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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.
FirstCash
FirstCash
FirstCash Revenue by Segment
FirstCash Revenue by Geographic Location
Revenue by Segment
Retail Merchandise Sales Revenue
CapyFin.comPawn Loan Fees 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
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.
- While inventory levels have generally stabilized in the third quarter, especially in the U.S., fourth quarter sales will be impacted by lower inventory levels compared to the prior year.
- Global economic uncertainty due to the COVID-19 pandemic has strengthened the relative value of the U.S. dollar and negatively impacted developing market currencies, including the Mexican peso, which is the primary currency for the Company’s foreign operations.
- The impacts of COVID-19 will likely limit the number of 2020 openings to a total of 70 to 75 stores.