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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 18, 2005
(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))
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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 nine month periods ended September 30,
2005. The Company's press release dated October 18, 2005 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 date October 18, 2005 announcing the Company's financial
results for the three month and nine month periods ended September 30,
2005.
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 18, 2005 FIRST CASH FINANCIAL SERVICES, INC.
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(Registrant)
/s/ R. DOUGLAS ORR
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R. Douglas Orr
Chief Accounting Officer
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EXHIBIT INDEX
Exhibit Number Document
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99.1 Press release dated October 18, 2005.
4
Exhibit 99.1
FIRST CASH REPORTS 19TH CONSECUTIVE QUARTER OF DOUBLE-DIGIT EPS GROWTH;
THIRD QUARTER EPS INCREASES 26%
ARLINGTON, Texas, Oct. 18 /PRNewswire-FirstCall/ -- First Cash Financial
Services, Inc. (Nasdaq: FCFS) today announced record-setting revenues, net
income and earnings per share for the three months ended September 30, 2005.
In addition, this marked the Company's 19th consecutive quarter of achieving
double-digit earnings per share growth.
Earnings
* Third quarter 2005 diluted earnings per share were $0.39, an increase of
26% compared to $0.31 diluted earnings per share for the third quarter of
2004.
* For the nine months ending September 30, 2005, diluted earnings per share
were $1.06, an increase of 23% over $0.86 earnings per share for the same
period in 2004.
* Diluted earnings per share from continuing operations for the trailing
twelve months ending September 30, 2005 were $1.42, an increase of 26%
over $1.13 for the trailing twelve months ending September 30, 2004.
* Net income for the third quarter was $6.4 million. This represents a 23%
increase over third quarter 2004 net income of $5.2 million.
* Year-to-date net income was $17.7 million, compared to $14.6 million for
the first nine months of 2004, which represents an increase of 21%.
Revenues
* Total revenues for the third quarter were $54.3 million, an increase of
17% compared to $46.5 million for the third quarter of 2004. Year-to-date
revenues were $147.6 million, up from $128.7 million in the comparative
period last year, which represents a 15% increase.
* Pawn service fees increased 19% in the third quarter of 2005 compared to
the prior year, while aggregate short-term advance and credit services
fees increased by 18% over the third quarter of last year.
* Merchandise sales for the quarter increased by 16% compared to last year.
A significant component of merchandise sales is non-retail sales of scrap
jewelry, especially in the Company's newer pawn stores. Such scrap sales
increased from $5.4 million in the third quarter of 2004 to $6.2 million
in the third quarter of 2005.
* Same-store revenues for the third quarter of 2005 increased by 10% over
the comparable prior-year period. Same-store revenue increases, which
include merchandise sales, pawn service fees, and payday advance and
credit services fees, were realized across all major revenue lines.
Growth and Expansion
* The Company has opened 34 new stores during the first nine months of the
year, bringing the total store count to 313 units at September 30, 2005.
In addition, the Company operates 40 financial services kiosks located
inside convenience stores.
* Total pawn receivables increased 17%, from $24.9 million at September 30,
2004, to $29.2 million at September 30, 2005. Pawn receivables in the
Company's Mexico stores increased by 31% over the past twelve months,
while pawn receivables in its U.S. stores increased by 11% over the same
period.
* During the third quarter the Company transitioned its short-term advance
product in all Texas locations from a bank-funded model to its new credit
services product. While outstanding short-term receivables as of
September 30, 2005 in Texas decreased by $7.7 million on a year-over-year
basis, the Company's credit services customers had net new loans
outstanding with an independent lender in the amount of $10.0 million.
Accordingly, the combined bank-funded and credit services-originated loan
volumes in Texas at September 30, 2005 increased 29% compared to the
prior year. Payday advance receivables in the Company's non-Texas
locations increased from $6.0 million at September 30, 2004 to $6.3
million at September 30, 2005, an increase of 5%.
Operating Metrics
* The operating margin, calculated as income before taxes as a percentage
of revenues, was 18.5% for the current quarter, compared to 17.7% for the
same period last year.
* Return on stockholders' equity for the trailing twelve months ended
September 30, 2005, was 16.0%, compared to 15.2% for the comparable
period last year.
* Inventory turns for the trailing twelve months improved to 3.2 times at
the end of the current 2005 quarter, compared to 3.0 times for the
trailing twelve months last year.
* The payday advance and credit services loss provision decreased from 28%
of fees in the third quarter of 2004 to 25% in the third quarter of 2005.
During the quarter, the Company received approximately $900,000 from the
sale of certain previously written-off payday advance receivables, which
was recorded as a credit to the overall loss provision, as are all
recoveries of previously written-off receivables. It is anticipated that
such sales of selected written-off receivables, along with the
implementation of other collection improvement initiatives, will continue
into future periods for the purpose of ongoing reduction of the payday
advance and credit services loss provision.
* Gross profit margins on total merchandise sales, both retail and non-
retail, for the third quarter of 2005 were 39%, compared to 38% in the
prior year. Retail merchandise margins, which do not include bulk jewelry
scrap sales, were 45% for the third quarter of both 2005 and 2004.
Financial Position & Liquidity
* Earnings before interest, taxes, depreciation and amortization (EBITDA)
for the trailing twelve month period ended September 30, 2005 totaled
$42.6 million, an increase of 23% compared to $34.7 million to the
trailing twelve month period ended September 30, 2004. This non-GAAP
measure for 2005 is derived by adding back combined interest, provision
for income taxes and depreciation expense of $18.8 million to net income
of $23.8 million for the trailing twelve month period. For 2004, it is
derived by adding back combined interest, provision for income taxes and
depreciation expense of $15.3 million to net income from continuing
operations of $19.4 million for the trailing twelve month period. The
Company provides a more detailed reconciliation of this non-GAAP measure
in its financial reporting.
* Cash balances as of September 30, 2005 totaled almost $30 million, of
which $17 million was required for daily store and administrative
operations; the remaining $13 million represented excess cash reserves
currently on-hand.
* With total assets of $170 million and total liabilities of $17 million as
of September 30, 2005, the ratio of total assets to total liabilities was
10 to 1. The current ratio at the current quarter end was 9 to 1.
2005 Outlook
* The Company previously forecast fiscal 2005 diluted earnings per share to
be in a range of $1.49 to $1.53. Based on year-to-date results and
projected operating trends for the fourth quarter, the Company has
revised its 2005 earnings estimate to a range of $1.50 to $1.53 per
share. For the fourth quarter of 2005, earnings are forecast to be in a
range from $0.44 to $0.47 per share, an increase of 22% to 31% over the
prior year quarter.
Commentary & Analysis
Mr. Alan Barron, Chief Executive Officer and Chief Operating Officer,
commented on the third quarter highlights, "We are again pleased to report
exceptionally strong operating results, highlighted by a 26% increase in
earnings per share for the third quarter. Significant revenue and profit growth
was realized in both our mature stores and in newer stores located in our
expansion markets. In addition, we successfully launched a credit services
product which has replaced the bank-funded payday advance product in our Texas
locations; it is already accretive to both revenues and profits in these
stores."
The Company continues to execute its expansion strategy, focusing primarily
on new First Cash Pawn stores in Mexico and First Cash Advance locations in the
U.S. Third quarter store openings were on target in Mexico, while new store
openings in the U.S. were slightly behind target as the Company focused during
the second and third quarters on the deployment of the new credit services
product in the Company's Texas markets. The Company has approximately 30 new
locations currently under lease, which it expects to open during the fourth
quarter and early first quarter of 2006.
As previously noted, a key accomplishment during the third quarter of 2005
was the successful rollout of the credit services product in all of the
Company's Texas locations. On July 1, First Cash began marketing a fee-based
credit services package in Texas, which includes access to a short-term loan
funded by an independent consumer lending company. First Cash Credit, Ltd.
("FCC"), a wholly owned subsidiary of the Company, is registered as a "Credit
Services Organization" in order to provide, for a fee, credit services to help
consumers in obtaining credit. As part of these services, FCC assists customers
in applying for loans from an independent consumer lender. Effective September
30, the Company ceased processing new bank-funded payday loans in its Texas
locations and now offers exclusively the credit services product to customers
seeking short-term advances. The Company currently has 58 First Cash Pawn
stores, 54 First Cash Advance stores and 40 Cash & Go, Ltd. kiosks located in
Texas. First Cash continues to provide its payday advance product in seven other
markets where the Company is the direct issuer of payday or short-term advances
under existing state and/or local regulations. In none of these markets, in
Texas or elsewhere, is the Company utilizing the bank-funded model.
In summarizing the Company's expectations for the balance of 2005 and
beyond, Mr. Barron said, "First Cash is extremely well-positioned for sustained
growth in earnings, revenues and new store locations. We have a profitable base
of mature stores in proven markets and a significant number of new stores
approaching maturity. We have consistently evidenced our ability to increase and
sustain revenue growth even in our mature stores. Over the past four years we
have also demonstrated our ability to execute an organic expansion strategy
focused on new store openings in multiple, high-potential markets. Our balance
sheet is strong, we are debt-free and our new store investments are funded
entirely from operating cash flows. In short, we have high expectations for
continued growth and confidence in First Cash's ability to build long-term value
for our shareholders."
Forward-Looking Information
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," "could," 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 Company's diluted earnings per share forecast for the
fiscal year and quarter ended December 31, 2005, its expectations for new store
openings, and its expectations for continued growth of earnings, revenues and
store counts. 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 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 consumer
borrowing and repayment behaviors, changes or increases in competition, the
ability to locate, open and integrate new stores, the ability to integrate and
operate the credit services product in Texas, new legislative and governmental
regulations or changes to existing 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.
About First Cash
First Cash Financial Services, Inc. and its subsidiaries are engaged in the
operation of pawn and consumer credit stores, which lend money on the collateral
of pledged personal property, retail previously-owned merchandise acquired
through loan forfeitures, provide payday advances, and offer other financial and
credit services products. The Company currently owns and operates 314 stores in
eleven U.S. states and six states in Mexico. First Cash is also an equal partner
in Cash & Go, Ltd., a joint venture, which owns and operates 40 check-cashing
and financial services kiosks located inside convenience stores.
First Cash has been recognized for four consecutive years by Forbes magazine
as one of its "200 Best Small Companies." This annual ranking is based on a
combination of profitability and growth performance measures over the most
current one and five-year periods. First Cash was also recently ranked for the
second consecutive year by Fortune Small Business magazine on the "FSB 100:
America's Fastest-Growing Small Public Companies." 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 FINANCIAL SERVICES, INC.
STORE COUNT INFORMATION
The following table details store openings and closings for the quarter and
nine months ended September 30, 2005:
Quarter Ended Nine Months Ended
September 30, 2005 September 30, 2005
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Payday Payday
Pawn Advance Total Pawn Advance Total
Stores Stores Stores Stores Stores Stores
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Beginning of
period count 214 93 307 197 87 284
New stores opened 8 1 9 27 7 34
Stores closed or
consolidated (3) --- (3) (5) --- (5)
End of period
count 219 94 313 219 94 313
For the quarter and nine months ended September 30, 2005, 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, 2005.
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Quarter Ended Nine Months Ended
September 30, September 30,
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2005 2004 2005 2004
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(unaudited, in thousands, except per share amounts)
Revenues:
Merchandise sales $ 25,441 $ 22,006 $ 72,222 $ 61,103
Pawn service fees 10,732 8,998 29,255 25,176
Short-term advance
and credit services
fees 17,200 14,545 43,131 39,187
Check cashing fees 671 683 2,188 2,316
Other 263 312 838 930
54,307 46,544 147,634 128,712
Cost of revenues:
Cost of goods sold 15,635 13,603 43,605 36,330
Short-term advance
and credit services
loss provision 4,257 4,007 8,856 8,413
Check cashing returned
items expense 72 50 206 179
19,964 17,660 52,667 44,922
Gross profit 34,343 28,884 94,967 83,790
Expenses:
Store operating
expenses 17,574 15,353 49,499 44,723
Administrative
expenses 5,251 4,208 13,676 12,870
Depreciation 1,533 1,073 4,195 2,982
Interest expense --- 17 --- 60
Interest income (46) (10) (217) (42)
24,312 20,641 67,153 60,593
Income before
income taxes 10,031 8,243 27,814 23,197
Provision for
income taxes 3,661 3,053 10,152 8,583
Net income $ 6,370 $ 5,190 $ 17,662 $ 14,614
Net income per share:
Basic $ 0.41 $ 0.33 $ 1.12 $ 0.93
Diluted $ 0.39 $ 0.31 $ 1.06 $ 0.86
Weighted average common
shares outstanding:
Basic 15,571 15,750 15,771 15,738
Diluted 16,433 16,830 16,621 17,068
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30,
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2005 2004
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(unaudited, in thousands)
ASSETS:
Cash and cash equivalents $ 29,657 $ 12,288
Service fees receivable 4,227 4,527
Pawn receivables 29,152 24,859
Short-term advance receivables 6,598 14,014
Inventories 21,461 18,074
Prepaid expenses and other current assets 1,812 1,303
Income taxes receivable 789 598
Total current assets 93,696 75,663
Property and equipment, net 22,396 16,767
Goodwill 53,237 53,237
Other 938 772
$ 170,267 $ 146,439
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable $ 945 $ 604
Accrued expenses 9,242 6,776
Total current liabilities 10,187 7,380
Revolving credit facility --- 2,000
Deferred income taxes payable 7,165 6,855
Total liabilities 17,352 16,235
Stockholders' equity 152,915 130,204
$ 170,267 $ 146,439
SOURCE First Cash Financial Services, Inc.
-0- 10/18/2005
/CONTACT: Rick Wessel, President, or Doug Orr, Executive Vice President &
Chief Financial Officer, both of First Cash Financial Services, Inc.,
+1-817-505-3199, or investorrelations@firstcash.com /
/Web site: http://www.firstcash.com /
