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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ___________

Commission file number 001-10960

FIRSTCASH HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware

~~75-2237318~~87-3920732

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1600 West 7th Street, Fort Worth, Texas 76102

(Address of principal executive offices) (Zip code)

(817) 335-1100

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	FCFS	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No


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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


☒	Large accelerated filer	☐	Accelerated filer
☐	Non-accelerated filer	☐	Smaller reporting company
		☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of April ~~20, 2021,~~27, 2022, there were ~~41,027,426~~47,464,357 shares of common stock outstanding.


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FIRSTCASH HOLDINGS, INC.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, ~~2021~~2022

INDEX


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CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS

Forward-Looking Information

This quarterly report contains forward-looking statements about the business, financial condition and prospects of FirstCash Holdings, Inc. and its wholly owned subsidiaries (together, the “Company”). Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends,” “could,” “would,” “anticipates,” “potential,” “confident,” “optimistic” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, guidance, expectations and future plans. Forward-looking statements can also be identified by the fact these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties.

While the Company believes the expectations reflected in forward-looking statements are reasonable, there can be no assurances such expectations will prove to be accurate. Security holders are cautioned that such forward-looking statements involve risks and uncertainties. Certain factors may cause results to differ materially from those anticipated by the forward-looking statements made in this quarterly report. Such factors may include, without limitation, risks associated with the putative shareholder securities class action lawsuit filed against the Company, the Consumer Financial Protection Bureau (the “CFPB”) lawsuit filed against the Company, the California private lawsuits filed against the Company in which the plaintiffs are seeking class certification, and subpoenas seeking information from the Company received from state regulators from time to time, including the incurrence of meaningful expenses, reputational damage, monetary damages and other penalties; risks ~~uncertainties~~relating to the American First Finance (“AFF”) transaction, including the failure of the transaction to deliver the estimated value and ~~regulatory developments (1)~~benefits expected by the Company, the incurrence of unexpected future costs, liabilities or obligations as a result of the transaction, the effect of the transaction on the ability of the Company to retain and hire personnel and maintain relationships with retail partners, consumers and others with whom the Company and AFF do business; the ability of the Company to successfully integrate AFF’s operations; the ability of the Company to successfully implement its plans, forecasts and other expectations with respect to AFF’s business; risks related to the COVID-19 pandemic, including risks and uncertainties related to the current unknown duration and severity of the COVID-19 pandemic, ~~which may be impacted by variants of~~ the ~~COVID-19 virus and the timing, availability and efficacy of the COVID-19 vaccines in the jurisdictions in which the Company operates, the impact of~~ governmental responses that have been, and may in the future be, imposed in response to the ~~pandemic, including stimulus programs which could adversely impact lending demand and regulations which could adversely affect the Company’s ability to continue to fully operate,~~pandemic; potential changes in consumer behavior and shopping patterns which could impact demand for ~~both~~ the Company’s pawn loan, retail, lease-to-own and retail ~~products, changes~~finance products; labor shortages and increased labor costs; inflation; a deterioration in the economic conditions in the United States and Latin America which potentially could have an impact on discretionary consumer ~~spending or impact demand for pawn loan products, and~~spending; currency fluctuations, primarily involving the Mexican ~~peso~~peso; and ~~(2)~~ those other risks discussed and described in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), including the risks described in Part 1, Item 1A, “Risk Factors” thereof, and other reports filed ~~subsequently by the Company~~ with the SEC. Many of these risks and uncertainties are beyond the ability of the Company to control, nor can the Company predict, in many cases, all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. The forward-looking statements contained in this quarterly report speak only as of the date of this quarterly report, and the Company expressly disclaims any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.


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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


FIRSTCASH, INC.
FIRSTCASH HOLDINGS, INC.								FIRSTCASH HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS	CONSOLIDATED BALANCE SHEETS							CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)	(unaudited, in thousands)							(unaudited, in thousands)

		March 31,				December 31,			March 31,				December 31,
		2021		2020		2020			2022		2021		2021
ASSETS	ASSETS							ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	54,641	$	75,464	$	65,850	Cash and cash equivalents	$	113,317	$	54,641	$	120,046
Fees and service charges receivable		35,334		40,121		41,110
Accounts receivable, net								Accounts receivable, net	52,017		35,334		55,356
Pawn loans	Pawn loans	265,438		314,296		308,231		Pawn loans	344,101		265,438		347,973

Finance receivables, net								Finance receivables, net	140,481		—		181,021
Inventories	Inventories	185,336		227,876		190,352		Inventories	247,276		185,336		263,311
Income taxes receivable		8,236		4,279		9,634
Leased merchandise, net								Leased merchandise, net	119,147		—		143,944
Prepaid expenses and other current assets	Prepaid expenses and other current assets	8,629		10,736		9,388		Prepaid expenses and other current assets	22,592		16,865		17,707

Total current assets	Total current assets	557,614		672,772		624,565		Total current assets	1,038,931		557,614		1,129,358

Property and equipment, net	Property and equipment, net	384,617		329,066		373,667		Property and equipment, net	471,193		384,617		462,526
Operating lease right of use asset	Operating lease right of use asset	287,418		280,840		298,957		Operating lease right of use asset	303,444		287,418		306,061
Goodwill	Goodwill	974,051		927,290		977,381		Goodwill	1,541,424		974,051		1,536,178
Intangible assets, net	Intangible assets, net	83,229		84,999		83,651		Intangible assets, net	373,928		83,229		388,184
Other assets	Other assets	9,365		9,188		9,818		Other assets	8,318		9,365		8,531
Deferred tax assets		3,869		8,718		4,158
Deferred tax assets, net								Deferred tax assets, net	5,930		3,869		5,614
Total assets	Total assets	$	2,300,163	$	2,312,873	$	2,372,197	Total assets	$	3,743,168	$	2,300,163	$	3,836,452

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	79,575	$	74,805	$	81,917	Accounts payable and accrued liabilities	$	237,164	$	86,714	$	244,327
Customer deposits		38,727		39,728		34,719
Income taxes payable		7,139		9,832		1,148
Customer deposits and prepayments								Customer deposits and prepayments	57,874		38,727		57,310
Lease liability, current	Lease liability, current	86,529		82,355		88,622		Lease liability, current	92,091		86,529		90,570
Total current liabilities	Total current liabilities	211,970		206,720		206,406		Total current liabilities	387,129		211,970		392,207

Revolving unsecured credit facilities	Revolving unsecured credit facilities	44,000		355,519		123,000		Revolving unsecured credit facilities	218,000		44,000		259,000

Senior unsecured notes	Senior unsecured notes	493,108		296,744		492,916		Senior unsecured notes	1,034,355		493,108		1,033,904
Deferred tax liabilities		73,020		64,728		71,173
Deferred tax liabilities, net								Deferred tax liabilities, net	126,741		73,020		126,098
Lease liability, non-current	Lease liability, non-current	186,972		181,787		194,887		Lease liability, non-current	198,760		186,972		203,166

Other liabilities								Other liabilities	13,950		—		13,950
Total liabilities	Total liabilities	1,009,070		1,105,498		1,088,382		Total liabilities	1,978,935		1,009,070		2,028,325

Stockholders’ equity:	Stockholders’ equity:							Stockholders’ equity:

Common stock	Common stock	493		493		493		Common stock	573		493		573
Additional paid-in capital	Additional paid-in capital	1,218,323		1,224,113		1,221,788		Additional paid-in capital	1,726,750		1,218,323		1,724,956
Retained earnings	Retained earnings	811,921		749,126		789,303		Retained earnings	880,138		811,921		866,679
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(130,767)		(180,472)		(118,432)		Accumulated other comprehensive loss	(119,510)		(130,767)		(131,299)
Common stock held in treasury, at cost	Common stock held in treasury, at cost	(608,877)		(585,885)		(609,337)		Common stock held in treasury, at cost	(723,718)		(608,877)		(652,782)
Total stockholders’ equity	Total stockholders’ equity	1,291,093		1,207,375		1,283,815		Total stockholders’ equity	1,764,233		1,291,093		1,808,127
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	2,300,163	$	2,312,873	$	2,372,197	Total liabilities and stockholders’ equity	$	3,743,168	$	2,300,163	$	3,836,452

The accompanying notes are an integral part of these consolidated financial statements.	The accompanying notes are an integral part of these consolidated financial statements.							The accompanying notes are an integral part of these consolidated financial statements.


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FIRSTCASH, INC.
FIRSTCASH HOLDINGS, INC.								FIRSTCASH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME	CONSOLIDATED STATEMENTS OF INCOME					CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share amounts)	(unaudited, in thousands, except per share amounts)					(unaudited, in thousands, except per share amounts)

		Three Months Ended					Three Months Ended
		March 31,					March 31,
		2021		2020					2022		2021
Revenue:	Revenue:							Revenue:
Retail merchandise sales	Retail merchandise sales	$	272,042	$	296,629			Retail merchandise sales	$	302,819	$	272,042
Pawn loan fees	Pawn loan fees	115,522		142,115				Pawn loan fees	131,819		115,522
Leased merchandise income								Leased merchandise income	149,947		—
Interest and fees on finance receivables								Interest and fees on finance receivables	42,449		—
Wholesale scrap jewelry sales	Wholesale scrap jewelry sales	20,375		26,371				Wholesale scrap jewelry sales	32,805		20,375
Consumer loan and credit services fees		0		1,375
Total revenue	Total revenue	407,939		466,490				Total revenue	659,839		407,939

Cost of revenue:	Cost of revenue:							Cost of revenue:
Cost of retail merchandise sold	Cost of retail merchandise sold	157,153		184,695				Cost of retail merchandise sold	182,214		157,153
Depreciation of leased merchandise								Depreciation of leased merchandise	93,706		—
Provision for lease losses								Provision for lease losses	39,820		—
Provision for loan losses								Provision for loan losses	24,697		—
Cost of wholesale scrap jewelry sold	Cost of wholesale scrap jewelry sold	17,197		22,847				Cost of wholesale scrap jewelry sold	28,215		17,197
Consumer loan and credit services loss provision		0		(361)
Total cost of revenue	Total cost of revenue	174,350		207,181				Total cost of revenue	368,652		174,350

Net revenue	Net revenue	233,589		259,309				Net revenue	291,187		233,589

Expenses and other income:	Expenses and other income:							Expenses and other income:
Store operating expenses		137,324		153,500
Operating expenses								Operating expenses	173,296		137,324
Administrative expenses	Administrative expenses	30,999		32,902				Administrative expenses	36,863		30,999
Depreciation and amortization	Depreciation and amortization	10,612		10,674				Depreciation and amortization	25,542		10,612
Interest expense	Interest expense	7,230		8,418				Interest expense	16,221		7,230
Interest income	Interest income	(158)		(185)				Interest income	(676)		(158)
(Gain) loss on foreign exchange								(Gain) loss on foreign exchange	(480)		267
Merger and acquisition expenses	Merger and acquisition expenses	166		68				Merger and acquisition expenses	665		166
Loss on foreign exchange		267		2,685
Loss on revaluation of contingent acquisition consideration								Loss on revaluation of contingent acquisition consideration	2,570		—
Impairments and dispositions of certain other assets								Impairments and dispositions of certain other assets	177		878

Write-off of certain Cash America merger related lease intangibles		878		3,630
Impairment of certain other assets		0		1,900

Total expenses and other income	Total expenses and other income	187,318		213,592				Total expenses and other income	254,178		187,318

Income before income taxes	Income before income taxes	46,271		45,717				Income before income taxes	37,009		46,271

Provision for income taxes	Provision for income taxes	12,556		12,799				Provision for income taxes	9,004		12,556

Net income	Net income	$	33,715	$	32,918			Net income	$	28,005	$	33,715

Earnings per share:	Earnings per share:							Earnings per share:
Basic	Basic	$	0.82	$	0.79			Basic	$	0.58	$	0.82
Diluted	Diluted	$	0.82	$	0.78			Diluted	$	0.58	$	0.82

The accompanying notes are an integral part of these consolidated financial statements.	The accompanying notes are an integral part of these consolidated financial statements.					The accompanying notes are an integral part of these consolidated financial statements.


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FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FIRSTCASH HOLDINGS, INC.								FIRSTCASH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME								CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in thousands)	(unaudited, in thousands)					(unaudited, in thousands)

		Three Months Ended					Three Months Ended
		March 31,					March 31,
		2021		2020					2022		2021
Net income	Net income	$	33,715	$	32,918			Net income	$	28,005	$	33,715
Other comprehensive income (loss):
Other comprehensive income:								Other comprehensive income:
Currency translation adjustment	Currency translation adjustment	(12,335)		(83,503)				Currency translation adjustment	11,789		(12,335)
Comprehensive income (loss)		$	21,380	$	(50,585)
Comprehensive income								Comprehensive income	$	39,794	$	21,380

The accompanying notes are an integral part of these consolidated financial statements.	The accompanying notes are an integral part of these consolidated financial statements.					The accompanying notes are an integral part of these consolidated financial statements.


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FIRSTCASH, INC.
FIRSTCASH HOLDINGS, INC.																		FIRSTCASH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY	CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY												CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited, in thousands, except per share amounts)	(unaudited, in thousands, except per share amounts)												(unaudited, in thousands, except per share amounts)

Three Months Ended March 31, 2021
Three Months Ended March 31, 2022																		Three Months Ended March 31, 2022
		Common Stock		Additional Paid-In Capital		Retained Earnings		Accum- ulated Other Compre- hensive Loss		Common Stock Held in Treasury				Total Stock- holders’ Equity					Common Stock	Additional Paid-In Capital	Retained Earnings		Accum- ulated Other Compre- hensive Loss		Common Stock Held in Treasury				Total Stock- holders’ Equity
			Shares	Amount								Shares		Amount						Shares	Amount								Shares	Amount
As of 12/31/2020			49,276	$	493	$	1,221,788	$	789,303	$	(118,432)	8,238		$	(609,337)	$	1,283,815
Shares issued under share-based compensation plan, net of 28 shares net-settled			—	—		(7,090)		—		—		(73)		5,427		(1,663)
As of 12/31/2021																		As of 12/31/2021		57,322	$	573	$	1,724,956	$	866,679	$	(131,299)	8,843	$	(652,782)	$	1,808,127
Shares issued under share-based compensation plan																		Shares issued under share-based compensation plan		—	—		(1,281)		—		—		(17)	1,281		—

Share-based compensation expense	Share-based compensation expense		—	—		3,625		—		—		—		—		3,625		Share-based compensation expense		—	—		3,075		—		—		—	—		3,075
Net income	Net income		—	—		—		33,715		—		—		—		33,715		Net income		—	—		—		28,005		—		—	—		28,005
Cash dividends ($0.27 per share)			—	—		—		(11,097)		—		—		—		(11,097)
Cash dividends ($0.30 per share)																		Cash dividends ($0.30 per share)		—	—		—		(14,546)		—		—	—		(14,546)
Currency translation adjustment	Currency translation adjustment		—	—		—		—		(12,335)		—		—		(12,335)		Currency translation adjustment		—	—		—		—		11,789		—	—		11,789
Purchases of treasury stock	Purchases of treasury stock		—	—		—		—		—		84		(4,967)		(4,967)		Purchases of treasury stock		—	—		—		—		—		1,048	(72,217)		(72,217)

As of 3/31/2021			49,276	$	493	$	1,218,323	$	811,921	$	(130,767)	8,249		$	(608,877)	$	1,291,093
As of 3/31/2022																		As of 3/31/2022		57,322	$	573	$	1,726,750	$	880,138	$	(119,510)	9,874	$	(723,718)	$	1,764,233

The accompanying notes are an integral part of these consolidated financial statements.	The accompanying notes are an integral part of these consolidated financial statements.												The accompanying notes are an integral part of these consolidated financial statements.


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FIRSTCASH, INC.
FIRSTCASH HOLDINGS, INC.																		FIRSTCASH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY	CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY												CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
CONTINUED	CONTINUED												CONTINUED
(unaudited, in thousands, except per share amounts)	(unaudited, in thousands, except per share amounts)												(unaudited, in thousands, except per share amounts)

Three Months Ended March 31, 2020
Three Months Ended March 31, 2021																		Three Months Ended March 31, 2021
		Common Stock		Additional Paid-In Capital		Retained Earnings		Accum- ulated Other Compre- hensive Loss		Common Stock Held in Treasury				Total Stock- holders’ Equity					Common Stock	Additional Paid-In Capital	Retained Earnings		Accum- ulated Other Compre- hensive Loss		Common Stock Held in Treasury				Total Stock- holders’ Equity
			Shares	Amount								Shares		Amount						Shares	Amount								Shares	Amount
As of 12/31/2019			49,276	$	493	$	1,231,528	$	727,476	$	(96,969)	6,947		$	(512,493)	$	1,350,035
Shares issued under share-based compensation plan, net of 46 shares net-settled			—	—		(10,266)		—		—		(93)		6,939		(3,327)
As of 12/31/2020																		As of 12/31/2020		49,276	$	493	$	1,221,788	$	789,303	$	(118,432)	8,238	$	(609,337)	$	1,283,815
Shares issued under share-based compensation plan, net of 28 shares net-settled																		Shares issued under share-based compensation plan, net of 28 shares net-settled		—	—		(7,090)		—		—		(73)	5,427		(1,663)

Share-based compensation expense	Share-based compensation expense		—	—		2,851		—		—		—		—		2,851		Share-based compensation expense		—	—		3,625		—		—		—	—		3,625
Net income	Net income		—	—		—		32,918		—		—		—		32,918		Net income		—	—		—		33,715		—		—	—		33,715
Cash dividends ($0.27 per share)	Cash dividends ($0.27 per share)		—	—		—		(11,268)		—		—		—		(11,268)		Cash dividends ($0.27 per share)		—	—		—		(11,097)		—		—	—		(11,097)
Currency translation adjustment	Currency translation adjustment		—	—		—		—		(83,503)		—		—		(83,503)		Currency translation adjustment		—	—		—		—		(12,335)		—	—		(12,335)
Purchases of treasury stock	Purchases of treasury stock		—	—		—		—		—		981		(80,331)		(80,331)		Purchases of treasury stock		—	—		—		—		—		84	(4,967)		(4,967)

As of 3/31/2020			49,276	$	493	$	1,224,113	$	749,126	$	(180,472)	7,835		$	(585,885)	$	1,207,375
As of 3/31/2021																		As of 3/31/2021		49,276	$	493	$	1,218,323	$	811,921	$	(130,767)	8,249	$	(608,877)	$	1,291,093

The accompanying notes are an integral part of these consolidated financial statements.	The accompanying notes are an integral part of these consolidated financial statements.												The accompanying notes are an integral part of these consolidated financial statements.


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FIRSTCASH, INC.
FIRSTCASH HOLDINGS, INC.						FIRSTCASH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS	CONSOLIDATED STATEMENTS OF CASH FLOWS					CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)	(unaudited, in thousands)					(unaudited, in thousands)
		Three Months Ended					Three Months Ended
		March 31,					March 31,
		2021		2020			2022		2021
Cash flow from operating activities:	Cash flow from operating activities:					Cash flow from operating activities:
Net income	Net income	$	33,715	$	32,918	Net income	$	28,005	$	33,715
Adjustments to reconcile net income to net cash flow provided by operating activities:	Adjustments to reconcile net income to net cash flow provided by operating activities:					Adjustments to reconcile net income to net cash flow provided by operating activities:
Non-cash portion of consumer loan credit loss provision		0		(729)
Depreciation of leased merchandise						Depreciation of leased merchandise	93,706		—
Provision for lease losses						Provision for lease losses	39,820		—
Provision for loan losses						Provision for loan losses	24,697		—
Share-based compensation expense	Share-based compensation expense	3,625		2,851		Share-based compensation expense	3,075		3,625
Depreciation and amortization expense	Depreciation and amortization expense	10,612		10,674		Depreciation and amortization expense	25,542		10,612
Amortization of debt issuance costs	Amortization of debt issuance costs	395		387		Amortization of debt issuance costs	732		395

Write-off of certain Cash America merger related lease intangibles		878		3,630
Impairment of certain other assets		0		1,900
Net amortization of premiums, discounts and unearned origination fees on finance receivables						Net amortization of premiums, discounts and unearned origination fees on finance receivables	15,782		—
Loss on revaluation of contingent acquisition consideration						Loss on revaluation of contingent acquisition consideration	2,570		—
Impairments and dispositions of certain other assets						Impairments and dispositions of certain other assets	177		878

Deferred income taxes, net	Deferred income taxes, net	2,010		4,239		Deferred income taxes, net	493		2,010
Changes in operating assets and liabilities, net of business combinations:	Changes in operating assets and liabilities, net of business combinations:					Changes in operating assets and liabilities, net of business combinations:
Fees and service charges receivable		5,394		3,673
Accounts receivable, net						Accounts receivable, net	3,746		5,394
Inventories purchased directly from customers, wholesalers or manufacturers	Inventories purchased directly from customers, wholesalers or manufacturers	1,442		6,951		Inventories purchased directly from customers, wholesalers or manufacturers	7,075		1,442
Leased merchandise, net						Leased merchandise, net	(108,729)		—
Prepaid expenses and other assets	Prepaid expenses and other assets	868		355		Prepaid expenses and other assets	(1,165)		868
Accounts payable, accrued liabilities and other liabilities	Accounts payable, accrued liabilities and other liabilities	3,122		9,755		Accounts payable, accrued liabilities and other liabilities	(14,707)		3,122
Income taxes	Income taxes	7,113		781		Income taxes	(674)		7,113
Net cash flow provided by operating activities	Net cash flow provided by operating activities	69,174		77,385		Net cash flow provided by operating activities	120,145		69,174
Cash flow from investing activities:	Cash flow from investing activities:					Cash flow from investing activities:
Loan receivables, net (1)		42,394		52,279
Pawn loans, net (1)						Pawn loans, net (1)	17,383		42,394
Finance receivables, net						Finance receivables, net	61		—
Purchases of furniture, fixtures, equipment and improvements	Purchases of furniture, fixtures, equipment and improvements	(9,491)		(10,581)		Purchases of furniture, fixtures, equipment and improvements	(7,028)		(9,491)
Purchases of store real property	Purchases of store real property	(14,441)		(9,617)		Purchases of store real property	(10,233)		(14,441)

Acquisitions of pawn stores, net of cash acquired	Acquisitions of pawn stores, net of cash acquired	(1,204)		(5,477)		Acquisitions of pawn stores, net of cash acquired	—		(1,204)

Net cash flow provided by investing activities	Net cash flow provided by investing activities	17,258		26,604		Net cash flow provided by investing activities	183		17,258
Cash flow from financing activities:	Cash flow from financing activities:					Cash flow from financing activities:
Borrowings from unsecured credit facilities	Borrowings from unsecured credit facilities	45,000		106,925		Borrowings from unsecured credit facilities	39,000		45,000
Repayments of unsecured credit facilities	Repayments of unsecured credit facilities	(124,000)		(88,000)		Repayments of unsecured credit facilities	(80,000)		(124,000)

Debt issuance costs paid	Debt issuance costs paid	0		(130)		Debt issuance costs paid	(132)		—
Purchases of treasury stock	Purchases of treasury stock	(4,967)		(80,331)		Purchases of treasury stock	(72,217)		(4,967)

Payment of withholding taxes on net share settlements of restricted stock unit awards		(1,663)		0
Payment of withholding taxes on net share settlements of restricted stock unit awards and stock options exercised						Payment of withholding taxes on net share settlements of restricted stock unit awards and stock options exercised	—		(1,663)
Dividends paid	Dividends paid	(11,097)		(11,268)		Dividends paid	(14,546)		(11,097)
Net cash flow used in financing activities	Net cash flow used in financing activities	(96,727)		(72,804)		Net cash flow used in financing activities	(127,895)		(96,727)
Effect of exchange rates on cash		(914)		(2,248)
Change in cash and cash equivalents		(11,209)		28,937
Cash and cash equivalents at beginning of the period		65,850		46,527
Cash and cash equivalents at end of the period		$	54,641	$	75,464


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FIRSTCASH HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
CONTINUED
(unaudited, in thousands)
	Three Months Ended
	March 31,
	2022		2021
Effect of exchange rates on cash	838		(914)
Change in cash and cash equivalents	(6,729)		(11,209)
Cash and cash equivalents at beginning of the period	120,046		65,850
Cash and cash equivalents at end of the period	$	113,317	$	54,641

(1)Includes the funding of new pawn loans net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral.

The accompanying notes are an integral part of these consolidated financial statements.


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FIRSTCASH HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 1 - General

Basis of Presentation

The accompanying consolidated balance sheet as of December 31, ~~2020,~~2021, which is derived from audited consolidated financial statements, and the unaudited consolidated financial statements, including the notes thereto, ~~include~~includes the accounts of FirstCash Holdings, Inc. and its wholly-owned subsidiaries (together, the “Company”). The Company regularly makes acquisitions, and the results of operations for the acquired stores have been consolidated since the acquisition dates. All significant intercompany accounts and transactions have been eliminated.

These unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include certain information and disclosures required for comprehensive financial statements. These interim period financial statements should be read in conjunction with the Company’s audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the Securities and Exchange Commission (the “SEC”) on February ~~1, 2021.~~28, 2022. The consolidated financial statements as of March 31, ~~2021~~2022 and ~~2020,~~2021, and for the three month periods ended March 31, ~~2021~~2022 and ~~2020,~~2021, are unaudited, but in management’s opinion include all adjustments (consisting of only normal recurring adjustments) considered necessary to present fairly the financial position, results of operations and cash flow for such interim periods. Operating results for the period ended March 31, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the full year.

On December 17, 2021, the Company completed the acquisition (the “AFF Acquisition”) of American First Finance (“AFF”), which is a leading technology-driven retail point-of-sale (“POS”) payment solutions platform primarily focused on providing lease-to-own (“LTO”) products.

The Company has operations in Latin America, where in Mexico, Guatemala and Colombia, the functional currency is the Mexican peso, Guatemalan quetzal and Colombian peso. Accordingly, the assets and liabilities of these subsidiaries are translated into U.S. dollars at the exchange rate in effect at each balance sheet date, and the resulting adjustments are accumulated in other comprehensive income (loss) as a separate component of stockholders’ equity. Revenues and expenses are translated at the average exchange rates occurring during the respective period. The Company also has operations in El Salvador where the reporting and functional currency is the U.S. dollar.

~~Continuing Impact of COVID-19~~

The onset of COVID-19 in March 2020 in the U.S. and shortly thereafter in Latin America significantly impacted the Company’s operations and earnings results. Most countries, states and other local government officials reacted by instituting quarantines, shelter-in-place and other orders mandating non-essential business closures, travel restrictions and other measures in an effort to reduce the spread of COVID-19. The measures significantly reduced normal levels of consumer spending, and combined with broad-based stimulus programs and enhanced unemployment benefits in the U.S., provided significant and unprecedented liquidity to many of the Company’s customers, which greatly suppressed normal demand for pawn loans which, in turn, reduced volumes of inventory acquired from forfeited pawn loans.

The extent to which COVID-19 continues to impact the Company’s operations, results of operations, liquidity and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the unknown duration and severity of the COVID-19 pandemic, which may be impacted by variants of the COVID-19 virus and the timing, availability and efficacy of the COVID-19 vaccines in the jurisdictions in which the Company operates, and the actions taken to contain the impact of COVID-19, as well as further actions taken to limit the resulting economic impact. In particular, government stimulus and other transfer programs have and may continue to have a material adverse impact on demand for pawn loans in future periods.

Use of Estimates

The preparation of interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and related revenue and expenses, and the disclosure of gain and loss contingencies at the date of the financial statements. Such estimates and assumptions are subject to a number of risks and uncertainties, which may cause actual results to differ materially from the Company’s estimates. The extent to which COVID-19 impacts the Company’s operations, results of operations, liquidity and financial condition, including estimates and assumptions used by the Company in the calculation and evaluation of the accrual for earned but uncollected pawn loan fees, impairment of goodwill and other intangible assets and current and deferred tax assets and liabilities, will depend on future


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developments, which are highly uncertain and cannot be predicted with confidence, including the unknown duration and severity of the COVID-19 pandemic and the actions taken to contain its impact, as well as actions taken to limit the resulting economic impact, among others. The Company’s future assessment of the magnitude and duration of the COVID-19 pandemic, as well as other factors, could result in material impacts to the Company’s financial statements in future reporting periods.

Reclassification

Certain amounts in the consolidated ~~financial statements~~balance sheets as of March 31, 2021 and December 31, 2021 and the consolidated statements of income and consolidated statements of cash flows for the three months ended March 31, ~~2020~~2021 have been reclassified in order to conform to the ~~2021~~2022 presentation.

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board issued ASU No 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 removes certain exceptions to the general principles in Topic 740 in Generally Accepted Accounting Principles. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, with early adoption permitted. The adoption of ASU 2019-12 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In March 2020, the Financial Accounting Standards Board issued ASU No 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other ~~interbank offered~~interbank-offered rates to alternative reference rates. ASU 2020-04 iswas effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company does not expect ASU 2020-04 to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.


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In March 2022, the Financial Accounting Standards Board issued ASU No 2022-02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”). ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings by creditors while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors made to borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for entities. Early adoption is permitted if an entity has adopted the CECL accounting standard. Except for expanded disclosures to its vintage disclosures, the Company does not expect ASU 2022-02 to have a material effect on the Company’s current financial position, results of operations or financial statements.

Note 2 - Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):

Three Months Ended
March 31,
2021 2020
Numerator:
Net income $ 33,715 $ 32,918
Denominator:
Weighted-average common shares for calculating basic earnings per share 41,034 41,912
Effect of dilutive securities:
Stock options and restricted stock unit awards 22 95
Weighted-average common shares for calculating diluted earnings per share 41,056 42,007
Earnings per share:
Basic $ 0.82 $ 0.79
Diluted $ 0.82 $ 0.78


	Three Months Ended
	March 31,
	2022		2021
Numerator:
Net income	$	28,005	$	33,715



Denominator:
Weighted-average common shares for calculating basic earnings per share	48,241		41,034
Effect of dilutive securities:
Stock options and restricted stock unit awards	59		22
Weighted-average common shares for calculating diluted earnings per share	48,300		41,056

Earnings per share:
Basic	$	0.58	$	0.82
Diluted	$	0.58	$	0.82


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Note 3 - Operating Leases

Lessor

For information about the Company’s revenue-generating activities as a lessor, refer to Note 2 to the consolidated financial statements included in the Company’s 2021 Annual Report on Form 10-K. All of the Company’s lease agreements are considered operating leases.

Lessee

The Company leases the majority of its pawnshop locations and certain administrative offices under operating leases and determines if an arrangement is or contains a lease at inception. Many leases include both lease and non-lease components, for which the Company accounts ~~for~~ separately. Lease components include rent, taxes and insurance costs while non-lease components include common area or other maintenance costs. Operating leases are included in operating lease right of use assets, lease liability, current and lease liability, non-current in the consolidated balance sheets. The Company does not have any finance leases.

Leased facilities are generally leased for a term of three to five years with one or more options to renew for an additional three to five years, typically at the Company’s sole discretion. In addition, the majority of these leases can be terminated early upon an adverse change in law which negatively affects the store’s profitability. The Company regularly evaluates renewal and termination options to determine if the Company is reasonably certain to exercise the option, and excludes these options from the lease term included in the recognition of the operating lease right of use asset and lease liability until such certainty exists. The weighted-average remaining lease term for operating leases ~~as of March 31, 2021 and 2020~~ was 4.1 years for both March 31, 2022 and ~~3.9 years, respectively.~~2021.


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The operating lease right of use asset and lease liability is recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The Company’s leases do not provide an implicit rate and therefore, it uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The Company utilizes a portfolio approach for determining the incremental borrowing rate to apply to groups of leases with similar characteristics. The weighted-average discount rate used to measure the lease liability as of March 31, 2022 and 2021 was 6.1% and ~~2020 was~~ 6.7% ~~and 7.8%~~, respectively.

The Company has certain operating leases in Mexico which are denominated in U.S. dollars. The liability related to these leases is considered a monetary liability and requires remeasurement each reporting period into the functional currency (Mexican pesos) using reporting date exchange rates. The remeasurement results in the recognition of foreign currency exchange gains or losses each reporting period, which can produce a certain level of earnings volatility. The Company recognized a foreign currency gain of $0.7 million and a loss of $0.6 ~~million and $4.4~~ million during the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively, related to the remeasurement of these U.S. dollar denominated operating leases, which is included in (gain) loss on foreign exchange in the accompanying consolidated statements of income.

Lease expense is recognized on a straight-line basis over the lease term, with variable lease expense recognized in the period such payments are incurred. The following table details the components of lease expense included in ~~store~~ operating expenses in the consolidated statements of income during the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 (in thousands):

Three Months Ended
March 31,
2021 2020
Operating lease expense $ 31,065 $ 31,210
Variable lease expense (1)
3,834 3,545
Total operating lease expense $ 34,899 $ 34,755


	Three Months Ended
	March 31,
	2022		2021
Operating lease expense	$	31,528	$	31,065
Variable lease expense (1)	4,174		3,834
Total operating lease expense	$	35,702	$	34,899

(1)Variable lease costs consist primarily of taxes, insurance and common area or other maintenance costs paid based on actual costs incurred by the lessor and can therefore vary over the lease term.

The following table details the maturity of lease liabilities for all operating leases as of March 31, ~~2021~~2022 (in thousands):

Nine months ending December 31, 2021 $ 78,410
2022 84,948
2023 64,926
2024 42,188
2025 18,221
Thereafter 23,966
Total $ 312,659
Less amount of lease payments representing interest (39,158)
Total present value of lease payments $ 273,501


Nine months ending December 31, 2022	$	81,751
2023	91,376
2024	67,484
2025	41,008
2026	21,792
Thereafter	25,194
Total	$	328,605
Less amount of lease payments representing interest	(37,754)
Total present value of lease payments	$	290,851


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The following table details supplemental cash flow information related to operating leases for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 (in thousands):

Three Months Ended
March 31,
2021 2020
Cash paid for amounts included in the measurement of operating lease liabilities $ 28,186 $ 28,835
Leased assets obtained in exchange for new operating lease liabilities $ 16,778 $ 24,983


	Three Months Ended
	March 31,
	2022		2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	29,132	$	28,186
Leased assets obtained in exchange for new operating lease liabilities	$	18,946	$	16,778

~~Note 4 - Long-Term Debt~~

~~The following table details the Company’s long-term debt at the respective principal amounts, net of unamortized debt issuance costs on the senior unsecured notes (in thousands):~~

As of March 31, As of December 31,
2021 2020 2020
Revolving unsecured uncommitted credit facility, maturing 2023 (1)
$ 0 $ 25,519 $ 0
Revolving unsecured credit facility, maturing 2024 (1)
44,000 330,000 123,000
5.375% senior unsecured notes due 2024 (2)
0 296,744 0
4.625% senior unsecured notes due 2028 (3)
493,108 0 492,916
Total long-term debt $ 537,108 $ 652,263 $ 615,916

~~(1)Debt issuance costs related to the Company’s revolving unsecured credit facilities are included in other assets in the accompanying consolidated balance sheets.~~

~~(2)~~As of March 31, 2020, deferred debt issuance costs of $3.3 million are included as a direct deduction from the carrying amount of the senior unsecured notes due 2024 in the accompanying consolidated balance sheets.

~~(3)~~As of March 31, 2021 and December 31, 2020, deferred debt issuance costs of $6.9 million and $7.1 million, respectively, are included as a direct deduction from the carrying amount of the senior unsecured notes due 2028 in the accompanying consolidated balance sheets.

~~Revolving Unsecured Credit Facility~~

As of March 31, 2021, the Company maintained an unsecured line of credit with a group of U.S. based commercial lenders (the “Credit Facility”) in the amount of $500.0 million. The Credit Facility matures on December 19, 2024. As of March 31, 2021, the Company had $44.0 million in outstanding borrowings and $3.4 million in outstanding letters of credit under the Credit Facility, leaving $452.6 million available for future borrowings, subject to certain financial covenants. The Credit Facility is unsecured and bears interest, at the Company’s option, of either (1) the prevailing LIBOR (with interest periods of 1 week or 1, 2, 3 or 6 months at the Company’s option) plus a fixed spread of 2.5% or (2) the prevailing prime or base rate plus a fixed spread of 1.5%. The agreement has a LIBOR floor of 0%. Additionally, the Company is required to pay an annual commitment fee of 0.325% on the average daily unused portion of the Credit Facility commitment. The weighted-average interest rate on amounts outstanding under the Credit Facility at March 31, 2021 was 2.82% based on 1 week LIBOR. Under the terms of the Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Credit Facility also contains customary restrictions on the Company’s ability to incur additional debt, grant liens, make investments, consummate acquisitions and similar negative covenants with customary carve-outs and baskets. The Company was in compliance with the covenants of the Credit Facility as of March 31, 2021. During the three months ended March 31, 2021, the Company made net payments of $79.0 million pursuant to the Credit Facility.

~~Revolving Unsecured Uncommitted Credit Facility~~

As of March 31, 2021, the Company’s primary subsidiary in Mexico, First Cash S.A. de C.V., maintained an unsecured and uncommitted line of credit guaranteed by FirstCash, Inc. with a bank in Mexico (the “Mexico Credit Facility”) in the amount of $600.0 million Mexican pesos. The Mexico Credit Facility bears interest at the Mexican Central Bank’s interbank equilibrium rate (“TIIE”) plus a fixed spread of 2.5% and matures on March 9, 2023. Under the terms of the Mexico Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Company was in compliance with the covenants of the Mexico Credit Facility as of March 31, 2021. At March 31, 2021, the Company had 0 amount outstanding under the Mexico Credit Facility and $600.0 million Mexican pesos available for borrowings.


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~~Senior Unsecured Notes Due 2028~~

On August 26, 2020, the Company issued $500.0 million of 4.625% senior unsecured notes due on September 1, 2028 (the “Notes”), all of which are currently outstanding. Interest on the Notes is payable semi-annually in arrears on March 1 and September 1. The Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by all of the Company's existing and future domestic subsidiaries that guarantee its Credit Facility. The Notes will permit the Company to make restricted payments, such as purchasing shares of its stock and paying cash dividends, in an unlimited amount if, after giving pro forma effect to the incurrence of any indebtedness to make such payment, the Company's consolidated total debt ratio (“Net Debt Ratio”) is less than 2.75 to 1. The Net Debt Ratio is defined generally in the indenture governing the Notes as the ratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelve months EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement period.

The Company utilized the net proceeds from the offering of the Notes to redeem all of the $300.0 million aggregate principal amount of the Company’s 5.375% senior notes due 2024 and to repay a portion of the Company’s Credit Facility.

Note 54 - Fair Value of Financial Instruments

The fair value of financial instruments is determined by reference to various market data and other valuation techniques, as appropriate. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The three fair value levels are (from highest to lowest):

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Recurring Fair Value Measurements

AsThe Company’s financial assets and liabilities as of March 31, ~~2021, 2020~~2022 and December 31, ~~2020,~~2021 that are measured at fair value on a recurring basis are as follows (in thousands):


	Estimated Fair Value
	March 31,		Fair Value Measurements Using
	2022		Level 1		Level 2		Level 3
Financial liabilities:
Contingent AFF acquisition consideration (1)	$	112,119	$	—	$	—	$	112,119

(1)The current portion of $98.2 million is included in accounts payable and accrued liabilities, and the non-current portion of $14.0 million is included in other liabilities in the accompanying consolidated balance sheets.


	Estimated Fair Value
	December 31,		Fair Value Measurements Using
	2021		Level 1		Level 2		Level 3
Financial liabilities:
Contingent AFF acquisition consideration (1)	$	109,549	$	—	$	—	$	109,549

(1)The current portion of $95.6 million is included in accounts payable and accrued liabilities and the non-current portion of $14.0 million is included in other liabilities in the accompanying consolidated balance sheets.

The Company revalues the contingent AFF acquisition consideration to fair value at the end of each reporting period. The estimate of the fair value of contingent AFF acquisition consideration is determined by applying a Monte Carlo simulation, which includes inputs not observable in the market, such as the risk-free rate, risk-adjusted discount rate, the volatility of the underlying financial metrics and projected financial forecast of AFF over the earn-out period, and therefore represents a Level 3 measurement. Significant increases or decreases in these inputs could result in a significantly lower or higher fair value measurement of the contingent AFF acquisition consideration.

The changes in financial assets and liabilities that are measured and recorded at fair value on a recurring basis using Level 3 fair value measurements for the three months ended March 31, 2022 is as follows (in thousands):


	Contingent Consideration
Contingent AFF acquisition consideration as of December 31, 2021	$	109,549
Change in fair value (1)	2,570
Balance at March 31, 2022	$	112,119

(1) The Company recognized a $2.6 million loss during the three months ended March 31, 2022 as a result of the change in fair value of the contingent AFF acquisition consideration, which is included in loss on revaluation of contingent acquisition consideration in the accompanying consolidated statement of income.


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There were no transfers in or out of Level 1, 2 or 3 during the three months ended March 31, 2022, and the Company did not have any financial assets orand liabilities that are measured at fair value on a recurring ~~basis.~~basis as of March 31, 2021.

Fair Value Measurements on a Non-Recurring Basis

The Company measures non-financial assets and liabilities, such as property and equipment and intangible assets, at fair value on a non-recurring basis, or when events or circumstances indicate that the carrying amount of the assets may be impaired. During the three months ended March 31, 2020, the Company recorded a $1.9 million impairment related to a non-financial, non-operating asset that was included in other assets in the consolidated balance sheets.


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Financial Assets and Liabilities Not Measured at Fair Value, But for Which Fair Value is Disclosed

The Company’s financial assets and liabilities as of March 31, 2022, 2021 ~~2020~~ and December 31, ~~2020~~2021 that are not measured at fair value in the consolidated balance sheets are as follows (in thousands):

Carrying Value Estimated Fair Value
March 31, March 31, Fair Value Measurements Using
2021 2021 Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $ 54,641 $ 54,641 $ 54,641 $ 0 $ 0
Fees and service charges receivable 35,334 35,334 0 0 35,334
Pawn loans 265,438 265,438 0 0 265,438
$ 355,413 $ 355,413 $ 54,641 $ 0 $ 300,772
Financial liabilities:
Revolving unsecured credit facilities $ 44,000 $ 44,000 $ 0 $ 44,000 $ 0
Senior unsecured notes (outstanding principal) 500,000 506,000 0 506,000 0
$ 544,000 $ 550,000 $ 0 $ 550,000 $ 0


	Carrying Value		Estimated Fair Value
	March 31,		March 31,		Fair Value Measurements Using
	2022		2022		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	113,317	$	113,317	$	113,317	$	—	$	—
Accounts receivable, net	52,017		52,017		—		—		52,017
Pawn loans	344,101		344,101		—		—		344,101
Finance receivables, net	140,481		180,819		—		—		180,819
	$	649,916	$	690,254	$	113,317	$	—	$	576,937

Financial liabilities:
Revolving unsecured credit facilities	$	218,000	$	218,000	$	—	$	218,000	$	—
Senior unsecured notes (outstanding principal)	1,050,000		992,000		—		992,000		—
	$	1,268,000	$	1,210,000	$	—	$	1,210,000	$	—

Carrying Value Estimated Fair Value
March 31, March 31, Fair Value Measurements Using
2020 2020 Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $ 75,464 $ 75,464 $ 75,464 $ 0 $ 0
Fees and service charges receivable 40,121 40,121 0 0 40,121
Pawn loans 314,296 314,296 0 0 314,296
$ 429,881 $ 429,881 $ 75,464 $ 0 $ 354,417
Financial liabilities:
Revolving unsecured credit facilities $ 355,519 $ 355,519 $ 0 $ 355,519 $ 0
Senior unsecured notes (outstanding principal) 300,000 276,000 0 276,000 0
$ 655,519 $ 631,519 $ 0 $ 631,519 $ 0


		Carrying Value		Estimated Fair Value									Carrying Value		Estimated Fair Value
		December 31,		December 31,		Fair Value Measurements Using							March 31,		March 31,		Fair Value Measurements Using
		2020		2020		Level 1		Level 2		Level 3			2021		2021		Level 1		Level 2		Level 3
Financial assets:	Financial assets:											Financial assets:
Cash and cash equivalents	Cash and cash equivalents	$	65,850	$	65,850	$	65,850	$	0	$	0	Cash and cash equivalents	$	54,641	$	54,641	$	54,641	$	—	$	—
Fees and service charges receivable		41,110		41,110		0		0		41,110
Accounts receivable, net												Accounts receivable, net	35,334		35,334		—		—		35,334
Pawn loans	Pawn loans	308,231		308,231		0		0		308,231		Pawn loans	265,438		265,438		—		—		265,438

		$	415,191	$	415,191	$	65,850	$	0	$	349,341		$	355,413	$	355,413	$	54,641	$	—	$	300,772

Financial liabilities:	Financial liabilities:											Financial liabilities:
Revolving unsecured credit facilities	Revolving unsecured credit facilities	$	123,000	$	123,000	$	0	$	123,000	$	0	Revolving unsecured credit facilities	$	44,000	$	44,000	$	—	$	44,000	$	—
Senior unsecured notes (outstanding principal)	Senior unsecured notes (outstanding principal)	500,000		516,000		0		516,000		0		Senior unsecured notes (outstanding principal)	500,000		506,000		—		506,000		—
		$	623,000	$	639,000	$	0	$	639,000	$	0		$	544,000	$	550,000	$	—	$	550,000	$	—


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	Carrying Value		Estimated Fair Value
	December 31,		December 31,		Fair Value Measurements Using
	2021		2021		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	120,046	$	120,046	$	120,046	$	—	$	—
Accounts receivable, net	55,356		55,356		—		—		55,356
Pawn loans	347,973		347,973		—		—		347,973
Finance receivables, net	181,021		233,000		—		—		233,000
	$	704,396	$	756,375	$	120,046	$	—	$	636,329

Financial liabilities:
Revolving unsecured credit facilities	$	259,000	$	259,000	$	—	$	259,000	$	—
Senior unsecured notes (outstanding principal)	1,050,000		1,058,000		—		1,058,000		—
	$	1,309,000	$	1,317,000	$	—	$	1,317,000	$	—

As cash and cash equivalents have maturities of less than three months, the carrying value of cash and cash equivalents approximates fair value. Due to their short-term maturities, the carrying value of pawn loans and ~~fees and service charges~~accounts receivable, net approximate fair value.

Finance receivables are measured at amortized cost, net of an allowance for loan losses on the consolidated balance sheets. In estimating fair value for finance receivables, the Company utilized a discounted cash flow methodology. The Company used various unobservable inputs reflecting its own assumptions, such as contractual future principal and interest cash flows, future charge-off rates and discount rates (which consider current interest rates and are adjusted for credit risk, among other factors).

The carrying value of the unsecured credit facilities ~~approximate~~approximates fair value as of March 31, 2022, 2021 ~~2020~~ and December 31, ~~2020.~~2021. The fair value of the unsecured credit facilities is estimated based on market values for debt issuances with similar characteristics or rates currently available for debt with similar terms. In addition, the unsecured credit facilities have a variable interest rate based on a fixed spread over LIBOR or ~~TIIE~~the Mexican Central Bank’s interbank equilibrium rate (“TIIE”) and reprice with any changes in LIBOR or TIIE. The fair value of the senior unsecured notes is estimated based on quoted prices in markets that are not active.

Note 5 - Finance Receivables, Net

Finance receivables, net consist of the following (in thousands):


	As of March 31,				As of December 31,
	2022		2021		2021
Finance receivables, gross	$	191,845	$	—	$	220,329
Fair value premium on non-PCD finance receivables (1)	22,981		—		40,251
Non-credit discount on PCD finance receivables (2)	—		—		(3,521)
Merchant partner discounts and premiums, net	(430)		—		(104)
Unearned origination fees	(1,583)		—		(360)
Finance receivables, amortized cost	212,813		—		256,595
Less allowance for loan losses	(72,332)		—		(75,574)
Finance receivables, net	$	140,481	$	—	$	181,021

(1)Represents the difference between the initial fair value and the unpaid principal balance as of the date of the AFF Acquisition, which is recognized through interest income on an effective yield basis over the lives of the related non-purchased credit deteriorated (“PCD”) finance receivables.

(2)Represents the difference between the unpaid principal balance and the amortized cost basis as of the date of the AFF Acquisition, which is recognized through interest income on an effective yield basis over the lives of the related PCD finance receivables.


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Changes in the allowance for loan losses were as follows (in thousands):


	Three Months Ended
	March 31,
	2022		2021
Balance at beginning of period	$	75,574	$	—
Provision for loan losses	24,697		—

Charge-offs	(29,408)		—
Recoveries	1,469		—
Balance at end of period	$	72,332	$	—

The following is an assessment of the credit quality indicators of the amortized cost of finance receivables as of March 31, 2022, by origination year:


	2022		2021		2020		Total
FICO score category (1):
No FICO score identified or obtained	$	14,928	$	35,390	$	1,044	$	51,362
599 or less	19,589		43,693		5,389		68,671
Between 600 and 699	19,910		36,548		4,958		61,416
700 or greater	3,320		4,382		681		8,383
Finance receivables before fair value adjustments	$	57,747	$	120,013	$	12,072	189,832
Fair value premium on non-PCD finance receivables							22,981
Finance receivables, amortized cost							$	212,813

(1)FICO score as determined at the time of origination.

The following is an aging of the amortized cost of finance receivables as of March 31, 2022, by origination year:


	2022		2021		2020		Total
Delinquency:
1 to 30 days past due	$	3,083	$	11,180	$	1,132	$	15,395
31 to 60 days past due	1,048		6,917		556		8,521
61 to 90 days past due (1)	405		8,078		647		9,130
Total past due finance receivables before fair value adjustments	4,536		26,175		2,335		33,046
Current finance receivables before fair value adjustments	53,211		93,838		9,737		156,786
Finance receivables before fair value adjustments	$	57,747	$	120,013	$	12,072	189,832
Fair value premium on non-PCD finance receivables							22,981
Finance receivables, amortized cost							$	212,813

(1)The Company charges off finance receivables when a receivable is 90 days or more contractually past due.


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Note 6 - Leased Merchandise, Net

Leased merchandise, net consists of the following (in thousands):


	As of March 31,				As of December 31,
	2022		2021		2021
Leased merchandise (1)	$	193,023	$	—	$	156,280
Processing fees	(2,019)		—		(440)
Merchant partner discounts and premiums, net	1,192		—		310
Accumulated depreciation	(32,685)		—		(6,764)
Leased merchandise, before allowance for lease losses	159,511		—		149,386
Allowance for lease losses	(40,364)		—		(5,442)
Leased merchandise, net	$	119,147	$	—	$	143,944

(1)Acquired leased merchandise in the AFF Acquisition was recorded at fair value.

Changes in the allowance for lease losses were as follows (in thousands):


	Three Months Ended
	March 31,
	2022		2021
Balance at beginning of year	$	5,442	$	—
Provision for lease losses	39,820		—
Charge-offs	(6,020)		—
Recoveries	1,122		—
Balance at end of year	$	40,364	$	—


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Note 7 - Long-Term Debt

The following table details the Company’s long-term debt at the respective principal amounts, net of unamortized debt issuance costs on the senior unsecured notes (in thousands):


	As of March 31,				As of December 31,
	2022		2021		2021

Revolving unsecured credit facility, maturing 2024 (1)	$	218,000	$	44,000	$	259,000

Senior unsecured notes:
4.625% senior unsecured notes due 2028 (2)	492,739		493,108		492,499
5.625% senior unsecured notes due 2030 (3)	541,616		—		541,405
Total senior unsecured notes	1,034,355		493,108		1,033,904

Total long-term debt	$	1,252,355	$	537,108	$	1,292,904

(1)Debt issuance costs related to the Company’s revolving unsecured credit facilities are included in other assets in the accompanying consolidated balance sheets.

(2)As of March 31, 2022, 2021 and December 31, 2021, deferred debt issuance costs of $7.3 million, $6.9 million and $7.5 million, respectively, are included as a direct deduction from the carrying amount of the senior unsecured notes due 2028 in the accompanying consolidated balance sheets.

(3)As of March 31, 2022 and December 31, 2021, deferred debt issuance costs of $8.4 million and $8.6 million, respectively, are included as a direct deduction from the carrying amount of the senior unsecured notes due 2030 in the accompanying consolidated balance sheets.

Revolving Unsecured Credit Facility

As of March 31, 2022, the Company maintained an unsecured line of credit with a group of U.S.-based commercial lenders (the “Credit Facility”) in the amount of $500.0 million. The Credit Facility matures on December 19, 2024. As of March 31, 2022, the Company had $218.0 million in outstanding borrowings and $3.2 million in outstanding letters of credit under the Credit Facility, leaving $278.8 million available for future borrowings, subject to certain financial covenants. The Credit Facility is unsecured and bears interest, at the Company’s option, of either (1) the prevailing LIBOR (with interest periods of 1, 2, 3 or 6 months at the Company’s option) plus a fixed spread of 2.5% or (2) the prevailing prime or base rate plus a fixed spread of 1.5%. The agreement has a LIBOR floor of 0%. Additionally, the Company is required to pay an annual commitment fee of 0.325% on the average daily unused portion of the Credit Facility commitment. The weighted-average interest rate on amounts outstanding under the Credit Facility at March 31, 2022 was 2.82% based on 1-month LIBOR. Under the terms of the Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Credit Facility also contains customary restrictions on the Company’s ability to incur additional debt, grant liens, make investments, consummate acquisitions and similar negative covenants with customary carve-outs and baskets. The Company was in compliance with the covenants of the Credit Facility as of March 31, 2022. During the three months ended March 31, 2022, the Company made net payments of $41.0 million pursuant to the Credit Facility.

Revolving Unsecured Uncommitted Credit Facility

As of March 31, 2022, the Company’s primary subsidiary in Mexico, First Cash S.A. de C.V., maintained an unsecured and uncommitted line of credit guaranteed by FirstCash, Inc. with a bank in Mexico (the “Mexico Credit Facility”) in the amount of $600.0 million Mexican pesos. The Mexico Credit Facility bears interest at TIIE plus a fixed spread of 2.5% and matures on March 9, 2023. Under the terms of the Mexico Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Company was in compliance with the covenants of the Mexico Credit Facility as of March 31, 2022. At March 31, 2022, the Company had no amount outstanding under the Mexico Credit Facility and $600.0 million Mexican pesos available for borrowings.


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Senior Unsecured Notes Due 2028

On August 26, 2020, the Company issued $500.0 million of 4.625% senior unsecured notes due on September 1, 2028 (the “2028 Notes”), all of which are currently outstanding. Interest on the 2028 Notes is payable semi-annually in arrears on March 1 and September 1. The 2028 Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by all of the Company's existing and future domestic subsidiaries that guarantee its Credit Facility. The 2028 Notes will permit the Company to make restricted payments, such as purchasing shares of its stock and paying cash dividends, in an unlimited amount if, after giving pro forma effect to the incurrence of any indebtedness to make such payment, the Company's consolidated total debt ratio is less than 2.75 to 1. The consolidated total debt ratio is defined generally in the indenture governing the 2028 Notes as the ratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelve months EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement period. As of March 31, 2022, the Company’s consolidated total debt ratio was 2.72 to 1. While the 2028 Notes generally limit the Company’s ability to make restricted payments if the consolidated total debt ratio is greater than 2.75 to 1, restricted payments are allowable within certain permitted baskets, which currently provide the Company with continued flexibility to make restricted payments when the Company’s consolidated total debt ratio is greater than 2.75 to 1.

Senior Unsecured Notes Due 2030

On December 13, 2021, the Company issued $550.0 million of 5.625% senior unsecured notes due on January 1, 2030 (the “2030 Notes”), all of which are currently outstanding. Interest on the 2030 Notes is payable semi-annually in arrears on January 1 and July 1. The 2030 Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by all of the Company's existing and future domestic subsidiaries that guarantee its Credit Facility. The 2030 Notes will permit the Company to make restricted payments, such as purchasing shares of its stock and paying cash dividends, in an unlimited amount if, after giving pro forma effect to the incurrence of any indebtedness to make such payment, the Company's consolidated total debt ratio is less than 3.0 to 1. The consolidated total debt ratio is defined generally in the indenture governing the 2030 Notes as the ratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelve months EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement period. As of March 31, 2022, the Company’s consolidated total debt ratio was 2.72 to 1. While the 2030 Notes generally limit the Company’s ability to make restricted payments if the consolidated total debt ratio is greater than 3.0 to 1, restricted payments are allowable within certain permitted baskets, which currently provides the Company with continued flexibility to make restricted payments when the Company’s consolidated total debt ratio is greater than 3.0 to 1.

The Company utilized the net proceeds from the offering of the 2030 Notes to finance the cash consideration and transaction expenses for the AFF Acquisition, including the repayment, in full, of the outstanding debt under AFF’s credit facility at the closing of the AFF Acquisition, pay fees and expenses related to the note offering and reduce the outstanding balance on the Credit Facility.

Note 8 - Commitments and Contingencies

Litigation

The Company, in the ordinary course of business, is a defendant (actual or threatened) in certain lawsuits, arbitration proceedings and other general claims. Although no assurances can be given, in management’s opinion, any potential adverse result should not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

On January 14, 2022, plaintiff Genesee County Employees’ Retirement System filed a putative shareholder securities class action lawsuit (the “Litigation”) in the United States District Court for the Northern District of Texas against the Company and certain of its current officers styled Genesee County Employees’ Retirement System v. FirstCash Holdings, Inc., et al., Civil Action No. 4:22-CV-00033-P (N.D. Tex.). The complaint alleges that the defendants made materially false and/or misleading statements that caused losses to investors. The complaint further alleges that the defendants failed to disclose in public statements that the Company engaged in widespread and systemic violations of the Military Lending Act (“MLA”). The Litigation does not quantify any alleged damages, but, in addition to attorneys’ fees and costs, it seeks to recover damages on behalf of the plaintiff and other persons who purchased or otherwise acquired Company stock during the putative class period from February 1, 2018 through November 12, 2021 at allegedly inflated prices and purportedly suffered financial harm as a result. The Company disputes these allegations and intends to defend the Litigation vigorously. On April 4, 2022, following the appointment of a lead plaintiff, the Court entered an order setting certain case deadlines for the filing of an amended complaint and any responsive pleading thereto. At this stage, the Company is unable to determine whether a future loss will be incurred


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due to this Litigation, or estimate a range of loss, if any, and accordingly, no amounts have been accrued in the Company’s financial statements.

On November 12, 2021, the Consumer Financial Protection Bureau (“CFPB”) initiated a civil action in the United States District Court for the Northern District of Texas against FirstCash, Inc. and Cash America West, Inc., two of the Company’s subsidiaries, alleging violations of the MLA in connection with pawn transactions. The CFPB also alleges that these same alleged violations of the MLA also constitute breaches of a 2013 CFPB consent order entered into by its predecessor company that, among other things, allegedly required the company and its successors to cease and desist from further MLA violations. The CFPB is seeking an injunction, redress for affected borrowers and a civil monetary penalty. While the Company intends to vigorously defend itself against the allegations in the case, the Company cannot predict or determine the timing or final outcome of this matter or the effect that any adverse determinations the lawsuit may have on the Company.

On November 7, 2018, plaintiffs Maria Andrade and Shaun Caulkins filed a complaint (the “Andrade Complaint”) in the United States District Court for the Northern District of California against AFF. In the Andrade Complaint, the plaintiffs allege that AFF partnered with California merchants to deceive California customers into taking out usurious loans made from AFF, an unlicensed lender. Based on these allegations, the plaintiffs assert claims on behalf of themselves and a class of all California residents who purchased consumer goods or services from AFF’s partner retail businesses. Plaintiffs seek, among other things, class certification, a declaration that AFF’s security agreements are void and uncollectible, restitution of all amounts collected from class members, actual damages, statutory damages, and attorneys’ fees. Plaintiff Caulkins’ claims were dismissed in October 2020 and co-defendants were dismissed from the complaint in August 2021. The class certification motion hearing is set for August 15, 2022. At this time, the Company cannot predict or determine the timing or final outcome of the Andrade Complaint or the effect that any adverse determinations the lawsuit may have on the Company.

On October 20, 2021, plaintiff Larry Facio filed a complaint (the “Facio Complaint”) in the United States District Court for the Northern District of California against AFF. In the Facio Complaint, the plaintiff alleges that AFF partnered with California merchants to deceive California customers into taking out usurious loans made from AFF, an unlicensed lender. Plaintiff seeks, among other things, class certification, a declaration that AFF’s security agreements are subject to the California Finance Lenders Law and that no person has a right to collect or receive principal or payments, restitution for all amounts collected from class members, actual damages, statutory damages and attorneys’ fees. The case has been stayed pending resolution of the Andrade Complaint and pending the court’s ruling on AFF’s motion to compel arbitration. Accordingly, the Company cannot predict or determine the timing or final outcome of the Facio Complaint or the effect that any adverse determinations the lawsuit may have on the Company.

Note 69 - Segment Information

The Company organizes its operations into 23 reportable segments as follows:

•U.S. ~~operations~~pawn

•Latin America ~~operations - includes operations in Mexico, Guatemala, Colombia and El Salvador~~pawn

•Retail POS payment solutions (AFF)

Corporate expenses and income, which include administrative expenses, corporate depreciation and amortization, interest expense, interest income, (gain) loss on foreign exchange, merger and acquisition expenses, loss on ~~foreign exchange, write-offs~~revaluation of ~~certain lease intangibles~~contingent acquisition consideration, and ~~impairments~~impairment and dispositions of certain other assets, are ~~incurred or earned in both the U.S. and Latin America, but~~ presented on a consolidated basis and are not allocated between the U.S. ~~operations~~pawn segment, ~~and~~ Latin America ~~operations~~pawn segment or retail POS payment solutions segment.

~~The following tables present reportable segment information for the three month period ended March 31, 2021 and 2020 (in thousands):~~

Three Months Ended March 31, 2021
U.S.
Operations Latin America
Operations Corporate Consolidated
Revenue:
Retail merchandise sales $ 189,957 $ 82,085 $ 0 $ 272,042
Pawn loan fees 76,397 39,125 0 115,522
Wholesale scrap jewelry sales 9,203 11,172 0 20,375
Total revenue 275,557 132,382 0 407,939
Cost of revenue:
Cost of retail merchandise sold 106,530 50,623 0 157,153
Cost of wholesale scrap jewelry sold 7,513 9,684 0 17,197
Total cost of revenue 114,043 60,307 0 174,350
Net revenue 161,514 72,075 0 233,589
Expenses and other income:
Store operating expenses 95,247 42,077 0 137,324
Administrative expenses 0 0 30,999 30,999
Depreciation and amortization 5,382 4,263 967 10,612
Interest expense 0 0 7,230 7,230
Interest income 0 0 (158) (158)
Merger and acquisition expenses 0 0 166 166
Loss on foreign exchange 0 0 267 267
Write-off of certain Cash America merger related lease intangibles 0 0 878 878
Total expenses and other income 100,629 46,340 40,349 187,318
Income (loss) before income taxes $ 60,885 $ 25,735 $ (40,349) $ 46,271

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Three Months Ended March 31, 2020
U.S.
Operations Latin America
Operations Corporate Consolidated
Revenue:
Retail merchandise sales $ 195,966 $ 100,663 $ 0 $ 296,629
Pawn loan fees 97,857 44,258 0 142,115
Wholesale scrap jewelry sales 15,478 10,893 0 26,371
Consumer loan and credit services fees (1)
1,375 0 0 1,375
Total revenue 310,676 155,814 0 466,490
Cost of revenue:
Cost of retail merchandise sold 119,529 65,166 0 184,695
Cost of wholesale scrap jewelry sold 14,006 8,841 0 22,847
Consumer loan and credit services loss provision (1)
(361) 0 0 (361)
Total cost of revenue 133,174 74,007 0 207,181
Net revenue 177,502 81,807 0 259,309
Expenses and other income:
Store operating expenses 107,706 45,794 0 153,500
Administrative expenses 0 0 32,902 32,902
Depreciation and amortization 5,401 4,063 1,210 10,674
Interest expense 0 0 8,418 8,418
Interest income 0 0 (185) (185)
Merger and acquisition expenses 0 0 68 68
Loss on foreign exchange 0 0 2,685 2,685
Write-off of certain Cash America merger related lease intangibles 0 0 3,630 3,630
Impairment of certain other assets 0 0 1,900 1,900
Total expenses and other income 113,107 49,857 50,628 213,592
Income (loss) before income taxes $ 64,395 $ 31,950 $ (50,628) $ 45,717
The following tables present reportable segment information for the three-month periods ended March 31, 2022 and 2021 (in thousands):


	Three Months Ended March 31, 2022
	U.S. Pawn		Latin America Pawn		Retail POS Payment Solutions		Corporate		Consolidated
Revenue:
Retail merchandise sales	$	204,942	$	97,877	$	—	$	—	$	302,819
Pawn loan fees	90,339		41,480		—		—		131,819
Leased merchandise income	—		—		149,947		—		149,947
Interest and fees on finance receivables	—		—		42,449		—		42,449
Wholesale scrap jewelry sales	16,524		16,281		—		—		32,805
Total revenue	311,805		155,638		192,396		—		659,839

Cost of revenue:
Cost of retail merchandise sold	119,718		62,496		—		—		182,214
Depreciation of leased merchandise	—		—		93,706		—		93,706
Provision for lease losses	—		—		39,820		—		39,820
Provision for loan losses	—		—		24,697		—		24,697
Cost of wholesale scrap jewelry sold	14,530		13,685		—		—		28,215
Total cost of revenue	134,248		76,181		158,223		—		368,652

Net revenue	177,557		79,457		34,173		—		291,187

Expenses and other income:
Operating expenses	98,822		45,542		28,932		—		173,296
Administrative expenses	—		—		—		36,863		36,863
Depreciation and amortization	5,587		4,401		682		14,872		25,542
Interest expense	—		—		—		16,221		16,221
Interest income	—		—		—		(676)		(676)
Gain on foreign exchange	—		—		—		(480)		(480)
Merger and acquisition expenses	—		—		—		665		665
Loss on revaluation of contingent acquisition consideration	—		—		—		2,570		2,570
Impairments and dispositions of certain other assets	—		—		—		177		177

Total expenses and other income	104,409		49,943		29,614		70,212		254,178

Income (loss) before income taxes	$	73,148	$	29,514	$	4,559	$	(70,212)	$	37,009


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	Three Months Ended March 31, 2021
	U.S. Pawn		Latin America Pawn		Corporate		Consolidated
Revenue:
Retail merchandise sales	$	189,957	$	82,085	$	—	$	272,042
Pawn loan fees	76,397		39,125		—		115,522


Wholesale scrap jewelry sales	9,203		11,172		—		20,375
Total revenue	275,557		132,382		—		407,939

Cost of revenue:
Cost of retail merchandise sold	106,530		50,623		—		157,153



Cost of wholesale scrap jewelry sold	7,513		9,684		—		17,197
Total cost of revenue	114,043		60,307		—		174,350

Net revenue	161,514		72,075		—		233,589

Expenses and other income:
Operating expenses	95,247		42,077		—		137,324
Administrative expenses	—		—		30,999		30,999
Depreciation and amortization	5,382		4,263		967		10,612
Interest expense	—		—		7,230		7,230
Interest income	—		—		(158)		(158)
Loss on foreign exchange	—		—		267		267
Merger and acquisition expenses	—		—		166		166

Impairments and dispositions of certain other assets	—		—		878		878

Total expenses and other income	100,629		46,340		40,349		187,318

Income (loss) before income taxes	$	60,885	$	25,735	$	(40,349)	$	46,271

~~(1)~~

~~Effective June 30, 2020, the Company no longer offers an unsecured consumer loan product in the U.S.~~

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of financial condition, results of operations, liquidity and capital resources of FirstCash Holdings, Inc. and its wholly-owned subsidiaries (together, the “Company”) should be read in conjunction with the Company’s consolidated financial statements and accompanying notes included under Part I, Item 1 of this quarterly report on Form 10-Q, as well as with the audited consolidated financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

GENERAL

The Company’s primary line of business is the operation of retail pawn stores, also known as “pawnshops,” which focus on serving cash and credit-constrained consumers. The Company is athe leading operator of ~~retail-based~~ pawn stores ~~with over 2,770 store locations~~ in the U.S. and Latin America. ~~The Company’s pawn stores generate retail sales primarily from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers. In addition, the~~Pawn stores help customers meet small short-term cash needs by providing non-recourse pawn loans and buying merchandise directly from customers. Personal property, such as jewelry, electronics, tools, appliances, sporting goods and musical instruments, is pledged and held as collateral for the pawn loans ~~and held by the Company~~ over the typical 30-day term of the ~~loan plus~~loan. Pawn stores also generate retail sales primarily from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers.

With the Company’s acquisition of American First Finance (“AFF”) on December 17, 2021 (the “AFF Acquisition”), the Company is also a ~~stated grace period.~~leading provider of technology-driven, retail point-of-sale (“POS”) payment solutions focused on serving credit-constrained consumers. The Company’s retail POS payment solutions business line consists solely of the operations of AFF, which focuses on lease-to-own (“LTO”) products and facilitating other retail financing payment options across a large network of traditional and e-commerce merchant partners in all 50 states in the U.S., the District of Columbia and Puerto Rico. AFF’s retail partners provide consumer goods and services to their customers and use AFF’s LTO and retail finance solutions to facilitate payments on such transactions. As one of the largest omni-channel providers of “no credit required” payment options, AFF’s technology set provides consumers with seamless leasing and financing experiences in-store, online, in-cart and on mobile devices.

The Company’s ~~long-term~~two business plan is to grow 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.

~~The Company organizes its operations~~lines are organized into ~~two~~three reportable segments. The U.S. ~~operations~~pawn segment consists of all pawn operations in the U.S. and the Latin America ~~operations~~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 the U.S. and Puerto Rico.


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OPERATIONS AND LOCATIONS

As of March 31, ~~2021,~~2022, the Company ~~had 2,771~~operated 2,829 pawn store locations composed of ~~1,046~~1,078 stores in 2425 U.S. states and the District of Columbia, ~~1,637~~1,663 stores in 32 states in Mexico, 60 stores in Guatemala, 15 stores in Colombia and 13 stores in El Salvador.

The following table details pawn store count activity:

Three Months Ended March 31, 2021
U.S. Latin America
Operations Segment Operations Segment Total Locations
Total locations, beginning of period 1,046 1,702 2,748
New locations opened — 24 24
Locations acquired 2 — 2
Consolidation of existing pawn locations (1)
(2) (1) (3)
Total locations, end of period 1,046 1,725 2,771


	Three Months Ended March 31, 2022
	U.S.	Latin America	Total
Total locations, beginning of period	1,081	1,744	2,825
New locations opened (1)	—	10	10



Consolidation of existing pawn locations (2)	(3)	(3)	(6)

Total locations, end of period	1,078	1,751	2,829

(1)In addition to new store openings, the Company strategically relocated one store in Latin America during the three months ended March 31, 2022.

(2)Store consolidations were primarily acquired locations over the past ~~four~~five years which have been combined with overlapping stores and for which the Company expects to maintain a significant portion of the acquired customer base in the consolidated location.

As of March 31, 2022, AFF provided lease-to-own and retail finance payment solutions for consumer goods and services through a nationwide network of approximately 6,900 active retail merchant partner locations.

CRITICAL ACCOUNTING ~~POLICIES~~ESTIMATES

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The significant accounting policies and estimates that the Company believes are the most critical to aid in fully understanding and evaluating its reported financial results have been reported in the Company’s ~~2020~~2021 Annual Report on Form 10-K. There have been no changes to the Company’s significant accounting policies for the three months ended March 31, ~~2021.~~2022.

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RESULTS OF OPERATIONS (unaudited)

Continuing Impact of COVID-19

The ~~onset of~~ COVID-19 in March 2020 in the U.S. and shortly thereafter in Latin America significantly impacted the Company’s operations and earnings results. Most countries, states and other local government officials reacted by instituting quarantines, shelter-in-place and other orders mandating non-essential business closures, travel restrictions and other measures in an effortpandemic continues to reduce the spread of COVID-19. These measures significantly reduced normal levels of consumer spending, and combined with broad-based stimulus programs and enhanced unemployment benefits in the U.S., provided significant and unprecedented liquidity to manyimpact numerous aspects of the Company’s ~~customers, which greatly suppressed normal demand for pawn loans beginning in~~business and the ~~second quarter of 2020. As the broad shutdowns in response~~continuing long-term impact to COVID-19 began to ease late in the second half of 2020, pawn lending activity began to slowly recover. Even so, resulting pawn balances at December 31, 2020 were still down 17% compared to the prior year end.

During the first quarter of 2021, two additional federal stimulus payments in the U.S. caused further declines in U.S. pawn lending demand while pawn lending activity in Latin America continued recovering to near pre-pandemic levels given the limited government stimulus programs in the region. As of March 31, 2021, consolidated pawn loan balances were still down 16% compared to the prior-year quarter. Resulting pawn loan fees were negatively impacted during the first quarter of 2021 as a result of the lower pawn loan balances.

In most markets where the Company operates, pawnshops were designated as “essential businesses” and remained open during the broad shutdowns in response to COVID-19. As a result, the Company experienced strong customer demand for “stay-at-home” products such as consumer electronics and sporting goods. In addition, federal stimulus payments to consumers in the U.S. during 2020 also drove retail demand for most products. However, the increased retail volumes and less forfeited inventory from lower pawn receivables negatively impacted inventory balances in the second half of 2020. Resulting inventory balances at December 31, 2020 were down 28% compared to the prior year end. The lower beginning inventory levels negatively impacted retail sales during the first quarter of 2021 but were partially offset by additional retail demand in the U.S. as a result of the enhanced consumer liquidity caused by the two additional federal stimulus payments during the first quarter of 2021. In addition, retail sales margins increased significantly during the first quarter of 2021 in both the U.S. and Latin America compared to the prior-year quarter as a result of continued retail demand for value-priced pre-owned merchandise, increased buying of merchandise directly from customers and lower levels of aged inventory, all of which limited the need for normal discounting. Resulting gross profit from retail sales for the first quarter of 2021 increased 3% over the prior-year quarter.

its business remains unknown. The extent to which COVID-19 continues to impact the Company’s operations, results of operations, liquidity and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the unknown duration and severity of the COVID-19 pandemic, which may be impacted by variants of ~~the COVID-19 virus~~concern and the ~~timing, availability~~efficacy and ~~efficacy~~adoption rate of the COVID-19 vaccines in the jurisdictions in which the Company ~~operates,~~operates. In addition, changes in economic conditions and consumer spending, rising inflation, and the actions taken to ~~contain~~limit the economic impact of COVID-19, such as ~~well as further actions taken to limit the resulting economic impact. In particular,~~ government stimulus and other transfer programs, have and may continue to have a material adverse impact on demand for pawn loans in future periods. Moreover, safety protocols, staffing constraints and supply chain delays continue to impact operations and traffic counts for many retailers, which include the Company’s pawn stores and many of AFF’s retail merchant partners.


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Constant Currency Results

The Company’s management reviews and analyzes operating results in Latin America on a constant currency basis because the Company believes this better represents the Company’s underlying business trends. Constant currency results are non-GAAP financial measures, which exclude the effects of foreign currency translation and are calculated by translating current-year results at prior-year average exchange rates. The wholesale scrap jewelry sales in Latin America are priced and settled in U.S. dollars and are not affected by foreign currency translation, as are a small percentage of the operating and administrative expenses in Latin America, which are billed and paid in U.S. dollars. Amounts presented on a constant currency basis are denoted as such. See “Non-GAAP Financial Information” for additional discussion of constant currency operating results.

Business operations in Mexico, Guatemala and Colombia are transacted in Mexican pesos, Guatemalan quetzales and Colombian pesos. The Company also has operations in El Salvador, where the reporting and functional currency is the U.S. dollar. The following table provides exchange rates for the Mexican peso, Guatemalan quetzal and Colombian peso for the current and prior-year periods:

March 31, Favorable /
2021 2020 (Unfavorable)
Mexican peso / U.S. dollar exchange rate:
End-of-period 20.6 23.5 12 %
Three months ended 20.3 19.9 (2) %
Guatemalan quetzal / U.S. dollar exchange rate:
End-of-period 7.7 7.7 — %
Three months ended 7.8 7.7 (1) %
Colombian peso / U.S. dollar exchange rate:
End-of-period 3,737 4,065 8 %
Three months ended 3,553 3,533 (1) %


	March 31,		Favorable /
	2022	2021	(Unfavorable)
Mexican peso / U.S. dollar exchange rate:
End-of-period	20.0	20.6		3	%
Three months ended	20.5	20.3		(1)	%


Guatemalan quetzal / U.S. dollar exchange rate:
End-of-period	7.7	7.7		—	%
Three months ended	7.7	7.8		1	%


Colombian peso / U.S. dollar exchange rate:
End-of-period	3,748	3,737		—	%
Three months ended	3,914	3,553		(10)	%

~~Amounts presented on a constant currency basis are denoted as such. See “Non-GAAP Financial Information” for additional discussion of constant currency operating results.~~

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Operating Results for the Three Months Ended March 31, ~~2021~~2022 Compared to the Three Months Ended March 31, ~~2020~~2021

U.S. ~~Operations~~Pawn Segment

The following table details earning assets, which consist of pawn loans and inventories, as well as other earning asset metrics of the U.S. ~~operations~~pawn segment as of March 31, ~~2021~~2022 compared to March 31, ~~2020~~2021 (dollars in thousands, except as otherwise noted):

As of March 31, Increase /
2021 2020 (Decrease)
U.S. Operations Segment
Earning assets:
Pawn loans $ 169,642 $ 224,121 (24) %
Inventories 128,308 162,142 (21) %
$ 297,950 $ 386,263 (23) %
Average outstanding pawn loan amount (in ones) $ 215 $ 182 18 %
Composition of pawn collateral:
General merchandise 30 % 31 %
Jewelry 70 % 69 %
100 % 100 %
Composition of inventories:
General merchandise 44 % 42 %
Jewelry 56 % 58 %
100 % 100 %
Percentage of inventory aged greater than one year 2 % 3 %
Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories) 3.3 times 2.9 times


	As of March 31,
	2022			2021			Increase
U.S. Pawn Segment
Earning assets:
Pawn loans	$	241,597		$	169,642			42	%
Inventories		184,671			128,308			44	%
	$	426,268		$	297,950			43	%

Average outstanding pawn loan amount (in ones)	$	226		$	215			5	%

Composition of pawn collateral:
General merchandise	33		%	30		%
Jewelry	67		%	70		%
	100		%	100		%

Composition of inventories:
General merchandise	44		%	44		%
Jewelry	56		%	56		%
	100		%	100		%

Percentage of inventory aged greater than one year	1		%	2		%

Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)	2.8 times			3.3 times

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The following table presents segment pre-tax operating income and other operating metrics of the U.S. ~~operations~~pawn segment for the three months ended March 31, ~~2021~~2022 compared to the three months ended March 31, ~~2020~~2021 (dollars in thousands). ~~Store operating~~Operating expenses include salary and benefit expense of ~~store-level~~pawn-store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the pawn stores.

Three Months Ended
March 31,
2021 2020 Decrease
U.S. Operations Segment
Revenue:
Retail merchandise sales $ 189,957 $ 195,966 (3) %
Pawn loan fees 76,397 97,857 (22) %
Wholesale scrap jewelry sales 9,203 15,478 (41) %
Consumer loan and credit services fees (1)
— 1,375 (100) %
Total revenue 275,557 310,676 (11) %
Cost of revenue:
Cost of retail merchandise sold 106,530 119,529 (11) %
Cost of wholesale scrap jewelry sold 7,513 14,006 (46) %
Consumer loan and credit services loss provision (1)
— (361) (100) %
Total cost of revenue 114,043 133,174 (14) %
Net revenue 161,514 177,502 (9) %
Segment expenses:
Store operating expenses 95,247 107,706 (12) %
Depreciation and amortization 5,382 5,401 — %
Total segment expenses 100,629 113,107 (11) %
Segment pre-tax operating income $ 60,885 $ 64,395 (5) %
Operating metrics:
Retail merchandise sales margin 44 % 39 %
Wholesale scrap jewelry sales margin 18 % 10 %
Net revenue margin 59 % 57 %
Segment pre-tax operating margin 22 % 21 %


	Three Months Ended
	March 31,
	2022			2021			Increase
U.S. Pawn Segment
Revenue:
Retail merchandise sales	$	204,942		$	189,957			8	%
Pawn loan fees		90,339			76,397			18	%
Wholesale scrap jewelry sales		16,524			9,203			80	%
Total revenue		311,805			275,557			13	%

Cost of revenue:
Cost of retail merchandise sold		119,718			106,530			12	%
Cost of wholesale scrap jewelry sold		14,530			7,513			93	%
Total cost of revenue		134,248			114,043			18	%

Net revenue		177,557			161,514			10	%

Segment expenses:
Operating expenses		98,822			95,247			4	%
Depreciation and amortization		5,587			5,382			4	%
Total segment expenses		104,409			100,629			4	%

Segment pre-tax operating income	$	73,148		$	60,885			20	%

Operating metrics:
Retail merchandise sales margin	42		%	44		%

Net revenue margin	57		%	59		%
Segment pre-tax operating margin	23		%	22		%

~~(1)Effective June 30, 2020, the Company no longer offers an unsecured consumer loan product in the U.S.~~

Retail Merchandise Sales Operations

U.S. retail merchandise sales ~~decreased 3%~~increased 8% to ~~$190.0~~$204.9 million during the first quarter of ~~2021~~2022 compared to ~~$196.0~~$190.0 million for the first quarter of ~~2020.~~2021. Same-store retail sales ~~decreased 5%~~increased 4% in the first quarter of ~~2021~~2022 compared to the first quarter of ~~2020. Offsetting the small decline~~2021. The increase in total and same-store retail sales ~~revenue,~~was primarily due to increased inventory levels during the first quarter of 2022 compared to the first quarter of 2021. The gross profit margin on retail merchandise sales in the U.S. was ~~44% during~~42% in the first quarter of ~~2021 compared to a margin of 39% during~~2022 and 44% in the first quarter of ~~2020, which resulted~~2021.

U.S. inventories increased 44% from $128.3 million at March 31, 2021 to $184.7 million at March 31, 2022. The increase was primarily due to lower-than-normal inventory balances at March 31, 2021 due to the impacts of the COVID-19 pandemic. Inventories aged greater than one year in ~~a 9% increase in net revenue (gross profit) from retail sales for~~ the ~~first quarter of 2021~~U.S. were 1% at March 31, 2022 compared to the first quarter of 2020. The increase in margin was primarily a result of continued retail demand for value-priced pre-owned merchandise, increased buying of merchandise directly from customers and lower levels of aged inventory, which limited the need for normal discounting.2% at March 31, 2021.

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U.S. inventories decreased 21% from $162.1 million at March 31, 2020 to $128.3 million at March 31, 2021. Inventories aged greater than one year in the U.S. were 2% at March 31, 2021 compared to 3% at March 31, 2020. The decrease in inventories was primarily a result of significantly lower than normal beginning inventory levels, less inventory being generated from forfeited pawn loans and additional retail demand created by two additional federal stimulus payments made directly to consumers, partially offset by an increase in merchandise purchased directly from customers during the quarter compared to the prior-year quarter.

Pawn Lending Operations

U.S. pawn loan receivables as of March 31, 2022 increased 42% in total and 38% on a same-store basis compared to March 31, 2021. The increase in total and same-store pawn receivables was primarily due to the continued recovery in pawn lending demand during the first quarter of 2022 to pre-pandemic levels.

U.S. pawn loan fees ~~decreased 22%~~increased 18% to ~~$76.4~~$90.3 million during the first quarter of ~~2021~~2022 compared to ~~$97.9~~$76.4 million for the first quarter of ~~2020.~~2021. Same-store pawn fees in the first quarter of ~~2021 decreased 23%~~2022 increased 14% compared to the first quarter of ~~2020. Pawn loan receivables as of March 31, 2021 decreased 24%~~2021. The increase in total and ~~25% on a~~ same-store ~~basis compared to March 31, 2020.~~

~~The decline in total and same-store pawn receivables and resulting~~ pawn loan fees was primarily due to the ~~significantly lower than normal beginning~~continued recovery in pawn loan ~~levels and reduced origination activity during the first quarter of 2021~~receivables, as ~~a result of improved customer liquidity due to the two additional government stimulus payments made during the quarter.~~

~~Wholesale Scrap Jewelry Operations~~

U.S. wholesale scrap jewelry revenue, consisting primarily of gold sales, decreased 41% to $9.2 million during the first quarter of 2021 compared to $15.5 million during the first quarter of 2020. The decline in scrap revenue relates primarily to reductions in inventory levels as discusseddescribed above. The scrap jewelry gross profit margin in the U.S. was 18% compared to the prior-year margin of 10%, with the increase in scrap margin primarily due to an increase in the average selling price of gold during the first quarter of 2021 compared to 2020.

Segment Expenses and Segment Pre-Tax Operating Income

U.S. ~~store~~ operating expenses ~~decreased 12%~~increased 4% to $98.8 million during the first quarter of 2022 compared to $95.2 million during the first quarter of 2021 ~~compared to $107.7 million during the first quarter of 2020 and~~while same-store operating expenses ~~also decreased 12%~~were flat compared with the prior-year period. The ~~decrease~~increase in ~~total and same-store~~ operating expenses was primarily due to ~~cost saving initiatives in response to COVID-19.~~increased store count and increased store-level incentive compensation driven by increased revenues during the first quarter of 2022.

The U.S. segment pre-tax operating income for the first quarter of ~~2021~~2022 was ~~$60.9~~$73.1 million, which generated a pre-tax segment operating margin of ~~22%~~23% compared to ~~$64.4~~$60.9 million and ~~21%~~22% in the prior year, respectively. The ~~decrease~~increase in the segment pre-tax operating income and margin reflected ~~decreases~~increases in ~~pawn fee revenue as a result of the decline in~~gross profit from retail sales, pawn loan ~~receivables~~fees and ~~net revenue~~gross profit from ~~consumer loan and credit services products as a result of discontinuing consumer lending operations in 2020,~~scrap sales, partially offset by an increase in ~~gross profit from both retail and scrap sales and a decrease in~~ operating expenses.

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Latin America Operations Segment

Latin American results of operations for the three months ended March 31, ~~2021~~2022 compared to the three months ended March 31, ~~2020~~2021 were impacted by a 2%1% unfavorable change in the average value of the Mexican peso compared to the U.S. dollar. The translated value of Latin American earning assets as of March 31, ~~2021~~2022 compared to March 31, ~~2020~~2021 benefited from a ~~12%~~3% favorable change in the end-of-period value of the Mexican peso compared to the U.S. dollar.

The following table details earning assets, which consist of pawn loans and inventories as well as other earning asset metrics of the Latin America ~~operations~~pawn segment as of March 31, ~~2021~~2022 compared to March 31, ~~2020~~2021 (dollars in thousands, except as otherwise noted):

Constant Currency Basis
As of
March 31, Increase /
As of March 31, Increase / 2021 (Decrease)
2021 2020 (Decrease) (Non-GAAP) (Non-GAAP)
Latin America Operations Segment
Earning assets:
Pawn loans $ 95,796 $ 90,175 6 % $ 84,498 (6) %
Inventories 57,028 65,734 (13) % 50,324 (23) %
$ 152,824 $ 155,909 (2) % $ 134,822 (14) %
Average outstanding pawn loan amount (in ones) $ 76 $ 56 36 % $ 67 20 %
Composition of pawn collateral:
General merchandise 66 % 70 %
Jewelry 34 % 30 %
100 % 100 %
Composition of inventories:
General merchandise 58 % 62 %
Jewelry 42 % 38 %
100 % 100 %
Percentage of inventory aged greater than one year 2 % 1 %
Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories) 4.4 times 3.9 times


										Constant Currency Basis
										As of
										March 31,
	As of March 31,									2022		Increase
	2022			2021			Increase			(Non-GAAP)		(Non-GAAP)
Latin America Pawn Segment
Earning assets:
Pawn loans	$	102,504		$	95,796			7	%	$	99,610		4	%
Inventories		62,605			57,028			10	%	60,841			7	%

	$	165,109		$	152,824			8	%	$	160,451		5	%

Average outstanding pawn loan amount (in ones)	$	79		$	76			4	%	$	76		—	%

Composition of pawn collateral:
General merchandise	68		%	66		%
Jewelry	32		%	34		%
	100		%	100		%

Composition of inventories:
General merchandise	68		%	58		%
Jewelry	32		%	42		%
	100		%	100		%

Percentage of inventory aged greater than one year	1		%	2		%

Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)	4.3 times			4.4 times

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The following table presents segment pre-tax operating income and other operating metrics of the Latin America ~~operations~~pawn segment for the three months ended March 31, ~~2021~~2022 compared to the three months ended March 31, ~~2020~~2021 (dollars in thousands). ~~Store operating~~Operating expenses include salary and benefit expense of ~~store-level~~pawn-store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the pawn stores.

Constant Currency Basis
Three Months
Ended
Three Months Ended March 31, Increase /
March 31, Increase / 2021 (Decrease)
2021 2020 (Decrease) (Non-GAAP) (Non-GAAP)
Latin America Operations Segment
Revenue:
Retail merchandise sales $ 82,085 $ 100,663 (18) % $ 83,937 (17) %
Pawn loan fees 39,125 44,258 (12) % 40,010 (10) %
Wholesale scrap jewelry sales 11,172 10,893 3 % 11,172 3 %
Total revenue 132,382 155,814 (15) % 135,119 (13) %
Cost of revenue:
Cost of retail merchandise sold 50,623 65,166 (22) % 51,763 (21) %
Cost of wholesale scrap jewelry sold 9,684 8,841 10 % 9,902 12 %
Total cost of revenue 60,307 74,007 (19) % 61,665 (17) %
Net revenue 72,075 81,807 (12) % 73,454 (10) %
Segment expenses:
Store operating expenses 42,077 45,794 (8) % 42,960 (6) %
Depreciation and amortization 4,263 4,063 5 % 4,350 7 %
Total segment expenses 46,340 49,857 (7) % 47,310 (5) %
Segment pre-tax operating income $ 25,735 $ 31,950 (19) % $ 26,144 (18) %
Operating metrics:
Retail merchandise sales margin 38 % 35 % 38 %
Wholesale scrap jewelry sales margin 13 % 19 % 11 %
Net revenue margin 54 % 53 % 54 %
Segment pre-tax operating margin 19 % 21 % 19 %

~~Retail Merchandise Sales Operations~~

Latin America retail merchandise sales decreased 18% (17% on a constant currency basis) to $82.1 million during the first quarter of 2021 compared to $100.7 million for the first quarter of 2020. Same-store retail sales decreased 21% (19% on a constant currency basis) during the first quarter of 2021 compared to the first quarter of 2020. Partially offsetting the declines in retail sales revenue, the gross profit margin on retail merchandise sales was 38% during the first quarter of 2021 compared to 35% during the first quarter of 2020.

Inventories in Latin America decreased 13% (23% on a constant currency basis) from $65.7 million at March 31, 2020 to $57.0 million at March 31, 2021. Inventories aged greater than one year in Latin America were 2% at March 31, 2021 and 1% at March 31, 2020.


													Constant Currency Basis
													Three Months
													Ended
		Three Months Ended											March 31,
		March 31,											2022			Increase
		2022				2021			Increase				(Non-GAAP)			(Non-GAAP)
Latin America Pawn Segment
Revenue:
Retail merchandise sales		$	97,877			$	82,085			19	%		$	98,802			20	%
Pawn loan fees		41,480				39,125				6	%		41,873				7	%
Wholesale scrap jewelry sales		16,281				11,172				46	%		16,281				46	%

Total revenue		155,638				132,382				18	%		156,956				19	%

Cost of revenue:
Cost of retail merchandise sold		62,496				50,623				23	%		63,084				25	%
Cost of wholesale scrap jewelry sold		13,685				9,684				41	%		13,819				43	%

Total cost of revenue		76,181				60,307				26	%		76,903				28	%

Net revenue		79,457				72,075				10	%		80,053				11	%

Segment expenses:
Operating expenses		45,542				42,077				8	%		45,965				9	%
Depreciation and amortization		4,401				4,263				3	%		4,451				4	%
Total segment expenses		49,943				46,340				8	%		50,416				9	%

Segment pre-tax operating income		$	29,514			$	25,735			15	%		$	29,637			15	%

Operating metrics:
Retail merchandise sales margin	36			%	38			%				36			%

Net revenue margin	51			%	54			%				51			%
Segment pre-tax operating margin	19			%	19			%				19			%

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~~The decrease in inventories, which limited~~Retail Merchandise Sales Operations

Latin America retail merchandise sales increased 19% (20% on a constant currency basis) to $97.9 million during the first quarter ~~was primarily~~of 2022 compared to $82.1 million for the first quarter of 2021. Same-store retail sales increased 18% (19% on a result of significantly lower than normal beginning inventory levels and less inventory being generated from forfeited pawn loans partially offset by an increase in merchandise purchased directly from customersconstant currency basis) during the first quarter of 2022 compared to the ~~prior-year quarter.~~first quarter of 2021. The ~~lower~~increase in total and same-store retail sales ~~volume was partially offset by an increase in retail sales margin, which~~ was primarily due to increased inventory levels during the first quarter of 2022 compared to the first quarter of 2021. The gross profit margin on retail merchandise sales was 36% during the first quarter of 2022 compared to 38% during the first quarter of 2021.

Latin America inventories increased 10% (7% on a ~~result~~constant currency basis) from $57.0 million at March 31, 2021 to $62.6 million at March 31, 2022. The increase was primarily due to lower-than-normal inventory balances at March 31, 2021 due to the impacts of ~~continued retail demand for value-priced pre-owned merchandise~~the COVID-19 pandemic. Inventories aged greater than one year in Latin America were 1% at March 31, 2022 and ~~increased buying of merchandise directly from customers, which limited the need for normal discounting.~~2% at March 31, 2021.

Pawn Lending Operations

~~Pawn~~Latin America pawn loan receivables increased 7% (4% on a constant currency basis) as of March 31, 2022 compared to March 31, 2021, and on a same-store basis pawn loan receivables increased 6% (3% on a constant currency basis). The increase in total and same-store pawn receivables was primarily due to the continued recovery in pawn lending demand during the first quarter of 2022 towards pre-pandemic levels. The Company attributes the slower growth in Latin American pawn receivables in part to continued, elevated currency remittances from the U.S.

Latin America pawn loan fees ~~in Latin America decreased 12% (10%~~increased 6% (7% on a constant currency basis), totaling ~~$39.1~~$41.5 million during the first quarter of ~~2021~~2022 compared to ~~$44.3~~$39.1 million for the first quarter of ~~2020.~~2021. Same-store pawn fees ~~decreased 13% (11%~~increased 5% (6% on a constant currency basis) in the first quarter of ~~2021~~2022 compared to the first quarter of 2020. Pawn loan receivables increased 6% (decreased 6% on a constant currency basis) as of March 31, 2021 compared to March 31, 2020, while same-store pawn receivables increased 5% (decreased 7% on a constant currency basis).

2021. The ~~decline~~increase in total and same-store constant currency ~~pawn receivables and resulting~~ pawn loan fees was primarily due to the ~~significantly lower than normal beginning~~continued recovery in pawn loan ~~levels, partially offset by the continued improvement of pawn loan origination activity during the first quarter of 2021.~~

~~Wholesale Scrap Jewelry Operations~~

Latin America wholesale scrap jewelry revenue, consisting primarily of gold sales, increased 3% (also 3% on a constant currency basis) to $11.2 million during the first quarter of 2021 compared to $10.9 million during the first quarter of 2020. The scrap jewelry gross profit margin in Latin America was 13% (11% on a constant currency basis) during the first quarter of 2021 compared to the prior-year margin of 19%.receivables as described above.

Segment Expenses and Segment Pre-Tax Operating Income

~~Store operating~~Operating expenses ~~decreased~~increased 8% ~~(6%~~(9% on a constant currency basis) to $45.5 million during the first quarter of 2022 compared to $42.1 million during the first quarter of 2021, ~~compared to $45.8 million during the first quarter of 2020. Total~~reflecting continued store growth and inflationary pressure on labor and other operating expenses ~~decreased primarily due to cost saving initiatives in response to COVID-19, partially offset by the 3% increase~~ in the ~~Latin America weighted-average store count.~~current quarter. Same-store operating expenses ~~decreased 11% (9%~~increased 7% (8% on a constant currency basis).

~~Latin America store depreciation and amortization increased 5% (7% on a constant currency basis) to $4.3 million during the first quarter of 2021~~ compared to ~~$4.1 million during~~ the ~~first quarter of 2020, primarily due to the increase in the store count.~~prior-year period.

The segment pre-tax operating income for the first quarter of ~~2021~~2022 was ~~$25.7~~$29.5 million, which generated a pre-tax segment operating margin of 19% compared to ~~$32.0~~$25.7 million and ~~21%~~19% in the prior year, respectively. The ~~decline~~increase in the segment pre-tax operating income ~~and margin~~ was primarily due to ~~declines~~increases in gross profit from retail sales, ~~and~~ pawn loan fees and ~~a 2% unfavorable change in the average value of the Mexican peso,~~gross profit from scrap sales, partially offset by an increase in ~~retail sales margins and declines in store~~ operating expenses.


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Retail POS Payment Solutions Segment

The Company completed the AFF Acquisition on December 17, 2021, and the results of operations of AFF have been consolidated since the acquisition date. As a result of purchase accounting, AFF’s as reported earning assets, consisting of finance receivables and leased merchandise, contain significant fair value adjustments. The fair value adjustments will be amortized over the life of the finance receivables and lease contracts acquired at the time of acquisition.

The following table provides a detail of finance receivables as reported and as adjusted to exclude the impacts of purchase accounting as of March 31, 2022 (in thousands):


	As of March 31, 2022
	As Reported (GAAP)		Adjustments		Adjusted (Non-GAAP)
Finance receivables, before allowance for loan losses (1)	$	212,813	$	(26,484)	$	186,329
Less allowance for loan losses	(72,332)		—		(72,332)
Finance receivables, net	$	140,481	$	(26,484)	$	113,997

(1) As reported acquired finance receivables was recorded at fair value in conjunction with purchase accounting. Adjustment represents the difference between the original amortized cost basis and fair value of the remaining acquired finance receivables.

The following table provides a detail of leased merchandise as reported and as adjusted to exclude the impacts of purchase accounting as of March 31, 2022 (in thousands):


	As of March 31, 2022
	As Reported (GAAP)		Adjustments		Adjusted (Non-GAAP)
Leased merchandise, before allowance for lease losses (1)	$	159,511	$	32,327	$	191,838
Less allowance for lease losses	(40,364)		(35,664)		(76,028)
Leased merchandise, net	$	119,147	$	(3,337)	$	115,810

(1) As reported acquired leased merchandise was recorded at fair value (which includes estimates for charge-offs) in conjunction with purchase accounting. Adjustment represents the difference between the original depreciated cost and fair value of the remaining acquired leased merchandise.

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AFF’s as reported results of operations contain significant purchase accounting impacts. The following table presents segment pre-tax operating income as reported and as adjusted to exclude the impacts of purchase accounting for the three months ended March 31, 2022 (in thousands). Operating expenses include salary and benefit expense of certain operations focused departments, merchant partner incentives, bank and other payment processing charges, credit reporting costs, information technology costs, advertising costs and other operational costs incurred by AFF. Administrative expenses of AFF and amortization expense of intangible assets related to the purchase of AFF are not included in the segment pre-tax operating income.


	Three Months Ended March 31, 2022
	As Reported				Adjusted
	(GAAP)		Adjustments		(Non-GAAP)
Retail POS Payment Solutions Segment
Revenue:
Leased merchandise income	$	149,947	$	—	$	149,947
Interest and fees on finance receivables	42,449		16,173		58,622

Total revenue	192,396		16,173		208,569

Cost of revenue:
Depreciation of leased merchandise	93,706		(4,359)		89,347
Provision for lease losses	39,820		—		39,820
Provision for loan losses	24,697		—		24,697

Total cost of revenue	158,223		(4,359)		153,864

Net revenue	34,173		20,532		54,705

Segment expenses:
Operating expenses	28,932		—		28,932
Depreciation and amortization	682		—		682
Total segment expenses	29,614		—		29,614

Segment pre-tax operating income	$	4,559	$	20,532	$	25,091


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Consolidated Results of Operations

The following table reconciles pre-tax operating income of the Company’s U.S. ~~operations~~pawn segment, Latin America pawn segment and ~~Latin America operations~~retail POS payment solutions segment discussed above to consolidated net income for the three months ended March 31, ~~2021~~2022 compared to the three months ended March 31, ~~2020~~2021 (dollars in thousands):

Three Months Ended
March 31, Increase /
2021 2020 (Decrease)
Consolidated Results of Operations
Segment pre-tax operating income:
U.S. operations $ 60,885 $ 64,395 (5) %
Latin America operations 25,735 31,950 (19) %
Consolidated segment pre-tax operating income 86,620 96,345 (10) %
Corporate expenses and other income:
Administrative expenses 30,999 32,902 (6) %
Depreciation and amortization 967 1,210 (20) %
Interest expense 7,230 8,418 (14) %
Interest income (158) (185) (15) %
Merger and acquisition expenses 166 68 144 %
Loss on foreign exchange 267 2,685 (90) %
Write-off of certain Cash America merger related lease intangibles 878 3,630 (76) %
Impairment of certain other assets — 1,900 (100) %
Total corporate expenses and other income 40,349 50,628 (20) %
Income before income taxes 46,271 45,717 1 %
Provision for income taxes 12,556 12,799 (2) %

Net income $ 33,715 $ 32,918 2 %


	Three Months Ended
	March 31,				Increase /
	2022		2021		(Decrease)
Consolidated Results of Operations
Segment pre-tax operating income:
U.S. pawn	$	73,148	$	60,885		20	%
Latin America pawn	29,514		25,735			15	%
Retail POS payment solutions (1)	4,559		—			—	%
Consolidated segment pre-tax operating income	107,221		86,620			24	%

Corporate expenses and other income:
Administrative expenses	36,863		30,999			19	%
Depreciation and amortization	14,872		967			1,438	%
Interest expense	16,221		7,230			124	%
Interest income	(676)		(158)			328	%
(Gain) loss on foreign exchange	(480)		267			280	%
Merger and acquisition expenses	665		166			301	%
Loss on revaluation of contingent acquisition consideration	2,570		—			—	%
Impairments and dispositions of certain other assets	177		878			(80)	%

Total corporate expenses and other income	70,212		40,349			74	%

Income before income taxes	37,009		46,271			(20)	%

Provision for income taxes	9,004		12,556			(28)	%

Net income	$	28,005	$	33,715		(17)	%

(1) The AFF results are significantly impacted by certain purchase accounting adjustments as noted in the retail POS payment solutions segment results of operations above. Adjusted retail POS payment solutions segment pre-tax operating income excluding such purchase accounting adjustments was $25.1 million for the three months ended March 31, 2022.

Corporate Expenses and Taxes

Administrative expenses ~~decreased 6%~~increased 19% to ~~$31.0~~$36.9 million during the first quarter of ~~2021~~2022 compared to ~~$32.9~~$31.0 million in the first quarter of ~~2020,~~2021, primarily due to ~~reduced travel costs and other cost saving initiatives in response to COVID-19 and~~the AFF Acquisition. As a ~~2% unfavorable change in the average value~~percentage of ~~the Mexican peso resulting in lower U.S. dollar translated~~revenue, administrative expenses ~~partially offset by a 2% increase in the consolidated weighted-average store count. Administrative expenses were~~decreased from 8% ~~of revenue~~ during the first quarter of 2021 ~~and 7%~~to 6% during the first quarter of ~~2020.~~2022.

~~Interest~~Corporate depreciation and amortization expense ~~decreased 14%~~increased 1,438% to ~~$7.2~~$14.9 million during the first quarter of ~~2021~~2022 compared to ~~$8.4~~$1.0 million in the first quarter of ~~2020,~~2021, primarily due to ~~lower~~$14.2 million in amortization expense during the first quarter of 2022 related to identified intangible assets in the AFF Acquisition.

Interest expense increased 124% to $16.2 million during the first quarter of 2022 compared to $7.2 million in the first quarter of 2021, primarily due to an increase in the Company’s outstanding senior unsecured notes and higher average balances outstanding on the Company’s unsecured credit ~~facilities~~facilities. See Note 7 of Notes to Consolidated Financial Statements and ~~lower average interest rates during the first quarter of 2021 compared to the first quarter of 2020. See~~ “Liquidity and Capital Resources.”

~~Loss on foreign exchange decreased 90% to $0.3 million during the first quarter of 2021 compared to $2.7 million in the first quarter of 2020, as a result of fluctuations in foreign exchange rates.~~

During the first quarter of 2021, the Company recorded a $0.9 million write-off of certain merger related lease intangibles compared to a $3.6 million write-off of certain merger related lease intangibles during the first quarter of 2020. The Company also recorded a $1.9 million impairment related to a non-operating asset during the first quarter of 2020.

Consolidated effective income tax rates for the first quarter of 2021 and 2020 were 27.1% and 28.0%, respectively. The decrease in the effective tax rate was primarily due to the Internal Revenue Service finalizing regulations in July 2020 for the

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~~global intangible low-taxed~~Merger and acquisition expenses increased 301% to $0.7 million during the first quarter of 2022 compared to $0.2 million during first quarter of 2021, reflecting timing of transaction costs primarily related to the AFF Acquisition.

The Company recognized a loss of $2.6 million during the first quarter of 2022 as a result of an increase in the liability for the estimated fair value of certain contingent consideration related to the AFF Acquisition.

Consolidated effective income tax ~~(“GILTI”) provisions~~rates for ~~foreign operations~~the first quarter of 2022 and 2021 were 24.3% and 27.1%, respectively. The decrease in the effective tax rate was primarily due to an increase in U.S. ~~federal tax code, which essentially eliminated the impact~~sourced income, primarily a result of the ~~incremental GILTI~~AFF Acquisition, which is taxed at a lower rate than the Latin American countries the Company operates in, and an increased foreign permanent tax onbenefit recorded in the ~~Company.~~first quarter of 2022 compared to the first quarter of 2021, related to an increased inflation index adjustment allowed in Mexico as a result of elevated inflation in Mexico, which started during the latter half of 2021.

LIQUIDITY AND CAPITAL RESOURCES

~~As of March 31, 2021, the~~Material Capital Requirements

The Company’s primary ~~sources~~capital requirements include:

•Expand pawn operations through growth of ~~liquidity were $54.6 million~~pawn receivables and inventories in existing stores, new store openings and strategic acquisition of pawn stores;

•Expand retail POS payment solutions operations through growth of the business generated from new and existing merchant partners;

◦Expected to result in additional purchases of lease merchandise, funding of additional finance receivables and an increase in servicing and collection activities to support increased leases and finance receivables outstanding;

◦Expected to require operational support and development activities around AFF’s proprietary loan management and decisioning systems along with merchant and customer service functions; and

•Return capital to shareholders through dividends and stock repurchases.

Other material capital requirements include operating expenses (see Note 3 of Notes to Consolidated Financial Statements regarding operating lease commitments), general corporate operating activities, income tax payments and debt service among others. The Company believes that net cash provided by operating activities and ~~cash equivalents, $481.8 million of~~ available and unused funds under ~~the Company’s~~its revolving unsecured credit facilities ~~subject~~will be adequate to ~~certain financial covenants, $300.8 million~~meet its liquidity and capital needs for these items in ~~customer loans~~the short-term over the next 12 months and ~~fees and service charges receivable and $185.3 million~~also in ~~inventories. The Company had working capital of $345.6 million as of March 31, 2021.~~the long-term beyond the next 12 months.

As of March 31, 2021, the Company maintained an unsecured line of credit with a group of U.S. based commercial lenders (the “Credit Facility”) in the amount of $500.0 million. The Credit Facility matures on December 19, 2024. As of March 31, 2021, the Company had $44.0 million in outstanding borrowings and $3.4 million in outstanding letters of credit under the Credit Facility, leaving $452.6 million available for future borrowings, subject to certain financial covenants. The Credit Facility is unsecured and bears interest, at the Company’s option, of either (1) the prevailing London Interbank Offered Rate (“LIBOR”) (with interest periods of 1 week or 1, 2, 3 or 6 months at the Company’s option) plus a fixed spread of 2.5% or (2) the prevailing prime or base rate plus a fixed spread of 1.5%. The agreement has a LIBOR floor of 0%. Additionally, the Company is required to pay an annual commitment fee of 0.325% on the average daily unused portion of the Credit Facility commitment. The weighted-average interest rate on amounts outstanding under the Credit Facility at March 31, 2021 was 2.82% based on 1 week LIBOR. Under the terms of the Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Credit Facility also contains customary restrictions on the Company’s ability to incur additional debt, grant liens, make investments, consummate acquisitions and similar negative covenants with customary carve-outs and baskets. The Company was in compliance with the covenants of the Credit Facility as of March 31, 2021, and currently has the capacity to borrow a significant amount of the availability under the Credit Facility under the most restrictive covenant. During the three months ended March 31, 2021, the Company made net payments of $79.0 million pursuant to the Credit Facility.

As of March 31, 2021, the Company’s primary subsidiary in Mexico, First Cash S.A. de C.V., maintained an unsecured and uncommitted line of credit guaranteed by FirstCash, Inc. with a bank in Mexico (the “Mexico Credit Facility”) in the amount of $600.0 million Mexican pesos. The Mexico Credit Facility bears interest at the Mexican Central Bank’s interbank equilibrium rate plus a fixed spread of 2.5% and matures on March 9, 2023. Under the terms of the Mexico Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Company was in compliance with the covenants of the Mexico Credit Facility as of March 31, 2021. At March 31, 2021, the Company had no amount outstanding under the Mexico Credit Facility and $600.0 million Mexican pesos available for borrowings.

The Company regularly evaluates opportunities to optimize its capital structure, including through consideration of the issuance of debt or equity, the refinancing, repayment or restructuring of existing debt and the entry into interest rate hedge transactions, such as interest rate swap agreements, to fund ongoing cash needs, such as general corporate purposes, growth initiatives and its dividend and stock repurchase program.


~~Table of Contents~~

The continued developments and fluidity of the COVID-19 pandemic make it difficult to predict the impact of COVID-19 on the Company’s liquidity and presents a material uncertainty which could adversely affect the Company’s results of operations, financial condition and cash flows in the future. The Company’s cash flows depend heavily on the uninterrupted operation of its stores with sufficient customer activity, as the Company does not currently offer an online pawn lending or payment platform. If the Company became subject to closure or customer demand for the Company’s retail and lending products materially declines, the Company’s cash flows would be materially impaired and the Company could seek to raise or retain additional funds from a variety of sources, including but not limited to, repatriation of excess cash held in Latin America, the sale of assets, reductions in operating expenses, capital expenditures, dividends and share repurchases, the forbearance or deferral of operating expenses, the issuance of debt or equity securities, leveraging currently unencumbered real estate owned by the Company and/or changes to its management of current assets. The characteristics of the Company’s current assets, specifically the ability to rapidly liquidate gold jewelry inventory, which accounts for approximately 52% of total inventory, gives the Company flexibility to quickly increase cash flow, if necessary.

Other factors such as changes in general customer traffic and demand, loan balances, loan-to-value ratios, collection of pawn fees, merchandise sales, inventory levels, seasonality, operating expenses, administrative expenses, expenses related to merger and acquisition activities, tax rates, gold prices, foreign currency exchange rates and the pace of new store expansion and acquisitions, affect the Company’s liquidity. Regulatory developments affecting the Company’s operations may also impact profitability and liquidity. See “Regulatory Developments.” A prolonged reduction in earnings and EBITDA could limit the Company’s future ability to fully borrow under its credit facilities under current leverage covenants. Additionally, potential disruptions to the Company’s business resulting from COVID-19 could adversely impact the Company’s liquidity in the future.Expand Pawn Operations

The Company intends to continue expansion through new store openings, primarily in Latin ~~America and through acquisitions both in the U.S. and Latin~~ America. ~~Additionally, as opportunities arise at reasonable valuations,~~For 2022, the Company ~~may continue~~expects to ~~purchase real estate from its landlords at existing stores or in conjunction with pawn store acquisitions.~~

~~A total of 24 new stores were opened during the three months ended March 31, 2021. The impacts of COVID-19 will likely limit the number of 2021 openings to a total of 50~~add up to 60 de novo full-service pawn locations in Latin America. Future store openings remain subject to uncertainties related to the COVID-19 pandemic, including but not limited to, the ability to continue construction projects and obtain necessary licenses and permits, utility services, store equipment, supplies and staffing.

The Company continually looks for, and is presented with, potential pawn store acquisition opportunities and will evaluate potential acquisitions based upon growth potential, purchase price, available liquidity, debt covenant restrictions, strategic fit and quality of management personnel, among other factors. ~~The Company acquired two~~

Although viewed by management as a discretionary expenditure not required to operate its pawn stores, the Company may continue to purchase real estate from its landlords at existing stores or in ~~the U.S. during the three months ended March 31, 2021 for a purchase price of $1.3 million, net of cash acquired and subject to future post-closing adjustments. In addition, the~~conjunction with pawn store acquisitions as opportunities arise at reasonable valuations. The Company purchased the real estate at 12six store locations, primarily from landlords at existing stores, for a cumulative purchase price of ~~$14.4~~$10.2 million during the three months ended March 31, ~~2021.~~2022.

~~The following tables set forth certain historical information with respect to the Company’s sources and uses of cash and other key indicators of liquidity (dollars in thousands):~~

Three Months Ended
March 31,
2021 2020
Cash flow provided by operating activities $ 69,174 $ 77,385
Cash flow provided by investing activities $ 17,258 $ 26,604
Cash flow used in financing activities $ (96,727) $ (72,804)

As of March 31,
2021 2020
Working capital $ 345,644 $ 466,052
Current ratio 2.6:1 3.3:1
Liabilities to equity ratio 0.8:1 0.9:1
Net Debt Ratio (1)
2.1:1 1.9:1

~~(1)Adjusted EBITDA, a component of the Net Debt Ratio, is a non-GAAP financial measure. See “Non-GAAP Financial Information” for a calculation of the Net Debt Ratio.~~

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Net cash provided by operating activities decreased $8.2 million, or 11%, from $77.4 million for the three months ended March 31, 2020 to $69.2 million for the three months ended March 31, 2021 due to net changes in certain non-cash adjustments to reconcile net income to operating cash flow and net changes in other operating assets and liabilities (as detailed in the consolidated statements of cash flows), and an increase in net income of $0.8 million.Expand Retail POS Payment Solutions Operations

~~Net cash provided by investing activities decreased $9.3 million, or 35%,~~AFF will continue to promote and build relationships with existing customers and merchants and believes there is an opportunity to increase the share of existing merchants’ overall transaction volumes. While existing merchant partner relationships represent a significant source of AFF’s origination volumes, the Company believes there are also many more untapped traditional and e-commerce merchants providing goods and services to customers that could benefit from ~~$26.6 million for the three months ended March 31, 2020~~offering AFF’s retail POS payment solutions. AFF has made, and intends to ~~$17.3 million for the three months ended March 31, 2021. Cash flows from investing activities included funding~~continue to make, investments in its marketing team to drive awareness of ~~pawn store acquisitions, purchases of furniture, fixtures, equipment~~AFF’s products at its merchant partners to increase utilization and ~~improvements, which includes capital expenditures for improvements~~encourage repeat business through increased marketing directly to ~~existing stores and for new store openings and other corporate assets, and discretionary purchases of store real property.~~AFF’s customers. In addition, ~~cash flows related~~AFF has made, and intends to ~~net fundings/repayments of pawn loans are included~~continue to make, investments in ~~investing activities. The Company paid $1.2 million in cash related to current~~its unique and prior-year store acquisitions, $9.5 million for furniture, fixtures, equipment and improvements and $14.4 million for discretionary store real property purchases during the three months ended March 31, 2021 compared to $5.5 million, $10.6 million and $9.6 million in the prior-year period, respectively. The Company received funds from a net decrease in pawn loans of $42.4 million during the three months ended March 31, 2021 compared to a net decrease of $52.3 million during the three months ended March 31, 2020.proprietary decisioning platform.

~~Net cash used in financing activities increased $23.9 million, or 33%, from $72.8 million for the three months ended March 31, 2020~~Return of Capital to $96.7 million for the three months ended March 31, 2021. Net payments on the credit facilities were $79.0 million during the three months ended March 31, 2021 compared to net borrowings of $18.9 million during the three months ended March 31, 2020. The Company funded $5.0 million worth of share repurchases and paid dividends of $11.1 million during the three months ended March 31, 2021, compared to funding $80.3 million worth of share repurchases and dividends paid of $11.3 million during the three months ended March 31, 2020. In addition, the Company paid $1.7 million in withholding taxes on net share settlements of restricted stock unit awards during the three months ended March 31, 2021.Shareholders

In April ~~2021,~~2022, the Company’s Board of Directors declared a $0.30 per share second quarter cash dividend on common shares outstanding, or an aggregate of ~~$12.3~~$14.2 million based on the March 31, ~~2021~~2022 share count, ~~which will~~to be paid on May ~~28, 2021~~31, 2022 to stockholders of record as of May ~~14, 2021.~~16, 2022. While the Company currently expects to continue the payment of quarterly cash dividends, the amount, declaration and payment of cash dividends in the future (quarterly or otherwise) will be made by the Board of Directors, from time to time, subject to the Company’s financial condition, results of operations, business requirements, compliance with legal requirements, debt covenant restrictions and other relevant factors, including the impact of COVID-19.

During the three months ended March 31, ~~2021,~~2022, the Company repurchased a total of 1,048,000 shares of common stock at an aggregate cost of $72.2 million and an average cost per share of $68.87 to complete the $100.0 million share repurchase program authorized in January 2021. During the three months ended March 31, 2021, the Company repurchased 84,000 shares of common stock at an aggregate cost of $5.0 million and an average cost per share of ~~$59.06, and during three months ended March 31, 2020, repurchased 981,000~~$59.06. In April 2022, the Board of Directors approved a new share repurchase authorization of up to $100.0 million of common shares, of ~~common stock at an aggregate cost of $80.3~~which the entire $100.0 million ~~and an average cost per share of $81.84. The Company has approximately $116.9 million of remaining availability under its~~is currently ~~authorized stock repurchase programs.~~remaining. While the Company intends to continue repurchases under its active share repurchase ~~programs,~~program, future share repurchases are subject to a variety of factors, including, but not limited to, the level of cash balances, liquidity needs, credit availability, debt covenant restrictions, general business and economic conditions, regulatory requirements, the market price of the Company’s stock, dividend policy and the availability of alternative investment ~~opportunities, including acquisitions, and the impact~~opportunities.

Sources of ~~COVID-19.~~Liquidity

The ~~following table provides purchases made by~~Company regularly evaluates opportunities to optimize its capital structure, including through consideration of the ~~Company~~issuance of ~~shares of its common stock under each share repurchase program in effect during the three months ended March 31, 2021 (dollars in thousands):~~

Plan Authorization Date Plan Completion Date Dollar Amount Authorized Shares Purchased in 2021 Dollar Amount Purchased in 2021 Remaining Dollar Amount Authorized For Future Purchases
January 28, 2020 Currently active $ 100,000 84,000 $ 4,967 $ 16,860
January 27, 2021 Currently active 100,000 — — 100,000
Total 84,000 $ 4,967 $ 116,860

debt or equity, to refinance existing debt and to enter into interest rate hedge transactions, such as interest rate swap agreements. As of March 31, ~~2021,~~2022, the Company’s primary sources of liquidity were $113.3 million in cash and cash equivalents and $308.9 million of available and unused funds under the Company’s revolving unsecured credit facilities, subject to certain financial covenants (see Note 7 of Notes to Consolidated Financial Statements). The Company had working capital of $651.8 million as of March 31, 2022.

The Company’s cash and cash equivalents as of March 31, 2022 included $36.5 million held by its foreign subsidiaries. These cash balances, which are primarily held in Mexican pesos, are associated with foreign earnings the Company ~~had contractual commitments~~has asserted are indefinitely reinvested and which the Company primarily plans to ~~deliver~~use to support its continued growth plans outside the U.S. through funding of capital expenditures, acquisitions, operating expenses or other similar cash needs of the Company’s foreign operations.

The Company’s liquidity is affected by a ~~total~~number of ~~12,000~~factors, including changes in general customer traffic and demand, pawn loan balances, loan-to-value ratios, collection of pawn fees, merchandise sales, inventory levels, LTO and finance receivable originations, collection of lease and finance receivable payments, seasonality, operating expenses, administrative expenses, expenses related to merger and acquisition activities, earnout payments associated with the AFF Acquisition, litigation related expenses, tax rates, gold ounces between the months of April 2021 and December 2021 at a weighted-average price of $1,855 per ounce. The ounces required to be delivered over this time period are within historical scrap gold volumesprices, foreign currency exchange rates and the pace of new pawn store expansion and acquisitions. Additionally, a prolonged reduction in earnings and EBITDA could limit the Company’s future ability to fully borrow on its credit facilities under current leverage covenants. Regulatory developments affecting the Company’s operations may also impact profitability and liquidity. See “Regulatory Developments.”

If needed, the Company ~~expects~~could seek to ~~have~~raise additional funds from a variety of sources, including, but not limited to, repatriation of excess cash held in Latin America, the ~~required~~sale of assets, reductions in operating expenses, capital expenditures and dividends, the forbearance or deferral of operating expenses, the issuance of debt or equity securities, leveraging currently unencumbered real estate owned by the Company and/or changes to its management of current assets. The characteristics of the Company’s current assets, specifically the ability to rapidly liquidate gold ~~ounces~~jewelry inventory, which accounts for approximately 50% of total inventory, give the Company flexibility to ~~meet the commitments as they come due.~~quickly increase cash flow, if necessary.

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Cash Flows and Liquidity Metrics

The following tables set forth certain historical information with respect to the Company’s sources and uses of cash and other key indicators of liquidity (dollars in thousands):


	Three Months Ended March 31,
	2022		2021
Cash flow provided by operating activities	$	120,145	$	69,174
Cash flow provided by investing activities	$	183	$	17,258
Cash flow used in financing activities	$	(127,895)	$	(96,727)


		As of March 31,
		2022			2021
Working capital		$	651,802		$	345,644
Current ratio	2.7:1			2.6:1

Cash Flow Provided by Operating Activities

Net cash provided by operating activities increased $51.0 million, or 74%, from $69.2 million for the three months ended March 31, 2021 to $120.1 million for the three months ended March 31, 2022, due to net changes in certain non-cash adjustments to reconcile net income to operating cash flow and net changes in other operating assets and liabilities (as detailed in the consolidated statements of cash flows), partially offset by a decrease in net income of $5.7 million.

Cash Flow Provided by Investing Activities

Net cash provided by investing activities decreased $17.1 million, or 99%, from $17.3 million for the three months ended March 31, 2021 to $0.2 million for the three months ended March 31, 2022. Cash flows from investing activities are utilized primarily to fund acquisitions, purchases of furniture, fixtures, equipment and improvements, which includes capital expenditures for improvements to existing stores and for new pawn store openings and other corporate assets, and discretionary purchases of store real property. In addition, cash flows related to the funding of new pawn loans net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral and finance receivables are included in investing activities. The Company paid $7.0 million for furniture, fixtures, equipment and improvements and $10.2 million for discretionary pawn store real property purchases during the three months ended March 31, 2022 compared to $9.5 million and $14.4 million in the prior-year period, respectively. The Company paid $1.2 million in cash related to pawn store acquisitions during the three months ended March 31, 2021. The Company received funds from a net decrease in pawn loans of $17.4 million during the three months ended March 31, 2022 and $42.4 million during the three months ended March 31, 2021, and the Company received funds from a net decrease in finance receivables of $0.1 million during the three months ended March 31, 2022.

Cash Flow Used in Financing Activities

Net cash used in financing activities increased $31.2 million, or 32%, from $96.7 million for the three months ended March 31, 2021 to $127.9 million for the three months ended March 31, 2022. Net payments on the credit facilities were $41.0 million during the three months ended March 31, 2022 compared to net payments of $79.0 million during the three months ended March 31, 2021. The Company funded $72.2 million for share repurchases and paid dividends of $14.5 million during the three months ended March 31, 2022, compared to funding $5.0 million of share repurchases and dividends paid of $11.1 million during the three months ended March 31, 2021. In addition, the Company paid withholding taxes on net share settlements of restricted stock awards during the three months ended March 31, 2021 of $1.7 million.

REGULATORY DEVELOPMENTS

The ~~Company remains~~Company’s pawn, LTO and retail finance businesses are subject to significant regulation ~~of its pawn and general business operations~~ in all of the jurisdictions in which it operates. Existing regulations and regulatory developments are further and more completely described under “Governmental Regulation” in Part I, Item 1 of the Company’s ~~2020~~2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February ~~1, 2021.~~28, 2022. There have been no material changes in regulatory developments directly affecting the Company since December 31, ~~2020.~~2021.

In January 2021, the Illinois General Assembly passed the Predatory Loan Prevention Act (“PDLA”) that caps annual effective interest rates at 36% on most consumer loans, including payday and car title loans. On March 23, 2021, the governor of Illinois signed the PDLA into law, making it effective immediately. The Company does not believe the PDLA applies to collateralized pawn loans, and to date no effort has been made by regulators to assert that it applies. However, there can be no assurance that the Illinois authorities or other interested stakeholders will in the future interpret the PDLA to include collateralized pawn loans. The Company had 25 pawn stores located in Illinois as of March 31, 2021.


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NON-GAAP FINANCIAL INFORMATION

The Company uses certain financial calculations such as adjusted net income, adjusted diluted earnings per share, EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow, adjusted retail POS payment solutions segment metrics and constant currency results as factors in the measurement and evaluation of the Company’s operating performance and period-over-period growth. The Company derives these financial calculations on the basis of methodologies other than GAAP, primarily by excluding from a comparable GAAP measure certain items the Company does not consider to be representative of its actual operating performance. These financial calculations are “non-GAAP financial measures” as defined under the SEC rules. The Company uses these non-GAAP financial measures in operating its business because management believes they are less susceptible to variances in actual operating performance that can result from the excluded items, other infrequent charges and currency fluctuations. The Company presents these financial measures to investors because management believes they are useful to investors in evaluating the primary factors that drive the Company’s core operating performance and provide greater transparency into the Company’s results of operations. However, items that are excluded and other adjustments and assumptions that are made in calculating these non-GAAP financial measures are significant components in understanding and assessing the Company’s financial performance. These non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, the Company’s GAAP financial measures. Further, because these non-GAAP financial measures are not determined in accordance with GAAP and are thus susceptible to varying calculations, the non-GAAP financial measures, as presented, may not be comparable to other ~~similarly titled~~similarly-titled measures of other companies.

While acquisitions are an important part of the Company’s overall strategy, the Company has adjusted the applicable financial calculations to exclude merger and acquisition expenses, including the Company’s transaction expenses incurred in connection with its acquisition of AFF, and the impacts of purchase accounting with respect to the AFF acquisition in order to allow more accurate comparisons of the financial results to prior periods. In addition, the Company does not consider these merger and acquisition expenses to be related to the organic operations of the acquired businesses or its continuing operations, and such expenses are generally not relevant to assessing or estimating the long-term performance of the acquired businesses. Merger and acquisition expenses include incremental costs directly associated with merger and acquisition activities, including professional fees, legal expenses, severance, retention and other employee-related costs, contract breakage costs and costs related to the consolidation of technology systems and corporate facilities, among others.

The Company has certain leases in Mexico which are denominated in U.S. dollars. The lease liability of these U.S. dollar denominated leases, which is considered a monetary liability, is remeasured into Mexican pesos using current period exchange rates, resulting in the recognition of foreign currency exchange gains or losses. The Company has adjusted the applicable financial measures to exclude these remeasurement gains or losses because they are non-cash, non-operating items that could create volatility in the Company’s consolidated results of operations due to the magnitude of the end of period lease liability being remeasured, and to improve comparability of current periods presented with prior periods.

In conjunction with the Cash America merger in 2016, the Company recorded certain lease intangibles related to ~~above~~above- or ~~below market~~below-market lease liabilities of Cash America which are included in the operating lease right of use asset on the consolidated balance sheets. As the Company continues to opportunistically purchase real estate from landlords at certain Cash America stores, the associated lease intangible, if any, is ~~written-off~~written off and gain or loss is recognized. The Company has adjusted the applicable financial measures to exclude these gains or losses given the variability in size and timing of these transactions and because they are non-cash, non-operating gains or losses. The Company believes this improves comparability of operating results for current periods presented with prior periods.


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Adjusted Net Income and Adjusted Diluted Earnings Per Share

Management believes the presentation of adjusted net income and adjusted diluted earnings per share provides investors with greater transparency and provides a more complete understanding of the Company’s financial performance and prospects for the future by excluding items that management believes are non-operating in nature and not representative of the Company’s core operating ~~performance of its continuing operations.~~performance. In addition, management believes the adjustments shown below are useful to investors in order to allow them to compare the Company’s financial results for the current periods presented with the prior periods presented.

The following table provides a reconciliation between net income and diluted earnings per share calculated in accordance with GAAP to adjusted net income and adjusted diluted earnings per share, which are shown net of tax (in thousands, except per share amounts):

Three Months Ended March 31,
2021 2020
In Thousands Per Share In Thousands Per Share
Net income and diluted earnings per share, as reported $ 33,715 $ 0.82 $ 32,918 $ 0.78
Adjustments, net of tax:
Merger and acquisition expenses 116 — 50 —
Non-cash foreign currency loss related to lease liability 421 0.01 3,069 0.07
Non-cash write-off of certain Cash America merger related lease intangibles 676 0.02 2,795 0.07
Non-cash impairment of certain other assets (1)
— — 1,463 0.04
Adjusted net income and diluted earnings per share $ 34,928 $ 0.85 $ 40,295 $ 0.96


	Three Months Ended March 31,
	2022				2021
	In Thousands		Per Share		In Thousands		Per Share
Net income and diluted earnings per share, as reported	$	28,005	$	0.58	$	33,715	$	0.82
Adjustments, net of tax:




Merger and acquisition expenses	511		0.01		116		—
Non-cash foreign currency (gain) loss related to lease liability	(484)		(0.01)		421		0.01
AFF purchase accounting adjustments, net (1)	28,703		0.60		—		—
Impairments and dispositions of certain other assets	136		—		676		0.02



Adjusted net income and diluted earnings per share	$	56,871	$	1.18	$	34,928	$	0.85

(1)~~Impairment~~Includes $12.5 million related to the amortization of purchase accounting adjustments to record acquired finance receivables at fair value, $10.9 million related to the amortization of acquired intangible assets, $3.3 million related to the amortization of purchase accounting adjustments to record acquired leased merchandise at fair value and a ~~non-operating asset in which~~$2.0 million loss on the ~~Company determined that an other than temporary impairment existed as~~revaluation of ~~March 31, 2020.~~AFF contingent acquisition consideration (all shown net of tax).

The following table provides a reconciliation of the gross amounts, the impact of income taxes and the net amounts for the adjustments included in the table above (in thousands):

Three Months Ended March 31,
2021 2020
Pre-tax Tax After-tax Pre-tax Tax After-tax
Merger and acquisition expenses $ 166 $ 50 $ 116 $ 68 $ 18 $ 50
Non-cash foreign currency loss related to lease liability 602 181 421 4,384 1,315 3,069
Non-cash write-off of certain Cash America merger related lease intangibles 878 202 676 3,630 835 2,795
Non-cash impairment of certain other assets — — — 1,900 437 1,463
Total adjustments $ 1,646 $ 433 $ 1,213 $ 9,982 $ 2,605 $ 7,377


	Three Months Ended March 31,
	2022						2021
	Pre-tax		Tax		After-tax		Pre-tax		Tax		After-tax
Merger and acquisition expenses	$	665	$	154	$	511	$	166	$	50	$	116
Non-cash foreign currency (gain) loss related to lease liability	(692)		(208)		(484)		602		181		421
AFF purchase accounting adjustments, net	37,277		8,574		28,703		—		—		—
Impairment and dispositions of certain other assets	177		41		136		878		202		676


Total adjustments	$	37,427	$	8,561	$	28,866	$	1,646	$	433	$	1,213

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Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA

The Company defines EBITDA as net income before income taxes, depreciation and amortization, interest expense and interest income and adjusted EBITDA as EBITDA adjusted for certain items, as listed below, that management considers to be non-operating in nature and not representative of its actual operating performance. The Company believes EBITDA and adjusted EBITDA are commonly used by investors to assess a company’s financial performance and adjusted EBITDA is used as a starting point in the calculation of the ~~Net Debt Ratio~~consolidated total debt ratio as defined in the Company’s senior unsecured ~~notes covenants.~~notes. The following table provides a reconciliation of net income to EBITDA and adjusted EBITDA ~~(dollars in~~(in thousands):


								Trailing Twelve														Trailing Twelve
		Three Months Ended				Months Ended					Three Months Ended								Months Ended
		March 31,				March 31,					March 31,								March 31,
		2021		2020			2021		2020					2022			2021			2022	2021
Net income	Net income	$	33,715	$	32,918			$	107,376			$	154,881		Net income	$	28,005	$	33,715			$	119,199	$	107,376
Income taxes			12,556		12,799				36,877				56,604
Provision for income taxes															Provision for income taxes		9,004		12,556				38,041		36,877
Depreciation and amortization	Depreciation and amortization		10,612		10,674				42,043				42,704		Depreciation and amortization		25,542		10,612				60,836		42,043
Interest expense	Interest expense		7,230		8,418				28,156				34,083		Interest expense		16,221		7,230				41,377		28,156
Interest income	Interest income		(158)		(185)				(1,513)				(1,036)		Interest income		(676)		(158)				(1,214)		(1,513)
EBITDA	EBITDA		63,955		64,624				212,939				287,236		EBITDA		78,096		63,955				258,239		212,939
Adjustments:	Adjustments:														Adjustments:
Merger and acquisition expenses	Merger and acquisition expenses		166		68				1,414				1,685		Merger and acquisition expenses		665		166				15,948		1,414
Non-cash foreign currency loss (gain) related to lease liability			602		4,384				(2,533)				3,791
Non-cash foreign currency (gain) loss related to lease liability															Non-cash foreign currency (gain) loss related to lease liability		(692)		602				(650)		(2,533)
AFF purchase accounting adjustments, net (1)															AFF purchase accounting adjustments, net (1)		23,102		—				51,593		—
Impairments and dispositions of certain other assets															Impairments and dispositions of certain other assets		177		878				248		4,412
Loss on extinguishment of debt	Loss on extinguishment of debt		—		—				11,737				—		Loss on extinguishment of debt		—		—				—		11,737
Non-cash write-off of certain Cash America merger related lease intangibles			878		3,630				4,303				3,630
Non-cash impairment of certain other assets			—		1,900				—				1,900

Consumer lending wind-down costs and asset impairments			—		—				109				3,454

Adjusted EBITDA	Adjusted EBITDA	$	65,601	$	74,606			$	227,969			$	301,696		Adjusted EBITDA	$	101,348	$	65,601			$	325,378	$	227,969

Net Debt Ratio calculation:
Total debt (outstanding principal)								$	544,000			$	655,519
Less: cash and cash equivalents									(54,641)				(75,464)
Net debt								$	489,359			$	580,055
Adjusted EBITDA								$	227,969			$	301,696
Net Debt Ratio (Net Debt divided by Adjusted EBITDA)								2.1		:1		1.9		:1

(1)Excludes $14.2 million and $16.2 million of amortization expense related to identifiable intangible assets as a result of the AFF Acquisition for the three months and trailing twelve months ended March 31, 2022, respectively, which is already included in the add back of depreciation and amortization to calculate EBITDA.

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Free Cash Flow and Adjusted Free Cash Flow

For purposes of its internal liquidity assessments, the Company considers free cash flow and adjusted free cash flow. The Company defines free cash flow as cash flow from operating activities less purchases of furniture, fixtures, equipment and improvements and net fundings/repayments of pawn loan and finance receivables, which are considered to be operating in nature by the Company but are included in cash flow from investing activities. Adjusted free cash flow is defined as free cash flow adjusted for merger and acquisition expenses paid that management considers to be non-operating in nature.

Free cash flow and adjusted free cash flow are commonly used by investors as an additional ~~measure~~measures of cash generated by business operations that may be used to repay scheduled debt maturities and debt service or, following payment of such debt obligations and other non-discretionary items, that may be available to invest in future growth through new business development activities or acquisitions, repurchase stock, pay cash dividends or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company’s ability to generate cash flow from business operations and the impact that this cash flow has on the Company’s liquidity. However, free cash flow and adjusted free cash flow have limitations as analytical tools and should not be considered in isolation or as a substitute for cash flow from operating activities or other income statement data prepared in accordance with GAAP. The following table reconciles cash flow from operating activities to free cash flow and adjusted free cash flow (in thousands):

Trailing Twelve
Three Months Ended Months Ended
March 31, March 31,
2021 2020 2021 2020
Cash flow from operating activities $ 69,174 $ 77,385 $ 214,053 $ 237,284
Cash flow from certain investing activities:
Loan receivables, net (1)
42,394 52,279 97,123 44,469
Purchases of furniture, fixtures, equipment and improvements (9,491) (10,581) (36,453) (45,234)
Free cash flow 102,077 119,083 274,723 236,519
Merger and acquisition expenses paid, net of tax benefit 116 50 1,057 1,222
Adjusted free cash flow $ 102,193 $ 119,133 $ 275,780 $ 237,741


						Trailing Twelve
	Three Months Ended				Months Ended
	March 31,				March 31,
	2022		2021			2022		2021
Cash flow from operating activities	$	120,145	$	69,174		$	274,275	$	214,053
Cash flow from certain investing activities:
Pawn loans, net (1)	17,383		42,394			(98,351)		96,603
Finance receivables, net	61		—			(5,783)		520
Purchases of furniture, fixtures, equipment and improvements	(7,028)		(9,491)			(39,559)		(36,453)
Free cash flow	130,561		102,077			130,582		274,723
Merger and acquisition expenses paid, net of tax benefit	511		116			12,267		1,057
Adjusted free cash flow	$	131,072	$	102,193		$	142,849	$	275,780

(1)Includes the funding of new loans net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral.

Retail POS Payment Solutions Segment Purchase Accounting Adjustments

Management believes the presentation of certain retail POS payment solutions segment metrics adjusted to exclude the impacts of purchase accounting provides investors with greater transparency and provides a more complete understanding of AFF’s financial performance and prospects for the future by excluding the impacts of purchase accounting, which management believes is non-operating in nature and not representative of AFF’s core operating performance. See the retail POS payment solutions segment tables in “Results of Operations” above for additional reconciliation of certain amounts adjusted to exclude the impacts of purchase accounting to as reported GAAP amounts.

Additionally, the following table provides a reconciliation of consolidated total revenue presented in accordance with GAAP to adjusted total revenue, which excludes the impacts of purchase accounting (in thousands):


	Three Months Ended March 31,
	2022		2021
Total revenue, as reported	$	659,839	$	407,939
Adjustments:
AFF purchase accounting adjustments (1)	16,173		—
Adjusted total revenue	$	676,012	$	407,939


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(1)Adjustment relates to the net amortization of the fair value premium on acquired finance receivables, which is recognized as an adjustment to interest income on an effective yield basis over the lives of the acquired finance receivables. See the retail POS payment solutions segment tables in “Results of Operations” above for additional segment level reconciliations.

Constant Currency Results

The Company’s reporting currency is the U.S. dollar. However, certain performance metrics discussed in this report are presented on a “constant currency” basis, which is considered a non-GAAP financial measure. The Company’s management uses constant currency results to evaluate operating results of business operations in Latin America, which are primarily transacted in local currencies.

The Company believes constant currency results provide valuable supplemental information regarding the underlying performance of its business operations in Latin America, consistent with how the Company’s management evaluates such performance and operating results. Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in local currencies using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons. Business operations in Mexico, Guatemala and Colombia are transacted in Mexican pesos, Guatemalan quetzales and Colombian pesos. The Company also has operations in El Salvador where the reporting and functional currency is the U.S. dollar. See the Latin America operations segment tables in “Results of Operations” above for additional reconciliation of certain constant currency amounts to as reported GAAP amounts.


~~Table of Contents~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to the Company’s operations result primarily from changes in interest rates, gold prices and foreign currency exchange rates and are described in detail in the Company’s ~~2020~~2021 Annual Report on Form 10-K. The impact of current-year fluctuations in ~~gold prices and~~ foreign currency exchange rates, in particular, are further discussed in Part I, Item 2 herein. The Company does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes. There have been no material changes to the Company’s exposure to market risks since December 31, ~~2020.~~2021.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934) as of March 31, ~~2021~~2022 (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company’s management is in the process of documenting and testing AFF’s internal control over financial reporting and expects to incorporate AFF into its annual assessment of internal control over financial reporting for the Company’s year ending December 31, 2022.

Limitations on Effectiveness of Controls and Procedures

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or internal controls will prevent all possible error and fraud. The Company’s disclosure controls and procedures are, however, designed to provide reasonable assurance of achieving their objectives, and the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective at that reasonable assurance level.


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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~There have been no material changes~~See Note 8 - Commitments and Contingencies of Notes to Consolidated Financial Statements contained in ~~the status~~Part I, Item 1 of ~~legal proceedings previously reported in the Company’s 2020 Annual Report on Form 10-K.~~this report which is incorporated to this Part II, Item 1 by reference.

ITEM 1A. RISK FACTORS

Important risk factors that could materially affect the Company’s business, financial condition or results of operations in future periods are described in Part I, Item 1A, “Risk Factors” of the Company’s ~~2020~~2021 Annual Report on Form 10-K. These factors are supplemented by those discussed under “Management’s Discussion And Analysis Of Financial Condition And Results Of Operations” and “Regulatory Developments” in Part I, Item 2 of this quarterly report and in “Governmental Regulation” in Part I, Item 1 of the Company’s ~~2020~~2021 Annual Report on Form 10-K. There have been no material changes in the Company’s risk factors from those in Part I, Item 1A, “Risk Factors” of the Company’s ~~2020~~2021 Annual Report on Form 10-K.


~~Table of Contents~~

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended March 31, ~~2021,~~2022, the Company repurchased a total of 1,048,000 shares of common stock at an aggregate cost of $72.2 million and an average cost per share of $68.87, and during the three months ended March 31, 2021, repurchased 84,000 shares of common stock at an aggregate cost of $5.0 million and an average cost per share of $59.06. The Company intends to continue repurchases under its active share repurchase ~~programs,~~program, including through open market transactions under trading plans in accordance with Rule 10b5-1 and Rule 10b-18 under the Exchange Act of 1934, as amended, subject to a variety of factors, including, but not limited to, the level of cash balances, liquidity needs, credit availability, debt covenant restrictions, general business and economic conditions, regulatory requirements, the market price of the Company’s stock, dividend policy and the availability of alternative investment ~~opportunities, including acquisitions, and the impact of COVID-19.~~opportunities.

The following table provides the information with respect to purchases made by the Company of shares of its common stock during each month a share repurchase program was in effect during the three months ended March 31, ~~2021~~2022 (dollars in thousands, except per share amounts):

Total
Number
Of Shares
Purchased Average
Price
Paid
Per Share Total Number Of
Shares Purchased
As Part Of Publicly
Announced Plans Approximate Dollar Value Of Shares That May Yet Be Purchased Under The Plans
January 1 through January 31, 2021 — $ — — $ 121,827
February 1 through February 28, 2021 84,000 59.06 84,000 116,860
March 1 through March 31, 2021 — — — 116,860
Total 84,000 59.06 84,000


	Total Number Of Shares Purchased	Average Price Paid Per Share		Total Number Of Shares Purchased As Part Of Publicly Announced Plans	Approximate Dollar Value Of Shares That May Yet Be Purchased Under The Plans
January 1 through January 31, 2022	—	$	—	—	$	72,217
February 1 through February 28, 2022	250,000	74.18		250,000	53,624
March 1 through March 31, 2022	798,000	67.21		798,000	—
Total	1,048,000	68.87		1,048,000

The following table provides information regarding purchases made by the Company of shares of its common stock under each share repurchase program in effect during the three months ended March 31, ~~2021~~2022 (dollars in thousands):


Plan Authorization Date	Plan Completion Date	Dollar Amount Authorized		Shares Purchased in 2022	Dollar Amount Purchased in 2022		Remaining Dollar Amount Authorized For Future Purchases
January 27, 2021	March 28, 2022	$	100,000	1,048,000	$	72,217	$	—

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable.


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ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.


~~Table of Contents~~

ITEM 6. EXHIBITS

Incorporated by Reference
Exhibit No. Exhibit Description Form File No. Exhibit Filing Date Filed Herewith
3.1
Amended and Restated Certificate of Incorporation
DEF 14A 0-19133 B 04/29/2004
3.2
Amendment to Amended and Restated Certificate of Incorporation
8-K 001-10960 3.1 09/02/2016
3.3
Amended and Restated Bylaws
X
31.1
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by Rick L. Wessel, Chief Executive Officer
X
31.2
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by R. Douglas Orr, Chief Financial Officer
X
32.1
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 provided by Rick L. Wessel, Chief Executive Officer
X
32.2
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 provided by R. Douglas Orr, Chief Financial Officer
X
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X
104 Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101) X

Incorporated by Reference

Exhibit No.

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed Herewith

3.1

Amended and Restated Certificate of Incorporation

DEF 14A

0-19133

04/29/2004

3.2

Amendment to Amended and Restated Certificate of Incorporation

8-K

001-10960

3.1

09/02/2016

3.3

Amended and Restated Certificate of Incorporation of FirstCash Holdings, Inc., dated December 16, 2021

8-K12B

001-10960

3.1

12/16/2021

3.4

Amended and Restated Bylaws of FirstCash Holdings, Inc., dated December 16, 2021

8-K12B

001-10960

3.2

12/16/2021

31.1

Certification Pursuant to Exchange Act Section 13(a)-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act, provided by Rick L. Wessel, Chief Executive Officer

31.2

Certification Pursuant to Exchange Act Section 13(a)-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act, provided by R. Douglas Orr, Chief Financial Officer

32.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, provided by Rick L. Wessel, Chief Executive Officer

32.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, provided by R. Douglas Orr, Chief Financial Officer

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101)

3442


Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Dated: ~~April 26, 2021~~May 2, 2022			FIRSTCASH HOLDINGS, INC.
			(Registrant)

			/s/ RICK L. WESSEL
			Rick L. Wessel
			Chief Executive Officer
			(On behalf of the Registrant)

			/s/ R. DOUGLAS ORR
			R. Douglas Orr
			Executive Vice President and Chief Financial Officer
			(As Principal Financial and Accounting Officer)

3543


PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income ~~(Loss)~~	3
	Consolidated Statements of Changes in Stockholders’ Equity	4
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	78
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1521
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3240
Item 4.	Controls and Procedures	3240

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	3241
Item 1A.	Risk Factors	3241
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3341
Item 3.	Defaults Upon Senior Securities	3341
Item 4.	Mine Safety Disclosures	3342
Item 5.	Other Information	3342
Item 6.	Exhibits	3442

SIGNATURES		3543


Nine months ending December 31, 2021	$	78,410
2022	84,948
2023	64,926
2024	42,188
2025	18,221
Thereafter	23,966
Total	$	312,659
Less amount of lease payments representing interest	(39,158)
Total present value of lease payments	$	273,501


	As of March 31,				As of December 31,
	2021		2020		2020
Revolving unsecured uncommitted credit facility, maturing 2023 (1)	$	0	$	25,519	$	0
Revolving unsecured credit facility, maturing 2024 (1)	44,000		330,000		123,000
5.375% senior unsecured notes due 2024 (2)	0		296,744		0
4.625% senior unsecured notes due 2028 (3)	493,108		0		492,916

Total long-term debt	$	537,108	$	652,263	$	615,916


	Three Months Ended March 31, 2021
	U.S. Operations		Latin America Operations		Corporate		Consolidated
Revenue:
Retail merchandise sales	$	189,957	$	82,085	$	0	$	272,042
Pawn loan fees	76,397		39,125		0		115,522
Wholesale scrap jewelry sales	9,203		11,172		0		20,375

Total revenue	275,557		132,382		0		407,939

Cost of revenue:
Cost of retail merchandise sold	106,530		50,623		0		157,153
Cost of wholesale scrap jewelry sold	7,513		9,684		0		17,197

Total cost of revenue	114,043		60,307		0		174,350

Net revenue	161,514		72,075		0		233,589

Expenses and other income:
Store operating expenses	95,247		42,077		0		137,324
Administrative expenses	0		0		30,999		30,999
Depreciation and amortization	5,382		4,263		967		10,612
Interest expense	0		0		7,230		7,230
Interest income	0		0		(158)		(158)
Merger and acquisition expenses	0		0		166		166
Loss on foreign exchange	0		0		267		267

Write-off of certain Cash America merger related lease intangibles	0		0		878		878

Total expenses and other income	100,629		46,340		40,349		187,318

Income (loss) before income taxes	$	60,885	$	25,735	$	(40,349)	$	46,271