Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Results

Transcription

1 1

2 Cautionary Statement Regarding Risks and Uncertainties That May Affect Future Results This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about the business, financial condition and prospects of Cash America International, Inc. (the Company ). These forward-looking statements give current expectations or forecasts of future events and reflect the views and assumptions of the Company s senior management with respect to the business, financial condition and prospects of the Company as of the date of this presentation and are not guarantees of future performance. The actual results of the Company could differ materially from those indicated by such forwardlooking statements because of various risks and uncertainties applicable to the Company s business, including, without limitation, those risks and uncertainties indicated in the Company s filings with the Securities and Exchange Commission, especially on Forms 10-K, 10-Q and 8-K. These risks and uncertainties are beyond the ability of the Company to control, and, in many cases, the Company cannot predict all of the risks and uncertainties that could cause its actual results to differ materially from those indicated by the forward-looking statements. When used in this presentation, the words believes, estimates, plans, expects, anticipates and similar expressions or variations as they relate to the Company or its management are intended to identify forward-looking statements. The Company cautions you not to put undue reliance on these statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements after the date of this presentation. 2

3 Cash America International, Inc. NYSE: CSH We Provide Financial Solutions That Help Ordinary People Meet Their Needs and Pursue Their Dreams! Total U.S. Pawn Loans Written to Consumers (in millions) $1,100 $1,000 $900 $869 $916 $959 $1,033 $800 $700 $600 $592 $625 $689 $ U.S. Retail Lending Locations $400 $300 $200 $100 $0 3

4 Business Overview Storefronts serving the short-term cash needs of the under-banked consumer Business Overview Operated 847 (as of ) lending locations in 21 states in the U.S. Largest pawn lender in the U.S in terms of loans to customers High quality loan portfolio 63% of pawn loan portfolio is secured by jewelry Yield on merchandise sold of 138.9% in 2015 Approximately 68% Redemption Rate Inventory Held for sale as of Unsecured loan fees comprised only 7% of total revenue in Q

5 U.S. Focused Coast-to-Coast Market Presence 847 Total Locations as of % (686) in top 10 States WA=33 IL=26 OH=120 NV=28 NC=18 TN=41 AZ=36 TX=260 GA=47 FL=77 5

6 Recent Events Distribution of 80% of E Commerce (ENVA) to shareholders (Nov. 14) Creates near pure play pawn lender (consumer loan fees = 7% of Q Total Revenue) Stable cash flow Low risk of regulatory intrusion Highly defensible business model Solely operating in U.S. (no currency risk) Core business fundamentals strengthening Q EPS, Adjusted* for Unusual Items, up 100% YOY Launched the Cash America Retail App on itunes and Google Play Retained ENVA ownership will be divested in 2 years * See page 30 6

7 U.S. Pawn Lending Public Market Participants ($ in millions) $140 30% $68 15% $252 55% CSH FCFS EZPW $460 million as of December 31, 2014 No. of U.S. Stores Loans/Store (000 s) CSH 859 $294 FCFS 266 $256 EZPW* 512 $273 U.S. Market Estimate 2,179 * If 10,000 $150m loans/shop = $1.5 billion in pawn loans * Three public companies would comprise 31% of U.S. market * EZPW location count as of

8 Market Characteristics and Fundamentals 25% of U.S. households used Alternative Financial Services products in the last 12 months* 20% of U.S. households are underbanked (~25 million households)* 8% of U.S. households are unbanked (~10 million households)* 31% of U.S. households do not have a savings account* Cash America serves a growing market segment of the underbanked: Estimated 51 million adults in U.S. Growing need for consumer credit Many traditional consumer lenders have exited market * Source: 2013 FDIC National Survey of Unbanked and Underbanked Households published October

9 Business Operations Points of Emphasis Exited non-strategic products to emphasize pawn customer service Cash Advance phased out in most markets Money services business products Auto Equity Focus on improving marginal profitability as evidenced by expense cuts in Q3/Q Recent significant pawn acquisitions provide long-term value Growth of pawn balance key focus in 2015 Continued transition of retail disposition strategy evidenced in 2014 Customer traffic continues to improve in all major markets Assessment of new customer acquisition strategies Create retention through mobile phone technology 9

10 Outlook 2015 Play to strengths of business Strong cash flow Enhance marginal profitability through asset expansion vs. unit growth Reinvest cash to build long-term shareholder value New share repurchase authorization of 4 million shares (1,148,000 repurchased during Q1 2015) Increased annual dividend from $0.14 per share to $0.20 per share, a 43% increase (Jan. 2015) 10

11 Three Years of Strategic Unit Expansion Pawn Locations Added: Acquired DeNovo Total Pawn Locations Added Eliminated Non-Strategic locations: Exited Mexico Closed PDA Stores Sold/Closed Pawn Stores 114 locations 26 locations 140 (190) locations ( 59) locations ( 8) locations (257) Significant Acquisitions in key pawn markets of Texas (42 stores), Georgia (31 stores), Tennessee (19 stores) and North Carolina (10 stores). Increased U.S. store base of pawn locations 20% over 3 years Storefront appearance designed to differentiate from competitor pawn shop image 11

12 Attractive Exteriors Stand Alone Buildings for Easy Access Generally 6,000 to 10,000 sq. ft. 12

13 Friendly Open Shopping Environment Customer Service Focused 13

14 Exit / De-Emphasis on Cash Advance Product Cash Advance product eliminated from 311 locations during 2014 and more expected during 2015 About one-third of locations offer consumer loans (concentrated in Ohio) Introduced installment loan replacement product in Ohio in 2015 Gross fees expected to remain 7-8% of total revenue Closed all Texas mono-line units in 2013 Eliminated cash advance product from all but 40 Texas pawn stores in Q % 50% 45% 47% 40% 38% 30% 30% 30% 20% 10% 19% 7% 0% Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 6% Q1 '15 Single Pay CL Rev as a % of Total Rev Total CL Rev as a % of Total Rev 13

15 Growth Strategy Build on Stable Business Model Emphasis on customer acquisition Aggressive marketing campaigns Growth in lending assets drives higher marginal profitability and growth rates Utilize strong cash flow to enhance shareholder returns Selectively adding pawnshop units 15

16 Summary Investment Highlights Strong cash flow and ability to return capital to shareholders State and Federal Regulatory Stability (Licensed Lender - State by State) High Quality Secured Pawn Loan Portfolio Significant Market Share Geographic Diversification Demonstrated Access to Multiple Sources of Financing Attractive Market Fundamentals Continued De-Emphasis on the Unsecured Single-Pay Loan Products Diligent Focus on Regulatory Compliance 16

17 17 Supplemental Business Metrics

18 Price of Gold and Disposition Strategy Shift Average Spot Price Gold/oz Disposition Mix COGS 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% $1,750 $1,500 $1,250 $1,000 $750 $500 $250 $0 8% 92% 14% 16% 19% 23% 27% 86% 84% 81% 77% 73% 33% 67% 43% 47% 45% 48% 48% 57% 53% 55% 52% 52% 33% 67% 25% 22% 75% 78% LTM Q1 Retail Commercial 2015 $271 $310 $363 $409 $445 $604 $695 $ LTM Q $972 $1,225 $1,572 $1,669 $1,411 $1,184 $1,248 18

19 Domestic Retail Services Gross Profit Margins Gross Profit Margins Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Total Scrap GP% 17.6% 7.3% 12.4% 10.5% 7.1% 22.3% Retail GP% 34.0% 35.0% 33.2% 31.7% 32.4% 31.7% Total GP% 31.3% 29.6% 29.0% 26.5% 28.0% 30.4% YoY % Change (4.1%) (8.8%) (12.0%) (10.4%) (10.3%) 2.8% Total LTM Inv T/O** 2.3x 2.3x 2.2x 2.2x 2.3x 2.3x Current Qtr Ann'd Inv T/O*** 2.1x 2.5x 2.2x 2.2x 2.4x 2.3x 19

20 Gross Profit Contribution by Source ($ in millions) $200 $150 $100 $50 $0 $10 $79 $83 $13 $15 $102 $24 $107 $38 $112 $53 $118 $66 $112 $74 $122 $104 $138 $81 $144 Commercial Sales Gross Profit Dollars Retail Sales Gross Profit Dollars $33 $152 Average Price of Gold per ounce EOP $12 $ LTM Q $21 $159 $14 $172 LTM Q $49 $47 $3 $5 YTD Q YTD Q $1,800 $1,500 $1,200 $900 $600 $300 $- 20

21 Pawn Loan Portfolio Shift from Jewelry to General March 13 March 15 30% 37% 70% 63% GM % Jewelry % GM % Jewelry % YTD Jewelry Pulled for Inventory Rate - March 29.8% 26.5% 0.0%

22 Domestic Same Store Pawn Loan Balance Growth 5% 4.5% 2.1% 0% -1.1% -1.2% -0.5% -2.2% -4.4% -3.6% -4.8% -3.4% -5% Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 SS Bal Growth 22

23 U.S. Pawn Loan Balances $300 $250 $238 $240 $257 $252 $200 $197 Millions $150 $164 $100 $50 $ % increase in pawn loan balances since 2009 (11% per year average) 23

24 24 Investor Contact Information: (800)

25 25 Appendix

26 Non-GAAP Financial Information In addition to the financial information prepared in conformity with generally accepted accounting principles in the United States ( GAAP ), the Company provides earnings before interest, taxes, depreciation and amortization ( EBITDA ), which is a historical non-gaap financial calculation. Management uses the non- GAAP financial measure for internal managerial purposes and believes that its presentation is meaningful and useful in understanding the activities and business metrics of the Company s operations. Management believes that this non-gaap financial measure reflects an additional way of viewing aspects of the Company s business that, when viewed with the Company s GAAP results, provides a more complete understanding of factors and trends affecting the Company s business. Management provides such non-gaap financial information for informational purposes and to enhance understanding of the Company s GAAP consolidated financial statements. Readers should consider the information in addition to, but not instead of, the Company s financial statements prepared in accordance with GAAP. This non-gaap financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes. 26

27 Operating Income and Adjusted EBITDA ($/millions) Trailing 12 Months Ended March 31, Net (loss) income from continuing operations $ (5,779) $ 43,073 Net income attributable to the noncontrolling interest in continuing operations 312 Provision (benefit) for income taxes 3,131 (23,248) Equity in loss of unconsolidated subsidiary 25 Gain on sale of equity securities (126) Loss on early extinguishment of debt 21,007 2,153 Foreign currency transaction (gain) loss (154) 6 Interest expense, net 17,211 19,404 Depreciation and amortization expenses (a) 60,124 58,004 Adjustments: Store and Office Closures 503 1,373 Reorganization 8,391 Loss on divestitures 5,176 Regulatory Penalty 2, Litigation settlement ,260 Charges related to Ohio Adjustment and Ohio Reimbursement Program (5,000) Adjusted EBITDA from continuing operations $ 109,859 $ 116,862 Adjusted EBITDA margin from continuing operations calculated as follows: Total revenue $ 1,081,823 $ 1,029,324 Adjusted EBITDA $ 109,859 $ 116,862 Adjusted EBITDA as a percentage of total revenue 10.2 % 11.4% Adjusted EBITDA as a percentage of net revenue 18.8 % 20.1% 27

28 Operating Income and Adjusted EBITDA Footnotes - ($/millions) (a) For the trailing 12 months ended March 31, 2015, excludes $0.2 million of depreciation and amortization expenses, which are included in Store and Office Closures and are related to the closure of storefront locations and certain regional office locations during the first quarter of For the trailing 12 months ended March 31, 2014, excludes $0.2 million of depreciation and amortization expenses, which are included in Store and Office Closures and are related to the closure of 36 locations in Texas in 2013 that offered consumer loans as their primary source of revenue. 28

29 Adjusted Earnings and Earnings Per Share ($/millions) Three Months Ended March 31, $ Per Diluted Share (a) $ Per Diluted Share (a) Net income and diluted net income per share from continuing operations $ 7,845 $ 0.27 $ 3,237 $ 0.11 Adjustments (net of tax): Store and Office Closures Reorganization Loss on early extinguishment of debt Litigation Settlement Adjusted net income and adjusted diluted net income per share from continuing operations $ 8, $ 4, Other adjustments (net of tax): Intangible asset amortization 1, , Non-cash equity-based compensation 1, Convertible debt non-cash interest and issuance cost amortization Foreign currency transaction loss (gain) (25) 1 Adjusted earnings and adjusted earnings per share from continuing operations $10,710 $ 0.37 $ 6,726 $ 0.23 (a) Diluted shares are calculated by giving effect to the potential dilution that could occur if securities or other contracts to issue common shares were exercised and converted into common shares during the period. 29

30 Estimated Range of Free Cash Flow Per Share For the year ended December 31, 2015 Estimated net income attributable to Cash America International, Inc. (a) Depreciation and amortization (b) Capital expenditures (c) Low $ (0.80) High $ (0.80) Estimated free cash flow $ 2.05 $ 2.35 (a) Based on the estimate published by the Company on April 30, (b) Assumes approximately $60.0 million of depreciation and amortization for the year ended December 31, (c) Assumes approximately $23.4 million of capital expenditures for the year ended December 31,

31 CFPB Preliminary Draft Guidelines (March 2015) Key Interpretative Take Aways Emphasis on elimination of cycle of debt Desire to maintain access to this form of credit Expects less providers going forward Implications of CSH Non-Recourse pawn loans secured by non-auto personal assets excluded from guidelines Contraction in providers leaves consumers seeking alternatives 31

32 Product Highlights of Preliminary Guidelines 1) Short-Term Loans = 45 days or less Class A: Prevention (a) Affordability assessment / underwriting (b) 60 day cooling-off period after 3 consecutive loans (example: at 30 days per loan = 8 loans / year) Class B: Protection (a) $500 maximum (no auto) (b) 3 loans then 60 day cooling off (8 loans / year) (c) Max 90 days of loans over 12 months (d) off ramp requirement 32

33 Product Highlights of Preliminary Guidelines 2) Long-Term Loans = Beyond 45 days with collection via electronic payment or auto title collateral and greater than 36% APR Class A: Prevention (a) Affordability assessment / underwriting (b) Can only refinance if borrower s financial circumstances improve Class B: Protection (a) days under NCUA (28% rate cap) (b) Payments less than 5% of GMI (c) Max 2 loans in 12 months 3) Collections (a) 3 days notice before ACH (b) Max debits = 2 unless authorized by customer 33