FirstCash(FCFS) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Details FirstCash Holdings, Inc.'s unaudited consolidated financial statements for Q1 2024, covering balance sheets, income, cash flows, and explanatory notes Item 1. Financial Statements (Unaudited) Presents FirstCash Holdings, Inc.'s unaudited consolidated financial statements for Q1 2024, including core financial statements and comprehensive explanatory notes Consolidated Balance Sheets Summarizes the Company's financial position, detailing assets, liabilities, and stockholders' equity as of March 31, 2024, and comparative periods | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | March 31, 2023 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | ASSETS | | | | | Cash and cash equivalents | $135,070 | $127,018 | $100,795 | | Pawn loans | $456,079 | $471,846 | $377,697 | | Inventories | $302,385 | $312,089 | $257,603 | | Total current assets | $1,257,135 | $1,306,601 | $1,072,922 | | Total assets | $4,247,452 | $4,289,915 | $3,869,297 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | Revolving unsecured credit facilities | $15,000 | $568,000 | $308,000 | | Senior unsecured notes | $1,529,147 | $1,037,647 | $1,036,176 | | Total liabilities | $2,202,070 | $2,293,497 | $1,998,423 | | Total stockholders' equity | $2,045,382 | $1,996,418 | $1,870,874 | - Total assets increased by $378.2 million (9.8%) year-over-year from March 31, 2023, but decreased by $42.5 million (1.0%) quarter-over-quarter from December 31, 2023. Total liabilities increased by $203.6 million (10.2%) year-over-year and decreased by $91.4 million (4.0%) quarter-over-quarter. Total stockholders' equity increased by $174.5 million (9.3%) year-over-year and by $48.9 million (2.4%) quarter-over-quarter[13] Consolidated Statements of Income Reports the Company's revenues, expenses, and net income for the three months ended March 31, 2024, and comparative period | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (%) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :--------- | | Total revenue | $836,370 | $762,739 | 9.6% | | Total cost of revenue | $440,530 | $414,683 | 6.2% | | Net revenue | $395,840 | $348,056 | 13.7% | | Income before income taxes | $81,885 | $63,213 | 29.5% | | Net income | $61,368 | $47,388 | 29.5% | | Basic earnings per share | $1.36 | $1.03 | 32.0% | | Diluted earnings per share | $1.35 | $1.02 | 32.4% | - The company experienced significant growth in net income and earnings per share, with net income increasing by 29.5% to $61.4 million and diluted EPS by 32.4% to $1.35 year-over-year. This was driven by a 9.6% increase in total revenue, primarily from retail merchandise sales, pawn loan fees, and leased merchandise income[15] Consolidated Statements of Comprehensive Income Details net income and other comprehensive income components, primarily currency translation adjustments, for the three months ended March 31, 2024 | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------- | :------------------------------------- | :------------------------------------- | | Net income | $61,368 | $47,388 | | Currency translation adjustment | $6,335 | $29,513 | | Comprehensive income | $67,703 | $76,901 | - Comprehensive income decreased by 12% year-over-year, despite a 29.5% increase in net income, primarily due to a significantly lower currency translation adjustment of $6.3 million in Q1 2024 compared to $29.5 million in Q1 2023[17] Consolidated Statements of Changes in Stockholders' Equity Outlines changes in stockholders' equity, including net income, dividends, and currency adjustments, for the three months ended March 31, 2024 | Metric | As of March 31, 2024 (in thousands) | As of December 31, 2023 (in thousands) | As of March 31, 2023 (in thousands) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :---------------------------------- | | Total Stockholders' Equity | $2,045,382 | $1,996,418 | $1,870,874 | | Retained Earnings | $1,263,564 | $1,218,029 | $1,092,697 | | Accumulated Other Comprehensive Loss | $(36,702) | $(43,037) | $(77,060) | | Common Stock Held in Treasury | $(909,617) | $(920,193) | $(876,083) | - Stockholders' equity increased by $48.9 million from December 31, 2023, primarily driven by net income of $61.4 million and a positive currency translation adjustment of $6.3 million, partially offset by cash dividends of $15.8 million and share-based compensation adjustments[20] Consolidated Statements of Cash Flows Presents cash flows from operating, investing, and financing activities for the three months ended March 31, 2024, and comparative period | Cash Flow Activity | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | | Net cash flow provided by operating activities | $122,532 | $110,594 | | Net cash flow used in investing activities | $(29,634) | $(13,239) | | Net cash flow used in financing activities | $(84,934) | $(115,984) | | Change in cash and cash equivalents | $8,052 | $(16,535) | | Cash and cash equivalents at end of period | $135,070 | $100,795 | - Net cash flow from operating activities increased by 10.8% year-over-year. Net cash used in investing activities more than doubled, while net cash used in financing activities decreased by 26.8%, primarily due to a $500 million issuance of senior unsecured notes used to repay credit facilities[26][137] Notes to Consolidated Financial Statements Provides detailed explanations of accounting policies, financial instrument fair values, debt, and segment information supporting the financial statements Note 1 - General Outlines the basis of financial statement presentation, functional currencies, and the non-material impact of recent FASB ASUs - The financial statements are unaudited and prepared in accordance with U.S. GAAP for interim financial information, consolidating acquisitions since their respective dates[33] - Latin American pawn operations in Mexico, Guatemala, and Colombia use local functional currencies, with assets and liabilities translated at period-end rates and revenues/expenses at average rates, while El Salvador operations use the U.S. dollar[34] - Recent FASB ASUs (2023-06, 2023-07, 2023-09, 2024-02) are not expected to have a material effect on the Company's financial position, results of operations, or disclosures[36][37][38][39] Note 2 - Earnings Per Share Details the computation of basic and diluted earnings per share, showing year-over-year increases despite share count changes | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net income (in thousands) | $61,368 | $47,388 | | Weighted-average common shares (basic, in thousands) | 45,244 | 46,147 | | Weighted-average common shares (diluted, in thousands) | 45,387 | 46,312 | | Basic earnings per share | $1.36 | $1.03 | | Diluted earnings per share | $1.35 | $1.02 | - Diluted EPS increased by 32.4% to $1.35 in Q1 2024 from $1.02 in Q1 2023, driven by higher net income[40] Note 3 - Operating Leases Describes operating lease arrangements, including right-of-use assets, lease liabilities, weighted-average terms, discount rates, and lease expenses - The weighted-average remaining lease term for operating leases was 3.9 years as of March 31, 2024, with a weighted-average discount rate of 8.2%[43][44] | Lease Expense Component | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------- | :------------------------------------- | :------------------------------------- | | Operating lease expense | $36,919 | $33,540 | | Variable lease expense | $5,021 | $4,472 | | Total operating lease expense | $41,940 | $38,012 | - Total operating lease expense increased by 10.3% year-over-year. The Company recognized a foreign currency gain of $0.2 million in Q1 2024, down from $1.2 million in Q1 2023, related to remeasurement of U.S. dollar-denominated leases in Mexico[45][46] Note 4 - Fair Value of Financial Instruments Explains fair value measurements for financial instruments, categorizing them by input observability and detailing carrying and estimated fair values - The Company had no financial assets or liabilities measured at fair value on a recurring basis as of March 31, 2024, or December 31, 2023[49] | Financial Asset/Liability | Carrying Value (March 31, 2024, in thousands) | Estimated Fair Value (March 31, 2024, in thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | | Cash and cash equivalents | $135,070 | $135,070 | | Pawn loans | $456,079 | $456,079 | | Finance receivables, net | $105,653 | $227,922 | | Revolving unsecured credit facilities | $15,000 | $15,000 | | Senior unsecured notes (outstanding principal) | $1,550,000 | $1,489,000 | - Fair value for finance receivables is estimated using a discounted cash flow methodology with unobservable inputs (Level 3), while senior unsecured notes are estimated based on quoted prices in inactive markets (Level 2)[54][55] Note 5 - Finance Receivables, Net Details the composition of finance receivables, including gross amounts, allowances for loan losses, and credit quality indicators | Metric | As of March 31, 2024 (in thousands) | As of December 31, 2023 (in thousands) | As of March 31, 2023 (in thousands) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :---------------------------------- | | Finance receivables, gross | $222,087 | $227,474 | $201,288 | | Less allowance for loan losses | $(96,020) | $(96,454) | $(88,610) | | Finance receivables, net | $105,653 | $113,901 | $102,093 | | Allowance for Loan Losses | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------- | :------------------------------------- | :------------------------------------- | | Balance at beginning of period | $96,454 | $84,833 | | Provision for loan losses | $30,418 | $29,285 | | Charge-offs | $(33,279) | $(27,117) | | Recoveries | $2,427 | $1,609 | | Balance at end of period | $96,020 | $88,610 | - Finance receivables, net, increased by 3.5% year-over-year. The allowance for loan losses increased by 8.4% year-over-year, with provision for loan losses up 3.9% and charge-offs up 22.7%. The Company charges off finance receivables when 90 days or more contractually past due[56][57] Note 6 - Leased Merchandise, Net Provides a breakdown of leased merchandise, net, including gross amounts, depreciation, and the allowance for lease losses | Metric | As of March 31, 2024 (in thousands) | As of December 31, 2023 (in thousands) | As of March 31, 2023 (in thousands) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :---------------------------------- | | Leased merchandise | $369,298 | $384,129 | $349,648 | | Accumulated depreciation | $(114,431) | $(115,964) | $(105,997) | | Less allowance for lease losses | $(95,263) | $(95,127) | $(93,149) | | Leased merchandise, net | $157,785 | $171,191 | $148,854 | | Allowance for Lease Losses | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------- | :------------------------------------- | :------------------------------------- | | Balance at beginning of period | $95,127 | $79,189 | | Provision for lease losses | $43,010 | $49,065 | | Charge-offs | $(44,877) | $(36,778) | | Recoveries | $2,003 | $1,673 | | Balance at end of period | $95,263 | $93,149 | - Leased merchandise, net, increased by 5.9% year-over-year. The allowance for lease losses increased by 2.3% year-over-year, with charge-offs increasing by 22.0% and recoveries by 19.7%. Provision for lease losses decreased by 12.3%[58] Note 7 - Long-Term Debt Details the Company's long-term debt, including credit facilities and senior unsecured notes, and compliance with debt covenants | Debt Type | As of March 31, 2024 (in thousands) | As of December 31, 2023 (in thousands) | As of March 31, 2023 (in thousands) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :---------------------------------- | | Revolving unsecured credit facilities | $15,000 | $568,000 | $308,000 | | 4.625% senior unsecured notes due 2028 | $494,763 | $494,499 | $493,727 | | 5.625% senior unsecured notes due 2030 | $543,388 | $543,148 | $542,449 | | 6.875% senior unsecured notes due 2032 | $490,996 | $0 | $0 | | Total long-term debt | $1,544,147 | $1,605,647 | $1,344,176 | - The Company issued $500 million of 6.875% senior unsecured notes due 2032 on February 21, 2024, using the net proceeds to repay a portion of its Credit Facility[64] - As of March 31, 2024, the Company's consolidated total debt ratio was 2.5 to 1, well within the covenants for its 2028, 2030, and 2032 Senior Unsecured Notes (2.75 to 1 and 3.0 to 1 limits, respectively)[62][63][65] Note 8 - Commitments and Contingencies Addresses legal proceedings, including a CFPB lawsuit, and contractual commitments for gold ounces, with no material adverse effect expected - The Company is a party to various legal and regulatory proceedings, including a CFPB lawsuit alleging Military Lending Act violations, which is currently stayed pending a Supreme Court decision on the CFPB's funding structure[67][69] - Management believes outstanding proceedings are not expected to have a material adverse effect on the Company's financial position, results of operations, or cash flows, and no material amounts have been accrued[67][68] - As of March 31, 2024, the Company had contractual commitments to deliver 83,000 gold ounces by February 2026 at a weighted-average price of $2,110 per ounce, which it expects to meet with historical scrap gold volumes[70] Note 9 - Segment Information Provides financial data for U.S. pawn, Latin America pawn, and retail POS payment solutions segments, detailing revenue and operating income - The Company operates in three reportable segments: U.S. pawn, Latin America pawn, and Retail POS payment solutions (AFF)[72] | Segment | Total Revenue (Q1 2024, in thousands) | Total Revenue (Q1 2023, in thousands) | Pre-Tax Operating Income (Q1 2024, in thousands) | Pre-Tax Operating Income (Q1 2023, in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | U.S. Pawn | $377,690 | $339,681 | $96,602 | $81,019 | | Latin America Pawn | $196,640 | $186,681 | $31,904 | $32,872 | | Retail POS Payment Solutions | $263,058 | $238,080 | $33,149 | $23,197 | - Corporate expenses and other income are presented on a consolidated basis and not allocated to the individual segments[71] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes FirstCash Holdings, Inc.'s financial condition, operations, liquidity, and capital resources for Q1 2024, covering business lines, segment performance, and non-GAAP measures General Overview Describes FirstCash Holdings, Inc.'s core businesses: retail pawn operations in the U.S. and Latin America, and retail POS payment solutions via AFF - The Company's core business involves operating retail pawn stores in the U.S. and Latin America, serving cash- and credit-constrained consumers with pawn loans and merchandise sales[76] - FirstCash also provides technology-driven retail POS payment solutions through AFF, focusing on lease-to-own (LTO) products and retail financing across approximately 12,200 merchant partner locations in the U.S. and Puerto Rico[77][82] - The Company's operations are organized into three reportable segments: U.S. pawn, Latin America pawn (Mexico, Guatemala, Colombia, El Salvador), and retail POS payment solutions (AFF)[78] Operations and Locations Details the Company's global pawn store count, new openings, acquisitions, consolidations, and the expansion of the AFF merchant network - As of March 31, 2024, the Company operated 2,997 pawn store locations, including 1,179 in the U.S. and 1,818 in Latin America[80][81] - During the three months ended March 31, 2024, the Company opened 19 new pawn locations in Latin America and acquired 1 in the U.S., while consolidating 20 existing locations, including 10 in Acapulco, Mexico, damaged by a hurricane[81][83] - The retail POS payment solutions business (AFF) expanded its network to approximately 12,200 active retail merchant partner locations as of March 31, 2024, up from 9,800 at March 31, 2023[82] Critical Accounting Estimates Confirms no changes to the Company's critical accounting estimates from its 2023 Annual Report on Form 10-K for Q1 2024 - There have been no changes to the Company's significant accounting policies or critical accounting estimates for the three months ended March 31, 2024[83] Results of Operations Analyzes consolidated and segment-specific financial performance for Q1 2024, highlighting revenue, income, and expense drivers U.S. Pawn Segment Reports strong revenue and pre-tax operating income growth for the U.S. Pawn segment in Q1 2024, driven by pawn loan fees and retail sales | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | | Total revenue | $377,690 | $339,681 | 11% | | Pawn loan fees | $122,974 | $102,684 | 20% | | Retail merchandise sales | $236,990 | $210,681 | 12% | | Segment pre-tax operating income | $96,602 | $81,019 | 19% | | Pawn loans (earning assets) | $315,792 | $256,773 | 23% | | Inventories (earning assets) | $216,762 | $178,587 | 21% | - Same-store retail sales increased by 4% and same-store pawn fees increased by 12% in Q1 2024, indicating strong organic growth[87][90] - The increase in pawn loan receivables (23% total, 14% same-store) is attributed to continued inflationary pressures and tightened underwriting in other consumer credit forms[89] Latin America Pawn Segment Details revenue growth but a decrease in pre-tax operating income for Latin America Pawn in Q1 2024, impacted by increased operating expenses | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Change (%) | Constant Currency Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | :--------------------------- | | Total revenue | $196,640 | $186,681 | 5% | (3)% | | Pawn loan fees | $56,561 | $48,876 | 16% | 6% | | Retail merchandise sales | $130,849 | $118,937 | 10% | 0% | | Segment pre-tax operating income | $31,904 | $32,872 | (3)% | (10)% | | Pawn loans (earning assets) | $140,287 | $120,924 | 16% | 7% | | Inventories (earning assets) | $85,623 | $79,016 | 8% | 0% | - Operating expenses increased by 21% (11% on a constant currency basis) due to inflationary impacts and increases in federally mandated minimum wage and employee benefits[100] - Retail merchandise sales margin improved to 36% in Q1 2024 from 34% in Q1 2023 due to reduced discounting amid tighter inventory levels[97] Retail POS Payment Solutions Segment Highlights significant pre-tax operating income growth for the Retail POS Payment Solutions segment in Q1 2024, driven by revenue increases and lower lease loss provisions | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | | Total revenue | $263,058 | $238,080 | 10% | | Leased merchandise income | $205,671 | $183,438 | 12% | | Interest and fees on finance receivables | $57,387 | $54,642 | 5% | | Segment pre-tax operating income | $33,149 | $23,197 | 43% | | Provision for lease losses | $43,180 | $49,166 | (12)% | | Provision for loan losses | $30,418 | $29,285 | 4% | - Gross transaction volume increased by 3% to $256.3 million in Q1 2024, with leased merchandise volume up 2% and finance receivables volume up 4%[105] - The provision for lease losses decreased from 33% to 28% of gross transaction volume, reflecting lower-than-expected charge-offs from 2023 vintages and a release of reserves[110] Consolidated Results of Operations Summarizes the Company's overall financial performance, including income before taxes, net income, and key expense drivers for Q1 2024 | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | | Consolidated segment pre-tax operating income | $161,865 | $136,944 | 18% | | Income before income taxes | $81,885 | $63,213 | 30% | | Net income | $61,368 | $47,388 | 30% | | Administrative expenses | $43,057 | $39,017 | 10% | | Interest expense | $25,418 | $20,897 | 22% | - Depreciation and amortization decreased by 12% due to a $2.0 million reduction in amortization of acquired AFF intangible assets[119] - The consolidated effective income tax rate remained stable at approximately 25.1% in Q1 2024 compared to 25.0% in Q1 2023[120] Liquidity and Capital Resources Discusses the Company's liquidity sources, capital requirements for expansion and shareholder returns, and cash flow dynamics for Q1 2024 Material Capital Requirements Outlines key capital needs for expanding pawn and retail POS operations, and shareholder returns, with projected increases in net interest expense - Primary capital requirements include expanding pawn operations, expanding retail POS payment solutions, and returning capital to shareholders[121] - Net interest expense is expected to increase in 2024 due to increased borrowings for acquisitions and anticipated higher floating interest rates on credit facilities[121] - The Company believes net cash from operating activities and available credit facilities will be sufficient to meet liquidity and capital needs for the next 12 months and beyond[121] Expand Pawn Operations Details plans for pawn operations expansion through organic growth, new stores, and acquisitions, including Q1 2024 activities and real estate purchases - The Company acquired one U.S. pawn store for $1.3 million and opened 19 new stores in Q1 2024[123][124] - For the full year 2024, the Company anticipates adding approximately 90 to 100 new locations through new store openings and acquisitions[124] - The Company purchased real estate at nine store locations for $11.3 million in Q1 2024, viewed as a discretionary expenditure[125] Expand Retail POS Payment Solutions Operations Describes AFF's growth strategy through customer/merchant relationships and investments in support, technology, and decisioning platforms - AFF plans to expand by promoting and expanding relationships with new and existing customers and retail merchant partners[126] - Investments will continue in customer and merchant support operations, technology platforms, and proprietary decisioning platforms[126] Return of Capital to Shareholders Covers the Q2 2024 cash dividend declaration and the status of the common stock repurchase program, noting no Q1 2024 repurchases - The Board declared a $0.35 per share cash dividend for Q2 2024, totaling $15.8 million[127] - The Company has an authorized common stock repurchase program of up to $200.0 million, with the full amount remaining as of March 31, 2024[129] - No shares were repurchased in Q1 2024, compared to 782,000 shares repurchased for $70.7 million in Q1 2023[128] Sources of Liquidity Identifies primary liquidity sources, including cash and credit facilities, and the strategic use of foreign subsidiary cash and gold inventory - Primary liquidity sources as of March 31, 2024, were $135.1 million in cash and cash equivalents and $658.2 million in available funds under revolving unsecured credit facilities[130] - Foreign subsidiaries held $33.2 million in cash, primarily Mexican pesos, intended for international growth and operations[131] - The Company can rapidly increase cash flow by liquidating gold jewelry inventory, which accounts for 52% of total inventory[132] Cash Flows and Liquidity Metrics Analyzes cash flow changes from operating, investing, and financing activities, and key liquidity metrics for Q1 2024 | Cash Flow Activity | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | | Cash flow provided by operating activities | $122,532 | $110,594 | 11% | | Cash flow used in investing activities | $(29,634) | $(13,239) | 124% | | Cash flow used in financing activities | $(84,934) | $(115,984) | (27)% | | Working capital | $942,026 | $766,232 | 23% | | Current ratio | 4.0:1 | 3.5:1 | | - Increased cash used in investing activities was primarily due to higher purchases of furniture, fixtures, equipment, and improvements ($26.4 million vs $13.8 million) and store real property ($11.3 million vs $17.5 million)[136] - The decrease in cash used in financing activities was largely due to $500 million in proceeds from senior unsecured notes, used to repay credit facilities, and the absence of share repurchases in Q1 2024[137] Governmental Regulation States that the Company's businesses are subject to extensive governmental regulation, which can impact profitability and liquidity - The Company's pawn and retail POS payment solutions businesses are subject to significant regulation in all operating jurisdictions[138] - Regulatory developments can impact the Company's profitability and liquidity[132][138] Non-GAAP Financial Information Explains the use of non-GAAP measures like adjusted net income, EBITDA, and free cash flow to provide clearer insights into core operating performance - The Company uses non-GAAP financial measures (e.g., adjusted net income, adjusted diluted EPS, EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow) to evaluate operating performance and provide greater transparency to investors[139] - Adjustments typically exclude merger and acquisition expenses, non-cash foreign currency gains/losses related to lease liabilities, and certain purchase accounting adjustments to improve comparability[140][141][142] Adjusted Net Income and Adjusted Diluted Earnings Per Share Presents adjusted net income and diluted EPS, excluding non-operating items, showing year-over-year increases for Q1 2024 | Metric | Q1 2024 (in thousands/per share) | Q1 2023 (in thousands/per share) | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Net income, as reported | $61,368 | $47,388 | | Diluted earnings per share, as reported | $1.35 | $1.02 | | Adjusted net income | $70,189 | $57,700 | | Adjusted diluted earnings per share | $1.55 | $1.25 | - Adjustments for Q1 2024 included adding back merger and acquisition expenses ($457 thousand) and amortization of acquired AFF intangible assets ($9.573 million), while subtracting non-cash foreign currency gain related to lease liability ($169 thousand) and other expenses (income), net ($1.040 million)[144] Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA Details EBITDA and Adjusted EBITDA, used for performance assessment and debt ratio calculation, showing strong increases for Q1 2024 | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :-------------------------------- | :--------------------- | :--------------------- | | Net income | $61,368 | $47,388 | | EBITDA | $132,587 | $110,704 | | Adjusted EBITDA | $131,592 | $109,570 | - Adjusted EBITDA for the three months ended March 31, 2024, increased by 20.1% compared to the prior-year period[146] - Adjustments to EBITDA include merger and acquisition expenses, non-cash foreign currency gains, AFF purchase accounting adjustments, and other expenses (income), net[146] Free Cash Flow and Adjusted Free Cash Flow Defines and presents free cash flow and adjusted free cash flow, showing year-over-year decreases in Q1 2024 due to increased funding and capital expenditures | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :-------------------------------- | :--------------------- | :--------------------- | | Cash flow from operating activities | $122,532 | $110,594 | | Free cash flow | $105,943 | $116,584 | | Adjusted free cash flow | $106,400 | $116,606 | - Free cash flow decreased by 9.1% year-over-year, primarily due to increased net funding of finance receivables and higher purchases of furniture, fixtures, equipment and improvements[148] - Adjusted free cash flow includes an adjustment for merger and acquisition expenses paid, net of tax benefit[148] Constant Currency Results Explains constant currency results as non-GAAP measures for Latin American operations, excluding foreign currency translation effects - Constant currency results are non-GAAP measures used to evaluate Latin American operations by translating local currency items at prior-year exchange rates, excluding foreign currency fluctuations[149][150] | Currency Exchange Rate (vs. U.S. dollar) | March 31, 2024 | March 31, 2023 | Favorable / (Unfavorable) Change (%) | | :---------------------------------------- | :------------- | :------------- | :----------------------------------- | | Mexican peso (End-of-period) | 16.7 | 18.1 | 8% | | Mexican peso (Three months ended) | 17.0 | 18.7 | 9% | | Colombian peso (End-of-period) | 3,842 | 4,627 | 17% | | Colombian peso (Three months ended) | 3,915 | 4,762 | 18% | - The Guatemalan quetzal / U.S. dollar exchange rate remained stable year-over-year[151] Item 3. Quantitative and Qualitative Disclosures About Market Risk States that market risks from interest rates, gold prices, and foreign currency rates remain unchanged since December 31, 2023, with no speculative transactions - Market risks primarily arise from changes in interest rates, gold prices, and foreign currency exchange rates[152] - There have been no material changes to the Company's exposure to market risks since December 31, 2023[152] - The Company does not engage in speculative or leveraged transactions or hold/issue financial instruments for trading purposes[152] Item 4. Controls and Procedures Confirms the effectiveness of disclosure controls and procedures as of March 31, 2024, with no material changes in internal control over financial reporting - The Company's disclosure controls and procedures were evaluated as effective as of March 31, 2024, by the CEO and CFO[153] - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2024[154] - Management acknowledges that controls and procedures are designed to provide reasonable assurance and may not prevent all possible error and fraud[155] PART II. OTHER INFORMATION Presents additional information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings Refers to Note 8 for legal proceedings details, reiterating management's expectation of no material adverse effect on financials - Information on legal proceedings is incorporated by reference from Note 8 - Commitments and Contingencies of the Consolidated Financial Statements[156] Item 1A. Risk Factors References the 2023 Annual Report on Form 10-K for risk factors, confirming no material changes since the last report - Important risk factors are described in Part I, Item 1A, 'Risk Factors' of the Company's 2023 Annual Report on Form 10-K[157] - There have been no material changes in the Company's risk factors from those reported in the 2023 Annual Report on Form 10-K[157] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details shares withheld for tax obligations related to restricted stock vesting and the remaining availability of the stock repurchase program | Period | Total Number Of Shares Purchased | Average Price Paid Per Share | | :-------------------------------- | :------------------------------- | :--------------------------- | | January 1 through January 31, 2024 | 58,747 | $119.27 | | February 1 through February 29, 2024 | — | — | | March 1 through March 31, 2024 | — | — | | Total | 58,747 | $119.27 | - The 58,747 shares purchased in January 2024 were withheld to satisfy tax obligations from restricted stock vesting and were not part of a publicly announced repurchase plan[158] - The Company has a $200.0 million common stock repurchase program authorized in July 2023, with the entire amount remaining as of March 31, 2024[158] Item 3. Defaults Upon Senior Securities States that there are no defaults upon senior securities to report - Not Applicable[159] Item 4. Mine Safety Disclosures States that there are no mine safety disclosures to report - Not Applicable[160] Item 5. Other Information Discloses Rule 10b5-1 trading plans adopted by the CEO and AFF Services, Inc. for share sales - Rick L. Wessel, CEO, adopted a Rule 10b5-1 trading plan on March 12, 2024, to sell up to 120,000 shares by November 21, 2025[162] - AFF Services, Inc. adopted a non-Rule 10b5-1 trading plan on February 5, 2024, for up to 881,567 shares, which terminated on March 15, 2024[163] Item 6. Exhibits Lists all exhibits filed with the Form 10-Q, including organizational documents, debt agreements, and certifications - Exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, Indenture for 2032 Senior Unsecured Notes, Employment Agreement for Daniel R. Feehan, and certifications from the CEO and CFO[165] - The filing also includes Inline XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, and Presentation Linkbase Documents[165] SIGNATURES Confirms the official signing of the Form 10-Q report by the CEO and CFO on April 29, 2024 Signatures Confirms the official signing of the Form 10-Q report by the CEO and CFO on April 29, 2024 - The report was signed by Rick L. Wessel, Chief Executive Officer, and R. Douglas Orr, Executive Vice President and Chief Financial Officer, on April 29, 2024[168]