First Cash Reports 36% Increase In Third Quarter Earnings Per Share; Raising Full Year Guidance By $0.11 To $1.70 - $1.72
ARLINGTON, Texas, Oct. 20, 2010 (GLOBE NEWSWIRE) -- First Cash Financial Services, Inc. (Nasdaq:FCFS) today announced record-setting revenue, net income and earnings per share for the three months ended September 30, 2010. The Company reported third quarter earnings per share from continuing operations of $0.45, a 36% increase over the prior year. The Company is increasing fiscal 2010 earnings guidance to a range of $1.70 to $1.72 per share from continuing operations, which is an $0.11 increase in the mid-point of the guidance range as compared to the previous forecast.
- Diluted earnings per share from continuing operations for the third quarter of 2010 were $0.45, an increase of 36%, compared to $0.33 in the third quarter of 2009.
- Net income from continuing operations increased by 39% to $14.0 million, compared to $10.1 million in the prior-year third quarter.
- Year-to-date earnings per share from continuing operations for the nine months ended September 30, 2010 were $1.16, an increase of 25% over the prior year. Net income from continuing operations for the nine-month period increased 27% to $35.7 million.
- Total diluted earnings per share, including income from discontinued operations, were $0.46 for the third quarter of 2010 and $1.23 year-to-date. Earnings per share from discontinued operations were $0.01 for the third quarter and $0.07 year-to-date.
- Consolidated third quarter revenue increased by 18% over last year, totaling $108 million. Year-to-date revenue was $302 million, a 19% increase over the prior year.
- On a product-line basis, third quarter revenue from service fees on pawn loans increased 21%, which reflected ongoing consumer demand for micro-credit products in both the United States and Mexico. Overall pawn merchandise sales increased by 18% for the quarter, driven by especially strong retail sales in Mexico (up 37%) and jewelry scrap sales in the United States (up 21%).
- On a geographic basis, revenue continues to be diversified, with 50% of third quarter revenue being generated in Mexico and 50% from U.S. operations. In Mexico, third quarter revenue increased by 23%, reflecting contributions from both new stores and a large base of maturing stores. U.S. pawn revenue increased by 12% in the third quarter, the result of continuing strong same-store revenue growth and the addition of seven large format pawn stores over the past twelve months.
- Same-store revenue increased by 11% for both the third quarter and year-to-date periods. By region, same-store revenue increased in the current quarter by 12% in Mexico and 10% in the United States.
- Total short-term loan and credit services revenue increased by 16% in the third quarter; even with the increase, year-to-date revenue from the Company's remaining short-term loan and credit services operations in the United States represented less than 13% of total revenue.
- The Company's net operating margin (pre-tax income) was 20% for the third quarter of 2010, compared to 17% in 2009, which reflected strong same-store revenue growth, expanding sales margins and further leveraging of fixed expenses. The store-level operating profit margins, which reflected the same positive trends, were 30% for the third quarter of 2010, compared to 28% in the prior year.
- Gross margins on retail pawn merchandise sales improved to 44% for the quarter, compared to prior-year margins of 42%, based on the strength of strong retail demand in Mexico. Margins on wholesale scrap jewelry sales reflected increasing gold prices, as they were 35% for the third quarter compared to prior-year margins of 33%.
- Pawn receivables, which yield future service fees and inventories, increased by 21% year-over-year. Growth of pawn receivables in Mexico was particularly strong at 39% above the prior year.
- Inventory turns reflected the merchandise sales results, as they improved in the third quarter to a rate of 4.4 turns per year, compared to 4.1 turns in the prior year.
- Over 96% of the Company's $75 million in customer receivables are pawn loans, which are fully collateralized. For the other credit products, which are comprised of short-term loans and credit services transactions, credit losses were reduced to 30% of related revenue in the third quarter, compared to 31% in the prior-year. Credit losses declined over the trailing twelve months to 25% of related revenue, compared to 27% in the comparable prior-year period.
- The Company's return on equity for the trailing twelve months was 21%, while its return on assets was 17%. This compares to returns of 22% and 15%, respectively, in the prior-year period. On a year-over-year basis, total equity increased by 33% and total assets increased by 9%.
- A total of 25 stores were added during the third quarter and year-to-date, the Company has added 51 stores.
- The third quarter openings included 20 new pawn stores located in Mexico. The majority of the new locations were in expansion markets in central Mexico, including Mexico City, the surrounding State of Mexico and Veracruz.
- Five U.S. pawn stores were added in July 2010 through previously announced acquisition activity.
- As of September 30, 2010, the Company has 594 total store locations, of which 470 are pawn stores.
- Earnings before interest, taxes, depreciation and amortization ("EBITDA") from continuing operations totaled $88 million for the trailing twelve months ended September 30, 2010, an increase of 22% over the comparable prior-year period. The EBITDA margin was 21% for the current and prior-year periods. A detailed reconciliation of EBITDA and free cash flow, both non-GAAP financial measures, is provided elsewhere in this release.
- Free cash flow for the trailing twelve months was $55 million, an increase of 27%, compared to $43 million in the prior year. Cash balances increased to $33 million at September 30, 2010, compared to $19 million at the same point last year.
- During the third quarter, the Company utilized current-year cash flows to fund $5.7 million in acquisition activity, $5.5 million for new stores and $7.2 million for debt reduction.
- As of September 30, 2010, the Company had no amounts drawn on its $25 million unsecured revolving credit facility and only $2 million of other interest-bearing debt is currently outstanding. Total outstanding debt has been reduced by $52 million over the past twelve months.
- As of September 30, 2010, the ratio of total liabilities to stockholders' equity was 0.2 to 1, compared to 0.4 to 1 at September 30, 2009. The current ratio was 4.9 to 1 at September 30, 2010.
- The Company is increasing its fiscal 2010 guidance for earnings per share from continuing operations to a range of $1.70 to $1.72 per share, which represents 25% to 26% growth over 2009 earnings of $1.36. The previous guidance was $1.58 to $1.62 per share.
- The majority of 2010 revenue will be derived from pawn operations, with only 12% to 13% of revenue expected to be from U.S. short-term loan and credit services operations.
- The Company remains on target to add 65 to 75 new stores in 2010, the majority of which will be in Mexico. All of the anticipated 2010 store additions will be pawn stores.
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