EX-99.1 2 fd3271ex991.htm

Exhibit 99.1

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Safe Harbor Statement

• | Certain statements included in this presentation which are not historical in nature – including statements regarding the company’s and/or management’s strategies, beliefs, expectations, plans for new stores, plans and expected results for new products and services, projections of earnings and revenues, expected effect of regulatory pronouncements, potential legislation, or other predictions of the future – are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the Safe Harbor provisions for forward-looking statements contained in such Act.
• | Forward-looking statements are made based on assumptions involving certain known and unknown risks and uncertainties – many of which are beyond the company’s control – and other important factors that could cause actual results, performance or achievements to differ materially from expectations expressed or implied by such forward-looking statements. These risk factors and uncertainties are listed from time to time in the company’s filings with the Securities and Exchange Commission, including – but not limited to – our annual reports on Form 10-K for the years ending December 31, 2003 and 2004 and our reports on Form 10-Q for the periods ended March 31, 2005 and June 30, 2005.

Company Overview

• | Leading provider of specialty consumer finance products
| – | Pawn loans and related retail
| – | Payday advances and related financial services
• | Superior performance metrics and financial position
• | Significant growth through store expansion strategy

Company History

1988 | Founded – 3 pawn stores in Texas
Early 90’s | Goes public; multi-state pawn store roll-up acquisitions
Late 90’s | Payday lending acquisitions; introduction of payday product in pawn stores
| First pawn stores opened in Mexico
2001 to present | Expansion through new store openings: U.S. payday & Mexico pawn
2005 | Introduction of credit services product

Pawn Products

• | Pawn loans
| – | 30 day loan
| – | 10% to 20% monthly service fee
| – | Secured by personal property
| – | Many customers are unbanked or under-banked – no credit check required
• | Pawn-related retail
| – | Merchandise sales of forfeited pawn collateral
| – | Primarily jewelry, consumer electronics & tools

Pawn Retail Metrics

Trailing 12 Months: |  |  |  |
• Total merchandise margins |  |  | 39 | %
• Retail margins (excludes scrap jewelry sales) |  |  | 44 | %
• Inventory turns |  |  | 3.3 | x

Payday Advance Product

• | Payday Advances
| – | 7 to 31 day loan
| – | Requires proof of employment and bank account
| – | Secured by personal check held until due date
• | Financial Metrics
| – | 15% to 18% service charge per advance
| – | Annual loss provision in a range of 20% to 25% of service charges collected

Payday Advance Regulatory Landscape

• | Payday advances currently provided for under existing regulations in 38 states
| – | First Cash writes payday advances directly in six of these states
• | In most other states, payday lending is permitted using “bank funded” model
| – | First Cash uses bank funded model only in Texas
| – | New FDIC guidelines, effective July 1, do not allow customers to have outstanding bank funded payday advances for more than 90 days per year

Payday Advance-Related Credit Services

• | 31 states, including Texas, provide for credit service organizations (“CSO”s)
• | CSO provides customers access to a short-term loan funded by an independent consumer lending company
| – | Customer pays fee to CSO for its services:
|  | • processing of application
|  | • providing letter of credit
|  | • disbursement and collection of lender funds
| – | Customer pays interest to lender (at less than 10% APR)

First Cash - Texas Credit Services Product

• | First Cash Credit, Ltd., a wholly owned subsidiary, is a registered CSO in Texas. Credit services to be provided out of First Cash Pawn, First Cash Advance and Cash & Go, Ltd. locations.
• | Credit services fee is 20% of amount of credit requested by customer – maximum credit request is $1,000.
• | Independent lender underwrites and funds loans – interest rate of less than 10% annually.
• | Company will continue to provide bank funded payday advances. Customers who are denied credit by bank will be offered application for credit services product.
• | Company expects credit services revenues to more than offset expected decreases in payday advance service charges.

Comparison of Texas Payday Advance Models

|  | Existing Bank-Funded Model |  | New CSO Model
Maximum loan amount |  | $500 |  | $1,000
Rate charged to customers |  | 18% per loan |  | 20% CSO fee per loan*
Net fee realized by First Cash |  | Approx. 16% per loan |  | 20% per loan
Expected loss provision (as % of fee) |  | 20% to 25% |  | 20% to 25%

* - In addition, customer pays small interest charge to third-party lender. Interest capped at 10% APR.

Store Formats

Payday Advance/Credit Services Products |  |  |  | Pawn Products
Payday Advance Stores |  | Pawn Stores with Payday Advances |  | Pawn Only
• | Texas (First Cash Advance & Cash & Go JV) |  | • Texas |  | • Mexico
• | California |  | • South Carolina |  | • Maryland
• | Washington |  | • D.C. |  | • Virginia
• | Oregon |  | • Oklahoma |  | • Missouri
• | Illinois |  |  |  |
• | D.C. |  |  |  |

Superior Performance & Financial Position

• | Operating results
| – | Industry leading performance metrics
| – | Consistent growth
| – | Increasing margins
• | Financial Position
| – | Debt-free
| – | Strong cash flows

Operational Focus

• | Attention to key operational metrics:
| – | Loan growth
| – | Loan yields
| – | Retail margins
| – | Inventory management
• | Expense control important part of corporate culture
• | Sales associate & manager compensation plans reward store profitability

Use of Free Cash Flows

• | Growth funded from current cash flows
| – | Loan growth at new & existing stores
| – | Capital expenditures for new stores
| – | Start-up costs of new stores
• | Repurchased $24 million of stock over past 12 months

Recognition and Rankings

• | Forbes 200 Best Small Companies
| – | Recognized for three consecutive years: 2002, 2003 & 2004
• | Fortune Small Business 100
| – | America’s Fastest Growing Small Companies
| – | Recognized for two consecutive years: 2004 & 2005
• | Russell 2000 Index
| – | Added as component company effective June 25, 2004

Growth Strategy

• | New store openings in multiple markets
| – | United States
| – | Mexico
• | Multiple products
| – | Pawn loans & related retail
| – | Payday advances
| – | Credit services

Mexico Pawn Demographics

• | Over 80% of the population is estimated to be “unbanked”
• | 88% of all consumer transactions are made in cash
• | Estimated 2,500 Mexico pawnshops vs. 15,000+ in U.S.

New Store Financial Model

Cap Ex | $80,000 to $125,000
- Leasehold improvements |
- Computer & security equipment |
Working Capital (first year) | $80,000 to $150,000
- Operating cash |
- Loan funding |
- Inventory (pawn only) |
Start-up Losses | $40,000 to $60,000
- Pre-opening |
- First six months of operation |
Totals | $200,000 to $335,000

First Cash Summary

• | Industry leader
| – | Operational focus
| – | Strong cash flows and no debt
| – | 18 consecutive quarters of double digit EPS growth
• | Well-defined expansion strategy
| – | New store opening model
| – | Multiple product lines
| – | Geographic diversification
• | Meaningful growth goals
| – | 20% annual increase in store counts
| – | Short & long-term EPS growth