FCFS - FirstCash Reports Fourth Quarter and Full-Year Operating Results; Record Pawn Receivables Drive Strong Revenue and Earnings Growth; Company Adds 157 Pawn Stores in 2023; Declares Quarterly Cash Dividend | Benzinga

FORT WORTH, Texas, Feb. 01, 2024 (GLOBE NEWSWIRE) -- FirstCash Holdings, Inc. ("FirstCash" or the "Company") (NASDAQ:FCFS), the leading international operator of almost 3,000 retail pawn stores and a leading provider of retail point-of-sale ("POS") payment solutions through American First Finance ("AFF"), today announced operating results for the fourth quarter and full-year ended December 31, 2023. The Company also announced that the Board of Directors declared a quarterly cash dividend of $0.35 per share, which will be paid in February 2024.

Mr. Rick Wessel, chief executive officer, stated, "FirstCash posted impressive fourth quarter and full year results for 2023 with continued momentum from record pawn receivables and new store growth resulting in strong year-over-year increases in revenues and earnings. U.S. pawn receivables ended the year up 22% in total and 14% on a same-store basis, while LatAm pawn saw improving demand in the fourth quarter as well. AFF's fourth quarter results were also impressive, with gross transaction volumes up 14%, which drove similar growth in revenues and resulted in even stronger earnings growth.

"Utilizing its strong cash flows and balance sheet, FirstCash continued to invest in the long-term growth of its pawn and retail POS payment solutions platforms. In total, we added 157 pawn stores in 2023, including 96 in the U.S. primarily through multiple acquisitions, allowing us to enter four additional U.S. states. AFF continued to expand its market presence as well, posting a 26% net increase in the number of active retail and service locations as of year end. The growth in both of these platforms position us for further expected revenue and earnings growth in 2024."

This release contains adjusted financial measures, which exclude certain non-operating and/or non-cash income and expenses, that are non-GAAP financial measures. Please refer to the descriptions and reconciliations to GAAP of these and other non-GAAP financial measures at the end of this release.

Consolidated Operating Highlights

• Consolidated gross revenues topped $3 billion for the first time in the Company's history, totaling $3.2 billion for 2023, which represented an increase of 15% on a GAAP basis and 14% on an adjusted basis compared to the prior year. Consolidated revenues totaled $852 million in the fourth quarter, an increase of 14% on a GAAP basis and 13% on an adjusted basis compared to the prior-year quarter.
• Growth in earning assets combined with gross margin expansion helped drive increases in consolidated net revenues of 20% in the fourth quarter on a GAAP basis and 17% on an adjusted basis compared to the prior-year quarter. Full year net revenues increased 19% on a GAAP basis and 15% on an adjusted basis compared to the prior year.
• On a GAAP basis, prior-year diluted earnings per share included a significant non-cash gain ($0.47 for the 2022 fourth quarter and $1.91 for the full year 2022, net of tax) on the revaluation of contingent consideration related to the AFF acquisition. Due primarily to the significance of the prior-year non-cash gains, GAAP-basis diluted earnings per share for the fourth quarter of 2023 decreased 11% compared to the prior-year quarter and decreased 10% for the full year.
• Adjusted diluted earnings per share increased 24% in the fourth quarter and 17% for the full year compared to the respective prior-year periods. Adjusted results exclude certain non-operating and/or non-cash income and expenses as further detailed elsewhere in this release.
• While GAAP net income for the fourth quarter decreased 13% over the prior-year quarter, primarily due to the significant non-cash gain in the prior quarter described above, adjusted net income increased 21% compared to the prior-year quarter. For the full year, net income decreased 13% on a GAAP basis, however, net income increased 13% on an adjusted basis compared to the prior year.
• Adjusted EBITDA for the full year was $512 million, an increase of $74 million, or 17%, compared to the prior year. For the fourth quarter of 2023, adjusted EBITDA increased 24% compared to the prior-year quarter.

Store Base and Platform Growth

• Pawn Stores: For the full year of 2023, a total of 157 pawn locations were added, including 91 acquired locations and 66 new (de novo) stores, bringing the store count at December 31, 2023 to 2,997 locations. Fourth quarter activity included a total of 17 pawn locations added through a combination of acquisitions and store openings.
  
  By market, the Company reported the following store additions in 2023:
  • U.S. Pawn: Eight stores located in the states of Texas, Virginia and South Carolina were added in the fourth quarter through three separate acquisitions.
    
    For the full year, the Company added 96 locations, which is the most U.S. locations added in a year since the merger with Cash America in 2016. In total, the Company now has 1,183 U.S. pawn locations in 29 states and the District of Columbia.
    
    The Company also purchased the underlying real estate at 19 of its existing pawn stores during the fourth quarter. For the full year, the Company purchased the real estate at 43 locations, bringing the total number of owned U.S. locations to 337.
  • Latin America Pawn: Nine de novo locations were opened in Latin America during the fourth quarter of 2023, which included eight locations in Mexico and one in Guatemala.
    
    For the full year, 61 locations were opened in Latin America where the Company now has 1,814 total locations. The 61 de novo stores opened this year represent a 36% increase in the number of stores opened during 2023 compared to 2022.

• Retail POS Payment Solutions Merchant Partnerships:
  
  • AFF reported a 26% increase in the number of active merchant locations as of December 31, 2023 compared to a year ago.
  • At December 31, 2023, there were approximately 11,600 active retail and e-commerce merchant partner locations.
    

U.S. Pawn Segment Operating Results

• Segment pre-tax operating income in the fourth quarter of 2023 was $98 million, an increase of $15 million, or 18%, compared to the prior-year quarter. The resulting segment pre-tax operating margin increased to 26% for the fourth quarter of 2023, an improvement over the 25% margin for the prior-year quarter.
• Segment pre-tax operating income for the full year of 2023 was $336 million, an increase of $45 million, or 16%, compared to the prior year. The resulting segment pre-tax operating margin increased to 25% for the full year compared to 23% for the prior year.
• Pawn loan fee revenue increased 21% for the fourth quarter and 17% for the full year, while on a same-store basis, pawn loan fee revenue increased 11% compared to both of the respective prior-year periods. The increased pawn loan fee revenue reflected store growth, continued growth in demand for pawn loans and increased portfolio yield driven by improved customer redemption rates.
• Pawn receivables continued to grow to record levels, increasing 22% in total at December 31, 2023 compared to the prior year. Same-store pawn receivables accelerated sequentially to a 14% quarter-over-quarter increase from the 11% quarter-over-quarter increase in the third quarter of 2023. The increase in total pawn receivables was driven by a 7% increase in the U.S. store count coupled with the impressive 14% same-store increase. The same-store increase was driven by a 5% increase in average loan size and an 8% increase in the number of loans outstanding.
• Total retail merchandise sales increased 10% in the fourth quarter and 4% for the full year compared to the respective prior-year periods. Same-store retail sales increased less than 1% for the quarter and decreased 2% for the full year compared to the same prior-year periods. While the Company believes merchandise sales continue to be slightly moderated due to lower than normal inventory, all of the above sales growth metrics represented sequential improvements compared to growth rates reported for the third quarter of 2023.
• Retail sales margins of 42% for the fourth quarter were consistent with the prior-year quarter and continue to be driven by solid demand for value-priced, pre-owned merchandise and low levels of aged inventory. Full year retail margins improved to 43% in 2023 compared to 42% in 2022.
• Annualized inventory turnover improved to 2.8 times for the twelve months ended December 31, 2023 compared to prior-year annualized inventory turnover of 2.7 times. Inventories aged greater than one year at December 31, 2023 remained extremely low at 1%.
• Operating expenses for the fourth quarter increased 15% and 11% for the full year as compared to the prior-year periods, primarily due to store additions. On a same-store basis, expenses increased a modest 3% for the quarter and 5% for the full year.

Latin America Pawn Segment Operating Results

Note: Certain growth rates below are calculated on a constant currency basis, a non-GAAP financial measure defined at the end of this release. The average Mexican peso to U.S. dollar exchange rate for the fourth quarter of 2023 was 17.6 pesos / dollar, a favorable change of 11% versus the comparable prior-year period, and for the twelve-month period ended December 31, 2023 was 17.8 pesos / dollar, a favorable change of 11% versus the prior-year period.

• For the full year of 2023, segment pre-tax operating income increased $14 million, or 10%. The resulting pre-tax operating margin was 19% for the full year compared to 21% in the prior year. Fourth quarter segment pre-tax operating income increased 5% with a resulting pre-tax operating margin of 20% compared to 21% in the prior-year quarter. On a constant currency basis, which excludes the favorable foreign exchange impact in 2023, segment income for the full year was flat, and down 4% for the quarter, compared to the prior-year periods.
• Pawn loan fees increased 15%, or 3% on a constant currency basis, in the fourth quarter of 2023 as compared to the prior-year quarter, while same-store pawn loan fees increased 14%, or 3% on a constant currency basis, compared to the prior-year quarter. For the full year, pawn loan fees increased 19%, or 5% on a constant currency basis, compared to the prior year, and increased 18%, or 5% on a constant currency basis, on a same-store basis.
• Pawn receivables at December 31, 2023 increased 18%, or 3% on a constant currency basis, compared to the prior year. On a same-store basis, pawn receivables increased 17%, or 3% on a constant currency basis, compared to the prior year. These growth rates all represented sequential increases over the comparable growth rates at the end of the third quarter when pawn receivables were up 15% in total and flat on a constant currency basis over the prior year.
• Retail merchandise sales in the fourth quarter of 2023 increased 12%, or flat on a constant currency basis, compared to the prior-year quarter. Same-store retail merchandise sales in the fourth quarter of 2023 increased 11% on a U.S. dollar basis, or decreased 1% on a constant currency basis. For the full year, retail merchandise sales increased 19%, or 6% on a constant currency basis, compared to the prior year, while same-store retail merchandise sales increased 18%, or 5% on a constant currency basis, compared to the prior year.
• Retail margins remained consistent at 35% for both the fourth quarter of 2023 and the full year. Annualized inventory turnover improved to 4.4 times in 2023 versus 4.2 times in 2022, while inventories aged greater than one year at December 31, 2023 remained extremely low at 1%.
• Operating expenses increased 24% in total, or 12% on a constant currency basis, compared to the prior-year quarter while full year operating expenses increased 26%, or 13% on a constant currency basis, compared to last year. The increase in expenses reflected increased store counts, accelerated store opening activity over the prior year and increases in the federally mandated minimum wage and other required benefit programs and other inflationary impacts.

Retail POS Payment Solutions Segment - American First Finance (AFF) Operating Results

Note: The reconciliations of GAAP revenues and earnings for this segment to adjusted revenues and earnings are provided and described in more detail in the Retail POS Payment Solutions Segment Results section of this release.

• Fourth quarter segment pre-tax operating income totaled $44 million, an increase of 94% on a GAAP basis and 39% on an adjusted basis, which excludes the non-cash impacts of fair value purchase accounting requirements in the 2022 results, over the prior-year quarter. For the full year, segment pre-tax operating income was $132 million, an increase of 123% on a GAAP basis and 21% on an adjusted basis over the prior year.
  
  
• Segment revenues for the quarter, comprised of lease-to-own ("LTO") fees and interest and fees on finance receivables, increased 17% on a GAAP basis and 13% on an adjusted basis, which excludes the non-cash impacts of fair value purchase accounting requirements in the 2022 results, compared to the prior-year quarter. Revenues for the full year increased 23% on a GAAP basis and 17% on an adjusted basis compared to the prior year.
• Gross transaction volume from originated LTO and POS financing transactions totaled a record $1.0 billion in 2023, an increase of 21% over the prior year. For the fourth quarter, they increased 14% over the fourth quarter of last year despite a decline of 10% in same-door originations.
• Combined gross leased merchandise and finance receivables outstanding at December 31, 2023 increased 13% compared to the December 31, 2022 balances.
• AFF continues to provide significant up front expected lifetime loss provisioning on leased merchandise and finance receivable originations. The resulting allowance on leased merchandise and finance receivables at year end was 40% of the gross receivables, which was a nominal increase from 39% in the prior year.
• The combined lease and loan loss provision, as a percentage of the total gross transaction volume originated, decreased slightly from 27% during the fourth quarter of 2022 to 25% during the fourth quarter of 2023 and from 30% for the full year of 2022 to 29% for the full year of 2023.
• The average monthly net charge-off ("NCO") rate for combined leased merchandise and finance receivable products for the full year 2023 was 5.0% compared to the prior-year rate of 4.7%, and in line with the Company's targeted range for NCO's. The NCO rate in the fourth quarter, which is seasonally higher than the full year, was 5.5% and increased slightly compared to the prior-year rate of 5.2%.
• Operating expenses increased 7% for the full year and decreased 1% in the fourth quarter compared to the prior-year periods. The full year increase is primarily due to increased acquisition and servicing costs to support receivable growth.

Cash Flow and Liquidity

• Each of the Company's business segments generated significant operating cash flows in 2023. Consolidated operating cash flows for the full year totaled $416 million and adjusted free cash flows (a non-GAAP measure) were $212 million. The cash flows were even more impressive in light of the significant growth in earning assets and continued investments in the store platform which included:
  
  • Net investment of over $100 million to fund year-over-year increases in customer receivables, pawn inventories and LTO merchandise
  • Acquisitions of pawn stores totaling $181 million
  • Investments in real estate of $70 million
• Even with increased borrowings in 2023 to finance the significant acquisition activity and growth in earning assets, the Company's consolidated total debt to EBITDA ratio remained at 2.7x adjusted EBITDA (as defined in the Company's U.S. revolving commercial bank credit facility which provides proforma credit for acquired earnings) at December 31, 2023, which was equal to the prior-year ratio.
• To further support long-term growth and shareholder returns, the Company obtained a $50 million increase in lender commitments under its U.S. revolving commercial bank credit facility in October 2023, increasing the size of the facility from $590 million to $640 million. The August 2027 maturity date and all financial covenants remained unchanged under the expanded U.S. facility. Coupled with its Mexico bank line of credit, which renewed in August 2023 and was extended into 2027, the Company has total lender commitments under its bank credit facilities of approximately $676 million at December 31, 2023.
• The majority (over $1 billion) of the Company's long-term financing remains fixed rate debt with favorable interest rates ranging from 4.625% to 5.625% and maturity dates not until 2028 and 2030.
  

Shareholder Returns

• The Board of Directors declared a $0.35 per share first quarter cash dividend, which will be paid on February 28, 2024 to stockholders of record as of February 14, 2024. This represents an annualized dividend of $1.40 per share. Any future dividends are subject to approval by the Company's Board of Directors.
• For the full year, the Company repurchased 1,248,000 shares of common stock at an aggregate cost of $114 million and an average cost per share of $91.58. The Company has $200 million available under the share repurchase program authorized in July 2023. Future share repurchases are subject to expected liquidity, acquisitions and other investment opportunities, debt covenant restrictions, market conditions and other relevant factors.
• The Company generated an 11% return on equity and a 5% return on assets in 2023. Using adjusted net income for 2023, the adjusted return on equity was 14% while the adjusted return on assets was 7%.
  

2024 Outlook

The Company's outlook for 2024 is highly positive, with expected year-over-year growth in revenue and earnings in all segments driven by the continued growth in earning asset balances coupled with recent store additions. Anticipated conditions and trends for 2024 include the following:

Pawn Operations:

• Pawn operations are expected to remain the primary earnings driver in 2024 as the Company expects segment income from the combined U.S. and Latin America pawn segments to be approximately 80% of total segment level pre-tax income for the full year.
• U.S. pawn operations are expected to benefit in 2024 from full year revenue and earnings from the 79 stores acquired in August 2023 and seven stores acquired in late November of 2023.
• Beginning of the year pawn receivables were up 22% in the U.S., and continued to be strong in January 2024, which is expected to drive pawn loan fee growth in the first half of 2024 at a rate similar to the fourth quarter of 2023. As a reminder, U.S. pawn receivables growth rates in the second half of 2024 will moderate as the Company laps the significant 2023 pawn acquisition activity. Latin America pawn growth is currently up approximately 6% and full year 2024 growth is anticipated to remain in a mid-single digit range assuming foreign exchange rates remain steady.
• Retail sales are also expected to grow in both markets although at a slower rate than pawn loan fee growth given current inventory levels which remain below historical levels as a percentage of pawn receivables. Retail margins are anticipated to remain at or above historical averages at 40% to 43% in the U.S. and 34% to 36% in Latin America.
• Store operating expenses are expected to rise in a range of 7% to 9% for the full year in both the U.S. and Latin America in 2024 due to increased store counts along with continued inflationary impacts (primarily related to further minimum wage increases in Latin America). Even with increased operating expenses, the Company still anticipates improved operating leverage from pawn operations, especially in the U.S.
• The Company is currently targeting the addition of approximately 75 locations in 2024 through new store openings and acquisitions. Management continues to see a pipeline of potential acquisition opportunities in both the U.S. and Latin America, which could further boost store additions.

Retail POS Payment Solutions (AFF) Operations:

• Gross transaction volumes originated in 2024 are expected to increase in a range of 10% to 15% for the full year as compared to 2023. Resulting revenues are forecast to grow in a range of 7% to 9% in the first quarter and 10% to 12% for the full year as compared to the respective prior-year periods.
  
• The Company expects AFF's estimated lease and loan loss provisioning rates for 2024 will continue to reflect a consistent provisioning methodology with 100% of estimated lifetime losses being provided for (expensed) upon origination of the lease or loan. The full year loss provision expense for 2024 is expected to increase in line with the expected increase in originations, with anticipated provision rates (combined provision for lease and loan losses as a percentage of the total gross transaction volume originated) ranging between 28% to 32% in the first half of 2024 and 27% and 31% for the full year. As a reminder, provisioning rates are seasonally higher in the first half of the year than in the last half based on the proximity to the tax refund collection cycle in the first quarter each year.
  
• Operating expenses for the full year are expected to increase in the 10% to 15% range in 2024 as well, primarily due to the expected increase in origination activity and continued longer term investments in technology, customer service and merchant/customer acquisition activities.
  

Interest Expense, Tax Rates and Currency:

• Net interest expense is expected to increase for full year 2024 compared to 2023, with most of the increase expected in the first half of the year due to higher year-over-year interest rates for the comparative periods.
• For the full year of 2024, the effective income tax rate under current tax codes in the U.S. and Latin America is expected to range from 25% to 26%. This compares to the 2023 effective tax rate of 25.1%.
• Each full point change in the exchange rate of the Mexico peso represents an annual earnings impact of approximately $0.10 per share.
  

Additional Commentary and Analysis

Mr. Wessel further commented on the 2023 results, "The outstanding results for 2023 reflect FirstCash's superior strategic positioning and long-term growth initiatives which have allowed us to navigate rapidly changing, and often unpredictable, global macroeconomic conditions. Our ability to consistently and effectively meet the everyday needs of millions of credit constrained and value conscious consumers, while prudently managing risk, is truly unique in the consumer finance and retail marketplace.

"FirstCash achieved a number of significant records and growth milestones in 2023. Consolidated revenues exceeded $3 billion for the first time in Company history. The core pawn segments in both the U.S. and Latin America posted record high pawn receivables, revenues and segment earnings, while the total number of pawn stores stood at 2,997 locations at year end and, with January 2024 store openings, is now over 3,000 locations. For AFF, gross transaction originations in 2023 exceeded $1 billion for the first time ever.

"For our core pawn operations, which continue to contribute almost 80% of our segment earnings, we ended the year with combined U.S. and LatAm pawn loan receivable growth of 21% and an impressive 15% increase on a same-store basis. Our pawn operations saw significant growth in the store base in 2023 with the addition of 96 stores in the U.S., which included the entrance into four new states, and 61 new stores opened in Latin America. For the full year, we invested approximately $312 million in pawn acquisitions, new store openings, store real estate acquisitions and other capital expenditures. Furthermore, we continue to see a robust pipeline of acquisition opportunities in both new and existing markets.

"It has been two years since we made the strategic AFF acquisition, and the segment continues to grow and drive incremental earnings for FirstCash. Compared to AFF's results at the time of the acquisition at the end of 2021, revenues have now increased over 60% and the active merchant door counts have increased by almost 80%. Although the origination growth continues to have a short-term drag on earnings due to upfront provisioning expense, these originations position us well for future expected growth in revenue and earnings.

"FirstCash continued to provide significant shareholder returns in 2023, driven by the increased dividend that is now annualized at $1.40 per share and through the repurchase of 1,248,000 shares of common stock at an aggregate cost of $114 million or $91.58 per share. Since the merger with Cash America in 2016, the Company has repurchased almost 12 million shares of common stock at an average cost of $76.94 per share. Additionally, we repurchased the underlying real estate at 43 domestic locations during 2023, bringing the total Company owned locations to 337, or 28% of our U.S. stores.

"Our balance sheet and cash flow remain strong, as free cash flow totaled $212 million during 2023, while we maintain long-dated unsecured debt maturities with interest rate coupons far below most of our industry peers. Given the current momentum in our pawn operations and the continued steady growth for AFF, we believe that we are well positioned for continued revenue and earnings growth as we enter 2024," concluded Mr. Wessel.

About FirstCash

FirstCash is the leading international operator of pawn stores and a leading provider of technology-driven point-of-sale payment solutions, both focused on serving cash and credit-constrained consumers. FirstCash's approximately 3,000 pawn stores in the U.S. and Latin America buy and sell a wide variety of jewelry, electronics, tools, appliances, sporting goods, musical instruments and other merchandise, and make small non-recourse pawn loans secured by pledged personal property. FirstCash, through its wholly owned subsidiary, AFF, also provides lease-to-own and retail finance payment solutions for consumer goods and services through a nationwide network of approximately 11,600 active retail merchant partner locations. As one of the largest omni-channel providers of "no credit required" payment options, AFF's technology provides its merchant partners with seamless leasing and financing experiences in-store, online, in-cart and on mobile devices.

FirstCash is a component company in both the Standard & Poor's MidCap 400 Index® and the Russell 2000 Index®. FirstCash's common stock (ticker symbol "FCFS") is traded on the Nasdaq, the creator of the world's first electronic stock market. For additional information regarding FirstCash and the services it provides, visit FirstCash's websites located at http://www.firstcash.com and http://www.americanfirstfinance.com.

Forward-Looking Information      

This release contains forward-looking statements about the business, financial condition, outlook and prospects of FirstCash Holdings, Inc. and its wholly owned subsidiaries (together, the "Company"), including the Company's outlook for 2024. 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 "outlook," "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, outlook and future plans. Forward-looking statements can also be identified by the fact that 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 release. Such factors and risks may include, without limitation, risks related to the extensive regulatory environment in which the Company operates; risks associated with the legal and regulatory proceedings that the Company is a party to, or may become a party to in the future, including the Consumer Financial Protection Bureau (the "CFPB") lawsuit filed against the Company; risks related to the Company's acquisitions, including the failure of the Company's acquisitions to deliver the estimated value and benefits expected by the Company and the ability of the Company to continue to identify and consummate acquisitions on favorable terms; potential changes in consumer behavior and shopping patterns which could impact demand for the Company's pawn loan, retail, lease-to-own ("LTO") and retail finance products, including those changes resulting from shifts in the general economic conditions; labor shortages and increased labor costs; a deterioration in the economic conditions in the United States and Latin America, including as a result of inflation and rising interest rates, which potentially could have an impact on discretionary consumer spending and demand for the Company's products; currency fluctuations, primarily involving the Mexican peso; competition the Company faces from other retailers and providers of retail payment solutions; the ability of the Company to successfully execute on its business strategies; and 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 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 release speak only as of the date of this release, 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.

_{⁽¹⁾ As a result of purchase accounting, AFF's as reported amounts for the three and twelve months ended December 31, 2022 contain significant fair value adjustments. See reconciliation of reported amounts to adjusted amounts excluding the impacts of purchase accounting in the "Retail POS Payment Solutions Segment Results" section elsewhere in this release.}

FIRSTCASH HOLDINGS, INC.
OPERATING INFORMATION
(UNAUDITED)

The Company's reportable segments are as follows:

• U.S. pawn  
• Latin America pawn
• Retail POS payment solutions (AFF)
  

The Company provides revenues, cost of revenues, operating expenses, pre-tax operating income and earning assets by segment. Operating expenses include salary and benefit expense of pawn store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the pawn stores. Additionally, costs incurred in operating AFF have been classified as operating expenses, which include salary and benefit expenses 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 and amortization expense of intangible assets related to the purchase of AFF are not included in the segment pre-tax operating income.

U.S. Pawn Segment Results

U.S. Pawn Operating Results and Margins (dollars in thousands)

FIRSTCASH HOLDINGS, INC.
OPERATING INFORMATION (CONTINUED)
(UNAUDITED)

U.S. Pawn Earning Assets and Portfolio Metrics (dollars in thousands, except as otherwise noted)

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