Overview of the Company’s Financial Performance

First Cash Financial Services, Inc. (the “Company”) is the leading operator of pawn stores in the U.S. and Latin America, as well as a leading provider of technology-driven, retail point-of-sale (POS) payment solutions. The Company’s two business lines are organized into three reportable segments: the U.S. pawn segment, the Latin America pawn segment, and the retail POS payment solutions segment.

In 2024, the Company reported strong financial results, with revenue increasing 7% to $3.39 billion and net income growing 18% to $258.8 million compared to the prior year. Diluted earnings per share rose 19% to $5.73. The Company’s adjusted net income, which excludes certain non-operating items, increased 9% to $302.7 million, and adjusted diluted earnings per share grew 11% to $6.70.

Revenue and Profit Trends

The U.S. pawn segment saw a 15% increase in total revenue, driven by a 13% rise in retail merchandise sales and a 16% jump in pawn loan fees. The Latin America pawn segment also reported revenue growth, with a 2% increase (4% on a constant currency basis). The retail POS payment solutions segment generated a 3% rise in total revenue.

Segment pre-tax operating income increased 18% for the U.S. pawn business, but declined 4% (2% on a constant currency basis) for the Latin America pawn segment and 3% for the retail POS payment solutions segment. The decrease in Latin America pawn and retail POS payment solutions segment profitability was primarily due to higher operating expenses.

Consolidated segment pre-tax operating income grew 8% to $676.4 million. However, corporate expenses and other costs, including interest expense and income taxes, increased, resulting in a 17% rise in consolidated income before income taxes to $342.8 million. The Company’s effective tax rate decreased from 25.1% in 2023 to 24.5% in 2024, contributing to an 18% increase in net income to $258.8 million.

Analysis of Strengths and Weaknesses

The Company’s key strengths include its leading market positions in pawn operations in the U.S. and Latin America, as well as its growing retail POS payment solutions business. The pawn operations benefit from a resilient business model, with pawn loans secured by valuable collateral and the ability to recover value through merchandise sales. The retail POS payment solutions segment provides diversification and exposure to the growing market for alternative financing solutions.

However, the Company faces some challenges, including the impact of foreign currency fluctuations on its Latin America pawn operations and the potential for increased competition or regulatory changes that could affect its businesses. The retail POS payment solutions segment also faces the risk of higher loan loss provisions and the potential for changes in consumer demand or merchant partner performance.

Outlook for the Future

The Company expects to continue expanding its pawn operations through new store openings, acquisitions, and growth in pawn receivables and inventories. In the retail POS payment solutions segment, the Company plans to focus on promoting and expanding relationships with new and existing customers and merchant partners, as well as investing in its technology and operations.

The Company’s strong liquidity position, with $175.1 million in cash and cash equivalents and $528.9 million in available and unused credit facilities, provides flexibility to fund its growth initiatives and return capital to shareholders through dividends and share repurchases. The Company recently declared a $0.38 per share quarterly dividend and has $115.0 million remaining under its current $200.0 million share repurchase program.

Overall, the Company’s diversified business model, leading market positions, and strong financial position suggest it is well-positioned to continue delivering solid financial performance and shareholder value in the years ahead, despite the potential challenges it faces.