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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

Stocks in this article: FCFS

FIRST CASH FINANCIAL SERVICES, INC. UNAUDITED NON-GAAP FINANCIAL INFORMATION

The Company uses certain financial calculations, such as free cash flow, EBITDA and constant currency results, which are not considered measures of financial performance under U.S. generally accepted accounting principles ("GAAP"). Items excluded from the calculation of free cash flow, EBITDA and constant currency results are significant components in understanding and assessing the Company's financial performance. Since free cash flow, EBITDA and constant currency results are not measures determined in accordance with GAAP and are thus susceptible to varying calculations, free cash flow, EBITDA and constant currency results, as presented, may not be comparable to other similarly titled measures of other companies. Free cash flow, EBITDA and constant currency results should not be considered as alternatives to net income, cash flow provided by or used in operating, investing or financing activities or other financial statement data presented in the Company's consolidated financial statements as indicators of financial performance or liquidity. Non-GAAP measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures. 

Earnings Before Interest, Taxes, Depreciation and Amortization

EBITDA is commonly used by investors to assess a company's leverage capacity, liquidity and financial performance. The following table provides a reconciliation of income from continuing operations to EBITDA (in thousands): 

  Twelve Months Ended
  December 31,
  2012 2011
Income from continuing operations $ 81,105 $ 70,523
Adjustments:    
Income taxes 41,506 37,158
Depreciation and amortization 12,949 10,962
Interest expense 1,488 135
Interest income (216) (278)
Earnings from continuing operations before interest, taxes, depreciation and amortization $ 136,832 $ 118,500
     
EBITDA margin calculated as follows:    
Total revenue from continuing operations $ 595,946 $ 518,344
Earnings from continuing operations before interest, taxes, depreciation and amortization 136,832 118,500
EBITDA as a percentage of revenue 23% 23%

FIRST CASH FINANCIAL SERVICES, INC. UNAUDITED NON-GAAP FINANCIAL INFORMATION (CONTINUED)

Free Cash Flow

For purposes of its internal liquidity assessments, the Company considers free cash flow, which is defined as cash flow from the operating activities of continuing and discontinued operations reduced by purchases of property and equipment and net cash outflow from pawn and consumer loans. Free cash flow is commonly used by investors as a measure of cash generated by business operations that will be used to repay scheduled debt maturities and can be used to invest in future growth through new business development activities or acquisitions, repurchase stock, or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company's ability to generate cash flow from business operations and the impact that this cash flow has on the Company's liquidity. The following table reconciles "net cash flow from operating activities" to "free cash flow" (in thousands):

  Twelve Months Ended
  December 31,
  2012 2011
Cash flow from operating activities, including discontinued operations $ 88,792 $ 80,375
Cash flow from investing activities:    
Pawn and consumer loans (17,325) (5,208)
Purchases of property and equipment (21,841) (28,974)
Free cash flow $ 49,626 $ 46,193

Constant Currency

Certain performance metrics discussed in this release are presented on a "constant currency" basis, which may be considered a non-GAAP financial measurement of financial performance under GAAP. The Company's management uses constant currency results to evaluate operating results of certain business operations in Mexico, which are transacted primarily in Mexican pesos. Pawn scrap jewelry in Mexico is sold in U.S. dollars and, accordingly, does not require a constant currency adjustment. Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in Mexican pesos using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons. For balance sheet items, the closing exchange rate at the end of the applicable prior-year period (December 31, 2011) of 14.0 to 1 was used, compared to the current end of period (December 31, 2012) exchange rate of 13.0 to 1. For income statement items, the average closing daily exchange rate for the appropriate period was used. The average exchange rate for the prior-year quarter ended December 31, 2011 was 13.6 to 1, compared to the current-quarter rate of 12.9 to 1. The average exchange rate for the prior-year twelve-month period ended December 31, 2011 was 12.4 to 1, compared to the current year-to-date rate of 13.2 to 1.   

CONTACT: Gar Jackson
         Phone:   (949) 873-2789
         Email:   gar@irsense.com
         
         Rick Wessel, Chairman and Chief Executive Officer
         Doug Orr, Executive Vice President and Chief Financial Officer
         Phone:   (817) 505-3199
         Email:   investorrelations@firstcash.com
         Website: www.firstcash.com

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