ARLINGTON, Texas, Oct. 20, 2009 (GLOBE NEWSWIRE) -- First Cash Financial Services, Inc. (Nasdaq:FCFS) today announced revenue, net income and earnings per share for the quarter ended September 30, 2009. The Company reported record third quarter fully-diluted earnings per share from continuing operations of $0.35, a 21% increase over prior year earnings, which exceeded the consensus forecast. In addition, the Company announced that it is increasing guidance for full year earnings from continuing operations to a range of $1.37 to $1.39 per share.
Earnings per Share
-- Diluted earnings per share from continuing operations for the
third quarter of 2009 were $0.35, an increase of 21%, compared to
$0.29 in the third quarter of 2008. Net income from continuing
operations for the third quarter increased by 22% to $10.6
million, compared to $8.7 million in the prior-year quarter.
-- Year-to-date diluted earnings per share from continuing operations
were $0.98, compared to $0.91 in the prior-year nine month
period. Net income from continuing operations for the nine months
ended September 30, 2009 was $29.6 million, compared to $27.6
million in the prior year.
-- Total diluted earnings per share, including income from
discontinued operations, were $0.39 for the third quarter of 2009
and $1.15 year-to-date. Earnings per share from
discontinued operations were $0.04 for the third quarter of 2009
and $0.17 year-to-date, primarily the result of strong cash
collections of Auto Master customer receivables held by the
Company as a discontinued asset.
Revenue Highlights
-- Revenue from continuing operations for the third quarter of 2009
was $94.6 million, compared to $83.8 million in the same quarter
of 2008. Consolidated revenue increased by 20% on a constant
currency basis, determined by applying the currency exchange rate
from the third quarter of the prior year to the current quarter's
Mexican peso results. Year-to-date revenue on a constant currency
basis increased by 16%. Pawn-related revenue represented 82% of
year-to-date total revenue.
-- On a constant currency basis, Mexico pawn revenue grew by 38% for
the quarter and 35% year-to-date. U.S. pawn revenue, which is
derived from a significantly more mature store base, increased 12%
for the quarter and 6% year-to-date over the prior year. Payday loan
and credit services revenue in the U.S. decreased by 5% for the
quarter and 8% year-to-date, primarily the result of the Company's
planned contraction of unit growth, increased competition and general
economic conditions. Revenue from non-Texas short-term/payday loan
products comprised only 6% of consolidated year-to-date revenue, while
revenue from Texas-based credit services products represented only 11%
of the total.
-- Same-store sales increased by 9% for the quarter and 6% year-to-
date, on a constant currency basis, in the Company's U.S. and
Mexico pawn stores. Same-store sales declined by 8% for the
quarter and 14% year-to-date in the Company's U.S. short-
term/payday loan stores for the reasons previously identified.
-- The increases in pawn revenue are being driven by strong loan
portfolio growth in the U.S. and Mexico coupled with exceptionally
strong retail sales in Mexico. Sales of scrap jewelry increased
by 18% for the quarter and 9% year-to-date.
Key Profitability Metrics
-- Consolidated store-level operating margins were 28% for the
trailing twelve months, consistent with the prior-year comparative
period.
-- Return on equity for the trailing twelve months was 23%, compared
to 20% for the comparable prior-year period.
-- The Company continued to experience significant acceleration of
growth in pawn receivable balances during the third quarter, with
year-over-year increases of 17% in the U.S. and 21% in Mexico. On
a constant currency basis, pawn loans grew by 38% in Mexico and
27% overall.
-- The gross margin on retail pawn merchandise sales was 42% for the
quarter and 43% year-to-date, compared to prior-year margins of
45% for the quarter and year-to-date, which was reflective of the
current consumer retailing climate. Margins on wholesale scrap
jewelry sales were 33% for the quarter and 36% year-to-date,
compared to prior-year margins of 36% and 38%, respectively.
While the year-to-date average spot price of gold increased less
than 4% during the first nine months of the year, the Company
expects that the recent increase in gold prices will positively
impact scrap revenue beginning in the fourth quarter. Inventory
turns improved for the trailing twelve months, to 4.1x, compared
to 3.6x during the previous twelve-month period.
-- The year-to-date short-term/payday loan credit loss provision
improved to 25% of related loan revenue, compared to 27% in the
prior year. During the current quarter, the provision was 30%,
which was consistent with the prior year.
New Locations
-- A total of 15 new store locations were added during the third
quarter of 2009, all of which were pawn store openings in Mexico.
-- With a total of 45 year-to-date pawn store openings in Mexico, the
Company is on pace to meet its target of 55 to 60 new pawn store
openings in Mexico during 2009. The Company now operates 314
total store locations in Mexico, a 30% increase in the year-over-
year store count.
-- Three U.S. pawn stores have been added in 2009. The Company now
operates a total of 97 U.S. pawn stores.
-- In total, the Company operated 553 total stores as of September
30, 2009, a net store count increase of 17% over the past twelve
months.
Financial Position & Liquidity
-- Earnings before interest, taxes, depreciation and amortization
("EBITDA") from continuing operations totaled $75.5 million for
the trailing twelve months, an increase of 9% over the comparable
prior-year period. The EBITDA margin for the trailing twelve
months was 21%. A detailed reconciliation of this non-GAAP
financial measure is provided elsewhere in this release.
-- The Company reduced outstanding interest-bearing debt by $31
million, or 37%, during the first three quarters of 2009. The
outstanding balance on the Company's bank credit facility, which
matures in April 2010, was $43.0 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
September 30, 2009 was $43.8 million, a significant increase over
the comparable $9.3 million in the prior year. 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 10.3 to 1 in the third quarter of 2008 to 13.3 to 1 in the
current quarter. Year-to-date, the exchange rate averaged 13.7 to
1, compared to 10.5 to 1 in the prior year.
-- 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 third quarter and year-to-date net income and
earnings per share was minimal.
Discontinued Operations
-- After-tax net income from the discontinued Auto Master operation
during the third quarter was $1.4 million, or $0.04 per share, and
$6.2 million, or $0.20 per share, year-to-date. 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. The earnings in 2009 from this discontinued operation
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 $5.2 million on these
accounts and recorded a pre-tax benefit of approximately $3.6
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 $18.4
million and a pre-tax benefit of approximately $12.2 million. The
Company believes cash collections of these Auto Master receivables
will generate additional positive results in the fourth quarter of
2009, although at a declining rate compared to the first nine
months of the year, as the receivable balances are collected or
written-off.
-- Consistent with the Company's strategy of regularly evaluating
individual store profitability and market trends, the Company has
closed certain underperforming short-term/payday loan stores.
Accordingly, the Company completed the sale of eight short-
term/payday loan stores in Michigan to another operator in the
third quarter of 2009 and closed the remaining four stores in
Michigan. Year-to-date, the Company has disposed of a total of 23
stores through sale or closings, of which a significant majority
have been accounted for as discontinued operations. Associated
with these store closings, the Company has incurred a total year-
to-date charge to discontinued operations, net of tax, of $0.03
per share as a reduction against the $0.20 per share in year-to-
date discontinued earnings from Auto Master. With the closing and
disposition of these 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 increasing its 2009 guidance for diluted earnings
from continuing operations to a range of $1.37 to $1.39 per share.
Previous guidance was $1.36 to $1.38 per share. The increased
guidance range implies an estimated earnings growth rate of
approximately 12% to 15% over the second half of fiscal 2009.
-- The Company remains on target to open 60 new stores in Mexico and
at least three 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 fourth quarter of 2009 or
thereafter.
Commentary & Analysis
Rick Wessel, Chief Executive Officer of First Cash, commented on the Company's operating results, "We are pleased with our strong third quarter performance, as we continued to see significant acceleration of year-over-year revenue and earnings growth. Despite a still-challenging consumer economic environment, which has particularly dampened short-term/payday loan revenue, third quarter earnings grew by 21% on the continued strength of our core pawn businesses in both the U.S. and Mexico. We continued to experience significant growth in our fully collateralized pawn loan portfolio during the third quarter, which positions us well for continued revenue growth in the fourth quarter. As a result, we have increased our earnings guidance for 2009."
Regarding the Company's pawn operations in Mexico, Mr. Wessel noted, "With 45 store openings year-to-date, we are on target to meet our goal of 60 new pawn stores in Mexico for 2009. Importantly, the new stores opened this year, along with 64 stores opened and acquired last year, have generated early stage growth in pawn loan portfolios and profits at a record pace. In addition, we continue to identify significant opportunities for expansion into new, under-served markets in Mexico, which provides a clear pathway for continued short- and long-term expansion of our Mexico operations.
"The Company's already strong balance sheet should continue to improve as the significant free cash flow generated by the Company's operations and collection of the remaining Auto Master receivables are utilized to fund new store openings, grow pawn receivables and further reduce debt. The Company's pawn loan portfolio continues to perform at or above historical redemption rates and is fully-collateralized by customer property. Over half of the pledged collateral is in the form of gold jewelry. The strong cash flow and conservative balance sheet will allow the Company to further ramp up the number of new store openings and take advantage of additional strategic opportunities should they arise."
In summary, Mr. Wessel added, "We believe that our core pawn business is well-positioned for continued near- and long-term growth and profitability. We continue to see strong demand for pawn loans and value-priced consumer retail goods as many of our customers experience a shrinking availability of traditional consumer credit and diminished purchasing power. Our operating results this year, in the third quarter in particular, demonstrate clearly that our core, mature U.S. pawn business is extremely well-positioned to capitalize on these general economic market trends and conditions. Additionally, we expect the continued expansion and maturing of our large store base in Mexico to become an even greater source of revenue and profit growth for the foreseeable future. For all of these reasons, we remain extremely confident in our ability to generate significant near- and 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 Company'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 reflect 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 certain 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 550 stores in eleven U.S. states and 19 states in Mexico.
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
STORE COUNT ACTIVITY
The following table details store openings and closings for the three
and nine months ended September 30, 2009:
Mexico
U.S. Locations Locations
----------------------- -----------
Pawn/
Short-Term Short-Term
Pawn Loan Loan Total
Stores Stores Stores Locations
----------- ----------- ----------- -----------
Three Months Ended
September 30, 2009
-------------------
Total locations,
beginning of period 97 143 299 539
New locations opened -- -- 15 15
Locations acquired -- -- -- --
Discontinued short-
term loan operations -- (1) -- (1)
----------- ----------- ----------- -----------
Total locations, end
of period 97 142 314 553
=========== =========== =========== ===========
Nine Months Ended
September 30, 2009
-------------------
Total locations,
beginning of period 94 162 269 525
New locations opened 1 3 45 49
Locations acquired 2 -- -- 2
Locations closed or
consolidated -- (1) -- (1)
Discontinued short-
term loan operations -- (22) -- (22)
----------- ----------- ----------- -----------
Total locations, end
of period 97 142 314 553
=========== =========== =========== ===========
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 in the U.S.
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- --------------------
2009 2008 2009 2008
---- ---- ---- ----
(unaudited)
(in thousands, except per share amounts)
Revenue:
Pawn merchandise sales $ 56,097 $ 47,814 $ 156,198 $ 137,372
Pawn service fees 21,797 18,565 58,253 52,137
Short-term loan and
credit services fees 16,007 16,582 44,518 47,484
Other 745 832 2,449 2,739
--------- --------- --------- ---------
94,646 83,793 261,418 239,732
--------- --------- --------- ---------
Cost of revenue:
Cost of goods sold 34,313 27,795 92,894 78,481
Short-term loan and
credit services loss
provision 4,806 4,970 11,022 12,720
Other 62 107 192 291
--------- --------- --------- ---------
39,181 32,872 104,108 91,492
--------- --------- --------- ---------
Net revenue 55,465 50,921 157,310 148,240
--------- --------- --------- ---------
Expenses and other income:
Store operating expenses 26,776 26,794 77,470 74,623
Administrative expenses 9,059 7,647 24,742 21,565
Depreciation and
amortization 2,581 2,590 7,542 7,814
Interest expense 174 82 602 508
Interest income (3) (9) (60) (39)
-------- -------- --------- ---------
38,587 37,104 110,296 104,471
-------- -------- --------- ---------
Income from continuing
operations before
income taxes 16,878 13,817 47,014 43,769
Provision for income
taxes 6,268 5,088 17,366 16,143
--------- --------- --------- ---------
Income from continuing
operations 10,610 8,729 29,648 27,626
Income (loss) from
discontinued
operations, net of tax 1,364 (55,136) 5,119 (60,636)
--------- --------- --------- ---------
Net income (loss) $ 11,974 $ (46,407) $ 34,767 $ (33,010)
========= ========= ========= =========
Basic income per share:
Income from continuing
operations $ 0.36 $ 0.30 $ 1.01 $ 0.93
Income (loss) from
discontinued operations 0.04 (1.89) 0.17 (2.04)
--------- --------- --------- ---------
Net income (loss) per
basic share $ 0.40 $ (1.59) $ 1.18 $ (1.11)
========= ========= ========= =========
Diluted income per share:
Income from continuing
operations $ 0.35 $ 0.29 $ 0.98 $ 0.91
Income (loss) from
discontinued operations 0.04 (1.83) 0.17 (2.00)
--------- --------- --------- ---------
Net income (loss) per
diluted share $ 0.39 $ (1.54) $ 1.15 $ (1.09)
========= ========= ========= =========
Weighted average shares
outstanding:
Basic 29,801 29,235 29,466 29,685
Diluted 30,322 30,014 30,115 30,319
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Sept. 30, Dec. 31,
------------------- --------
2009 2008 2008
---- ---- ----
(unaudited)
(in thousands)
ASSETS
Cash and cash equivalents $ 18,552 $ 15,309 $ 29,006
Service charges receivable 9,214 8,205 7,173
Pawn receivables 59,585 50,182 44,170
Short-term loan receivables,
net of allowance 5,412 5,538 5,188
Inventories 38,410 33,781 28,738
Other 10,982 47,678 14,120
-------- -------- --------
Total current assets 142,155 160,693 128,395
Property and equipment, net 45,999 42,831 41,648
Goodwill and intangible
assets, net 75,986 53,237 75,191
Other 14,396 9,500 20,109
-------- -------- --------
Total assets $278,536 $266,261 $265,343
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of notes
payable $ 4,655 $ 2,250 $ 7,048
Revolving credit facility 43,000 -- --
Accounts payable and accrued
liabilities 19,295 15,329 23,660
Other 9,592 12,193 2,110
-------- -------- --------
Total current liabilities 76,542 29,772 32,818
Revolving credit facility -- 73,500 68,500
Notes payable, net of
current portion 5,919 2,250 9,389
Other 999 8,336 186
-------- -------- --------
Total liabilities 83,460 113,858 110,893
Stockholders' equity 195,076 152,403 154,450
-------- -------- --------
Total liabilities and
stockholders' equity $278,536 $266,261 $265,343
======== ======== ========
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION
The following table details the components of revenue for the three
months ended September 30, 2009, as compared to the three months ended
September 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, which is more fully described elsewhere in this release.
Increase/
Three Months Ended (Decrease)
September 30, Constant
--------------------- Currency
2009 2008 Increase/(Decrease) Basis
---- ---- ------------------- ----------
Domestic revenue:
Pawn retail
merchandise
sales $ 15,792 $ 14,930 $ 862 6% 6%
Pawn scrap
jewelry sales 8,984 7,500 1,484 20% 20%
Pawn service
fees 10,080 8,667 1,413 16% 16%
Short-term
loan and
credit
services fees 14,977 15,710 (733) (5)% (5)%
Other 714 830 (116) (14)% (14)%
---------- ---------- ----------
50,547 47,637 2,910 6% 6%
---------- ---------- ----------
Foreign revenue:
Pawn retail
merchandise
sales 20,590 16,134 4,456 28% 51%
Pawn scrap
jewelry sales 10,731 9,250 1,481 16% 16%
Pawn service
fees 11,717 9,898 1,819 18% 39%
Short-term
loan and
credit
services fees 1,030 872 158 18% 38%
Other 31 2 29 -- --
---------- ---------- ----------
44,099 36,156 7,943 22% 39%
---------- ---------- ----------
Total revenue:
Pawn retail
merchandise
sales 36,382 31,064 5,318 17% 29%
Pawn scrap
jewelry sales 19,715 16,750 2,965 18% 18%
Pawn service
fees 21,797 18,565 3,232 17% 29%
Short-term
loan and
credit
services fees 16,007 16,582 (575) (3)% (2)%
Other 745 832 (87) (10)% (9)%
---------- ---------- ----------
$ 94,646 $ 83,793 $ 10,853 13% 20%
========== ========== ==========
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING INFORMATION (CONTINUED)
The following table details the components of revenue for the nine
months ended September 30, 2009, as compared to the nine months ended
September 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, which is more fully described elsewhere in this release.
Increase/
Nine Months Ended (Decrease)
September 30, Constant
--------------------- Currency
2009 2008 Increase/(Decrease) Basis
---- ---- ------------------- ----------
Domestic revenue:
Pawn retail
merchandise
sales $ 47,920 $ 46,569 $ 1,351 3% 3%
Pawn scrap
jewelry sales 22,321 19,969 2,352 12% 12%
Pawn service
fees 27,253 25,130 2,123 8% 8%
Short-term
loan and
credit
services fees 41,801 45,505 (3,704) (8)% (8)%
Other 2,364 2,737 (373) (14)% (14)%
---------- ---------- ----------
141,659 139,910 1,749 1% 1%
---------- ---------- ----------
Foreign revenue:
Pawn retail
merchandise
sales 56,230 43,229 13,001 30% 53%
Pawn scrap
jewelry sales 29,727 27,605 2,122 8% 8%
Pawn service
fees 31,000 27,007 3,993 15% 36%
Short-term
loan and
credit
services fees 2,717 1,979 738 37% 61%
Other 85 2 83 -- --
---------- ---------- ----------
119,759 99,822 19,937 20% 36%
---------- ---------- ----------
Total revenue:
Pawn retail
merchandise
sales 104,150 89,798 14,352 16% 27%
Pawn scrap
jewelry sales 52,048 47,574 4,474 9% 9%
Pawn service
fees 58,253 52,137 6,116 12% 23%
Short-term
loan and
credit
services fees 44,518 47,484 (2,966) (6)% (5)%
Other 2,449 2,739 (290) (11)% (10)%
---------- ---------- ----------
$ 261,418 $ 239,732 $ 21,686 9% 16%
========== ========== ==========
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 September 30, 2009, as compared to September 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,
which is more fully described elsewhere in this release.
Increase/
Balance at (Decrease)
September 30, Constant
--------------------- Currency
2009 2008 Increase/(Decrease) Basis
---- ---- ------------------- ----------
Domestic
customer
receivables and
CSO loans
outstanding:
Pawn
receivables $ 31,237 $ 26,761 $ 4,476 17% 17%
Short-term
loan
receivables,
net of
allowance 4,476 4,678 (202) (4)% (4)%
CSO short-term
loans held by
independent
third-party
(1) 11,868 12,311 (443) (4)% (4)%
---------- ---------- ----------
47,581 43,750 3,831 9% 9%
---------- ---------- ----------
Foreign customer
receivables:
Pawn
receivables 28,348 23,421 4,927 21% 38%
Short-term
loan
receivables,
net of
allowance 936 860 76 9% 24%
---------- ---------- ----------
29,284 24,281 5,003 21% 38%
---------- ---------- ----------
Total customer
receivables and
CSO loans
outstanding:
Pawn
receivables 59,585 50,182 9,403 19% 27%
Short-term
loan
receivables,
net of
allowance 5,412 5,538 (126) (2)% --
CSO short-term
loans held by
independent
third-party
(1) 11,868 12,311 (443) (4)% (4)%
---------- ---------- ----------
$ 76,865 $ 68,031 $ 8,834 13% 19%
========== ========== ==========
(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 substitute 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
September 30,
-----------------------
2009 2008
---- ----
Cash flow from operating activities $ 68,517 $ 44,410
Cash flow from investing activities:
Pawn and short-term loan receivables (7,390) (15,421)
Purchases of property and equipment (17,322) (19,655)
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Free cash flow $ 43,805 $ 9,334
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FIRST CASH FINANCIAL SERVICES, INC.
UNAUDITED NON-GAAP FINANCIAL INFORMATION (CONTINUED)
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
September 30,
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2009 2008
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Income from continuing operations $ 40,586 $ 36,970
Adjustments:
Income taxes 24,005 21,491
Depreciation and amortization 10,119 10,315
Interest expense 887 665
Interest income (76) (61)
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Earnings from continuing operations before
interest, income taxes, depreciation and
amortization $ 75,521 $ 69,380
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EBITDA margin calculated as follows:
Total revenue from continuing operations $ 352,278 $ 318,668
Earnings from continuing operations before
interest, income taxes, depreciation and
amortization 75,521 69,380
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EBITDA as a percent of revenue 21% 22%
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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 (September 30, 2008) of 10.9 to 1 was used, compared to the current end of period (September 30, 2009) exchange rate of 13.5 to 1. For income statement items, the average closing daily exchange rate for the appropriate period was used. The average exchange rate for the prior-year quarter ended September 30, 2008 was 10.3 to 1, compared to the current quarter rate of 13.3 to 1. The average exchange rate for the prior-year nine-month period ended September 30, 2008 was 10.5 to 1, compared to the current year-to-date rate of 13.7 to 1.