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! 902* Retail Lending Locations $5.0 $4.0 $3.0 Total Loans Written to Consumers (in billions) $2.7 $3.1 $3.7 $4.0 $4.4 $2.0 E-Commerce Internet Lender * includes recently announced and completed acquisition of Top Dollar Pawn (41 locations)and pending acquisition of PawnMart (34 locations) $1.0 $

4 LTM Q Net Revenue Distribution ($ in millions) $1.0 billion Up 6% $15.8 $216.1 Retail Services Only U.S. = 97% Foreign = 3% $504.2 $205.8 E-Commerce Only $422 million, up 30% U.S. = 51% Foreign = 49% Percent of Consolidated Net Revenue Domestic Retail Services 57% Foreign Retail Services 2% Domestic E-Commerce 21% 59% 41% Foreign E-Commerce 20% 4

5 Historical Consolidated Financial Performance ($/millions) Total Revenue EBITDA $2,000 $1,500 $1,000 $500 $0 $1,800 $1,583 $1,337 $1,031 $1, $325 $300 $275 $250 $225 $200 $175 $150 $125 $100 $75 $50 $318 * $298 $251 $217 $ % 30% 20% 10% Operating Income EPS $275 $250 $225 $200 $175 $150 $149 $176 $207 $244 $262 * $125 $2.00 $100 $1.50 $75 $1.00 $50 $0.50 $25 $0 $ * Does not include $46.2 mm pre-tax expenses ($33.6 mm without non-cash items; $36.2 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). $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.70 $3.17 $3.67 $4.25 $4.57 * 5

6 Gross Lending Assets ($ in millions) $700 $600 Total Pawn Loans Storefront Consumer Loans* Online Consumer Loans* Other $675 $648 $599 $584 $500 $400 $300 $200 $305 $79 $58 $376 $111 $64 $446 $165 $66 $266 $351 $80 $80 $282 $347 $69 $71 $100 $169 $188 $218 $254 $245 $233 $230 $0 FYE 2008 FYE 2009 FYE 2010 FYE 2011 FYE 2012 Q Q * Gross cash advances include amounts extended by third parties. 6

7 E-Commerce Platforms International Online Financial Services United States United Kingdom Canada Australia 7

8 E-Commerce Consumer Loan Operation LTM Total Revenue = $723 million LTM Operating Income = $145 million Well Established Internet Platform E Commerce Business LTM growth Op Inc up 55% 3.5 year CAGR Op Inc 45% More than 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 6/30/13 Earning Assets 46% 54% U.S. Foreign 8

9 E-Commerce Business Segment $450 $400 $350 $300 $250 $200 $150 $100 $50 $- Net Revenue (in millions) Total revenue less loan loss provision $145.8 $21 $125 $213.4 $53 $278.7 $114 $160 $164 $373.9 $183 $191 $160 $421.9 $144.5 $140 $126.3 $206 $ LTM Q2 '13 $120 $100 $80 $60 $40 $20 $0 $39.8 $2.9 $36.9 Operating Income (in millions) $68.6 $10.8 $57.8 $94.3 $29.1 $63.4 $65.2 $62.9 $70.6 $ LTM Q2 '13 49% U.S. International 9

10 E-Commerce U.S./Foreign Total Revenue and Net Revenue Trend ($ in millions) Domestic E-Commerce Foreign E-Commerce $400 $350 $334.1 $369.7 $375 $326.9 $353.8 $300 $250 $214.5 $276.3 $254.7 $191.1 $216.1 $300 $225 $225.6 $182.8 $205.8 $200 $150 $124.9 $160.1 $164.2 $150 $102.0 $114.4 $100 $50 $0 $ % $ % 42% $ % $89.6 $ % LTM Q2 '13 $75 $0 $40.5 $53.3 $144.1 $ % $ % 42% $20.9 $ % $ % LTM Q2 '13 Loan Loss Provision Net Revenue 10

11 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 Credit Extended In ,000,000+ Web Page Views Since ,613,905 # Loan Transactions Originated In ,734,300* # of Customers Served Since 2006 Vision: Closing the World s Credit Gap * Count excludes MLOC 11

12 Proprietary Technology Platform Enables Scale Customer Relationship Management Integrated platform Performance Data Over 7.99 terabytes 2 Funding $2.5 billion 1 TECHNOLOGY PLATFORM Processing 4.6 million transactions 1 Decisioning 50 algorithms, 500 variables 1 For the year ended As of ; aggregate data collected since inception; used for credit risk score modeling 12

13 Current Industry Dynamics Dynamics Creating an Even Larger Opportunity Borrower Trends E-Commerce Trends Limited Rainy Day Funds ~50% in the U.S. and U.K. can t access funds for an emergency Growing Internet Usage 75% usage between ; 40% by 2015 Substantial Declines in Available Credit ~$1.3T reduction since 2008 in the U.S Increasing E-Commerce Activity 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 13

14 $ thousands, excludes MLOC $2,600 Consistent Growth in Customer Loans Solid Momentum in Both New & Existing Customers $2,501 $2,591 $2,096 $1,725 $1,177 $1,279 $1,862 $2,200 $2,282 $1,556 $1,074 $1,161 $0 $103 $118 $169 $234 $301 $ LTM 6-13 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. 14

15 Installment Loan Balances ($ in millions) Success of New Product Introductions Growth in Installment Loan Business $160 $140 $150.9 $120 $100 $80 $60 $40 $20 $0 $38.0 $16.2 $100.6 $54.6 $30.6 $86.4 $44.5 $10.1 $11.7 $15.4 $20.0 Q Q Q Foreign E-commerce Domestic E-commerce Retail Services 16% 27% 36% Consumer Loan Mix Installment Loans Other Consumer Loans $244.8mm $350.9mm *Balances include loans funded by third parties. $417.9mm

16 E-Commerce Lending Only Diversified Product Offerings & Geographies Minimizes U.S. Payday Exposure 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 90% 84% 70% 42% 33% 30% 29% 31% 28% 20% 18% 16% TTM 6/13 % U.S. Payday of Enova Revenue % U.S. Payday of Total Company Revenue Mix of U.S. Single Pay Loans vs. Gross Consumer Loan Portfolio 42% 26% 20% $74mm out of $176mm $73mm out of $282mm *Balances include loans funded by third parties. $67mm out of $347mm

17 U.S. and International Retail Services - Lending Platform United States Mexico 17

18 Business Overview Storefronts serving the short-term cash needs of the under-banked consumer Business Overview Operated 827 (as of ) lending locations in 22 states in the U.S. and 47 pawnshops in Mexico Largest pawn lender in the world High quality loan portfolio 66% of pawn loan portfolio is secured by jewelry Yield on merchandise sold of 150.3% in 2012 Approximately 67% Redemption Rate U.S. Only Pawn Loans as of % 7% 4% 20% 66% Jewelry Electronics Tools Musical Instruments Other 18

19 19 U.S. Pawn Lending Locations

20 20 U.S. Pawn Lending Locations

21 Domestic Retail Services Lending Locations (as of June 30, 2013*) $300 U.S. Pawn Loan Balances ($mm s) $250 $238 $240 WA=34 * 722 locations in 10 States $200 $150 $164 $197 IL=25 OH=120 $100 $50 NV=28 AZ=37 TX=293 * TN=41 GA=48 * NC=19 * FL=77 * includes recently announced and completed acquisition of Top Dollar Pawn (41 locations) and pending acquisition of PawnMart (34 locations) $- 1, Number U.S. Locations 902* Q2 '13* 21

22 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 $300 million 5-year 5.75% fixed rate Note offering, May 2013 Completed the $103.1 million acquisition of Top Dollar Pawn, adding 41 locations Announced the $62 million agreement for the acquisition of PawnMart, located in GA and NC (expected to close during Q4 2013), adding 34 locations Repurchased $41.3 million of CSH shares through an announced repurchase plan 22

23 Recently Completed Acquisition Top Dollar Pawn Transaction closed on August 2013 Well established and operating since 1994 $14.4 million pawn loan balance as of closing date $103.1 million price paid in cash Immediately accretive upon closing 41-Store chain enhances market positions: TDP CSH Total Houston Dallas/Ft. Worth San Antonio Waco College Station San Antonio DFW Waco College Station Houston 23

24 Recently Announced Pending Acquisition PawnMart Announced signed asset purchase agreement $10.7 million pawn loan balance as of $62.0 million estimated price to be paid in cash Transaction expected to close during Q Immediately accretive upon closing 34-Store chain enhances market positions: PMRT CSH Total Atlanta, GA Charlotte, NC

25 Total Revenue $ in millions 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 $1,084 $1,000 $800 $807 $865 $915 $600 $400 Operating Income Retail Lending Svcs. $200 $0 $106 $136 $153 $225 $203* $196* '08 '09 '10 '11 '12 LTM 6-13 * Does not include $35mm in unusual items expensed related to Mexico reorganization and the voluntary refund to certain customers, during

26 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% 14% 16% 19% 23% 27% 33% 43% 47% 45% 40% 48% 48% 92% 86% 84% 81% 77% 73% 67% 57% 53% 55% 60% 52% 52% YTD 6/13 Retail Commercial $1,669 $1,572 $1,468 $1,225 $972 $872 $695 $604 $271 $310 $363 $409 $ YTD

27 (Households in mm) International Storefront Market Opportunity Location Counts by Market 80 Million Mexico Has a Large Unbanked Population 16,000 14,000 ~ 14,000 Pawn Locations 60 Million 12,000 10,000 Unbanked 8,000 6,000 4,000 2,000 0 U.S. - Developed Market ~ 5,000 Pawn Locations Mexico - Emerging Market Serving ~ 60 million underbanked customers Serving ~ 80 million underbanked customers 27

28 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 28

29 Mexico Pawn Lending Locations

30 Mexico June 2013 Veracruz (7 locations) Guanajuato (1 location) 47 Total Locations Jalisco (5 location) Queretaro (1 location) 18 Greater Mexico City Estado de Mexico (8 locations) Distrito Federal (6 locations) Morelos (2 locations) Puebla (2 locations) Guerrero (5 locations) Mexico City Area 18 Locations Chiapas (3 locations) Tabasco (2 locations) Quitana Roo (4 locations) Nayarit (1 location) 30

31 31 Macro Consumer Trends

32 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

33 FICO Score Shift Change in Population Percentages by Score 25% 20% Less Bankable 15% More Unbankable 10% 5% 0% Source: FICO Banking Analytic Blog 2011 Fair Isaac Corporation Pre-Recession April

34 Personal Consumption ($ Billions) Consumer Credit Outstanding ($ Billions) U.S. Consumer De-Leveraging Since 2009 while Consumption Increasing 9,000 Personal Consumption vs. Consumer Credit Outstanding 1,200 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 1, 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) 34

35 Disposable Personal Income ($ Billions) YoY % Change Disposable Personal Income Rises But Rate of Growth Slowing Disposable Personal Income: Annual Change 14, % 12,000 10,000 8,000 6, % 6.8% % % % % % 7.0% 6.0% 5.0% 4.0% 3.0% 4, % 2, % 0.8% 1.0% 0.0% (2,000) (58) % Disposable Personal Income - PY Disposable Personal Income - Growth YoY % Change Source: Bureau of Economic Analysis (Department of Commerce) 35

36 Amt. Available after PCE & Transfer Pmts. as Used 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 100% 90% 80% 70% 60% 32% 28% 13% 10% 22% 10% % Change from 2009 to June 13 Down 31% Down 30% 50% 40% 30% 20% 55% 62% 68% Increase 24% 10% 0% YTD 6/13 Taxes Interest on Consumer Debt Savings Source: Bureau of Economic Analysis (Department of Commerce) 36

37 37 Business Initiatives

38 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 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 38

39 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 39

40 Alternative Financial Services Investor Contact Information: (800)

41 41 Appendix

42 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. 42

43 EBITDA ($ in millions) Twelve Months Ended December 31 Net Income attributable to Cash America International, Inc. Adjustments: 2012 $ 107, $ 135, $ 115,538 Charges related to withdrawn proposed Enova IPO Charges related to Mexico Reorganization Charges related to Ohio Reimbursements Provision for income taxes Depreciation and amortization Interest expense, net Foreign currency transaction loss Equity in loss of unconsolidated subsidiary Net loss attributable to the non-controlling interest $ 3,879 $ 28,873 $ 13,400 $ 77,495 $ 62,864 $ 28,987 $ 313 $ 295 $ (5,806) $ 82,360 $ 54,149 $ 25,447 $ 1,265 $ 104 $ (797) $ 69,269 $ 43,923 $ 22,020 $ 463 $ 136 $ (294) Adjusted EBITDA $ 317,770 $ 298,491 $ 251,055 EBITDA margin calculated as follows: Total revenue from continuing operations Adjusted EBITDA EBITDA as a percent of total revenue $1,800,430 $ 317, % $1,583,064 $ 298, % $1,337,050 $ 251, % 43