Alternative Financial Services

Transcription

1 1 Alternative Financial Services

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! 916 Retail Lending Locations Total Loans Written to Consumers (in billions) E-Commerce Internet Lender

4 YE 2013 Net Revenue Distribution ( in millions) 1.0 billion Up 3% Retail Services Only U.S. = 98% Foreign = 2% E-Commerce Only 448 million, up 20% U.S. = 53% Foreign = 47% Percent of Consolidated Net Revenue Domestic Retail Services 56% Foreign Retail Services 1% Domestic E-Commerce 23% 57% 43% Foreign E-Commerce 20% 4

5 Historical Consolidated Financial Performance (/millions) Total Revenue EBITDA Operating Income EPS 5 * Does not include 39.0 mm pre-tax expenses (33.6 mm without non-cash items; 36.3 mm after tax) in unusual items related to Mexico reorganization, the voluntary refund to certain OH customers and the withdrawal of the Enova International, Inc. proposed IPO, during 2012 (1.15 per share). ** Does not include a net benefit of 18.8 mm after-tax expenses (62 cents per share) in unusual items related to a tax benefit of 33.2 mm (1.09 per share) for the reorganization of its Mexico-based business which was partially offset by 11.3 mm (37 cents per share) expense items related to a litigation settlement during Q3 13 and the closure of consumer lending locations in TX.

6 Gross Lending Assets ( in millions) * Gross cash advances include amounts extended by third parties. 6

7 Single Pay CL Revenue as a % of Total Revenue Consumer & Pawn Loan Mix 50% Cons Single Pay CL Rev as a % of Cons Total Rev 45% 40% 35% 30% 25% 20% 15% 10% 5% 31.2% 30.4% 21.7% 21.7% 0% Q4 '11 Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Consolidated Consumer & Pawn Loan Mix 42% 13% 36% 21% 34% 26% Installment & Multi Pay CL's Single Pay CL's 4% 41% 6% 37% 16% 23% LOC CL's Pawn Loans 598.7MM Q4 ' MM Q4 '12 *Balances include loans funded by third parties **Balances include DRS AE & AT loans 766.8MM Q4 '13 7

8 E-Commerce Platforms International Online Financial Services United States United Kingdom Canada Australia 8

9 E-Commerce Consumer Loan Operation FYE 2013 Total Revenue = 766 million FYE 2013 Operating Income = 153 million Well Established Internet Platform E Commerce Business LTM growth Op Inc up 21% 4 year CAGR Op Inc 40% Approximately 50% International U.S. short-term loan product less significant 90% e-commerce revenue in % e-commerce revenue TTM Ability to rapidly deploy platform to new markets Success with introduction of diversified products Installment loans Line of credit 12/31/13 Earning Assets 9

10 E-Commerce Business Segment Net Revenue (in millions) Total revenue less loan loss provision Operating Income (in millions) % U.S. International 10

11 E-Commerce U.S./Foreign Total Revenue and Net Revenue Trend ( in millions) Domestic E-Commerce Foreign E-Commerce % % 42% 43% 40% 49% 36% 48% Loan Loss Provision 11 Net Revenue 48% 44%

12 Enova is a Pioneer in Online Lending Licensed in compliance with state laws in 32 U.S. states Scalable and flexible technology platform new products new markets Proprietary analytics and data Focus on customer experience Customer loyalty and brand recognition Strong emphasis on regulatory and compliance structure FY12 Total Headcount 993 versus 872 in FY11 Highlights 2,501,280,000 Vision: Closing the World s Credit Gap * Count excludes MLOC 12 Credit Extended In ,000,000+ Web Page Views Since ,613,905 # Loan Transactions Originated In ,734,300* # of Customers Served Since 2006

13 Proprietary Technology Platform Enables Scale Customer Relationship Management Integrated platform Performance Data Funding Over 7.99 terabytes billion 1 TECHNOLOGY PLATFORM Decisioning Processing 4.6 million transactions 1 For the year ended of ; aggregate data collected since inception; used for credit risk score modeling 2 As algorithms, 500 variables

14 Current Industry Dynamics Dynamics Creating an Even Larger Opportunity Borrower Trends E-Commerce Trends Limited Rainy Day Funds Growing Internet Usage ~50% in the U.S. and U.K. can t access funds for an emergency 75% usage between ; 40% by 2015 Substantial Declines in Available Credit Increasing E-Commerce Activity ~1.3T reduction since 2008 in the U.S 30% usage in % in 2011 Deteriorating Median Household Income 2011 income ~10% below 2001 levels in the U.S. Customers Moving Finances Online Online banking, bill pay, investing, etc. Sources: National Bureau of Economic Research, Federal Reserve Bank of New York, New York Times, FICO Inc., Frost & Sullivan, Pew Research 14

15 Consistent Growth in Customer Loans Solid Momentum in Both New & Existing Customers 2,600 2,501 2,596 thousands, excludes MLOC 2,096 1,725 1,279 1,177 2,281 1,862 1, ,074 1, New Customers Existing Customers * * Existing customer defined as a customer with at least one previous loan or has made at least one payment on an installment loan. 15 2,200

16 Q Growth in Installment & LOC Loan Balances Loan Balances (/millions) Domestic E-Com - LOC Foreign E-Com - IL Domestic E-Com - IL Foreign E-Com - LOC IL Only IL Only IL Only Q4 '11 Retail Services - IL & MP Q4 '12 Q4 '13 Consolidated Consumer Loan Mix 28% 6% 42% 22% 25% 32% 345.3MM Q4 ' MM Q4 '12 *Balances include loans funded by third parties **Balances include DRS AE & AT loans 16 65% 10% 40% Installment & Multi Pay Loans Single Pay Loans LOC Loans 505.7MM - Up 47% Since Q4'11 Q4 '13

17 E-Commerce Lending Only Diversified Product Offerings & Geographies Minimizes U.S. Payday Exposure 100% 90% 90% 84% 80% 70% 70% 60% % U.S. Payday of Enova Revenue 50% 42% 40% 31% 30% 20% 19% 18% 18% 10% 13% 11% % % % U.S. Payday of Total Company Revenue % 2013 Mix of U.S. Single Pay Loans vs. Gross Consumer Loan Portfolio 30% 17% 23% Up 61% from mm out of 265.7mm mm out of 359.9mm *Balances include loans funded by third parties mm out of mm

18 U.S. and International Retail Services - Lending Platform United States Mexico 18

19 Business Overview Storefronts serving the short-term cash needs of the under-banked consumer U.S. Only Pawn Loans as of Operated 869 (as of ) lending locations in 22 states in the U.S. and 47 pawnshops in Mexico Largest pawn lender in the world Business Overview 19 High quality loan portfolio 64% of pawn loan portfolio is secured by jewelry Yield on merchandise sold of 143.3% in 2013 Approximately 69% Redemption Rate

20 U.S. Pawn Lending Locations 20

21 U.S. Pawn Lending Locations 21

22 Domestic Retail Services Lending Locations (as of December 31, 2013) U.S. Pawn Loan Balances (mm s) locations in 10 States WA= IL= OH= NV=28 NC=20 TN=41 GA=48 AZ=36 FL=76 TX= Number U.S. Locations 2013

23 Retail Lending Services Recent Events Historically 10%-15% growth in Total Revenue and Operating Income 2012 Significant Events Transitioned from Jewelry Lending only, to Jewelry and General Merchandise Lending in Mexico Closed 151 Mexico jewelry lending locations in Q3 and Q4 Reorganization costs of 28.9 million (0.82 per share) Voluntary customer refund of 13.4 million (0.27 per share) Total unique items for retail services in 2012 = 42.3 million (1.08 per share) Completed the 55.1 million acquisition of 25 store pawn chain locations in Tennessee and North Carolina 2013 Significant Events million 5-year 5.75% fixed rate Note offering, May 2013 Completed the million acquisition of Top Dollar Pawn located in TX, adding 41 locations Completed the 62 million acquisition of PawnMart, located in GA and NC, adding 34 locations Repurchased 46.0 million of CSH shares through an announced repurchase plan during 2013

24 Recently Completed Acquisition Top Dollar Pawn Transaction closed August 2013 Well established and operating since million pawn loan balance as of closing date DFW Waco million price paid in cash Immediately accretive upon closing 42-Store chain enhances market positions: TDP CSH Total Houston Dallas/Ft. Worth San Antonio Waco College Station San Antonio College Station Houston

25 Recently Completed Acquisition PawnMart Transaction closed November 2013 Announced signed asset purchase agreement million pawn loan balance as of million estimated price to be paid in cash Immediately accretive upon closing 34-Store chain enhances market positions: PMRT CSH Total Atlanta, GA Charlotte, NC

26 Macro Trends Impacting Retail Services Segment Recent changes in gold prices shifts disposition mix from Commercial sales to In-Store sales Timing shifts profits from routine monthly to concentration in Q4 (Holiday season) and Q1 (tax refunds) annually U.S. consumer de-leveraging started in 2009, began seeing pawn customers de-leverage in 2012 Reduced growth in U.S. pawn loans leading to negative comps to PY and reduced guidance of Retail Services Segment 1,200 1,102 1,137 1,029 Total Revenue in millions 1, Operating Income Retail Lending Svcs '08 '09 ' * 161* '11 '12 '13 * Does not include 35mm in unusual items expensed related to Mexico reorganization and the voluntary refund to certain customers, during Does not include 17 million unusual items expensed related to legal settlement, voluntary refund, and the closure of consumer lending locations in TX. during

27 Disposition Mix COGS Price of Gold and Disposition Strategy Shift 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 8% 92% Average Spot Price Gold/oz % 86% % 84% % 81% % 77% % 73% 33% 67% 33% 43% 47% 45% 48% 48% 57% 53% 55% 52% 52% Retail Commercial 67% 1,750 1, ,669 1,411 1,500 1,225 1,250 1,

28 International Storefront Market Opportunity Location Counts by Market (Households in mm) Mexico Has a Large Unbanked Population ~ 14,000 Pawn Locations Unbanked U.S. Developed Market ~ 5,000 Pawn Locations Mexico Emerging Market Serving ~ 60 million underbanked customers Million Serving ~ 80 million underbanked customers 80 Million

29 Cash America casa de empeño Transition of Business Model in Q Rebranded 47 remaining full format stores Differentiation strategy for Central Mexico Competition = jewelry loans only General merchandise alternative attracts customers = jewelry loans New store openings will be full format Cash America advantage = full format expertise 29

30 Mexico Pawn Lending Locations

31 Mexico September 2013 Veracruz (7 locations) 47 Total Locations Guanajuato (1 location) Jalisco (5 location) Queretaro (1 location) Estado de Mexico (8 locations) 18 Greater Mexico City Distrito Federal (6 locations) Morelos (2 locations) Puebla (2 locations) Guerrero (5 locations) Chiapas (3 locations) Tabasco (2 locations) Quitana Roo (4 locations) Nayarit (1 location) 31 Mexico City Area 18 Locations

32 Macro Consumer Trends 32

33 Attractive Industry Fundamentals 25% of U.S. households used Alternative Financial Services products in the last 12 months * 20% of U.S. households are underbanked (~24 million households) * 8% of U.S. households are unbanked (~10 million households) * 29% of U.S. households do not have a savings account * Cash America serves a growing market segment of the underbanked: Estimated 60 million in U.S. Estimated 80 million in Mexico Growing need for consumer credit Many traditional consumer lenders have exited market * Source: 2011 FDIC National Survey of Unbanked and Underbanked Households published September

34 FICO Score Shift Change in Population Percentages by Score Less Bankable More Unbankable Pre-Recession Source: FICO Banking Analytic Blog 2011 Fair Isaac Corporation 34 April

35 U.S. Consumer De-Leveraging Since 2009 while Consumption Increasing Personal Consumption vs. Consumer Credit Outstanding 1,200 Personal Consumption ( Billions) 8,000 1,000 7,000 6, , ,000 3, , , Personal Consumption Expenditures (PCE) less Housing, Energy and Food Revolving Consumer Credit Outstanding Source: Board of Governors of the Federal Reserve; Personal consumption statistics sourced from the Bureau of Economic Analysis (Department of Commerce) 35 Consumer Credit Outstanding ( Billions) 9,000

36 Disposable Personal Income Rises But Rate of Growth Slowing Disposable Personal Income: Annual Change 8.0% 6.8% 12,000 10, % % % 4.6% 8, % 5.0% 3.9% 4.7% 4.0% 2.8% 6, % 4, % 2, % -0.5% 0.8% - 0.0% (58) (2,000) Disposable Personal Income - PY % Disposable Personal Income - Growth Source: Bureau of Economic Analysis (Department of Commerce) YoY % Change YoY % Change Disposable Personal Income ( Billions) 14,000

37 Percent of Income after PCE & Transfer Payments Taxes absorbing much larger share of available funds Mortgage refinancing and de-leveraging reducing interest, absorbs some of increased costs Savings rate declining % Change from 2009 to Sept % Amt. Available after PCE & Transfer Pmts. as Used 90% 80% 32% 70% 60% 13% 23% Down 30% 10% Down 22% 62% 67% Increase 23% 2012 YTD 9/13 28% 10% 50% 40% 30% 55% 20% 10% 0% 2009 Taxes Interest on Consumer Debt Source: Bureau of Economic Analysis (Department of Commerce) 37 Savings

38 Business Initiatives 38

39 Growth Strategy E-Commerce leverage platform, expand marginal profitability Domestic Attract disenfranchised bank and credit card customers Promote new products Installment / LOC and Net Credit International UK / Australia / Canada Markets Expand to additional countries Promote new products UK installment / Line of Credit Retail Services build on stable business model Domestic Adding pawnshop units de novo and acquisition Promoting new products Installment / Auto Equity Aggressive marketing campaigns International Conversion of Mexico model to full format Prove-out full format concept and long-term growth vehicle Explore other Latin American Countries 39

40 Summary Investment Highlights Success and Momentum of E-Commerce Business Growth Strategy Focused on Domestic Storefront Expansion and Product Diversification High Quality Loan Portfolio Strong Historical Financial Performance Demonstrated Access to Multiple Sources of Financing Attractive Industry Fundamentals Diligent Focus on Regulatory Compliance 40

41 Alternative Financial Services Investor Contact Information: (800)

42 Appendix 42

43 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 nongaap financial information may be determined or calculated differently by other companies, limiting the usefulness of those measures for comparative purposes. 43

44 EBITDA ( in millions) Twelve Months Ended December 31 Net Income attributable to Cash America International, Inc , ,963 Adjustments: Texas Store Closures 1, Litigation Settlement 18, Charges related to withdrawn proposed Enova IPO - 3,879 - Charges related to Mexico Reorganization - 28, Charges related to Ohio Reimbursements 13,400 Provision for income taxes 30,754 77,495 82,360 Depreciation and amortization 73,092 62,864 54,149 Interest expense, net 36,245 28,987 25,447 Foreign currency transaction loss 1, Loss on extinguishment of debt 607 Equity in loss of unconsolidated subsidiary Net loss attributable to the non-controlling interest 308 (5,806) (797) 304, , ,491 Total revenue from continuing operations 1,797,226 1,800,430 1,583,064 Adjusted EBITDA 317,770 Adjusted EBITDA - - 1,265 - EBITDA margin calculated as follows: EBITDA as a percent of total revenue , % 17.6% 298, %