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Mar 31, 2023
FirstCash Q1 2023 Earnings Report
FirstCash reported record first quarter earnings results, with pawn fee revenues increasing by 15% and growth in AFF originations. The company repurchased 782,000 shares and declared a $0.33 quarterly cash dividend.
Key Takeaways
FirstCash Holdings, Inc. reported outstanding operating results for the first quarter of 2023, highlighted by double-digit consolidated revenue growth and record earnings per share. The company's core pawn operations in the U.S. and Latin America posted combined pawn fee growth of 15%. The retail POS payment solutions segment (AFF) also recorded strong results, driven by improved transaction origination volumes and net charge-off rates.
Consolidated revenues totaled $763 million, a 16% increase on a GAAP basis and 13% on an adjusted basis compared to the prior-year quarter.
Diluted earnings per share increased 76% over the prior-year quarter on a GAAP basis, while adjusted diluted earnings per share increased 6% compared to the prior-year quarter.
AFF segment revenues increased 24% on a GAAP basis and 14% on an adjusted basis.
The company added a total of 17 new pawn locations: 3 in the U.S. and 14 in Latin America.
FirstCash
FirstCash
FirstCash Revenue by Segment
FirstCash Revenue by Geographic Location
Revenue by Segment
Retail Merchandise Sales Revenue
CapyFin.comPawn Loan Fees Revenue
CapyFin.comLeased Merchandise Income Revenue
CapyFin.comInterest & Fees on Finance Receivables Revenue
CapyFin.comWholesale Scrap Jewelry Sales Revenue
CapyFin.comRevenue by Geographic Location
U.S. Pawn Revenue
CapyFin.comLatin America Pawn Revenue
CapyFin.com Forward Guidance
Based on first quarter results and current trends, the Company’s outlook for 2023 remains highly positive, with expected year-over-year growth in revenue and earnings in all segments driven by the continued growth in earning asset balances coupled with recent store additions.
Positive Outlook
- Pawn operations are expected to remain the primary earnings driver in 2023.
- Inflationary economic environments have historically driven increased customer demand for both pawn loans and value-priced merchandise offered in pawn stores.
- Management expects second quarter 2023 originations to increase in a range of 18% to 22% over the second quarter of 2022 and has increased the expected growth in full year 2023 transaction volumes and revenues to now be in a range of 12% to 18%.
- Second quarter 2023 segment earnings for AFF are expected to be roughly equal to the second quarter of last year.
- The Company expects AFF's estimated lease and loan loss provisioning rates for the remainder of 2023 to reflect a conservative approach similar to 2022, with provisioning above historical pre-pandemic loss rates for most vintages.
Challenges Ahead
- While the Company expects some level of net de-leveraging by the end of 2023, net interest expense is expected to increase in 2023 compared to 2022 by approximately $12 million to $15 million due to higher floating interest rates on the borrowings under the revolving credit facilities.
- For the full year of 2023, the effective income tax rate under current tax codes in the U.S. and Latin America is expected to range from 24.5% to 25.5%.
- AFF had significant transaction volume growth in the second half of 2022 which is expected to compress 2023 transaction growth rates in the third and fourth quarter this year.
- Increased origination volumes create short-term profitability headwinds as a function of the upfront CECL accounting reserve methodology
- Operating expenses for the full year are expected to increase in 2023 as well, primarily due to the expected increase in origination activity.
Revenue & Expenses
Visualization of income flow from segment revenue to net income