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
November 10, 2016
(Date of Report - Date of Earliest Event Reported)
FirstCash, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
001-10960 (Commission File Number) | 75-2237318 (IRS Employer Identification No.) |
1600 West 7th Street, Fort Worth, Texas 76102
(Address of principal executive offices, including zip code)
(817) 335-1100
(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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 7.01 Regulation FD Disclosure.
FirstCash, Inc. has made available on its corporate website (www.ir.firstcash.com) its most recent investor presentation. This presentation is included herein as Exhibit 99.1.
The information provided in this Item 7.01, including the Earnings Release, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange 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 | FirstCash, Inc. Investor Presentation | ||
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: November 10, 2016 | FIRSTCASH, INC. |
(Registrant) | |
/s/ R. DOUGLAS ORR | |
R. Douglas Orr | |
Executive Vice President and Chief Financial Officer | |
(Principal Financial and Accounting Officer) | |
EXHIBIT INDEX
Exhibit Number | Document |
99.1 | FirstCash, Inc. Investor Presentation |
3
1
Analyst & Commercial
Banker Day
November 10, 2016
EXHIBIT 99.1
2
Forward Looking Information
“This presentation contains “forward-looking statements” (as defined in the Securities Litigation Reform Act of 1995) regarding, among other
things, future events or the future financial performance of FirstCash. Words such as “anticipate,” “expect,” “project,” “intend,” “believe,” “will,”
“estimates,” “may,” “could,” “should” and words and terms of similar substance used in connection with any discussion of future plans, actions or
events identify forward-looking statements. Forward-looking statements are based on information currently available to FirstCash and involve
estimates, expectations and projections. Investors are cautioned that all such forward-looking statements are subject to risks and uncertainties,
and important factors could cause actual events or results to differ materially from those indicated by such forward-looking statements. These
risks, uncertainties and factors include, but are not limited to: the risk that the businesses of Cash America and First Cash will not be integrated
successfully; the risk that the cost savings, synergies and growth from the merger of equals transaction with Cash America may not be fully
realized or may take longer to realize than expected; the diversion of management time on integration-related issues; the risk that costs
associated with the integration of the businesses are higher than anticipated; the risk that the company may not be able to successfully take
advantage of growth opportunities, including those in Latin America, or that such anticipated growth opportunities may not present themselves;
the effect of future regulatory or legislative actions on FirstCash or the industries in which it operates and the effect of compliance with
enforcement actions, orders or agreements issued by applicable regulators; risks related to the ability to obtain future financing; economic and
foreign exchange rate volatility, particularly in Latin American markets; adverse gold market or exchange rate fluctuations; increased competition
from banks, credit unions, internet-based lenders, other short-term consumer lenders and other entities offering similar financial services as well
as retail businesses that offer products and services offered by FirstCash; decrease in demand for FirstCash’s products and services; public
perception of FirstCash’s business and business practices; changes in the general economic environment, or social or political conditions, that
could affect the businesses; the potential impact of the consummation of the merger of equals transaction with Cash America on relationships
with customers, suppliers, competitors, management and other employees; risks related to any current or future litigation proceedings; the
ability to attract new customers and retain existing customers in the manner anticipated; the ability to hire and retain key personnel; reliance on
and integration of information technology systems; ability to protect intellectual property rights; impact of security breaches, cyber-attacks or
fraudulent activity on FirstCash’s reputation; the risks associated with assumptions the parties make in connection with the parties’ critical
accounting estimates and legal proceedings; and the potential of international unrest, economic downturn or effects of currencies, tax
assessments or tax positions taken, risks related to goodwill and other intangible asset impairment, tax adjustments, anticipated tax rates,
benefit or retirement plan costs, or other regulatory compliance costs.
3
Today’s Agenda
8:30-10:00 Management Presentation
• Merger Overview
• Domestic Operations
• LatAm Operations
• Looking Ahead
10:30-12:15 Store Tours
12:45-2:00 Lunch
2:00-2:30 Bus to Airport
2:00-3:30 Stadium Tour
4
Merger Review & Update
5
Strategic Rationale for Merger
• Enhanced scale and geographic reach
– Creates leading operator of more than 2,000 retail pawn stores with
operations in the United States and three Latin American countries
– Market Cap of over $2 billion
• Strong cash flows and financial flexibility
– Financial strength to enhance expansion plans in growing Latin
American market
– Strong cash flows to support capital returns to shareholders
– Leverage neutral transaction where synergies will significantly improve
the credit profile of the business
• Proven leadership team with successful integration track record
25 Year Combined History
Total Assets (millions)
$22
$161
$2,278
$216
$555$239
$716
1992 2004 As of 9/30/16
FCFS CSH
Sources: Factset; CapIQ; Public Filings; Internal Documents
6
25 Year Combined History
Revenue (millions)
Sources: Factset; CapIQ; Public Filings; Internal Documents
7
$9
$180 $185
$469
$194
$649
$1,780
1992 2004 LTM 9/30/2016, Pro Forma
FCFS CSH
25 Year Combined History
Store Count
Sources: Factset; CapIQ; Public Filings; Internal Documents
23
284
2,081
355
839
378
1,123
1992 2004 As of 9/30/16
FCFS CSH
8
9
Integration Strategy
• Corporate Office
– Headquarters in Fort Worth, Texas
– Significant opportunities to consolidate corporate expenses and support functions
• Stores
– Maintain existing footprints – no planned consolidation or closures of pawn stores
– Maintain established “brands” in local markets
– Integrate operations management over time
• Technology
– Standardize store operations on the First Pawn POS platform
– Complete integration of store POS systems by late 2017 or early 2018
– Consolidation of back office finance, HR and other support functions to follow
10
First Pawn Technology Platform
Proven, Propriety Pawn Store Operating System
Human Resources
• Scheduling
• Time Keeping
• Performance Management
• Incentive Comp
Financial Data
• Reporting & Analysis
• Internal Controls & Audit
Support
•Management Alerts
Retail Ops
• Retail POS
• Pricing
• Inventory Management
• Layaways
Pawn Transactions
• Collateral Valuation
• Pawn Contracts
• Customer Loan Disbursements
& Repayments
• Collateral Storage
• Compliance
Customers Merchandise
EmployeesTransactions
Core DatabasesCore Databases
11
Technology Integration Plan
• All stores will standardize on the First Pawn system
• Benefits at the store:
– Improved transaction times and system reliability
– Real-time pricing look-ups to determine optimum loan to value ratio
– Improved on-demand reporting of key performance indicators
– Reduced store-level costs for hardware and data networking
• Corporate benefits:
– Reduced support and maintenance costs
– Reduced development costs
– Streamlined back-office connectivity
• Conversion of 54 stores completed to-date:
– South Carolina, North Carolina, Oklahoma & Missouri successfully transitioned
– 65 stores completed by Thanksgiving
– Remaining conversions expected to be completed by late 2017
12
Synergy Update
• Estimated cost synergies continued to be forecast at $45
million
– Headcount efficiencies
– Technology support costs
– Interest savings
• Estimated D&A synergies of up to $20 million
– Primarily related to technology integration
• Potential future store-level synergies
– Store operating expenses
– Margin improvements
13
Domestic Operations
14
Domestic Footprint: 1,128 Stores
Store Count as of 9/30/2016
FCFS States
CSH States
Shared States
15
Domestic Locations
Store Count At End of Period
475
485
486
641
682 697 748
829 820
801 792
95 94 94
97
135 157
211
252 266 296 291
295 304 248
96
88
86
83
40 39 21 20
86 99
102 103
74
67
65
57 65 42 25
951
982
930 937
979 1,007
1,107
1,178 1,190 1,160
1,128
-
200
400
600
800
1,000
1,200
1,400
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD Sep
2016
CSH - Pawn FCFS - Pawn CSH - Cons. Loan Only FCFS - Cons. Loan Only
*Excludes previously discontinued locations
16
Domestic Locations
Acquisitions and Start-Ups
0
10
20
30
40
50
60
70
80
90
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
CSH-Acquisitions CSH-Start-Ups FCFS-Acquisitions FCFS-Start-Ups
Cash America - Domestic
2013: Top Dollar (41), PawnMart (34)
2012: Pawn & Bargains (25)
2010: Maxit (39)
First Cash - Domestic
2015: Quick Cash (25)
2014: PHC (15)
2013: Valu + Pawn ( 9), Money Man (12)
2012: Mister Money (24)
17
Population Growth by US State
Top 15 States by 2015 Population
*Data obtained from census.gov and fdic.gov
2015 Store Store % of
Pop. Rank Count Dom. TOT vs. 2014 vs. 2013 Un- Under-
CA 1 11 1.0% 3 2 Q3 Q2
TX 2 416 36.9% 1 1 Q4 Q4
FL 3 77 6.8% 2 3 Q3 Q2
NY 4 0 0.0% 15 11 Q3 Q4
IL 5 25 2.2% 51 51 Q3 Q1
PA 6 0 0.0% 38 37 Q2 Q2
OH 7 119 10.5% 26 24 Q2 Q1
GA 8 45 4.0% 4 4 Q4 Q4
NC 9 41 3.6% 6 5 Q3 Q3
MI 10 0 0.0% 39 34 Q3 Q3
NJ 11 0 0.0% 24 20 Q3 Q1
VA 12 6 0.5% 11 10 Q2 Q2
WA 13 33 2.9% 5 7 Q1 Q3
AZ 14 35 3.1% 8 6 Q3 Q2
MA 15 0 0.0% 16 16 Q2 Q1
Total 808 71.6%
2015 Pop. Growth Rank Banked Quartile
Q1 1.5 to 4.1 Q1 12.8 to 17.5
Q2 4.2 to 5.8 Q2 17.6 to 19.7
Q3 5.9 to 8.9 Q3 19.8 to 23.1
Q4 9.0 to 14.0 Q4 23.2 to 27.3
Under Banked % of Pop.
Quartile Legend:
Unbanked % of Pop.
Pawn Stores No Pawn Stores
18
Domestic Population Growth by Origin
YoY Change in Population and Hispanic Growth by State (2015 vs. 2013)
0.8% 0.7% 0.8% 0.8%
0.5% 0.5% 0.5% 0.5%
2.2% 2.1% 2.2% 2.2%
Total Non Hispanic Hispanic
*Growth defined as absolute change, not percent
change
YoY-2012 YoY-2015YoY-2014YoY-2013
2015 Growth Rank
Pop. Rank vs. 2013
California 1 2
Texas 2 1
Florida 3 3
New York 4 4
Illinois 5 11
Arizona 6 5
New Jersey 7 6
Colorado 8 8
New Mexico 9 30
Georgia 10 14
North Carolina 11 12
Washington 12 9
Pennsylvania 13 7
Nevada 14 13
Massachusetts 15 10
Hispanic Population
*Data obtained from census.gov and fdic.gov
19
Average Loan & Average Gold Price
Domestic Stores
145 146
142 144
148
141
178
185
171 171 169
163
$0
$400
$800
$1,200
$1,600
$2,000
$0
$40
$80
$120
$160
$200
2011 2012 2013 2014 2015 YTD Sep 2016
Av
er
ag
e P
ric
e
of
G
old
P
er
O
un
ce
Av
er
ag
e L
oa
n
CSH FCFS Avg. Gold Price
20
Reduced Reliance on Scrap
(000’s)
80,953
33,124
12,114
8,494
-911
17,218
6,884
4,064
1,850 3,347
186
119
111
74
87
-20
0
20
40
60
80
100
120
140
160
180
200
-$10,000
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
2012 2013 2014 2015 TTM Sep 2016
Go
ld
Ou
nc
es
Sc
ra
p G
P
CSH FCFS Total Gold Oz.
10 Year Legacy Store Analysis
Positive Comps Despite Recent Headwinds1
1CAGR is calculated over the period beginning in 12/31/2006 through 9/30/2016
2Legacy stores are U.S. stores in operation since 2006
3Core store contribution defined as store income excluding taxes, administrative & supervisory expense and non-core net revenues
21
Legacy Store Count2 434 92
Retail Sales 3.0% 1.0%
Retail Sales GP 0.9% 1.2%
Pawn Fees 4.1% 3.9%
Core Pawn Gross Profit 2.9% 2.8%
Core Store Contribution3 4.9% 5.1%
Pawn Loan Balance 2.1% 2.3%
Latin America Operations
22
23
Latin America Locations
Store Count At End of Period
112
176 180 190
47 47
157
207
269
329
386
447
538
597 674
737
953
157
207
381
505
566
637
585
644
674
737
953
-
100
200
300
400
500
600
700
800
900
1,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD Sep
2016CSH FCFS
24
LatAm Locations
Acquisitions and Start-Ups
0
50
100
150
200
250
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
CSH-Acquisitions CSH-Start-Ups FCFS-Acquisitions FCFS-Start-Ups
Cash America - LatAm
2008: Prenda Facil (112)
First Cash - LatAm
2016: Maxi Prenda - El Salvador (13)
2016: Maxi Prenda - Mexico (166)
2015: Maxi Prenda - Guatemala (32)
2014: Cash America - Mexico (47)
2012: Cash & Go (49)
25
Foreign Exchange Rates – YTD Average
Mexican Peso to US Dollar
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
18.0
19.0
20.0
EPS Impact*
$0.10-$0.14
EPS Impact*
$0.08-$0.12
EPS Impact*
$0.06-$0.10
EPS Impact*
$0.06-$0.08
*Annualized impact of a “one point” (one peso) movement in the exchange rate vs. the US dollar
LatAm Revenue Growth
(millions)
26
$101
$141
$175
$222
$281
$322
$363
$388 $368
$402
$101
$143
$206
$250
$312
$378
$419
$468
$527
$641
$0
$100
$200
$300
$400
$500
$600
$700
2007 2008 2009 2010 2011 2012 2013 2014 2015 T12M,
Sep-2016
Total Revenue, USD CC Revenue, 2007 MXN*
9 Year CAGR
22.9%
*Constant currency revenue is considered a non-GAAP measurement of financial performance
Case Study: Cash America Mexico
(MXN)
27
7,217
8,008
7,575 7,695
126
856
1,081
1,338
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2013 2014 2015 TTM Sep 2016
Thou
sand
s
Total revenue Store Contribution Contribution Margin
TTM Sep-16 vs. TTM Sep-14
Per store contribution1 growth of 169%
1Store contribution defined as store income excluding taxes, administrative and supervisory expense
*FCFS acquired Cash America –Mexico, August 2014
Maxi Prenda Update
• Merger Highlights
– Acquired 211 Maxi Prenda stores in late 2015 and early 2016
– Stores located in Southern & Central Mexico, Guatemala & El Salvador
• Integration Update
– Most corporate functions fully integrated at this point
– Reduced approximately 90% of corporate staff and office real estate in Mexico City
– All synergies realized and in place by the end of 2016
• Technology Platforms
– Legacy POS platform was antiquated and did not support general merchandise lending and retail
operations
– Started store conversions in July 2016 and completed them in early November 2016
– Provides significant productivity gains and increased management visibility
• Maxi Prenda Acquisition a Launchpad for Further Growth in Central & South America
– Insight into markets outside Mexico
– Experience gained from transforming jewelry operation to a full service model
28
29
Population Growth for Mexico
Store Count as of 9/30/2016
BAJA
CALIFORNIA
74
MICHOACAN
16
CHIHUAHUA
39
COAHUILA
41
NUEVO
LEON
65DURANGO
14
SINALOA
19
TABASCO
11
ZACATECAS
6
SAN LUIS
POTOSI
13
JALISCO
59
PUEBLA
57
VERACRUZ
70
CHIAPAS
10
CAMPECHE
6
YUCATAN
9
QUINTANA
ROO
21
AGUASCALIENTES
14
ESTADO DE
MEXICO
107
GUANAJUATO
38
TLAXCALA
5
SONORA
24
NAYARIT
4
GUERRERO
26 OAXACA
17
HIDALGO
10
TAMAULIPAS
54
*Data obtained from Population Reference Bureau
2015 Pop. Store
(millions) Count 2030 2050
Mexico 128.6 907 148.1 163.8
U.S. 323.9 1,128 359.4 398.3
Pop. Projections
BAJA
SUR
9
COLIMA
5
MORELOS
17
DISTRITO
FEDERAL
32
QUERETARO
17
30
EL
SALVADOR
13
HONDURAS
GUATEMALA
33
NICARAGUA
BELIZE
COSTA RICA
PANAMA
Guatemala
Belmopan
TegucigalpaSan
Salvador
Managua
San Jose
Panama
Population Growth for Central America
Store Count as of 9/30/2016
*Data obtained from Population Reference Bureau
2015 Pop. Store
(millions) Count 2030 2050
Guatemala 16.6 33 21.3 27.6
Honduras 8.2 0 10.2 12.6
El Salvador 6.4 13 6.7 6.7
Nicaragua 6.3 0 7.5 9.1
Costa Rica 4.9 0 5.6 6.1
Panama 4.0 0 4.8 5.7
Belize 0.4 0 0.5 0.6
U.S. 323.9 1,128 359.4 398.3
Pop. Projections
Pawn Stores No Current Stores
31
New Market Update
Population Growth for South America
FRENCH GUIANA
BRAZIL
ARGENTINA
CHILE
URUGUAY
VENEZUELA
COLOMBIA*
SURINAME
ECUADOR
PERU
BOLIVIA
PARAGUAY
GUYANA
*Data obtained from Population Reference Bureau
No Current Stores
2015 Pop.
(millions) 2030 2050
Brazil 206.1 223.1 226.3
Colombia* 48.8 53.3 55.0
Argentina 43.6 49.1 55.2
Peru 31.5 35.9 40.1
Venezuela 31.0 36.1 40.5
Chile 18.2 20.3 21.7
Ecuador 16.5 19.7 23.2
Bolivia 11.0 13.3 16.5
Paraguay 7.0 8.2 9.3
Uruguay 3.5 3.6 3.7
Guyana 0.8 0.8 0.8
Suriname 0.5 0.6 0.7
French Guiana 0.3 0.4 0.6
U.S. 323.9 359.4 398.3
Pop. Projections
*2017 planned market entry
Looking Ahead
32
Store Growth
33
Projected 2016 Projected Adds Projected 2017
Domestic 1,128 10 1,138
Pawn Lending Only 757 10 767
Consumer Lending Only 45 0 45
Pawn & Consumer Lending 326 0 326
Latin America 958 75 1,033
Pawn Lending Only 881 75 956
Consumer Lending Only 28 0 28
Pawn & Consumer Lending 49 0 49
Consolidated 2,086 85 2,171
Pawn Lending Only 1,638 85 1,723
Consumer Lending Only 73 0 73
Pawn & Consumer Lending 375 0 375
Balance Sheet
(millions)
34
$1,306
$972
$1,433
$560
$285
$0
$500
$1,000
$1,500
$2,000
$2,500
Assets Liabilities and Equity
Operating Assets Intangibles
Equity Interest Bearing Liabilities, Prin Outstanding
Other Liabilities
Liabilities to Equity
Ratio 58.9%$2,278
35
Leverage Profile
(millions)
$200 $200
$51
$181
$360
$4
$436
$560
$0
$100
$200
$300
$400
$500
$600
6/30/2016 9/30/2016
FCFS Senior Notes CSH Notes
FCFS Line of Credit CSH Line of Credit
Increase in debt due to transaction costs and
redemption of Cash America RSUs
Maturity
Date 6/30/2016 9/30/2016
Cash America Line of Credit 3.69% -
Cash America Notes 5.75% -
First Cash Line of Credit 3.00% -
First Cash Senior Notes 4/21 6.75% 6.75%
FirstCash Line of Credit 9/21 - 3.06%
Weighted Avg Borrowing Rate 5.84% 4.38%
Consumer Lending Update
• Consumer Lending Revenues and Store Counts Continue to
Strategically Diminish
– Year-to-date (Sept. 30) proforma revenues down 19%
– 18 total consumer loan store closings in 2016 (includes Cash America
and First Cash)
– Expected to be 5% of total revenues in 2017
• Enova Shares
– Began open market sales in August
More than 1.8 million shares sold to-date
4.1 million still held
Ownership percentage reduced from over 18% to less than 13%
36
Shareholder Payout Strategy
• Target shareholder payout of up to 50% of Net Income
• Increased Dividend
– Previous Cash America Dividend: $0.32 per share
– Previous First Cash Dividend: $0.50 per share
– New Dividend Policy: $0.76 per share
• Future Share Buybacks
– No buybacks in 2016 given merger activity
– 1.1 million shares available under current authorization
– Expect to resume buybacks in 2017
37
38
Analyst & Commercial
Banker Day
November 10, 2016