First Cash Reports 35% Increase In Fourth Quarter Earnings Per Share To $0.93; Pawn Revenue Growth In Both The U.S. And Mexico Drives Record Earnings; Company Announces New Share Buyback Authorization
ARLINGTON, Texas, Jan. 23, 2013 (GLOBE NEWSWIRE) -- First Cash Financial Services, Inc. (Nasdaq:FCFS) today announced record-setting revenue, net income and earnings per share for the three-month and full-year periods ended December 31, 2012. In addition, the Company has also announced that its Board of Directors has authorized a new program for the repurchase of up to 1,500,000 shares of its common stock.
- Diluted earnings per share from continuing operations for the fourth quarter of 2012 were $0.93, an increase of 35% compared to $0.69 in the fourth quarter of 2011.
- Net income from continuing operations increased by 30% to $27.7 million for the fourth quarter of 2012, compared to $21.2 million in the prior year.
- Diluted earnings per share from continuing operations for fiscal 2012 were $2.73, a 22% increase compared to $2.24 in 2011.
- Net income from continuing operations for the year increased 15%, totaling $81.1 million, compared to $70.5 million in the prior year.
Revenue growth rates are presented below on a constant currency basis, calculated by applying the currency exchange rate from the comparable prior-year period to the current year's Mexican peso-denominated revenue. The average exchange rate for the fourth quarter of 2012 was 12.9 Mexican pesos / U.S. dollar versus 13.6 Mexican pesos / U.S. dollar in the comparable prior-year period. The average exchange rate for fiscal 2012 was 13.2 Mexican pesos / U.S. dollar versus 12.4 Mexican pesos / U.S. dollar in fiscal 2011.
- Consolidated revenue in the fourth quarter increased 21% compared to the fourth quarter of 2011. Fiscal 2012 total revenue reached almost $600 million, representing an increase of 18% compared to the comparable prior-year period. Revenue generated from operations in Mexico comprised 54% of total 2012 revenue.
- Pawn fees, which the Company considers its core revenue stream, increased by 37% in the fourth quarter versus the comparable prior quarter, while in-store merchandise sales increased by 31%. The full year increase in pawn fees was 29%, while merchandise sales increased 26%.
- Fourth quarter same-store revenue, excluding wholesale scrap jewelry revenue, increased 13% in Mexico, 3% in the U.S. and 8% overall. The core revenue from same-store pawn service fees increased 14% on a consolidated basis, driven by 19% growth in Mexico and 8% growth in the U.S.
- Full year same-store revenue, excluding wholesale scrap jewelry revenue, increased 7% in Mexico, 5% in the U.S. and 6% overall. The 4% decrease in scrap jewelry revenue caused total same-store revenue to increase 1% over the prior year.
- The growth in consolidated revenues was achieved despite decreases in wholesale scrap jewelry revenues of 12% for the quarter and 4% for the year. Scrap jewelry operations accounted for less than 8% of net revenue (gross profit) for the quarter and the year. While the average selling price for gold during the fourth quarter of 2012 increased 6% to $1,723 per ounce compared to the prior-year period, the volume of scrap jewelry sold decreased 19% compared to the prior-year quarter. The average selling price for gold for the full year increased 11% to $1,676 per ounce, while the volume decreased 15%.
- Consolidated fourth quarter and full year revenue from payday loan products increased 8% and 3% respectively, primarily due to large format pawn acquisitions, which offer payday loans as an ancillary product. The majority of the payday loan revenues are generated in the Company's stand-alone stores in Texas, which saw no revenue growth during 2012. Payday loan-related products comprised only 8% of total revenue for the fourth quarter of 2012.
- Consolidated pawn receivables increased 41% as of December 31, 2012 (36% on a constant currency basis). In Mexico, pawn receivables increased 50% (39% on a constant currency basis), driven by 20% same-store receivable growth and the continued increase in store counts. Pawn receivables in the U.S. increased by 34% versus the prior year, primarily driven by store count growth and positive same-store receivable growth.
- The consolidated gross margin on retail merchandise sales was 41% for the fourth quarter and 42% for fiscal 2012, both increasing compared to 39% and 40%, respectively, in the prior-year periods. The two percentage point gross margin increase in each respective period was driven by solid retail demand, optimizing loan to value ratios and better buying of merchandise. The consolidated gross margin on wholesale scrap jewelry was 27% for the fourth quarter and 26% for fiscal 2012, compared to 35% and 34% in the prior-year periods, reflecting higher scrap jewelry acquisition costs and nominal gold appreciation when compared to the prior year.
- Consolidated annualized inventory turns remained at near-record levels of 4.2 turns over the past twelve months, as the Company continued to focus on inventory quality and driving retail traffic and demand to its stores.
- On a consolidated basis, 57% of total pawn loans were collateralized with hard goods (electronics, tools and appliances) with the remaining 43% collateralized by jewelry at December 31, 2012. In Mexico, 83% of the Company's pawns were collateralized with hard goods, and 17% were collateralized with jewelry, compared to 75% and 25%, respectively, one year ago. In the U.S., jewelry comprised 65% of pawn collateral as of the quarter end, compared to a 68% jewelry mix last year.
- The Company's return on equity for fiscal 2012 increased four percentage points to 26% versus 22% in the comparable prior-year period.
- Consolidated net operating margin (pre-tax income) for fiscal 2012 was 21%, while store-level operating profit margins were 30% for fiscal 2012, both remaining at record levels and equaling the prior year.
- A record total of 143 stores were opened (68) or acquired (75) in 2012 and the Company increased its market penetration from eight to 12 states in the U.S. and from 22 to 24 states in Mexico.
- During fiscal 2012, a total of 91 large format, full-service stores were added in Mexico, composed of 62 new store openings and a 29-store acquisition in January 2012. As a result, the Company has increased the number of large format pawn stores in Mexico by 23% over the past year. As of December 31, 2012, First Cash had 538 stores in Mexico, of which 485 are large format, full-service locations.
- During fiscal 2012, a total of 52 U.S. stores were opened or acquired, including separate acquisitions of two large format pawn stores during the fourth quarter. As of December 31, 2012, First Cash had 276 stores in the U.S., of which 184 are large format, full-service pawn stores. The Company has increased the number of large format pawn stores in the U.S. by 52 locations, or 39%, over the past year.
- During fiscal 2012, the Company utilized cash on-hand, operating cash flows and its credit facility to fund $121 million of pawn store acquisitions, repurchase $61 million of common stock and invest $22 million in capital expenditures.
- Even with the funding of fourth quarter acquisitions and capital expenditures totaling $18 million, the Company utilized operating cash flows to pay down debt by $9 million during the fourth quarter.
- EBITDA from continuing operations totaled $137 million for fiscal 2012, an increase of 15% versus the comparable prior-year period. EBITDA margins were 23% for fiscal 2012, which equaled the prior year. Even with the large number of store additions and significant funding of loan growth, free cash flow for fiscal 2012 increased to $50 million, compared to $46 million in the prior year. EBITDA and free cash flow are defined in the detailed reconciliation of these non-GAAP financial measures provided elsewhere in this release.
- In January 2013, the Board of Directors authorized a new program for the repurchase of up to 1,500,000 shares of its common stock. Under previously completed share repurchase programs over the past eight years, the Company has repurchased a total of 9,700,000 shares, representing 33% of the currently outstanding share count.
- Under its new share repurchase program, the Company can purchase common stock in open market transactions, block or privately negotiated transactions, and may from time to time purchase shares pursuant to a trading plan in accordance with Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended, or by any combination of such methods. The number of shares to be purchased and the timing of the purchases are based on a variety of factors, including, but not limited to, the level of cash balances, credit availability, general business conditions, regulatory requirements, the market price of the Company's stock and the availability of alternative investment opportunities. No time limit was set for completion of repurchases under the new authorization and the program may be suspended or discontinued at any time.
- The Company is initiating its fiscal 2013 guidance for diluted earnings per share from continuing operations to be in a range of $3.10 to $3.24, representing 14% to 19% earnings growth over 2012.
- The Company expects to open approximately 75 to 85 new stores in 2013, the majority of which will be in Mexico. All of the anticipated 2013 store openings will be large format pawn stores and it is anticipated that up to 30 of the new stores will be opened in the first quarter. As in 2012, the Company will continue to look opportunistically for large format pawn acquisitions in strategic markets, which could further increase store additions for 2013.
- Revenue growth in 2013 is expected to be generated exclusively from pawn operations, with no growth projected from payday lending. Approximately 92% to 93% of total 2013 revenues are expected to be derived from growing pawn operations. Earnings guidance estimates for 2013 are based on an average exchange rate of 13.0 Mexican pesos / U.S. dollar and the Company anticipates that the 2013 tax rate will be 35.25% versus 33.9% in 2012.
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