FirstCash Holdings, Inc (FCFS) - The Success of Pawn-Centric Business Model and Multi-Country Growth Strategy
Basics
The U.S. pawn segment consists of all pawn operations in 25 U.S. states and the District of Columbia
Latin America pawn segment consists of all pawn operations in Mexico, Guatemala, Colombia and El Salvador
The retail POS payment solutions segment consists of the operations of AFF in all 50 states in the U.S., the District of Columbia and Puerto Rico.
Interesting notes & slides
1. Pawn focused business model
‒ small secured pawn loans to unbanked and underbanked consumers with limited or no access to traditional credit products
‒ diversified lending and retail model is a significant competitive advantage with strong margins and cash flows
2. Proven multi-country growth strategy
– mature U.S. business generates significant cash flow with continued growth through roll-up acquisitions
‒ runway for growth in Latin America where customer demographics are favorable and large format competition is limited
‒ additional growth expected from retail POS payment solution revenues
3. Pawn loans are customer friendly
‒ non-recourse loans
‒ no credit check or bank account required
‒ no collection activity or reporting to credit bureaus
4. Pawn loans are small and affordable
‒ typically, 30-to-60-day term
5. Pawn loans have limited credit risk
‒ fully collateralized with personal property
‒ collateral held in secure backroom of store
‒ rapid liquidation of forfeited collateral through pawnshop retail operations
6. Pawn Performs Well Across Economic Cycles
‒ Pawn receivables are fully collateralized and not subject to consumer credit risk
‒ Pawn transaction cycle total transaction time less than 15 minutes
‒ During the financial crisis, legacy first cash stores in the U.S. saw a 50% increase in pawn receivables from 2007 to 2012. Latam stores saw growth of 31% over the same period
‒ 2022 performance was at or near 2012 results during the great financial crisis
7. Attractive acquisition opportunities
‒ 4 pawn stores acquired and 2 new store openings ytd-2023; 30 pawn stores acquired in 2022 ‒ 15 stores in alabama (1 store in 2023) ‒ 13 stores in texas ‒ 3 stores in florida ‒ 3 stores in oklahoma (all in 2023) ‒ 2 stores in nevada (2 new stores all in 2023)
‒ Since 2017 the company opened or acquired 1,133 pawn stores
