Company Quick10K Filing
FirstCash
Price94.19 EPS4
Shares43 P/E26
MCap4,084 P/FCF25
Net Debt575 EBIT227
TEV4,659 TEV/EBIT21
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-04-27
10-K 2019-12-31 Filed 2020-02-03
10-Q 2019-09-30 Filed 2019-10-28
10-Q 2019-06-30 Filed 2019-07-29
10-Q 2019-03-31 Filed 2019-05-03
10-K 2018-12-31 Filed 2019-02-05
10-Q 2018-09-30 Filed 2018-10-31
10-Q 2018-06-30 Filed 2018-08-01
10-Q 2018-03-31 Filed 2018-04-30
10-K 2017-12-31 Filed 2018-02-20
10-Q 2017-09-30 Filed 2017-11-01
10-Q 2017-06-30 Filed 2017-08-07
10-Q 2017-03-31 Filed 2017-05-05
10-K 2016-12-31 Filed 2017-03-01
10-Q 2016-09-30 Filed 2016-11-09
10-Q 2016-06-30 Filed 2016-08-08
10-Q 2016-03-31 Filed 2016-05-10
10-K 2015-12-31 Filed 2016-02-17
10-Q 2015-09-30 Filed 2015-10-28
10-Q 2015-06-30 Filed 2015-07-22
10-Q 2015-03-31 Filed 2015-04-22
10-K 2014-12-31 Filed 2015-02-12
10-Q 2014-09-30 Filed 2014-10-22
10-Q 2014-06-30 Filed 2014-07-28
10-Q 2014-03-31 Filed 2014-04-24
10-K 2013-12-31 Filed 2014-02-28
10-Q 2013-09-30 Filed 2013-10-25
10-Q 2013-06-30 Filed 2013-07-25
10-Q 2013-03-31 Filed 2013-05-08
10-K 2012-12-31 Filed 2013-02-22
10-Q 2012-09-30 Filed 2012-10-26
10-Q 2012-06-30 Filed 2012-08-06
10-Q 2012-03-31 Filed 2012-05-01
10-K 2011-12-31 Filed 2012-02-29
10-Q 2011-09-30 Filed 2011-10-24
10-Q 2011-06-30 Filed 2011-07-25
10-Q 2011-03-31 Filed 2011-04-25
10-K 2010-12-31 Filed 2011-02-25
10-Q 2010-09-30 Filed 2010-10-21
10-Q 2010-06-30 Filed 2010-08-09
10-Q 2010-03-31 Filed 2010-05-05
10-K 2009-12-31 Filed 2010-03-15
8-K 2020-05-06 Regulation FD, Exhibits
8-K 2020-04-22 Earnings, Exhibits
8-K 2020-02-11 Regulation FD, Exhibits
8-K 2020-01-29 Earnings, Other Events, Exhibits
8-K 2019-12-19 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-11-12 Regulation FD, Exhibits
8-K 2019-10-23 Earnings, Exhibits
8-K 2019-08-21 Regulation FD, Exhibits
8-K 2019-07-30 Regulation FD, Exhibits
8-K 2019-07-24 Earnings, Exhibits
8-K 2019-06-11 Regulation FD, Exhibits
8-K 2019-06-11 Officers, Shareholder Vote
8-K 2019-05-06 Regulation FD, Exhibits
8-K 2019-05-03 Regulation FD, Exhibits
8-K 2019-04-23 Earnings, Amend Bylaw, Exhibits
8-K 2019-02-11 Regulation FD, Exhibits
8-K 2019-01-31 Earnings, Exhibits
8-K 2018-11-06 Regulation FD, Other Events, Exhibits
8-K 2018-10-29 Regulation FD, Exhibits
8-K 2018-10-25 Earnings, Other Events, Exhibits
8-K 2018-10-04 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-09-25 Exhibits
8-K 2018-09-11 Regulation FD, Other Events, Exhibits
8-K 2018-07-31 Regulation FD, Exhibits
8-K 2018-07-26 Earnings, Other Events, Exhibits
8-K 2018-06-12 Shareholder Vote
8-K 2018-05-11 Regulation FD, Exhibits
8-K 2018-05-02 Regulation FD, Exhibits
8-K 2018-04-26 Earnings, Other Events, Exhibits
8-K 2018-02-13 Regulation FD, Exhibits
8-K 2018-02-01 Earnings, Exhibits

FCFS 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Note 1 - Significant Accounting Policies
Note 2 - Earnings per Share
Note 3 - Acquisitions
Note 4 - Operating Leases
Note 5 - Long - Term Debt
Note 6 - Fair Value of Financial Instruments
Note 7 - Segment Information
Note 8 - Subsequent Event
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 fcfs03312020exhibit311.htm
EX-31.2 fcfs03312020exhibit312.htm
EX-32.1 fcfs03312020exhibit321.htm
EX-32.2 fcfs03312020exhibit322.htm

FirstCash Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
2.52.01.51.00.50.02012201420172020
Assets, Equity
0.50.40.30.20.10.02012201420172020
Rev, G Profit, Net Income
0.20.10.0-0.0-0.1-0.22012201420172020
Ops, Inv, Fin

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________

Commission file number 001-10960
fcfslogo.jpg
FIRSTCASH, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
75-2237318
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
 
 
1600 West 7th Street
Fort Worth
Texas
 
76102
(Address of principal executive offices)
 
(Zip Code)

(817) 335-1100
(Registrant’s telephone number, including area code)

NONE
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $.01 per share
FCFS
The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes   No




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
 
 
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes   No

As of April 21, 2020, there were 41,440,498 shares of common stock outstanding.






FIRSTCASH, INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2020

INDEX

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS

Forward-Looking Information

This quarterly report contains forward-looking statements about the business, financial condition and prospects of FirstCash, Inc. and its wholly owned subsidiaries (together, 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,” “would,” “anticipates,” “potential,” “confident,” “optimistic” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, guidance, expectations and future plans. Forward-looking statements can also be identified by the fact 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.

While the Company believes the expectations reflected in forward-looking statements are reasonable, there can be no assurances such expectations will prove to be accurate. Security holders are cautioned such forward-looking statements involve risks and uncertainties. Certain factors may cause results to differ materially from those anticipated by the forward-looking statements made in this quarterly report. Such factors may include, without limitation, the risks, uncertainties and regulatory developments (1) related to the COVID-19 pandemic, which include risks and uncertainties related to the current unknown duration of the COVID-19 pandemic, the impact of governmental regulations that have been, and may in the future be, imposed in response to the pandemic, including regulations which could adversely affect the Company’s ability to continue to operate as an “essential business,” potential changes in consumer behavior and shopping patterns, which could impact demand for both the Company’s pawn loan and retail products, the potential effects of government stimulus packages, the deterioration in the economic conditions in the United States and Latin America, which potentially could have an impact on discretionary consumer spending, and currency fluctuations, primarily involving the Mexican peso and (2) those discussed and described in the Company’s 2019 annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 3, 2020, including the risks described in Part 1, Item 1A, “Risk Factors” thereof, in this quarterly report on Form 10-Q, and other reports filed with the SEC. Many of these risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, in many cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. The forward-looking statements contained in this quarterly report speak only as of the date of this quarterly report, 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, except as required by law.





PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
FIRSTCASH, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
 
 
 
 
 
 
 
March 31,
 
December 31,
 
 
2020
 
2019
 
2019
ASSETS
 
 
 
 
 
 
Cash and cash equivalents
 
$
75,464

 
$
49,663

 
$
46,527

Fees and service charges receivable
 
40,121

 
43,993

 
46,686

Pawn loans
 
314,296

 
345,200

 
369,527

Consumer loans, net
 
410

 
11,017

 
751

Inventories
 
227,876

 
257,803

 
265,256

Income taxes receivable
 
4,279

 
1,096

 
875

Prepaid expenses and other current assets
 
10,326

 
9,329

 
11,367

Total current assets
 
672,772

 
718,101

 
740,989

 
 
 
 
 
 
 
Property and equipment, net
 
329,066

 
276,397

 
336,167

Operating lease right of use asset
 
280,840

 
298,167

 
304,549

Goodwill
 
927,290

 
932,773

 
948,643

Intangible assets, net
 
84,999

 
87,810

 
85,875

Other assets
 
9,188

 
10,927

 
11,506

Deferred tax assets
 
8,718

 
11,608

 
11,711

Total assets
 
$
2,312,873

 
$
2,335,783

 
$
2,439,440

 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
74,805

 
$
77,363

 
$
72,398

Customer deposits
 
39,728

 
40,055

 
39,736

Income taxes payable
 
9,832

 
7,484

 
4,302

Lease liability, current
 
82,355

 
84,946

 
86,466

Total current liabilities
 
206,720

 
209,848

 
202,902

 
 
 
 
 
 
 
Revolving unsecured credit facilities
 
355,519

 
255,000

 
335,000

Senior unsecured notes
 
296,744

 
296,053

 
296,568

Deferred tax liabilities
 
64,728

 
57,496

 
61,431

Lease liability, non-current
 
181,787

 
188,970

 
193,504

Total liabilities
 
1,105,498

 
1,007,367

 
1,089,405

 
 
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
 
Common stock
 
493

 
493

 
493

Additional paid-in capital
 
1,224,113

 
1,225,482

 
1,231,528

Retained earnings
 
749,126

 
638,574

 
727,476

Accumulated other comprehensive loss
 
(180,472
)
 
(107,694
)
 
(96,969
)
Common stock held in treasury, at cost
 
(585,885
)
 
(428,439
)
 
(512,493
)
Total stockholders’ equity
 
1,207,375

 
1,328,416

 
1,350,035

Total liabilities and stockholders’ equity
 
$
2,312,873

 
$
2,335,783

 
$
2,439,440

 
 
 
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.

1


FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share amounts)
 
 
 
 
 
Three Months Ended
 
 
March 31,
 
 
2020
 
2019
Revenue:
 
 
 
 
Retail merchandise sales
 
$
296,629

 
$
284,241

Pawn loan fees
 
142,115

 
141,192

Wholesale scrap jewelry sales
 
26,371

 
31,710

Consumer loan and credit services fees
 
1,375

 
10,461

Total revenue
 
466,490

 
467,604

 
 
 
 
 
Cost of revenue:
 
 
 
 
Cost of retail merchandise sold
 
184,695

 
179,349

Cost of wholesale scrap jewelry sold
 
22,847

 
30,353

Consumer loan and credit services loss provision
 
(361
)
 
2,103

Total cost of revenue
 
207,181

 
211,805

 
 
 
 
 
Net revenue
 
259,309

 
255,799

 
 
 
 
 
Expenses and other income:
 
 
 
 
Store operating expenses
 
153,500

 
146,852

Administrative expenses
 
32,902

 
32,154

Depreciation and amortization
 
10,674

 
9,874

Interest expense
 
8,418

 
8,370

Interest income
 
(185
)
 
(204
)
Merger and other acquisition expenses
 
68

 
149

Loss (gain) on foreign exchange
 
2,685

 
(239
)
Write-offs and impairments of certain lease intangibles and other assets
 
5,530

 

Total expenses and other income
 
213,592

 
196,956

 
 
 
 
 
Income before income taxes
 
45,717

 
58,843

 
 
 
 
 
Provision for income taxes
 
12,799

 
16,188

 
 
 
 
 
Net income
 
$
32,918

 
$
42,655

 
 
 
 
 
Earnings per share:
 
 
 
 
Basic
 
$
0.79

 
$
0.98

Diluted
 
$
0.78

 
$
0.98

 
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.

2


FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands)
 
 
 
 
 
Three Months Ended
 
 
March 31,
 
 
2020
 
2019
Net income
 
$
32,918

 
$
42,655

Other comprehensive income (loss):
 
 
 
 
Currency translation adjustment
 
(83,503
)
 
5,423

Comprehensive income (loss)
 
$
(50,585
)
 
$
48,078

 
 
 
 
 
 The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited, in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2020
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accum-
ulated
Other
Compre-
hensive
Loss
 
Common Stock
Held in Treasury
 
Total
Stock-
holders’
Equity
 
Shares
 
Amount
 
 
 
 
 
 
 
Shares
 
Amount
 
 
As of 12/31/2019
49,276

 
$
493

 
$
1,231,528

 
$
727,476

 
$
(96,969
)
 
6,947

 
$
(512,493
)
 
$
1,350,035

Shares issued under share-based com-pensation plan, net of 46 shares net-settled

 

 
(10,266
)
 

 

 
(93
)
 
6,939

 
(3,327
)
Share-based compensation expense

 

 
2,851

 

 

 

 

 
2,851

Net income

 

 

 
32,918

 

 

 

 
32,918

Cash dividends ($0.27 per share)

 

 

 
(11,268
)
 

 

 

 
(11,268
)
Currency translation adjustment

 

 

 

 
(83,503
)
 

 

 
(83,503
)
Purchases of treasury stock

 

 

 

 

 
981

 
(80,331
)
 
(80,331
)
As of 3/31/2020
49,276

 
$
493

 
$
1,224,113

 
$
749,126

 
$
(180,472
)
 
7,835

 
$
(585,885
)
 
$
1,207,375

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.

3


FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
CONTINUED
(unaudited, in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accum-
ulated
Other
Compre-
hensive
Loss
 
Common Stock
Held in Treasury
 
Total
Stock-
holders’
Equity
 
Shares
 
Amount
 
 
 
 
 
 
 
Shares
 
Amount
 
 
As of 12/31/2018
49,276

 
$
493

 
$
1,224,608

 
$
606,810

 
$
(113,117
)
 
5,673

 
$
(400,690
)
 
$
1,318,104

Shares issued under share-based com-pensation plan

 

 
(1,441
)
 

 

 
(21
)
 
1,441

 

Share-based compensation expense

 

 
2,315

 

 

 

 

 
2,315

Net income

 

 

 
42,655

 

 

 

 
42,655

Cash dividends ($0.25 per share)

 

 

 
(10,891
)
 

 

 

 
(10,891
)
Currency translation adjustment

 

 

 

 
5,423

 

 

 
5,423

Purchases of treasury stock

 

 

 

 

 
343

 
(29,190
)
 
(29,190
)
As of 3/31/2019
49,276

 
$
493

 
$
1,225,482

 
$
638,574

 
$
(107,694
)
 
5,995

 
$
(428,439
)
 
$
1,328,416

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.

4


FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 
 
Three Months Ended
 
 
March 31,
 
 
2020
 
2019
Cash flow from operating activities:
 
 
 
 
Net income
 
$
32,918

 
$
42,655

Adjustments to reconcile net income to net cash flow provided by operating activities:
 
 
 
 
Non-cash portion of credit loss provision
 
(729
)
 
1,335

Share-based compensation expense
 
2,851

 
2,315

Depreciation and amortization expense
 
10,674

 
9,874

Amortization of debt issuance costs
 
387

 
473

Non-cash write-offs and impairments of certain lease intangibles and other assets
 
5,530

 

Deferred income taxes, net
 
4,239

 
2,855

Changes in operating assets and liabilities, net of business combinations:
 
 
 
 
Fees and service charges receivable
 
3,673

 
2,093

Inventories
 
6,951

 
5,874

Prepaid expenses and other assets
 
355

 
776

Accounts payable, accrued liabilities and other liabilities
 
9,755

 
(3,560
)
Income taxes
 
781

 
7,007

Net cash flow provided by operating activities
 
77,385

 
71,697

Cash flow from investing activities:
 
 
 
 
Loan receivables, net of cash repayments
 
52,279

 
42,216

Purchases of furniture, fixtures, equipment and improvements
 
(10,581
)
 
(9,658
)
Purchases of store real property
 
(9,617
)
 
(22,145
)
Acquisitions of pawn stores, net of cash acquired
 
(5,477
)
 
(24,520
)
Net cash flow provided by (used in) investing activities
 
26,604

 
(14,107
)
Cash flow from financing activities:
 
 
 
 
Borrowings from unsecured credit facilities
 
106,925

 
43,000

Repayments of unsecured credit facilities
 
(88,000
)
 
(83,000
)
Debt issuance costs paid
 
(130
)
 

Purchases of treasury stock
 
(80,331
)
 
(29,599
)
Dividends paid
 
(11,268
)
 
(10,891
)
Net cash flow used in financing activities
 
(72,804
)
 
(80,490
)
Effect of exchange rates on cash
 
(2,248
)
 
770

Change in cash and cash equivalents
 
28,937

 
(22,130
)
Cash and cash equivalents at beginning of the period
 
46,527

 
71,793

Cash and cash equivalents at end of the period
 
$
75,464

 
$
49,663

 
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.

5


FIRSTCASH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 1 - Significant Accounting Policies

Basis of Presentation

The accompanying consolidated balance sheet as of December 31, 2019, which is derived from audited financial statements, and the unaudited consolidated financial statements, including the notes thereto, include the accounts of FirstCash, Inc. and its wholly-owned subsidiaries (together, the “Company”). The Company regularly makes acquisitions and the results of operations for the acquired stores have been consolidated since the acquisition dates. All significant intercompany accounts and transactions have been eliminated.

These unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include certain information and disclosures required for comprehensive financial statements. These interim period financial statements should be read in conjunction with the Company’s consolidated financial statements, which are included in the Company’s annual report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (the “SEC”) on February 3, 2020. The consolidated financial statements as of March 31, 2020 and 2019, and for the three month periods ended March 31, 2020 and 2019, are unaudited, but in management’s opinion include all adjustments (consisting of only normal recurring adjustments) considered necessary to present fairly the financial position, results of operations and cash flow for such interim periods. Operating results for the period ended March 31, 2020 are not necessarily indicative of the results that may be expected for the full year.

The Company has significant operations in Latin America, where in Mexico, Guatemala and Colombia the functional currency is the Mexican peso, Guatemalan quetzal and Colombian peso, respectively. Accordingly, the assets and liabilities of these subsidiaries are translated into U.S. dollars at the exchange rate in effect at each balance sheet date, and the resulting adjustments are accumulated in other comprehensive income (loss) as a separate component of stockholders’ equity. Revenues and expenses are translated at the average exchange rates occurring during the respective period. The Company also has operations in El Salvador where the reporting and functional currency is the U.S. dollar.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. In November 2018, the Financial Accounting Standards Board issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2018-19”) which clarifies that receivables arising from operating leases are accounted for using lease guidance and not as financial instruments. In April 2019, the Financial Accounting Standards Board issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” (“ASU 2019-04”) which clarifies treatment of certain credit losses. In May 2019, the Financial Accounting Standards Board issued ASU No. 2019-05, “Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief ” (“ASU 2019-05”) which provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost. In November 2019, the Financial Accounting Standards Board issued ASU No. 2019-11, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2019-11”), which provides guidance around how to report expected recoveries. In February 2020, the Financial Accounting Standards Board issued ASU No. 2020-02, “Financial Instruments - Credit Losses (Topic 326) (“ASU 2020-02”) which provides updated guidance on how an entity should measure credit losses on financial instruments and delayed the effective date of the original pronouncement for smaller reporting companies. ASU 2016-13, ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11 and ASU 2020-02 (collectively, “ASC 326”) are effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. The adoption of ASC 326 did not have a material impact on the Company’s recognition of financial instruments within the scope of the standard.

In January 2017, the Financial Accounting Standards Board issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which eliminates step two from the goodwill impairment test and instead requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The guidance is effective for annual or any interim goodwill impairment

6


tests in fiscal years beginning after December 15, 2019 and should be adopted on a prospective basis. The adoption of ASU 2017-04 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In August 2018, the Financial Accounting Standards Board issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The adoption of ASU 2018-13 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In December 2019, the Financial Accounting Standards Board issued ASU No 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 removes certain exceptions to the general principles in Topic 740 in Generally Accepted Accounting Principles. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company does not expect ASU 2019-12 to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In March 2020, the Financial Accounting Standards Board issued ASU 2020-03, “Codification Improvements to Financial Instruments” (“ASU 2020-03”). ASU 2020-03 improves and clarifies various financial instruments topics. ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The Company adopted ASU 2020-03 upon issuance, which did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In March 2020, the Financial Accounting Standards Board issued ASU No 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. ASU 2020-04 is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company does not expect ASU 2020-04 to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

Note 2 - Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):

 
 
Three Months Ended
 
 
March 31,
 
 
2020
 
2019
Numerator:
 
 
 
 
Net income
 
$
32,918

 
$
42,655

 
 
 
 
 
Denominator:
 
 
 
 
Weighted-average common shares for calculating basic earnings per share
 
41,912

 
43,518

Effect of dilutive securities:
 
 
 
 
Stock options and restricted stock unit awards
 
95

 
140

Weighted-average common shares for calculating diluted earnings per share
 
42,007

 
43,658

 
 
 
 
 
Earnings per share:
 
 
 
 
Basic
 
$
0.79

 
$
0.98

Diluted
 
$
0.78

 
$
0.98




7


Note 3 - Acquisitions

Consistent with the Company’s strategy to continue its expansion of pawn stores in selected markets, during the three months ended March 31, 2020, the Company acquired a 36-store chain of pawn stores from an independent operator in Mexico. The purchase price totaled $7.0 million, net of cash acquired and subject to future post-closing adjustments. The aggregate purchase price was composed of $3.7 million in cash paid at the closing date on March 31, 2020 and remaining short-term amounts payable to the seller of approximately $3.3 million.

The purchase price of the 2020 acquisition was allocated to assets acquired and liabilities assumed based upon the estimated fair market values at the date of acquisition. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company and the pawn stores acquired. This acquisition was not material to the Company’s consolidated financial statements.

Note 4 - Operating Leases

The Company leases the majority of its pawnshop locations under operating leases and determines if an arrangement is or contains a lease at inception. Many leases include both lease and non-lease components, which the Company accounts for separately. Lease components include rent, taxes and insurance costs while non-lease components include common area or other maintenance costs. Operating leases are included in operating lease right of use assets, lease liability, current and lease liability, non-current in the consolidated balance sheets. The Company does not have any finance leases.

Leased facilities are generally leased for a term of three to five years with one or more options to renew for an additional three to five years, typically at the Company’s sole discretion. In addition, the majority of these leases can be terminated early upon an adverse change in law which negatively affects the store’s profitability. The Company regularly evaluates renewal and termination options to determine if the Company is reasonably certain to exercise the option, and excludes these options from the lease term included in the recognition of the operating lease right of use asset and lease liability until such certainty exists. The weighted-average remaining lease term for operating leases as of March 31, 2020 and 2019 was 3.9 years and 4.0 years, respectively.

The operating lease right of use asset and lease liability is recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The Company’s leases do not provide an implicit rate and therefore, it uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The Company utilizes a portfolio approach for determining the incremental borrowing rate to apply to groups of leases with similar characteristics. The weighted-average discount rate used to measure the lease liability as of March 31, 2020 and 2019 was 7.8% and 7.2%, respectively.

The Company has certain operating leases in Mexico which are denominated in U.S. dollars. The liability related to these leases is considered a monetary liability, and requires remeasurement each reporting period into the functional currency (Mexican pesos) using reporting date exchange rates. The remeasurement results in the recognition of foreign currency exchange gains or losses each reporting period, which can produce a certain level of earnings volatility. The Company recognized a foreign currency loss of $4.4 million and a gain of $0.3 million during the three months ended March 31, 2020 and 2019, respectively, related to the remeasurement of these U.S. dollar denominated operating leases, which is included in loss (gain) on foreign exchange in the accompanying consolidated statements of income.


8


Lease expense is recognized on a straight-line basis over the lease term, with variable lease expense recognized in the period such payments are incurred. The following table details the components of lease expense included in store operating expenses in the consolidated statements of income during the three months ended March 31, 2020 and 2019 (in thousands):

 
Three Months Ended
 
March 31,
 
2020
 
2019
Operating lease expense
$
31,210

 
$
30,980

Variable lease expense (1)
3,545

 
2,075

Total operating lease expense
$
34,755

 
$
33,055


(1) 
Variable lease costs consist primarily of taxes, insurance and common area or other maintenance costs paid based on actual costs incurred by the lessor and can therefore vary over the lease term.

The following table details the maturity of lease liabilities for all operating leases as of March 31, 2020 (in thousands):

Nine months ending December 31, 2020
$
76,393

2021
84,670

2022
62,293

2023
43,372

2024
23,004

Thereafter
15,886

Total
$
305,618

Less amount of lease payments representing interest
(41,476
)
Total present value of lease payments
$
264,142



The following table details supplemental cash flow information related to operating leases for the three months ended March 31, 2020 and 2019 (in thousands):

 
Three Months Ended
 
March 31,
 
2020
 
2019
Cash paid for amounts included in the measurement of operating lease liabilities
$
28,835

 
$
28,840

Leased assets obtained in exchange for new operating lease liabilities
$
24,983

 
$
2,551




9


Note 5 - Long-Term Debt

The following table details the Company’s long-term debt at the respective principal amounts, net of unamortized debt issuance costs on the senior unsecured notes (in thousands):

 
As of March 31,
 
As of December 31,
 
2020
 
2019
 
2019
Revolving unsecured credit facility, maturing 2024 (1)
$
330,000

 
$
255,000

 
$
335,000

Revolving unsecured uncommitted credit facility, maturing 2023 (1)
25,519

 

 

5.375% senior unsecured notes due 2024 (2)
296,744

 
296,053

 
296,568

Total long-term debt
$
652,263

 
$
551,053

 
$
631,568


(1) 
Debt issuance costs related to the Company’s revolving unsecured credit facilities are included in other assets in the accompanying consolidated balance sheets.

(2)
As of March 31, 2020, 2019 and December 31, 2019, deferred debt issuance costs of $3.3 million, $3.9 million and $3.4 million, respectively, are included as a direct deduction from the carrying amount of the senior unsecured notes in the accompanying consolidated balance sheets.

Revolving Unsecured Credit Facility

As of March 31, 2020, the Company maintained an unsecured line of credit with a group of U.S. based commercial lenders (the “Credit Facility”) in the amount of $500.0 million. The Credit Facility matures on December 19, 2024, which would accelerate to 90 days prior to the maturity of the Company’s senior unsecured notes due June 1, 2024 if the Company’s senior unsecured notes have not been refinanced or otherwise extended past December 19, 2024 by such date. As of March 31, 2020, the Company had $330.0 million in outstanding borrowings and $3.3 million in outstanding letters of credit under the Credit Facility, leaving $166.7 million available for future borrowings. The Credit Facility is unsecured and bears interest, at the Company’s option, of either (1) the prevailing London Interbank Offered Rate (“LIBOR”) (with interest periods of 1 week or 1, 2, 3 or 6 months at the Company’s option) plus a fixed spread of 2.5% or (2) the prevailing prime or base rate plus a fixed spread of 1.5%. The agreement has a LIBOR floor of 0%. Additionally, the Company is required to pay an annual commitment fee of 0.50% on the average daily unused portion of the Credit Facility commitment. The weighted-average interest rate on amounts outstanding under the Credit Facility at March 31, 2020 was 3.16% based on 1 week LIBOR. Under the terms of the Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Credit Facility also contains customary restrictions on the Company’s ability to incur additional debt, grant liens, make investments, consummate acquisitions and similar negative covenants with customary carve-outs and baskets. The Company was in compliance with the covenants of the Credit Facility as of March 31, 2020. During the three months ended March 31, 2020, the Company made net payments of $5.0 million pursuant to the Credit Facility.

Revolving Unsecured Uncommitted Credit Facility

During March 2020, the Company’s primary subsidiary in Mexico, First Cash S.A. de C.V., entered into an unsecured and uncommitted line of credit guaranteed by FirstCash, Inc. with a bank in Mexico (the “Mexico Credit Facility”) in the amount of $600.0 million Mexican pesos. The Mexico Credit Facility matures on March 9, 2023 and, as of March 31, 2020, was fully drawn, leaving no availability for future borrowings. The Mexico Credit Facility bears interest at the Mexican Central Bank’s interbank equilibrium rate (“TIIE”) plus a fixed spread of 2.5%. The interest rate on the amount outstanding under the Mexico Credit Facility at March 31, 2020 was 9.71%. Under the terms of the Mexico Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Company was in compliance with the covenants of the Mexico Credit Facility as of March 31, 2020. During the three months ended March 31, 2020, the Company received net proceeds of $600.0 million Mexican pesos from borrowings pursuant to the Mexico Credit Facility.

Senior Unsecured Notes

On May 30, 2017, the Company issued $300.0 million of 5.375% senior unsecured notes due on June 1, 2024 (the “Notes”), all of which are currently outstanding. Interest on the Notes is payable semi-annually in arrears on June 1 and December 1. The Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by all of the Company's existing and future domestic subsidiaries that guarantee its Credit Facility. The Notes will permit the Company to make restricted payments, such as purchasing shares of its stock and paying cash dividends, in an unlimited amount if, after giving pro forma effect to the

10


incurrence of any indebtedness to make such payment, the Company's consolidated total debt ratio (“Net Debt Ratio”) is less than 2.25 to 1. The Net Debt Ratio is defined generally in the indenture governing the Notes as the ratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelve months EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement period.

Note 6 - Fair Value of Financial Instruments

The fair value of financial instruments is determined by reference to various market data and other valuation techniques, as appropriate. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The three fair value levels are (from highest to lowest):

Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.

Recurring Fair Value Measurements

As of March 31, 2020, 2019 and December 31, 2019, the Company did not have any financial assets or liabilities measured at fair value on a recurring basis.

Fair Value Measurements on a Non-Recurring Basis

The Company measures non-financial assets and liabilities, such as property and equipment and intangible assets, at fair value on a non-recurring basis or when events or circumstances indicate that the carrying amount of the assets may be impaired. During the three months ended March 31, 2020, the Company recorded $1.9 million impairment related to a non-financial, non-operating asset that was included in other assets in the consolidated balance sheets.

Financial Assets and Liabilities Not Measured at Fair Value

The Company’s financial assets and liabilities as of March 31, 2020, 2019 and December 31, 2019 that are not measured at fair value in the consolidated balance sheets are as follows (in thousands):

 
 
Carrying Value
 
Estimated Fair Value
 
 
March 31,
 
March 31,
 
Fair Value Measurements Using
 
 
2020
 
2020
 
Level 1
 
Level 2
 
Level 3
Financial assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
75,464

 
$
75,464

 
$
75,464

 
$

 
$

Fees and service charges receivable
 
40,121

 
40,121

 

 

 
40,121

Pawn loans
 
314,296

 
314,296

 

 

 
314,296

Consumer loans, net
 
410

 
410

 

 

 
410

 
 
$
430,291

 
$
430,291

 
$
75,464

 
$

 
$
354,827

 
 
 
 
 
 
 
 
 
 
 
Financial liabilities:
 
 
 
 
 
 
 
 
 
 
Revolving unsecured credit facilities
 
$
355,519

 
$
355,519

 
$

 
$
355,519

 
$

Senior unsecured notes (outstanding principal)
 
300,000

 
276,000

 

 
276,000

 

 
 
$
655,519

 
$
631,519

 
$

 
$
631,519

 
$



11


 
 
Carrying Value
 
Estimated Fair Value
 
 
March 31,
 
March 31,
 
Fair Value Measurements Using
 
 
2019
 
2019
 
Level 1
 
Level 2
 
Level 3
Financial assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
49,663

 
$
49,663

 
$
49,663

 
$

 
$

Fees and service charges receivable
 
43,993

 
43,993

 

 

 
43,993

Pawn loans
 
345,200

 
345,200

 

 

 
345,200

Consumer loans, net
 
11,017

 
11,017

 

 

 
11,017

 
 
$
449,873

 
$
449,873

 
$
49,663

 
$

 
$
400,210

 
 
 
 
 
 
 
 
 
 
 
Financial liabilities:
 
 
 
 
 
 
 
 
 
 
Revolving unsecured credit facility
 
$
255,000

 
$
255,000

 
$

 
$
255,000

 
$

Senior unsecured notes (outstanding principal)
 
300,000

 
306,000

 

 
306,000

 

 
 
$
555,000

 
$
561,000

 
$

 
$
561,000

 
$


 
 
Carrying Value
 
Estimated Fair Value
 
 
December 31,
 
December 31,
 
Fair Value Measurements Using
 
 
2019
 
2019
 
Level 1
 
Level 2
 
Level 3
Financial assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
46,527

 
$
46,527

 
$
46,527

 
$

 
$

Fees and service charges receivable
 
46,686

 
46,686