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Dec 31, 2022
FirstCash Q4 2022 Earnings Report
FirstCash reported record Q4 and full-year earnings, added 45 pawn stores through acquisitions and openings, repurchased 2.2 million shares in 2022, and declared a quarterly cash dividend.
Key Takeaways
FirstCash announced record operating results for the fourth quarter and full-year ended December 31, 2022. Record fourth quarter revenue and earnings results capped off an outstanding 2022. Pawn receivables ended the year at record levels and continued to see strong revenue and earnings growth from the core pawn segments in both the U.S. and Latin America.
Net income for the fourth quarter increased 173% over the prior-year quarter on a GAAP basis.
Diluted earnings per share for the fourth quarter of 2022 increased 146% over the prior-year quarter on a GAAP basis.
Consolidated revenues in the fourth quarter increased 49% over the prior-year quarter and 50% on an adjusted basis.
The retail POS payment solutions segment (AFF) contributed fourth quarter GAAP segment pre-tax income of $22 million.
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
The Company’s outlook for 2023 is 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 as we begin the year.
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.
- Beginning of the year pawn receivables are up 10% in the U.S., which includes balances from recently acquired stores, and Latin American balances are up 12% on a currency adjusted basis.
- Consolidated retail sales are expected to grow as well, reflecting mid-single digit growth in total inventories with margins for 2023 expected to remain above 40% in the U.S. with mid-thirty percent margins in Latin America.
- The Company expects approximately 60 new store additions in Latin America in 2023 through de novo openings and another four stores are expected to be opened in the Las Vegas market in the U.S. in 2023.
Challenges Ahead
- Macroeconomic retail headwinds continue to impact consumer confidence in general and more specifically for large ticket transactions at many of AFF’s retail merchant partners.
- Assuming that the current macro environment does not change significantly, management continues to expect year-over-year growth in gross transaction volumes of 8% to 12% in 2023, primarily from increased merchant door counts, which should result in similar expected growth in revenues for 2023 as well.
- LTO and finance revenues are typically lower in the first half of the year due to the impact of early buyout activity associated with first quarter tax refunds which reduces merchandise on lease and finance receivable balances.
- The Company expects AFF’s estimated lease and loan loss provisioning rates for 2023 to remain consistent with 2022, reflecting continued additional provisioning above historical losses for most portfolios given ongoing inflationary stress on consumers.
- 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 $10 million to $14 million due to higher floating interest rates on the borrowings under the revolving credit facilities.
Revenue & Expenses
Visualization of income flow from segment revenue to net income