Segment update #1
Discover hidden gems, find unreleated businesss and segment turnarounds. If you are an activist investor, you can unlock the hidden value.
Table of contents
FirstCash Holdings (FCFS) - with interesting notes
Evertec (EVTC) - The Business Solutions segment is an unrelated segment
FirstCash Holdings, Inc (FCFS)
1. Segment data
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 American First Finance (“AFF”) in all 50 states in the U.S., the District of Columbia and Puerto Rico. The company acquired Aff in December 2021.
2. Interesting notes
a) 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.
Pawn loans are customer friendly
non-recourse loans; no credit check or bank account required;
no collection activity or reporting to credit bureaus
b) 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
c) 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
d) Attractive acquisition opportunities
Primary long-term business plan is to continue growing pawn revenues and income by opening new (“de novo”) retail pawn locations, acquiring existing pawn stores in strategic markets and increasing revenue and operating profits in existing stores
Mature U.S. business generates significant cash flow with continued growth through roll-up acquisitions
Since 2017 the company opened or acquired 1,133 pawn stores
Since 2009
317 pawn stores acuired in U.S
870 pawn stores acuired in Latin America
Runway for growth in Latin America where customer demographics are favorable and large format competition is limited
e) Repurchase
Since 2017, the company spent a total of $902 million to repurchase shares.
July 2023 buyback authorization provides for $200 million of future repurchases.
