diluted earnings per share for the quarter ending September 30, 2004
were $0.31. This represents an increase of 24% compared to $0.25
diluted earnings per share for the third quarter of 2003.
-- Net income for the third quarter was $5.2 million. This represents a
29% increase over third quarter 2003 net income of $4.0 million.
-- For the nine months ending September 30, 2004, diluted earnings per
share were $0.86, an increase of 26% compared to $0.68 for the
comparative period in 2003.
-- Year-to-date net income was $14.6 million, compared to $10.5 million
for the first nine months of 2003, which represents a 39% increase.
-- For the trailing twelve months ending September 30, 2004, diluted
earnings per share from continuing operations were $1.13, an increase
of 24% over $0.91 for the trailing twelve months ending
September 30, 2003.
Revenues
-- Total revenues for the third quarter were $46.5 million, compared to
$37.2 million for the same quarter last year, representing an
increase of 25%. Year-to-date revenues were $128.7 million, up from
$104.9 million in the comparative 2003 period, which represents a 23%
increase.
-- Same-store revenues for the third quarter of 2004 increased by 14%
over the comparable prior year quarter. For the nine months ending
September 30, 2004, same-store revenues increased by 10% compared to
the same period in 2003.
-- Revenues excluding non-retail sales of scrap jewelry merchandise
increased by 20%, from $34.2 million in the third quarter of 2003 to
$41.1 million for the third quarter of 2004. Non-retail sales of
scrap jewelry merchandise increased from $3.0 million in the third
quarter of 2003 to $5.4 million in the third quarter of 2004.
Growth and Operating Metrics
-- The Company added 13 new stores during the third quarter, bringing
the number of store openings to 40 for the first nine months of 2004.
The Company opened 34 stores in the first nine months of 2003.
-- As of September 30, 2004, the Company's total store count was 273, a
22% increase over the unit count one year ago. In addition, the
Company has 40 financial services kiosks located inside convenience
stores.
-- The Company's overall operating margin (income before income taxes)
increased to 17.7% of revenues for the quarter ended
September 30, 2004, compared to 17.4% for the same quarter in 2003.
The current year-to-date operating margin was 18.0% compared to 16.2%
for the nine months ended September 30, 2003.
-- Short-term advance receivables increased from $10.5 million at
September 30, 2003 to $14.0 million at September 30, 2004. This
increase of 33% was the result of opening new stores, the continued
maturation of existing stores and consolidation of the Cash & Go,
Ltd. joint venture receivables in the amount of $1.4 million.
-- Pawn receivables, which totaled $24.9 million at September 30, 2004,
increased by 22% over the balance at September 30, 2003 of
$20.5 million. Pawn receivables in the Company's stores located in
Mexico totaled $7.8 million at the end of the current period, which
compares to $4.9 million one year ago.
-- Retail merchandise margins, which do not include bulk jewelry scrap
sales, were 45% for the nine months ending September 30, 2004, which
equaled the margin for the same period in 2003. Year-to-date 2004
profit margins on total merchandise sales both retail and non-retail,
were 41%, which was also consistent with the prior year.
Financial Position & Liquidity
-- On July 15, 2004 the Company announced a stock repurchase plan for up
to 1.6 million shares of common stock. Through September 30, 2004,
the Company has repurchased 623,000 shares under the plan at an
average price of $19.46 per share. Total shares outstanding at
September 30, 2004 were 15,504,615.
-- The Company reduced its interest-bearing debt by $9 million during
the most recent twelve-month period. As of September 30, 2004, the
Company's only interest-bearing debt was its long-term line of
credit, which had a balance of $2 million, compared to $11 million at
September 30, 2003.
-- As of September 30, 2004, total stockholders' equity was
$130 million, an amount which exceeded total liabilities by a ratio
of 8 to 1. This compares to September 30, 2003, when stockholders'
equity was $110 million and exceeded total liabilities by a ratio of
4 to 1.
-- While total inventories increased from $15.0 million to $18.1 million
over the past twelve months, inventories in aging categories of
180 days or more decreased by 15% over the same period and currently
represent only 12% of total inventories. On a per store basis,
inventories decreased from $98,000 per store at September 30, 2003 to
$95,000 per store at September 30, 2004.
Updated Earnings & Growth Estimates
-- Management forecasts that diluted earnings per share for the fourth
quarter of 2004 will be in a range of $0.34 to $0.36. For the full
2004 fiscal year, diluted earnings per share are projected to be in a
range of $1.20 to $1.22.
-- With 40 new stores opened through September 30, 2004 and a
significant number of new sites under lease and in the construction
pipeline, the Company is on target to open a total of 52 to 55 stores
during 2004, an increase over the previous forecast of 50 new stores.
In addition, the Company has announced plans to open 60 stores in
2005, which it expects to fund through operating cash flows.
Commentary & Analysis
The Company's Chairman and Chief Executive Officer, Rick Powell, commented
on the Company's results for the third quarter of 2004, "We are extremely
pleased with our performance for the quarter and the year as a whole. Our
earnings per share increased by 24% over the comparative prior-year quarter,
and year-to-date our earnings are up by 26%. This marks the 15th consecutive
quarter that First Cash has posted double-digit EPS growth."
According to Mr. Powell, the Company continues to be excited about a very
successful growth strategy, "Our year-to-date store openings are ahead of
schedule and we expect to open more than our original target of 50. The
significant gains in "same-store" sales and net income have allowed us to
absorb the earnings impact from the new stores opened in 2004 and still
maintain our targeted earnings growth."
The cash flows and financial position of the Company continue to be
strong. For the first nine months of 2004, the Company has funded
approximately $5 million in loan receivable growth, $5 million of capital
expenditures primarily related to new stores and debt reduction of $4 million.
Most significantly, the Company has utilized over $12 million in excess cash
flows to repurchase common stock at an attractive price that will further
enhance future earnings per share. Mr. Powell noted that, "First Cash is
uniquely positioned to drive long-term shareholder value. We are funding an
aggressive expansion plan from operating cash flows while, at the same time,
reducing debt and directly increasing shareholder value through the stock
repurchase program. As we move forward, our financial position gives us
tremendous resources and flexibility for increasing growth in shareholder
value."
In summary, Mr. Powell stated, "We remain committed to building a
sustainable long-term growth platform that relies on new store startups rather
than acquisitions. The Company continues to make significant investments in
its management, technology and operational infrastructure to support this
growth. Our expansion into new geographic markets will provide added
diversification of our earnings stream."
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 advances, check
cashing and other financial services. The Company currently owns and operates
274 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 expectation for additional
store openings, the expected impact of stock repurchase and the expectation
for future operating cash flows necessary to fund store openings. 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
nine-month periods ended September 30, 2004:
Quarter Ended Nine Months Ended
September 30, 2004 September 30, 2004
Check Check
Cashing/ Cashing/
Short-term Short-term
Pawn Advance Total Pawn Advance Total
Stores Stores Stores Stores Stores Stores
Beginning of period
count 180 80 260 160 75 235
New stores opened 10 3 13 32 8 40
Closed stores --- --- --- (2) --- (2)
End of period count 190 83 273 190 83 273
For the quarter and nine months ended September 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 nine-
month period ended September 30, 2004.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2004 2003 2004 2003
(unaudited, in thousands, except per share amounts)
Revenues:
Merchandise sales $22,006 $17,283 $61,103 $49,986
Pawn service charges 8,998 7,634 25,176 20,796
Short-term advance
service charges 14,545 11,362 39,187 31,136
Check cashing fees 683 670 2,316 2,109
Other 312 292 930 876
46,544 37,241 128,712 104,903
Cost of revenues:
Cost of goods sold 13,603 10,245 36,330 29,570
Short-term advance
loss provision 4,007 3,009 8,413 7,137
Check cashing
returned items
expense 50 59 179 151
17,660 13,313 44,922 36,858
Gross profit 28,884 23,928 83,790 68,045
Expenses:
Operating expenses 15,353 13,534 44,723 38,089
Interest expense 17 108 60 412
Interest income (10) (133) (42) (467)
Depreciation 1,073 828 2,982 2,176
Administrative
expenses 4,208 3,110 12,870 10,855
20,641 17,447 60,593 51,065
Income before income
taxes 8,243 6,481 23,197 16,980
Provision for income
taxes 3,053 2,465 8,583 6,465
Net income $5,190 $4,016 $14,614 $10,515
Net income per share:
Basic $0.33 $0.28 $0.93 $0.77
Diluted $0.31 $0.25 $0.86 $0.68
Weighted average common
shares outstanding:
Basic 15,750 14,300 15,738 13,658
Diluted 16,830 16,358 17,068 15,417
Earnings per share and outstanding share amounts reflect
the Company's three-for-two stock split on April 6, 2004.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30,
2004 2003
(unaudited)
(in thousands)
ASSETS:
Cash & cash equivalents $12,288 $13,665
Service charges receivable 4,527 3,615
Pawn receivables 24,859 20,457
Short-term advance receivables 14,014 10,532
Inventories 18,074 15,011
Prepaid expenses and other current assets 1,303 1,239
Income taxes receivable 598 2,043
Total current assets 75,663 66,562
Property & equipment, net 16,767 12,926
Goodwill 53,237 53,194
Receivable from Cash & Go, Ltd. --- 4,943
Other 772 612
$146,439 $138,237
LIABILITIES & STOCKHOLDERS' EQUITY:
Accounts payable and other current liabilities $7,380 $11,775
Total current liabilities 7,380 11,775
Revolving credit facility 2,000 11,000
Deferred income taxes payable 6,855 5,824
Total liabilities 16,235 28,599
Stockholders' Equity 130,204 109,638
$146,439 $138,237
SOURCE First Cash Financial Services, Inc.
-0- 10/19/2004
/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