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First Cash Reports Record First Quarter Earnings Per Share Of $0.68; Loan Growth And Strong Same-Store Sales Drive 19% EPS Growth

ARLINGTON, Texas, April 17, 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 period ended March 31, 2013.

Earnings Highlights

  • Diluted earnings per share from continuing operations increased 19% to $0.68, compared to $0.57 in the same quarter of the prior year.  
  • Net income from continuing operations for the first quarter of 2013 increased 16% to $20.3 million, compared to $17.5 million in the first quarter of 2012.

Revenue Highlights

Revenue growth rates presented below on a constant currency basis are 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 first quarter of 2013 was 12.7 Mexican pesos / U.S. dollar versus 13.0 Mexican pesos / U.S. dollar in the comparable prior-year period.

  • Consolidated first quarter revenue totaled $161 million, representing an increase of 19% (or 18% on a constant currency basis) compared to the first quarter of 2012.  
  • Same-store revenue in the Company's pawn stores (excluding wholesale jewelry scrapping) increased 15% in Mexico, 2% in the U.S. and 9% on a consolidated basis. The same measures, on a constant currency basis, increased 12% in Mexico, 2% in the U.S. and 7% overall. The strength in same-store pawn revenues more than offset a 24% decrease in same-store wholesale jewelry scrapping revenue and a 6% decline in same-store revenues at freestanding payday/consumer loan stores.  
  • Consolidated retail merchandise sales from pawn operations increased by 31% for the quarter (28% on a constant currency basis), while revenue from pawn fees increased 24% versus the prior-year first quarter (22% on a constant currency basis).  
  • Revenue from wholesale scrap jewelry operations in the first quarter decreased 4% compared to the same period last year. While the volume of scrap jewelry sold increased 1% compared to the prior period (primarily due to store additions), the average selling price for gold decreased 4% compared to the prior-year quarter. Scrap jewelry operations accounted for only 5% of net revenue (gross profit) for the quarter, compared to 9% in the first quarter of the prior year.  
  • Short-term loan and credit services revenue (collectively, payday loan products) decreased 1% compared to the prior-year quarter, primarily the result of a 5% decrease in revenue from the Company's U.S. stand-alone consumer loan stores that are all located in Texas. This decrease was partially offset by added revenue from acquired pawn stores that had existing payday operations. Payday loan-related products comprised less than 8% of total revenue for the first quarter.

Pawn Metrics

  • Consolidated pawn receivables at March 31, 2013 totaled $105 million, an increase of 29% over the prior year (26% on a constant currency basis). In Mexico, pawn receivables increased 25% (21% on a constant currency basis), driven by 11% same-store receivable growth and new stores. Pawn receivables in the U.S. increased by 34% versus the prior year, primarily driven by store count growth and same-store receivable growth of 3%.  
  • The consolidated gross margin on retail merchandise sales was 41% for both the first quarter of 2013 and the prior-year period. The consolidated gross margin on wholesale scrap jewelry was 20% for the quarter, compared to 28% in the prior-year period, reflecting lower spot gold selling prices and higher acquisition costs.  
  • Consolidated annualized inventory turns in the first quarter were 4.1 turns, representing the sixth consecutive quarter that turns for the trailing twelve months exceed four turns.  
  • On a consolidated basis at March 31, 2013, 63% of total pawn loans were collateralized with hard goods (electronics, tools and appliances) with the remaining 37% collateralized by jewelry. In Mexico, 85% of the Company's pawn loans were collateralized with hard goods, and only 15% were collateralized with jewelry, compared to 78% and 22%, respectively, one year ago. In the U.S. stores, jewelry comprised 65% of pawn collateral as of the quarter end, compared to a 67% jewelry mix last year. 

Profitability and Return Metrics

  • The Company's return on equity for the trailing twelve months ended March 31, 2013, increased to 25% versus 23% in the comparable prior-year period.       
  • Consolidated net operating margin (pre-tax income) was 20% for the trailing twelve month period, while store-level operating profit margins were 29% for the trailing twelve month period.       

Acquisitions and New Store Openings

  • The Company added 22 pawn store locations during the first quarter of 2013, including 21 new stores in Mexico and one acquired store in the U.S.   
  • As of March 31, 2013, First Cash had 559 stores in Mexico, of which 506 are large format, full-service stores and 277 stores in the U.S., of which 185 are large format, full-service pawn stores.  
  • Over the past twelve months, the Company has added 63 stores in Mexico and 48 stores in the U.S., representing a 15% increase in the total store count. 

Financial Position & Liquidity

  • EBITDA from continuing operations for the trailing twelve months ended March 31, 2013, was $143 million, an increase of 18% versus the comparable prior twelve-month period. The EBITDA margin from continuing operations of 23% for the trailing twelve months equaled the prior-year period. Free cash flow for the trailing twelve months increased to $50 million. EBITDA from continuing operations and free cash flow are defined in the detailed reconciliation of these non-GAAP financial measures provided elsewhere in this release.  
  • The Company paid down the balance on its unsecured bank credit facility by $51 million during the first quarter of 2013, and as of March 31, 2013, had only $52 million outstanding on the facility. The Company has $123 million of availability under the $175 million facility, which bears interest at the prevailing LIBOR rate plus a fixed spread of 2.0% and matures in February 2015. The total interest rate on the facility is currently 2.25% annually.  
  • Over the past twelve months, the Company has invested $78 million in acquisitions, $23 million in stock repurchases, $22 million in capital expenditures and $42 million in net new loans and inventory.

Share Buyback Authorization

  • In the first quarter of 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, 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.

Fiscal 2013 Outlook

  • The Company is maintaining its fiscal 2013 guidance for earnings per share to be in a range of $3.10 to $3.24 per share, which represents estimated growth of 14% to 19% over fiscal 2012. Should the recent negative volatility in the spot price of gold continue, the Company would anticipate earnings per share being at the lower end of the annual guidance range.   
  • 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.  
  • Approximately 92% to 93% of 2013 revenues are expected to be derived from the Company's growing pawn operations, with the remainder expected to come from consumer loan and credit services operations. 

Commentary & Analysis   

Mr. Rick Wessel, chief executive officer, commented on the first quarter results, "We are pleased with our first quarter results as we again reached record levels of revenues and profitability. Our growth continues to be driven by strong customer demand in growing markets coupled with our singular focus on the core pawn business."

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