UNITED STATES
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 22, 2008
First Cash Financial Services, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-19133 |
75-2237318 |
|
| (Commission File Number) | (IRS Employer Identification No.) |
690 East Lamar Blvd., Suite 400, Arlington, Texas |
76011 |
|
| (Address of principal executive offices) | (Zip Code) |
(817) 460-3947
Registrant's telephone number, including area code:
NA
(Former name or former address, if changed since last report)
| 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 three month and six month periods ended June 30, 2008. The Company's press release dated July 22, 2008 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.
(d) Exhibits:
99.1
Press Release dated July 22, 2008 announcing the Company’s financial results for the three month and six month periods ended June 30, 2008.
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.
|
First Cash Financial Services, Inc.
(Registrant) |
||
|
July 22, 2008
(Date) |
/s/ R. DOUGLAS ORR
R. Douglas Orr Chief Accounting Officer |
EXHIBIT INDEX
| Exhibit Number | Document | |
| 99.1 | Press release dated July 22, 2008 |
EXHIBIT 99.1
First Cash Reports Second Quarter Earnings Per Share of $0.23; Pawn and Short-Term Loan Profits Increase by 39% as Same-Store Revenues Grow by 19%
ARLINGTON, Texas, July 22, 2008 (PRIME NEWSWIRE) -- First Cash Financial Services, Inc. (Nasdaq:FCFS) today announced revenue, net income and earnings per share for the three months ended June 30, 2008. Diluted earnings per share from continuing operations were $0.23 for the second quarter of 2008 and $0.43 year-to-date. Store-level profits from the Company's core pawn and short-term loan segment continued to surge this quarter as they grew by 39%, which represented significant acceleration over the first quarter growth rate of 26%. Same-store revenues from this segment increased by 19% over the prior year. In addition to the strong performance from mature stores, the expansion and maturing of newer stores contributed to earnings growth as well, especially in the Company's pawn stores in Mexico where the Company saw pawn receivable balances grow by 37% year-over-year. During the quarter, the Company has also realized significant increases in gross profit margins and operating cash flows from the core pawn an d short-term loan segment.
While the Company's Auto Master division continued to experience a managed contraction of sales and margins, its operating results showed significant improvement over the previous sequential quarter. For the second quarter of 2008, Auto Master incurred a store-level loss of $0.03 per share, net of tax, the level forecast in the first quarter earnings release. This amount is less than half the loss recorded in this business segment in the first quarter of 2008. The Company believes that the appropriate strategic actions have been taken to further reduce Auto Master store-level losses to $0.01 per share or breakeven in the third quarter and return it to store-level profitability during the fourth quarter of 2008.
Revenue ------- * Consolidated revenue for the second quarter totaled $106 million, an increase of 17% over the prior-year quarter; year-to-date revenue was $209 million, which represents a 17% increase. Total second quarter revenue from the Company's Mexico operations was $34.3 million, an increase of 47% over the prior year. * Same-store revenue increased 19% in the Company's pawn and short-term loan stores during the second quarter compared to the prior-year period, while year-to-date same-store revenue increased 18%. * Total pawn store revenue for the second quarter was $64.4 million, an increase of 29% over the prior-year quarter. Mexico pawn store revenue increased by 45% for the quarter, a result of both continued store expansion and strong same-store revenue growth in existing stores. In the U.S., which has a mature store base, pawn store revenues grew by 15% during the quarter. Total pawn service charge revenue increased by 24%, while total pawn merchandise sales increased by 34%. * Second quarter revenue in the 195 free-standing short-term loan stores was $13.2 million, an increase of 6% compared to the prior-year period (this calculation excludes revenue from 5 stores in Oregon, which have significantly reduced revenues in 2008 as a result of a new law enacted in July 2007). * Total second-quarter revenue from Auto Master of $26.4 million was flat compared to the prior-year quarter as a result of strategic initiatives implemented at Auto Master in the latter part of 2007 to improve credit quality and overall financial results. These changes, which included more rigid underwriting standards, larger down payment requirements for certain customers and sales of higher quality vehicles have been in place since November 2007 and contributed to the significant decreases in same-store sales of 25% in the second quarter and 31% year-to-date. Earnings -------- * Diluted earnings per share from continuing operations for the second quarter of 2008 were $0.23, compared to $0.24 in the second quarter of 2007. Net income from continuing operations for the second quarter of 2008 was $6.8 million, compared to $8.0 million in the prior year. The consolidated year-over-year decrease is due to the Auto Master segment, which recorded a store-level loss of $0.03 per share, net of tax, in the current quarter compared to a store-level profit of $0.09 per share, net of tax, in the prior year. This represents a $0.12 per share year-over-year swing in the profitability of Auto Master. * Year-to-date diluted earnings per share from continuing operations were $0.43, compared to $0.52 in the six months ended June 30, 2007. Net income from continuing operations for the six months ended June 30, 2008 was $13.2 million, compared to $17.4 million in the prior year. The year-to-date results were also impacted by Auto Master, which had a first half store-level loss of $0.10 per share, net of tax, compared to a store level profit of $0.19 per share, net of tax, in the first half of 2007, a $0.29 per share swing in profitability. * The pawn and short-term loan segment reported store-level earnings of $21.9 million for the quarter and $44.3 million year-to-date. These represent increases of 39% and 32%, respectively, over comparable prior-year periods (net segment contributions are reconciled to income from continuing operations elsewhere in this release). New Locations ------------- * A total of 15 new stores were opened during the second quarter of 2008, which included 14 pawn and short-term loan stores in Mexico and one short-term loan store in the U.S. The Company has opened 24 new stores year-to-date. * The Company operated 495 locations as of June 30, 2008, a net increase of 52 stores, or 12%, over the prior year. In addition, the Company operates 39 convenience store kiosks through a joint venture. Key Operating Metrics --------------------- * Total pawn receivable balances increased by 21% compared to the prior-year quarter. The increase was comprised of a 37% increase in the Mexico stores and a 10% increase in the fully-mature U.S. pawn stores. The average pawn receivable balance per store at June 30, 2008 was $261,000 in the U.S. and $110,000 in Mexico. For the Mexico stores, this represents an increase of 25% over the prior year. * The gross margin on retail pawn merchandise sales increased to 46% for the quarter and 45% year-to-date, compared to the prior-year margin of 44% for both the quarter and year-to-date. The margin on wholesale scrap jewelry sales was 38% for the quarter and 40% for the year, compared to the prior-year margin of 34% for both the quarter and year-to-date. * In the Company's free-standing short-term loan stores (excluding the five remaining Oregon locations), total short-term loans, including third-party credit services loans outstanding, increased by 14% compared to the prior-year quarter. * The short-term loan credit loss provision improved in the current quarter, decreasing to 28% of fees, compared to 29% in the prior-year quarter. The Company did not sell any charged-off accounts in the current or prior-year quarter. * Retail automobile gross margins declined to 52% for the quarter, compared to 58% in the prior-year quarter, while year-to-date margins were 51% compared to 58% in 2007. This margin adjustment was the result of a recently enacted strategy to deliver newer, lower mileage vehicles to customers while maintaining historical price points. The Company believes that this strategy will reduce future warranty expenses, improve collection results and increase customer satisfaction and repeat business. * The Auto Master credit loss provision for the second quarter of 2008 totaled $11.6 million, compared to a provision of $12.1 million for the quarter ended March 31, 2008, the most recent sequential quarter. The Company continues to see significant improvement in its accounts receivable aging and fewer early stage defaults on accounts originated in 2008. Should these improved results continue or expand, the credit loss provision should continue to decline to a more normalized, acceptable result late in 2008 and beyond. Financial Position & Liquidity ------------------------------ * Cash flow from operations total $24.7 million year-to-date, compared to $3.7 million for the first half of last year. This very significant improvement is the result of the increased operating profits in the pawn and short-term loan segment, coupled with reduced cash flow demands from Auto Master. * Year-to-date, the Company has funded over $7 million in net customer loan and inventory growth, $17 million of stock repurchases and approximately $10 million in capital expenditures (almost all of which was invested in new store openings). Most of the funding for these cash uses has come from operating cash flow, as interest-bearing debt has increased by only $7 million during the first six months of 2008. * The total amount outstanding on the Company's $90 million long-term credit facility was $63.4 million at June 30, 2008. The facility bears interest at LIBOR plus 1.375%, or currently a rate of 3.9%. The Company does not securitize customer receivables nor is it dependent on direct third-party financing of new loan originations. * The Company repurchased 288,000 shares of its common stock during the quarter. Year-to-date, it has repurchased 1,640,000 shares at an aggregate cost of $17 million and an average price per share of $10.37. * The ratio of total assets to total liabilities at June 30, 2008 was 3 to 1; the current ratio was 6 to 1. 2008 Outlook ------------ * The Company is maintaining its current 2008 earnings per share guidance from continuing operations at an estimated range of $1.17 to $1.20 per share, representing an increase of 17% to 20% over 2007 earnings from continuing operations. * The Company is forecasting a total of 70 to 80 new store openings in 2008, which will include approximately 60 pawn and short-term loan stores in Mexico. There are currently no plans to open additional Auto Master dealerships in 2008.
Commentary & Analysis
Rick Wessel, Chief Executive Officer, commented on the Company's second quarter results, "We are again extremely pleased with the strong performance in our core pawn and short-term loan business segment, and in the improvement in the Auto Master business unit. Year-over-year revenue and earnings growth in the pawn and short-term loan segment continued to accelerate in the second quarter, as evidenced by the 39% increase in store-level operating profits. For the second consecutive quarter, we experienced record same-store revenue growth, a 19% increase driven by both strong performance in our mature domestic stores and continued expansion in Mexico. This core business segment continues to be the primary driver of revenue, profitability and growth for the Company."
The Company continues to execute its long-term growth strategy through new store openings and product enhancements in new and existing stores. Year-to-date revenues in Mexico have grown by 46%, an acceleration over the comparable 2007 growth rate of 28%. According to Mr. Wessel, "The expansion opportunities in Mexico are more attractive than ever. We see increasing mainstream consumer acceptance and demand for our suite of micro-lending services and value-priced retail products. Because of our deep knowledge of the local markets and our well-established operational infrastructure, we continue to build on our substantial competitive advantage in Mexico."
While the operating environment for the Auto Master buy-here/pay-here segment continues to be challenging this year, the segment realized significant sequential quarterly improvement in its operating results in the second quarter. These results, which were at the level of improvement forecast at the beginning of the quarter, were due to slightly increased sales combined with reductions in the credit loss provision and operating expenses. Auto Master will continue to reduce store operating costs and administrative expenses and will remain focused on further improving credit performance. Management believes that these initiatives will provide further positive impact on operating results in the second half of 2008. Third quarter Auto Master store-level results are projected to range from a $0.01 per share loss to breakeven, with profitability expected in the fourth quarter.
In summary, Mr. Wessel noted, "We are excited with our second quarter results and the outlook for the full year and beyond. We continue to build on a long-term, proven track record of earnings growth exceeding 20% on a compounded basis. Our growth plans for the balance of 2008 will remain focused on the core pawn and short-term loan businesses. We target having 550 store locations in operation by year end, of which approximately 265 locations will be in Mexico. We believe that First Cash is well positioned for continued earnings growth, even in uncertain economic times. We anticipate strong continuing demand for both our credit products and our value-priced retail merchandise offerings."
Forward-Looking Information
This release may contain forward-looking statements about the business, financial condition and prospects of First Cash Financial Services, Inc. ("First Cash" or 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," "intends," "could," or "anticipates," or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy. 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 inc lude, without limitation, the Company's expectations of earnings per share, earnings growth, expansion strategies, store and dealership openings, liquidity, cash flows, credit losses and related provisions, debt repayments, consumer demand for the Company's products and services, competition, 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 borrowing and repayment behaviors, changes in credit markets, credit losses, changes or increases in competition, the ability to locate, open and staff new stores and dealerships, 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 in Texas, new legislative initiatives or governmental regulations (or changes to existing laws and regulations) affecting short-term loan busin esses, 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, and other uncertainties. These and other risks, uncertainties and regulatory developments are further and more completely described in the Company's 2007 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 many locations, provide short-term loans and credit services products. The Company's short-term loan locations provide various combinations of short-term loan products, check cashing, credit services and other financial services products. First Cash also operates automobile dealerships focused on the buy-here/pay-here segment of the used-vehicle retail market. In total, the Company owns and operates over 495 stores and buy-here/pay-here dealerships in thirteen U.S. states and twelve states in Mexico. 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.
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.primenewswire.com/newsroom/prs/?pkgid=3365
STORE COUNT ACTIVITY
The following table details store openings and closings for the three
months and six months ended June 30, 2008:
Mexico
U.S. Locations Locations
----------------------------- ---------
Buy-Here/ Pawn/
Short-Term Pay-Here Short-Term
Pawn Loan Automotive Loan Total
Stores Stores Dealerships Stores Locations
--------- --------- --------- --------- ---------
Three Months Ended
June 30, 2008
------------------
Total locations,
beginning of period 95 158 16 211 480
New locations opened -- 1 -- 14 15
Locations closed or
consolidated -- -- -- -- --
--------- --------- --------- --------- ---------
Total locations, end
of period 95 159 16 225 495
========= ========= ========= ========= =========
Six Months Ended
June 30, 2008
----------------
Total locations,
beginning of period 96 157 15 207 475
New locations opened -- 3 1 20 24
Locations closed or
consolidated (1) (1) -- (2) (4)
--------- --------- --------- --------- ---------
Total locations, end
of period 95 159 16 225 495
========= ========= ========= ========= =========
For the three and six months ended June 30, 2008, the Company's 50%
owned joint venture, Cash & Go, Ltd., operated a total of 39 kiosks
located inside convenience stores in the state of Texas, which are not
included in the above table. During the six months ended June 30,
2008, the Company did not open or close any Cash & Go, Ltd. kiosks.
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
-------- -------- -------- --------
(unaudited)
(in thousands, except per share amounts)
Revenue:
Merchandise sales $ 69,703 $ 58,264 $136,402 $115,498
Finance and service
charges 35,157 31,287 69,940 61,004
Other 1,088 1,017 2,347 2,187
-------- -------- -------- --------
105,948 90,568 208,689 178,689
-------- -------- -------- --------
Cost of revenue:
Cost of goods sold 37,997 30,898 74,441 61,064
Credit loss provision 16,024 12,013 31,880 21,044
Other 76 104 184 212
-------- -------- -------- --------
54,097 43,015 106,505 82,320
-------- -------- -------- --------
Net revenue 51,851 47,553 102,184 96,369
-------- -------- -------- --------
Expenses and other
income:
Store operating
expenses 28,776 24,420 57,577 48,170
Administrative
expenses 8,598 7,311 16,119 14,768
Depreciation and
amortization 2,997 2,788 5,982 5,224
Interest expense 772 367 1,684 709
Interest income (12) (18) (30) (38)
-------- -------- -------- --------
41,131 34,868 81,332 68,833
-------- -------- -------- --------
Income from continuing
operations before
income taxes 10,720 12,685 20,852 27,536
Provision for
income taxes 3,963 4,659 7,698 10,104
-------- -------- -------- --------
Income from continuing
operations 6,757 8,026 13,154 17,432
Income/(loss) from
discontinued
operations, net of
tax (55) 859 243 1,732
-------- -------- -------- --------
Net income $ 6,702 $ 8,885 $ 13,397 $ 19,164
======== ======== ======== ========
Basic income per share:
Income from
continuing operations $ 0.23 $ 0.25 $ 0.44 $ 0.55
Income/(loss) from
discontinued
operations -- 0.03 0.01 0.05
-------- -------- -------- --------
Net income per basic
share $ 0.23 $ 0.28 $ 0.45 $ 0.60
======== ======== ======== ========
Diluted income per
share:
Income from continuing
operations $ 0.23 $ 0.24 $ 0.43 $ 0.52
Income/(loss) from
discontinued
operations -- 0.03 0.01 0.06
-------- -------- -------- --------
Net income per
diluted share $ 0.23 $ 0.27 $ 0.44 $ 0.58
======== ======== ======== ========
Weighted average
shares outstanding:
Basic 29,233 32,001 29,910 31,862
Diluted 29,853 33,421 30,485 33,296
FIRST CASH FINANCIAL SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, Dec. 31,
-------------------- --------
2008 2007 2007
-------- -------- --------
(unaudited)
(in thousands)
ASSETS
Cash and cash equivalents $ 13,558 $ 18,779 $ 14,175
Finance and service charges
receivable 7,688 5,710 7,867
Customer receivables, net of
allowances 80,431 66,592 74,532
Inventories 37,007 32,168 35,612
Prepaid expenses and other
current assets 6,175 8,634 9,103
Discontinued operations -- 2,769 1,509
-------- -------- --------
Total current assets 144,859 134,652 142,798
Customer receivables with
long-term maturities,
net of allowance 31,592 25,563 31,218
Property and equipment, net 48,011 38,988 43,762
Goodwill, net 66,874 66,874 66,874
Intangible assets, net 5,348 5,585 5,466
Other 1,373 1,322 1,430
-------- -------- --------
Total assets $298,057 $272,984 $291,548
======== ======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current portion of notes
payable $ 2,250 $ 2,250 $ 2,250
Accounts payable 1,716 1,626 1,732
Accrued liabilities 19,645 16,269 17,066
-------- -------- --------
Total current liabilities 23,611 20,145 21,048
Revolving credit facility 63,400 22,900 55,000
Notes payable, net of current
portion 2,813 6,063 3,938
Deferred income taxes payable 9,753 8,138 10,353
-------- -------- --------
Total liabilities 99,577 57,246 90,339
Stockholders' equity 198,480 215,738 201,209
-------- -------- --------
Total liabilities and
stockholders' equity $298,057 $272,984 $291,548
======== ======== ========
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING SEGMENT INFORMATION
The following tables detail results of continuing operations by
segment for the three months ended June 30, 2008 and June 30, 2007
(unaudited, in thousands):
Pawn and Buy-Here/
Short-Term Pay-Here
Loan Automotive Consolidated
---------- ---------- ------------
Three Months Ended June 30, 2008
Revenues:
Retail merchandise sales $ 29,920 $ 23,711 $ 53,631
Wholesale merchandise sales 15,635 437 16,072
Pawn service charges 17,119 -- 17,119
Short-term loan and credit
services fees 15,932 -- 15,932
Buy-here/pay-here finance
charges -- 2,106 2,106
Other 951 137 1,088
--------- --------- ---------
79,557 26,391 105,948
--------- --------- ---------
Cost of revenues:
Cost of goods sold - retail 16,255 11,495 27,750
Cost of goods sold - wholesale 9,687 560 10,247
Credit loss provision 4,462 11,562 16,024
Other 76 -- 76
--------- --------- ---------
30,480 23,617 54,097
--------- --------- ---------
Net revenues 49,077 2,774 51,851
--------- --------- ---------
Expenses and other income:
Store operating expenses 24,771 4,005 28,776
Store depreciation and
amortization 2,399 174 2,573
--------- --------- ---------
27,170 4,179 31,349
--------- --------- ---------
Net store contribution (loss) $ 21,907 $ (1,405) $ 20,502
========= ========= =========
Three Months Ended June 30, 2007
Revenues:
Retail merchandise sales $ 26,419 $ 23,530 $ 49,949
Wholesale merchandise sales 7,584 731 8,315
Pawn service charges 13,797 -- 13,797
Short-term loan and credit
services fees 15,721 -- 15,721
Buy-here/pay-here finance
charges -- 1,769 1,769
Other 980 37 1,017
--------- --------- ---------
64,501 26,067 90,568
--------- --------- ---------
Cost of revenues:
Cost of goods sold - retail 14,924 9,920 24,844
Cost of goods sold - wholesale 5,037 1,017 6,054
Credit loss provision 4,634 7,379 12,013
Other 104 -- 104
--------- --------- ---------
24,699 18,316 43,015
--------- --------- ---------
Net revenues 39,802 7,751 47,553
--------- --------- ---------
Expenses and other income:
Store operating expenses 21,609 2,811 24,420
Store depreciation and
amortization 2,418 22 2,440
--------- --------- ---------
24,027 2,833 26,860
--------- --------- ---------
Net store contribution $ 15,775 $ 4,918 $ 20,693
========= ========= =========
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING SEGMENT INFORMATION (CONTINUED)
The following tables detail results of continuing operations by
segment for the six months ended June 30, 2008 and June 30, 2007
(unaudited, in thousands):
Pawn and Buy-Here/
Short-Term Pay-Here
Loan Automotive Consolidated
---------- ---------- ------------
Six Months Ended June 30, 2008
Revenues:
Retail merchandise sales $ 58,734 $ 45,991 $ 104,725
Wholesale merchandise sales 30,824 853 31,677
Pawn service charges 33,572 -- 33,572
Short-term loan and credit
services fees 32,211 -- 32,211
Buy-here/pay-here finance
charges -- 4,157 4,157
Other 2,057 290 2,347
--------- --------- ---------
157,398 51,291 208,689
--------- --------- ---------
Cost of revenues:
Cost of goods sold - retail 32,057 22,675 54,732
Cost of goods sold - wholesale 18,629 1,080 19,709
Credit loss provision 8,187 23,693 31,880
Other 184 -- 184
--------- --------- ---------
59,057 47,448 106,505
--------- --------- ---------
Net revenues 98,341 3,843 102,184
--------- --------- ---------
Expenses and other income:
Store operating expenses 49,188 8,389 57,577
Store depreciation and
amortization 4,855 284 5,139
--------- --------- ---------
54,043 8,673 62,716
--------- --------- ---------
Net store contribution (loss) $ 44,298 $ (4,830) $ 39,468
========= ========= =========
Six Months Ended June 30, 2007
Revenues:
Retail merchandise sales $ 52,613 $ 45,902 $ 98,515
Wholesale merchandise sales 15,835 1,148 16,983
Pawn service charges 27,115 -- 27,115
Short-term loan and credit
services fees 30,746 -- 30,746
Buy-here/pay-here finance
charges -- 3,143 3,143
Other 2,105 82 2,187
--------- --------- ---------
128,414 50,275 178,689
--------- --------- ---------
Cost of revenues:
Cost of goods sold - retail 29,592 19,308 48,900
Cost of goods sold - wholesale 10,527 1,637 12,164
Credit loss provision 6,966 14,078 21,044
Other 212 -- 212
--------- -------- ---------
47,297 35,023 82,320
--------- --------- ---------
Net revenues 81,117 15,252 96,369
--------- --------- ---------
Expenses and other income:
Store operating expenses 42,966 5,204 48,170
Store depreciation and
amortization 4,575 36 4,611
--------- --------- ---------
47,541 5,240 52,781
--------- --------- ---------
Net store contribution $ 33,576 $ 10,012 $ 43,588
========= ========= =========
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING SEGMENT INFORMATION (CONTINUED)
The following table reconciles net store contribution, as presented
above, to income from continuing operations before income taxes for
each period presented (unaudited, in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
2008 2007 2008 2007
-------- -------- -------- --------
Total net store
contribution for
reportable segments $ 20,502 $ 20,693 $ 39,468 $ 43,588
Administrative
depreciation and
amortization (424) (348) (843) (613)
Administrative
expenses (1) (8,598) (7,311) (16,119) (14,768)
Interest expense (772) (367) (1,684) (709)
Interest income 12 18 30 38
-------- -------- -------- --------
Income from continuing
operations before
income taxes $ 10,720 $ 12,685 $ 20,852 $ 27,536
======== ======== ======== ========
(1) Administrative expenses are comprised of all operating expenses,
except for interest, depreciation and amortization, incurred by
the Company that are not allocable to specific stores. It is the
Company's policy not to allocate such administrative expenses to
specific stores or operating segments.
FIRST CASH FINANCIAL SERVICES, INC.
OPERATING SEGMENT INFORMATION (CONTINUED)
The following tables detail selected assets by operating segment
as of June 30, 2008 and June 30, 2007 (unaudited, in thousands):
Pawn and Buy-Here/
Short-Term Pay-Here
Loan Automotive Consolidated
---------- ---------- ------------
June 30, 2008
Customer receivables, with
short- and long-term
maturities:
Pawn $ 45,588 $ -- $ 45,588
Short-term loan 6,328 -- 6,328
Buy-here/pay-here -- 76,250 76,250
--------- --------- ---------
51,916 76,250 128,166
CSO short-term loans held
by independent
third-party (1) 12,538 -- 12,538
Allowances for doubtful
accounts (935) (15,866) (16,801)
--------- --------- ---------
$ 63,519 $ 60,384 $ 123,903
========= ========= =========
Service fees receivable $ 7,428 $ 260 $ 7,688
Inventories 28,755 8,252 37,007
Total assets 217,129 80,928 298,057
June 30, 2007
Customer receivables,
with short- and long-term
maturities:
Pawn $ 37,788 $ -- $ 37,788
Short-term loan 5,066 -- 5,066
Buy-here/pay-here -- 62,583 62,583
--------- --------- ---------
42,854 62,583 105,437
CSO short-term loans held
by independent
third-party (1) 11,336 -- 11,336
Allowances for doubtful
accounts (688) (13,102) (13,790)
--------- --------- ---------
$ 53,502 $ 49,481 $ 102,983
========= ========= =========
Service fees receivable $ 5,500 $ 210 $ 5,710
Inventories 26,272 5,896 32,168
Total assets 213,882 59,102 272,984
(1) CSO loans outstanding are from an independent third-party lender
and are not included on the Company's balance sheet.
FIRST CASH FINANCIAL SERVICES, INC.
UNAUDITED NON-GAAP FINANCIAL INFORMATION -- EBITDA
EBITDA is commonly used by investors to assess a company's leverage
capacity, liquidity and financial performance. EBITDA is not
considered a measure of financial performance under U.S. generally
accepted accounting principles ("GAAP"), and the items excluded from
EBITDA are significant components in understanding and assessing the
Company's financial performance. Since EBITDA is not a measure
determined in accordance with GAAP and is thus susceptible to varying
calculations, EBITDA, as presented, may not be comparable to other
similarly titled measures of other companies. EBITDA should not be
considered as an alternative to net income, cash flows provided by or
used in operating, investing or financing activities or other
financial statement data presented in the Company's consolidated
financial statements as an indicator of financial performance or
liquidity. Non-GAAP measures should be evaluated in conjunction with,
and are not a substitute for, GAAP financial measures. The following
table provides a reconciliation of income from continuing operations
to EBITDA (unaudited, in thousands):
Trailing Twelve Months Ended
June 30,
----------------------
2008 2007
--------- ---------
Income from continuing operations
$ 28,432 $ 33,395
Adjustments:
Income taxes 16,314 18,915
Depreciation and amortization 11,561 9,632
Interest expense 3,413 1,625
Interest income (70) (215)
--------- ---------
Earnings from continuing operations before
interest, income taxes, depreciation and
amortization $ 59,650 $ 63,352
========= =========
EBITDA margin calculated as follows:
Total revenue $ 418,450 $ 332,198
Earnings from continuing operations before
interest, income taxes, depreciation and
amortization 59,650 63,352
--------- ---------
EBITDA as a percent of revenue 14% 19%
========= =========
CONTACT: First Cash Financial Services, Inc.
Rick Wessel, Vice Chairman & Chief Executive Officer
Doug Orr, Executive Vice President & Chief Financial Officer
(817) 505-3199
investorrelations@firstcash.com
www.firstcash.com