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Sep 30, 2020
FirstCash Q3 2020 Earnings Report
FirstCash's Q3 2020 results reflected continued profitability and resiliency despite the sharp second quarter decline in pawn receivables.
Key Takeaways
FirstCash reported a net income of $15.06 million on a GAAP basis ($24.45 million non-GAAP) and revenue of $359.89 million. The company saw steady recovery in pawn lending activity and near-record levels of retail margins. The total store count reached 2,750 locations.
Diluted earnings per share decreased 56% on a GAAP basis and 30% on an adjusted non-GAAP basis in the third quarter of 2020 compared to the prior-year quarter.
Pawn fee revenues declined $43 million, or 30%, in the third quarter compared to the prior-year quarter due to COVID-19 related impact on lending demand.
Gross profit from merchandise sales was down only 2% on a U.S dollar basis due to significantly increased retail and scrap jewelry margins.
A total of 13 de novo locations were opened in Latin America during the third quarter.
Revenue by Segment
Revenue by Geographic Location
Forward Guidance
Due to the uncertainty around COVID-19 and foreign currency volatility, the Company withdrew its initial 2020 earnings guidance on April 22, 2020 and has not reinstated earnings guidance for the balance of the year.
Positive Outlook
- Based on the currently improving growth trends for pawn receivables, the Company expects a smaller percentage decline in pawn fees in the fourth quarter as compared to the third quarter.
- The Company expects the continuation of improved retail margins in the fourth quarter, which will partially offset lower sales volumes.
- The Company expects to realize total expense savings at a rate similar to third quarter results.
- Additional store openings are planned in the fourth quarter.
- The Company is optimistic about potential store acquisition opportunities in both the U.S. and Latin America over the next several quarters.
Challenges Ahead
- The extent to which COVID-19 continues to impact the Company’s operations will depend on future developments, which are uncertain and cannot be predicted with confidence.
- The normalization of demand for pawn loans could be delayed in the short-term by reduced personal spending if businesses and schools cannot reopen or remain open and by additional government stimulus payments and benefit programs.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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