

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

~~FORM~~ ~~10-Q~~

FORM 10-Q



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ~~quarterly period ended~~ Quarterly Period Ended March 31, ~~2020~~2021



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ___________

Commission file number 001-10960

FIRSTCASH, INC.

(Exact name of registrant as specified in its charter)

Delaware

75-2237318

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

~~1600 West 7th Street~~

~~Fort Worth~~

~~Texas~~

~~76102~~

~~(Address of principal executive offices)~~

~~(Zip Code)~~

1600 West 7th Street, Fort Worth, Texas 76102

(Address of principal executive offices) (Zip code)

(
~~817~~)

(817) 335-1100

(Registrant’s telephone number, including area code)

~~NONE~~Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	FCFS	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No



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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



☒	Large accelerated filer	☐	Accelerated filer
☐	Non-accelerated filer	☐	Smaller reporting company
		☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of April ~~21, 2020,~~20, 2021, there were ~~41,440,498~~41,027,426 shares of common stock outstanding.


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FIRSTCASH, INC.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2021

INDEX


PART I.			FINANCIAL INFORMATION

~~Table of Contents~~Item 1.			Financial Statements (Unaudited)

~~FIRSTCASH, INC.~~

~~FORM 10-Q FOR THE QUARTER ENDED~~ ~~MARCH 31, 2020~~1

~~INDEX~~



SIGNATURES						35


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CAUTIONARY STATEMENT REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS

Forward-Looking Information

This quarterly report contains forward-looking statements about the business, financial condition and prospects of FirstCash, Inc. and its wholly owned subsidiaries (together, the “Company”). 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 “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 and future plans. Forward-looking statements can also be identified by the fact 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 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 quarterly report. Such factors may include, without limitation, the risks, uncertainties and regulatory developments (1) related to the COVID-19 pandemic, ~~which include risks~~including the unknown duration and ~~uncertainties related to the current unknown duration~~severity of the COVID-19 pandemic, which may be impacted by variants of the COVID-19 virus and the timing, availability and efficacy of the COVID-19 vaccines in the jurisdictions in which the Company operates, the impact of governmental ~~regulations~~responses that have been, and may in the future be, imposed in response to the pandemic, including stimulus programs which could adversely impact lending demand and regulations which could adversely affect the Company’s ability to continue to fully operate, ~~as an “essential business,”~~ potential changes in consumer behavior and shopping patterns which could impact demand for both the Company’s pawn loan and retail products, ~~the potential effects of government stimulus packages, the deterioration~~changes in the economic conditions in the United States and Latin America, which potentially could have an impact on discretionary consumer spending or impact demand for pawn loan products, and currency fluctuations, primarily involving the Mexican peso and (2) those discussed and described in the Company’s ~~2019 annual report~~most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) ~~on February 3, 2020,~~, including the risks described in Part 1, Item 1A, “Risk Factors” thereof, ~~in this quarterly report on Form 10-Q,~~ and other reports filed subsequently by the Company 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 quarterly report speak only as of the date of this quarterly report, 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.



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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FIRSTCASH, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

March 31, December 31,
2020 2019 2019
ASSETS
Cash and cash equivalents $ 75,464
$ 49,663
$ 46,527
Fees and service charges receivable 40,121
43,993
46,686
Pawn loans 314,296
345,200
369,527
Consumer loans, net 410
11,017
751
Inventories 227,876
257,803
265,256
Income taxes receivable 4,279
1,096
875
Prepaid expenses and other current assets 10,326
9,329
11,367
Total current assets 672,772
718,101
740,989

Property and equipment, net 329,066
276,397
336,167
Operating lease right of use asset 280,840
298,167
304,549
Goodwill 927,290
932,773
948,643
Intangible assets, net 84,999
87,810
85,875
Other assets 9,188
10,927
11,506
Deferred tax assets 8,718
11,608
11,711
Total assets $ 2,312,873
$ 2,335,783
$ 2,439,440

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued liabilities $ 74,805
$ 77,363
$ 72,398
Customer deposits 39,728
40,055
39,736
Income taxes payable 9,832
7,484
4,302
Lease liability, current 82,355
84,946
86,466
Total current liabilities 206,720
209,848
202,902

Revolving unsecured credit facilities 355,519
255,000
335,000
Senior unsecured notes 296,744
296,053
296,568
Deferred tax liabilities 64,728
57,496
61,431
Lease liability, non-current 181,787
188,970
193,504
Total liabilities 1,105,498
1,007,367
1,089,405

Stockholders’ equity:
Common stock 493
493
493
Additional paid-in capital 1,224,113
1,225,482
1,231,528
Retained earnings 749,126
638,574
727,476
Accumulated other comprehensive loss (180,472 ) (107,694 ) (96,969 )
Common stock held in treasury, at cost (585,885 ) (428,439 ) (512,493 )
Total stockholders’ equity 1,207,375
1,328,416
1,350,035
Total liabilities and stockholders’ equity $ 2,312,873
$ 2,335,783
$ 2,439,440

The accompanying notes are an integral part of these consolidated financial statements.


FIRSTCASH, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

	March 31,				December 31,
	2021		2020		2020
ASSETS
Cash and cash equivalents	$	54,641	$	75,464	$	65,850
Fees and service charges receivable	35,334		40,121		41,110
Pawn loans	265,438		314,296		308,231

Inventories	185,336		227,876		190,352
Income taxes receivable	8,236		4,279		9,634
Prepaid expenses and other current assets	8,629		10,736		9,388

Total current assets	557,614		672,772		624,565

Property and equipment, net	384,617		329,066		373,667
Operating lease right of use asset	287,418		280,840		298,957
Goodwill	974,051		927,290		977,381
Intangible assets, net	83,229		84,999		83,651
Other assets	9,365		9,188		9,818
Deferred tax assets	3,869		8,718		4,158
Total assets	$	2,300,163	$	2,312,873	$	2,372,197

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts payable and accrued liabilities	$	79,575	$	74,805	$	81,917
Customer deposits	38,727		39,728		34,719
Income taxes payable	7,139		9,832		1,148
Lease liability, current	86,529		82,355		88,622
Total current liabilities	211,970		206,720		206,406

Revolving unsecured credit facilities	44,000		355,519		123,000

Senior unsecured notes	493,108		296,744		492,916
Deferred tax liabilities	73,020		64,728		71,173
Lease liability, non-current	186,972		181,787		194,887

Total liabilities	1,009,070		1,105,498		1,088,382

Stockholders’ equity:

Common stock	493		493		493
Additional paid-in capital	1,218,323		1,224,113		1,221,788
Retained earnings	811,921		749,126		789,303
Accumulated other comprehensive loss	(130,767)		(180,472)		(118,432)
Common stock held in treasury, at cost	(608,877)		(585,885)		(609,337)
Total stockholders’ equity	1,291,093		1,207,375		1,283,815
Total liabilities and stockholders’ equity	$	2,300,163	$	2,312,873	$	2,372,197

The accompanying notes are an integral part of these consolidated financial statements.



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FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share amounts)

Three Months Ended
March 31,
2020 2019
Revenue:
Retail merchandise sales $ 296,629
$ 284,241
Pawn loan fees 142,115
141,192
Wholesale scrap jewelry sales 26,371
31,710
Consumer loan and credit services fees 1,375
10,461
Total revenue 466,490
467,604

Cost of revenue:
Cost of retail merchandise sold 184,695
179,349
Cost of wholesale scrap jewelry sold 22,847
30,353
Consumer loan and credit services loss provision (361 ) 2,103
Total cost of revenue 207,181
211,805

Net revenue 259,309
255,799

Expenses and other income:
Store operating expenses 153,500
146,852
Administrative expenses 32,902
32,154
Depreciation and amortization 10,674
9,874
Interest expense 8,418
8,370
Interest income (185 ) (204 )
Merger and other acquisition expenses 68
149
Loss (gain) on foreign exchange 2,685
(239 )
Write-offs and impairments of certain lease intangibles and other assets 5,530
—
Total expenses and other income 213,592
196,956

Income before income taxes 45,717
58,843

Provision for income taxes 12,799
16,188

Net income $ 32,918
$ 42,655

Earnings per share:
Basic $ 0.79
$ 0.98
Diluted $ 0.78
$ 0.98

The accompanying notes are an integral part of these consolidated financial statements.


FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share amounts)

	Three Months Ended
	March 31,
	2021		2020
Revenue:
Retail merchandise sales	$	272,042	$	296,629
Pawn loan fees	115,522		142,115
Wholesale scrap jewelry sales	20,375		26,371
Consumer loan and credit services fees	0		1,375
Total revenue	407,939		466,490

Cost of revenue:
Cost of retail merchandise sold	157,153		184,695
Cost of wholesale scrap jewelry sold	17,197		22,847
Consumer loan and credit services loss provision	0		(361)
Total cost of revenue	174,350		207,181

Net revenue	233,589		259,309

Expenses and other income:
Store operating expenses	137,324		153,500
Administrative expenses	30,999		32,902
Depreciation and amortization	10,612		10,674
Interest expense	7,230		8,418
Interest income	(158)		(185)
Merger and acquisition expenses	166		68
Loss on foreign exchange	267		2,685

Write-off of certain Cash America merger related lease intangibles	878		3,630
Impairment of certain other assets	0		1,900
Total expenses and other income	187,318		213,592

Income before income taxes	46,271		45,717

Provision for income taxes	12,556		12,799

Net income	$	33,715	$	32,918

Earnings per share:
Basic	$	0.82	$	0.79
Diluted	$	0.82	$	0.78

The accompanying notes are an integral part of these consolidated financial statements.



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FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands)

	Three Months Ended
	March 31,
	2021		2020
Net income	$	33,715	$	32,918
Other comprehensive income (loss):
Currency translation adjustment	(12,335)		(83,503)
Comprehensive income (loss)	$	21,380	$	(50,585)

The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands)

Three Months Ended
March 31,
2020 2019
Net income $ 32,918
$ 42,655
Other comprehensive income (loss):
Currency translation adjustment (83,503 ) 5,423
Comprehensive income (loss) $ (50,585 ) $ 48,078

The accompanying notes are an integral part of these consolidated financial statements.

FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited, in thousands, except per share amounts)

Three Months Ended March 31, 2020

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Accum-
ulated
Other
Compre-
hensive
Loss

Common Stock
Held in Treasury

Total
Stock-
holders’
Equity
Shares Amount Shares Amount
As of 12/31/2019 49,276
$ 493
$ 1,231,528
$ 727,476
$ (96,969 ) 6,947
$ (512,493 ) $ 1,350,035
Shares issued under share-based com-pensation plan, net of 46 shares net-settled —
—
(10,266 ) —
—
(93 ) 6,939
(3,327 )
Share-based compensation expense —
—
2,851
—
—
—
—
2,851
Net income —
—
—
32,918
—
—
—
32,918
Cash dividends ($0.27 per share) —
—
—
(11,268 ) —
—
—
(11,268 )
Currency translation adjustment —
—
—
—
(83,503 ) —
—
(83,503 )
Purchases of treasury stock —
—
—
—
—
981
(80,331 ) (80,331 )
As of 3/31/2020 49,276
$ 493
$ 1,224,113
$ 749,126
$ (180,472 ) 7,835
$ (585,885 ) $ 1,207,375

The accompanying notes are an integral part of these consolidated financial statements.



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FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
CONTINUED
(unaudited, in thousands, except per share amounts)

Three Months Ended March 31, 2019

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Accum-
ulated
Other
Compre-
hensive
Loss

Common Stock
Held in Treasury

Total
Stock-
holders’
Equity
Shares Amount Shares Amount
As of 12/31/2018 49,276
$ 493
$ 1,224,608
$ 606,810
$ (113,117 ) 5,673
$ (400,690 ) $ 1,318,104
Shares issued under share-based com-pensation plan —
—
(1,441 ) —
—
(21 ) 1,441
—
Share-based compensation expense —
—
2,315
—
—
—
—
2,315
Net income —
—
—
42,655
—
—
—
42,655
Cash dividends ($0.25 per share) —
—
—
(10,891 ) —
—
—
(10,891 )
Currency translation adjustment —
—
—
—
5,423
—
—
5,423
Purchases of treasury stock —
—
—
—
—
343
(29,190 ) (29,190 )
As of 3/31/2019 49,276
$ 493
$ 1,225,482
$ 638,574
$ (107,694 ) 5,995
$ (428,439 ) $ 1,328,416

The accompanying notes are an integral part of these consolidated financial statements.


FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited, in thousands, except per share amounts)

Three Months Ended March 31, 2021
	Common Stock		Additional Paid-In Capital		Retained Earnings		Accum- ulated Other Compre- hensive Loss		Common Stock Held in Treasury			Total Stock- holders’ Equity
		Shares	Amount								Shares	Amount
As of 12/31/2020		49,276	$	493	$	1,221,788	$	789,303	$	(118,432)	8,238	$	(609,337)	$	1,283,815
Shares issued under share-based compensation plan, net of 28 shares net-settled		—	—		(7,090)		—		—		(73)	5,427		(1,663)


Share-based compensation expense		—	—		3,625		—		—		—	—		3,625
Net income		—	—		—		33,715		—		—	—		33,715
Cash dividends ($0.27 per share)		—	—		—		(11,097)		—		—	—		(11,097)
Currency translation adjustment		—	—		—		—		(12,335)		—	—		(12,335)
Purchases of treasury stock		—	—		—		—		—		84	(4,967)		(4,967)

As of 3/31/2021		49,276	$	493	$	1,218,323	$	811,921	$	(130,767)	8,249	$	(608,877)	$	1,291,093





























The accompanying notes are an integral part of these consolidated financial statements.



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FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Three Months Ended
March 31,
2020 2019
Cash flow from operating activities:
Net income $ 32,918
$ 42,655
Adjustments to reconcile net income to net cash flow provided by operating activities:
Non-cash portion of credit loss provision (729 ) 1,335
Share-based compensation expense 2,851
2,315
Depreciation and amortization expense 10,674
9,874
Amortization of debt issuance costs 387
473
Non-cash write-offs and impairments of certain lease intangibles and other assets 5,530
—
Deferred income taxes, net 4,239
2,855
Changes in operating assets and liabilities, net of business combinations:
Fees and service charges receivable 3,673
2,093
Inventories 6,951
5,874
Prepaid expenses and other assets 355
776
Accounts payable, accrued liabilities and other liabilities 9,755
(3,560 )
Income taxes 781
7,007
Net cash flow provided by operating activities 77,385
71,697
Cash flow from investing activities:
Loan receivables, net of cash repayments 52,279
42,216
Purchases of furniture, fixtures, equipment and improvements (10,581 ) (9,658 )
Purchases of store real property (9,617 ) (22,145 )
Acquisitions of pawn stores, net of cash acquired (5,477 ) (24,520 )
Net cash flow provided by (used in) investing activities 26,604
(14,107 )
Cash flow from financing activities:
Borrowings from unsecured credit facilities 106,925
43,000
Repayments of unsecured credit facilities (88,000 ) (83,000 )
Debt issuance costs paid (130 ) —
Purchases of treasury stock (80,331 ) (29,599 )
Dividends paid (11,268 ) (10,891 )
Net cash flow used in financing activities (72,804 ) (80,490 )
Effect of exchange rates on cash (2,248 ) 770
Change in cash and cash equivalents 28,937
(22,130 )
Cash and cash equivalents at beginning of the period 46,527
71,793
Cash and cash equivalents at end of the period $ 75,464
$ 49,663

The accompanying notes are an integral part of these consolidated financial statements.


FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
CONTINUED
(unaudited, in thousands, except per share amounts)

Three Months Ended March 31, 2020
	Common Stock		Additional Paid-In Capital		Retained Earnings		Accum- ulated Other Compre- hensive Loss		Common Stock Held in Treasury			Total Stock- holders’ Equity
		Shares	Amount								Shares	Amount
As of 12/31/2019		49,276	$	493	$	1,231,528	$	727,476	$	(96,969)	6,947	$	(512,493)	$	1,350,035
Shares issued under share-based compensation plan, net of 46 shares net-settled		—	—		(10,266)		—		—		(93)	6,939		(3,327)


Share-based compensation expense		—	—		2,851		—		—		—	—		2,851
Net income		—	—		—		32,918		—		—	—		32,918
Cash dividends ($0.27 per share)		—	—		—		(11,268)		—		—	—		(11,268)
Currency translation adjustment		—	—		—		—		(83,503)		—	—		(83,503)
Purchases of treasury stock		—	—		—		—		—		981	(80,331)		(80,331)

As of 3/31/2020		49,276	$	493	$	1,224,113	$	749,126	$	(180,472)	7,835	$	(585,885)	$	1,207,375


































The accompanying notes are an integral part of these consolidated financial statements.



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FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
	Three Months Ended
	March 31,
	2021		2020
Cash flow from operating activities:
Net income	$	33,715	$	32,918
Adjustments to reconcile net income to net cash flow provided by operating activities:
Non-cash portion of consumer loan credit loss provision	0		(729)
Share-based compensation expense	3,625		2,851
Depreciation and amortization expense	10,612		10,674
Amortization of debt issuance costs	395		387


Write-off of certain Cash America merger related lease intangibles	878		3,630
Impairment of certain other assets	0		1,900

Deferred income taxes, net	2,010		4,239
Changes in operating assets and liabilities, net of business combinations:
Fees and service charges receivable	5,394		3,673
Inventories purchased directly from customers, wholesalers or manufacturers	1,442		6,951
Prepaid expenses and other assets	868		355
Accounts payable, accrued liabilities and other liabilities	3,122		9,755
Income taxes	7,113		781
Net cash flow provided by operating activities	69,174		77,385
Cash flow from investing activities:
Loan receivables, net (1)	42,394		52,279
Purchases of furniture, fixtures, equipment and improvements	(9,491)		(10,581)
Purchases of store real property	(14,441)		(9,617)

Acquisitions of pawn stores, net of cash acquired	(1,204)		(5,477)

Net cash flow provided by investing activities	17,258		26,604
Cash flow from financing activities:
Borrowings from unsecured credit facilities	45,000		106,925
Repayments of unsecured credit facilities	(124,000)		(88,000)





Debt issuance costs paid	0		(130)
Purchases of treasury stock	(4,967)		(80,331)


Payment of withholding taxes on net share settlements of restricted stock unit awards	(1,663)		0
Dividends paid	(11,097)		(11,268)
Net cash flow used in financing activities	(96,727)		(72,804)
Effect of exchange rates on cash	(914)		(2,248)
Change in cash and cash equivalents	(11,209)		28,937
Cash and cash equivalents at beginning of the period	65,850		46,527
Cash and cash equivalents at end of the period	$	54,641	$	75,464

(1)Includes the funding of new loans net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral.

The accompanying notes are an integral part of these consolidated financial statements.


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FIRSTCASH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 1 - ~~Significant Accounting Policies~~General

Basis of Presentation

The accompanying consolidated balance sheet as of December 31, ~~2019,~~2020, which is derived from audited financial statements, and the unaudited consolidated financial statements, including the notes thereto, include the accounts of FirstCash, Inc. and its wholly-owned subsidiaries (together, the “Company”). The Company regularly makes acquisitions and the results of operations for the acquired stores have been consolidated since the acquisition dates. All significant intercompany accounts and transactions have been eliminated.

These unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include certain information and disclosures required for comprehensive financial statements. These interim period financial statements should be read in conjunction with the Company’s consolidated financial statements, which are included in the Company’s ~~annual report~~Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, filed with the Securities and Exchange Commission (the “SEC”) on February ~~3, 2020.~~1, 2021. The consolidated financial statements as of March 31, ~~2020~~2021 and ~~2019,~~2020, and for the three month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, are unaudited, but in management’s opinion include all adjustments (consisting of only normal recurring adjustments) considered necessary to present fairly the financial position, results of operations and cash flow for such interim periods. Operating results for the period ended March 31, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the full year.

The Company has ~~significant~~ operations in Latin America, where in Mexico, Guatemala and Colombia, the functional currency is the Mexican peso, Guatemalan quetzal and Colombian ~~peso, respectively.~~peso. Accordingly, the assets and liabilities of these subsidiaries are translated into U.S. dollars at the exchange rate in effect at each balance sheet date, and the resulting adjustments are accumulated in other comprehensive income (loss) as a separate component of stockholders’ equity. Revenues and expenses are translated at the average exchange rates occurring during the respective period. The Company also has operations in El Salvador where the reporting and functional currency is the U.S. dollar.

~~Recent Accounting Pronouncements~~Continuing Impact of COVID-19

The onset of COVID-19 in March 2020 in the U.S. and shortly thereafter in Latin America significantly impacted the Company’s operations and earnings results. Most countries, states and other local government officials reacted by instituting quarantines, shelter-in-place and other orders mandating non-essential business closures, travel restrictions and other measures in an effort to reduce the spread of COVID-19. The measures significantly reduced normal levels of consumer spending, and combined with broad-based stimulus programs and enhanced unemployment benefits in the U.S., provided significant and unprecedented liquidity to many of the Company’s customers, which greatly suppressed normal demand for pawn loans which, in turn, reduced volumes of inventory acquired from forfeited pawn loans.

The extent to which COVID-19 continues to impact the Company’s operations, results of operations, liquidity and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the unknown duration and severity of the COVID-19 pandemic, which may be impacted by variants of the COVID-19 virus and the timing, availability and efficacy of the COVID-19 vaccines in the jurisdictions in which the Company operates, and the actions taken to contain the impact of COVID-19, as well as further actions taken to limit the resulting economic impact. In ~~June 2016,~~particular, government stimulus and other transfer programs have and may continue to have a material adverse impact on demand for pawn loans in future periods.

Use of Estimates

The preparation of interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the ~~Financial Accounting Standards Board issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement~~reported amounts of ~~Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 amends~~assets and liabilities, and related revenue and expenses, and the ~~impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types~~disclosure of ~~financial instruments, including trade receivables. In November 2018,~~gain and loss contingencies at the Financial Accounting Standards Board issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2018-19”) which clarifies that receivables arising from operating leases are accounted for using lease guidance and not as financial instruments. In April 2019, the Financial Accounting Standards Board issued ASU No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” (“ASU 2019-04”) which clarifies treatment of certain credit losses. In May 2019, the Financial Accounting Standards Board issued ASU No. 2019-05, “Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief ” (“ASU 2019-05”) which provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost. In November 2019, the Financial Accounting Standards Board issued ASU No. 2019-11, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2019-11”), which provides guidance around how to report expected recoveries. In February 2020, the Financial Accounting Standards Board issued ASU No. 2020-02, “Financial Instruments - Credit Losses (Topic 326) (“ASU 2020-02”) which provides updated guidance on how an entity should measure credit losses on financial instruments and delayed the effective date of the ~~original pronouncement for smaller reporting companies. ASU 2016-13, ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11~~financial statements. Such estimates and ~~ASU 2020-02 (collectively, “ASC 326”)~~assumptions are ~~effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. The adoption~~subject to a number of ~~ASC 326 did not have a material impact on~~risks and uncertainties, which may cause actual results to differ materially from the Company’s ~~recognition~~estimates. The extent to which COVID-19 impacts the Company’s operations, results of operations, liquidity and financial ~~instruments within~~condition, including estimates and assumptions used by the ~~scope~~Company in the calculation and evaluation of the ~~standard.~~

~~In January 2017, the Financial Accounting Standards Board issued ASU No. 2017-04, “Intangibles - Goodwill~~accrual for earned but uncollected pawn loan fees, impairment of goodwill and ~~Other (Topic 350) - Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which eliminates step two from the goodwill impairment test~~other intangible assets and instead requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The guidance is effective for annual or any interim goodwill impairmentcurrent and deferred tax assets and liabilities, will depend on future



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~~tests~~developments, which are highly uncertain and cannot be predicted with confidence, including the unknown duration and severity of the COVID-19 pandemic and the actions taken to contain its impact, as well as actions taken to limit the resulting economic impact, among others. The Company’s future assessment of the magnitude and duration of the COVID-19 pandemic, as well as other factors, could result in ~~fiscal years beginning after December 15, 2019 and should be adopted on a prospective basis. The adoption of ASU 2017-04 did not have a~~ material ~~effect on~~impacts to the Company’s ~~current~~ financial ~~position, results~~statements in future reporting periods.

Reclassification

Certain amounts in the consolidated financial statements as of ~~operations or financial statement disclosures.~~

~~In August 2018,~~and for the ~~Financial Accounting Standards Board issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes~~three months ended March 31, 2020 have been reclassified in order to conform to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The adoption of ASU 2018-13 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.2021 presentation.

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board issued ASU No 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 removes certain exceptions to the general principles in Topic 740 in Generally Accepted Accounting Principles. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, with early adoption permitted. The ~~Company does not expect~~adoption of ASU 2019-12 ~~to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.~~

In March 2020, the Financial Accounting Standards Board issued ASU 2020-03, “Codification Improvements to Financial Instruments” (“ASU 2020-03”). ASU 2020-03 improves and clarifies various financial instruments topics. ASU 2020-03 includes seven different issues that describe the areas of improvement and the related amendments to GAAP, intended to make the standards easier to understand and apply by eliminating inconsistencies and providing clarifications. The Company adopted ASU 2020-03 upon issuance, which did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

In March 2020, the Financial Accounting Standards Board issued ASU No 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. ASU 2020-04 is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company does not expect ASU 2020-04 to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

Note 2 - Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):


	Three Months Ended
	March 31,
	2021		2020
Numerator:
Net income	$	33,715	$	32,918



Denominator:
Weighted-average common shares for calculating basic earnings per share	41,034		41,912
Effect of dilutive securities:
Stock options and restricted stock unit awards	22		95
Weighted-average common shares for calculating diluted earnings per share	41,056		42,007

Earnings per share:
Basic	$	0.82	$	0.79
Diluted	$	0.82	$	0.78

Three Months Ended
March 31,
2020 2019
Numerator:
Net income $ 32,918
$ 42,655

Denominator:
Weighted-average common shares for calculating basic earnings per share 41,912
43,518
Effect of dilutive securities:
Stock options and restricted stock unit awards 95
140
Weighted-average common shares for calculating diluted earnings per share 42,007
43,658

Earnings per share:
Basic $ 0.79
$ 0.98
Diluted $ 0.78
$ 0.98



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~~Note 3 - Acquisitions~~

Consistent with the Company’s strategy to continue its expansion of pawn stores in selected markets, during the three months ended March 31, 2020, the Company acquired a 36-store chain of pawn stores from an independent operator in Mexico. The purchase price totaled $7.0 million, net of cash acquired and subject to future post-closing adjustments. The aggregate purchase price was composed of $3.7 million in cash paid at the closing date on March 31, 2020 and remaining short-term amounts payable to the seller of approximately $3.3 million.

The purchase price of the 2020 acquisition was allocated to assets acquired and liabilities assumed based upon the estimated fair market values at the date of acquisition. The excess purchase price over the estimated fair market value of the net assets acquired has been recorded as goodwill. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company and the pawn stores acquired. This acquisition was not material to the Company’s consolidated financial statements.

Note 43 - Operating Leases

The Company leases the majority of its pawnshop locations under operating leases and determines if an arrangement is or contains a lease at inception. Many leases include both lease and non-lease components, which the Company accounts for separately. Lease components include rent, taxes and insurance costs while non-lease components include common area or other maintenance costs. Operating leases are included in operating lease right of use assets, lease liability, current and lease liability, non-current in the consolidated balance sheets. The Company does not have any finance leases.

Leased facilities are generally leased for a term of three to five years with one or more options to renew for an additional three to five years, typically at the Company’s sole discretion. In addition, the majority of these leases can be terminated early upon an adverse change in law which negatively affects the store’s profitability. The Company regularly evaluates renewal and termination options to determine if the Company is reasonably certain to exercise the option, and excludes these options from the lease term included in the recognition of the operating lease right of use asset and lease liability until such certainty exists. The weighted-average remaining lease term for operating leases as of March 31, 2021 and 2020 was 4.1 years and ~~2019 was~~ 3.9 years, ~~and 4.0 years,~~ respectively.

The operating lease right of use asset and lease liability is recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The Company’s leases do not provide an implicit rate and therefore, it uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The Company utilizes a portfolio approach for determining the incremental borrowing rate to apply to groups of leases with similar characteristics. The weighted-average discount rate used to measure the lease liability as of March 31, 2021 and 2020 was 6.7% and ~~2019 was~~ 7.8% ~~and 7.2%~~, respectively.

The Company has certain operating leases in Mexico which are denominated in U.S. dollars. The liability related to these leases is considered a monetary liability, and requires remeasurement each reporting period into the functional currency (Mexican pesos) using reporting date exchange rates. The remeasurement results in the recognition of foreign currency exchange gains or losses each reporting period, which can produce a certain level of earnings volatility. The Company recognized a foreign currency loss of ~~$4.4~~$0.6 million and ~~a gain of $0.3~~$4.4 million during the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively, related to the remeasurement of these U.S. dollar denominated operating leases, which is included in loss ~~(gain)~~ on foreign exchange in the accompanying consolidated statements of income.



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Lease expense is recognized on a straight-line basis over the lease term, with variable lease expense recognized in the period such payments are incurred. The following table details the components of lease expense included in store operating expenses in the consolidated statements of income during the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands):


	Three Months Ended
	March 31,
	2021		2020
Operating lease expense	$	31,065	$	31,210
Variable lease expense (1)	3,834		3,545
Total operating lease expense	$	34,899	$	34,755

Three Months Ended
March 31,
2020 2019
Operating lease expense $ 31,210
$ 30,980
Variable lease expense ⁽¹⁾
3,545
2,075
Total operating lease expense $ 34,755
$ 33,055
(1)Variable lease costs consist primarily of taxes, insurance and common area or other maintenance costs paid based on actual costs incurred by the lessor and can therefore vary over the lease term.


⁽¹⁾	~~Variable lease costs consist primarily of taxes, insurance and common area or other maintenance costs paid based on actual costs incurred by the lessor and can therefore vary over the lease term.~~

The following table details the maturity of lease liabilities for all operating leases as of March 31, ~~2020~~2021 (in thousands):


Nine months ending December 31, 2021	$	78,410
2022	84,948
2023	64,926
2024	42,188
2025	18,221
Thereafter	23,966
Total	$	312,659
Less amount of lease payments representing interest	(39,158)
Total present value of lease payments	$	273,501

Nine months ending December 31, 2020 $ 76,393
2021 84,670
2022 62,293
2023 43,372
2024 23,004
Thereafter 15,886
Total $ 305,618
Less amount of lease payments representing interest (41,476 )
Total present value of lease payments $ 264,142


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The following table details supplemental cash flow information related to operating leases for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands):


	Three Months Ended
	March 31,
	2021		2020
Cash paid for amounts included in the measurement of operating lease liabilities	$	28,186	$	28,835
Leased assets obtained in exchange for new operating lease liabilities	$	16,778	$	24,983

Three Months Ended
March 31,
2020 2019
Cash paid for amounts included in the measurement of operating lease liabilities $ 28,835
$ 28,840
Leased assets obtained in exchange for new operating lease liabilities $ 24,983
$ 2,551



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Note 54 - Long-Term Debt

The following table details the Company’s long-term debt at the respective principal amounts, net of unamortized debt issuance costs on the senior unsecured notes (in thousands):


	As of March 31,				As of December 31,
	2021		2020		2020
Revolving unsecured uncommitted credit facility, maturing 2023 (1)	$	0	$	25,519	$	0
Revolving unsecured credit facility, maturing 2024 (1)	44,000		330,000		123,000
5.375% senior unsecured notes due 2024 (2)	0		296,744		0
4.625% senior unsecured notes due 2028 (3)	493,108		0		492,916

Total long-term debt	$	537,108	$	652,263	$	615,916

As of March 31, As of December 31,
2020 2019 2019
Revolving unsecured credit facility, maturing 2024 ⁽¹⁾
$ 330,000
$ 255,000
$ 335,000
Revolving unsecured uncommitted credit facility, maturing 2023 ⁽¹⁾
25,519
—
—
5.375% senior unsecured notes due 2024 ⁽²⁾
296,744
296,053
296,568
Total long-term debt $ 652,263
$ 551,053
$ 631,568
(1)Debt issuance costs related to the Company’s revolving unsecured credit facilities are included in other assets in the accompanying consolidated balance sheets.

⁽¹⁾

(2)As of March 31, 2020, deferred debt issuance costs of $3.3 million are included as a direct deduction from the carrying amount of the senior unsecured notes due 2024 in the accompanying consolidated balance sheets.

(3)As of March 31, 2021 and December 31, 2020, deferred debt issuance costs of $6.9 million and $7.1 million, respectively, are included as a direct deduction from the carrying amount of the senior unsecured notes due 2028 in the accompanying consolidated balance sheets.

~~Debt issuance costs related to the Company’s revolving unsecured credit facilities are included in other assets in the accompanying consolidated balance sheets.~~


⁽²⁾	As of March 31, 2020, 2019 and December 31, 2019, deferred debt issuance costs of $3.3 million, $3.9 million and $3.4 million, respectively, are included as a direct deduction from the carrying amount of the senior unsecured notes in the accompanying consolidated balance sheets.

Revolving Unsecured Credit Facility

As of March 31, ~~2020,~~2021, the Company maintained an unsecured line of credit with a group of U.S. based commercial lenders (the “Credit Facility”) in the amount of $500.0 million. The Credit Facility matures on December 19, 2024, which would accelerate to 90 days prior to the maturity of the Company’s senior unsecured notes due June 1, 2024 if the Company’s senior unsecured notes have not been refinanced or otherwise extended past December 19, 2024 by such date.2024. As of March 31, ~~2020,~~2021, the Company had ~~$330.0~~$44.0 million in outstanding borrowings and ~~$3.3~~$3.4 million in outstanding letters of credit under the Credit Facility, leaving ~~$166.7~~$452.6 million available for future ~~borrowings.~~borrowings, subject to certain financial covenants. The Credit Facility is unsecured and bears interest, at the Company’s option, of either (1) the prevailing ~~London Interbank Offered Rate (“LIBOR”)~~LIBOR (with interest periods of 1 week or 1, 2, 3 or 6 months at the Company’s option) plus a fixed spread of 2.5% or (2) the prevailing prime or base rate plus a fixed spread of 1.5%. The agreement has a LIBOR floor of 0%. Additionally, the Company is required to pay an annual commitment fee of ~~0.50%~~0.325% on the average daily unused portion of the Credit Facility commitment. The weighted-average interest rate on amounts outstanding under the Credit Facility at March 31, ~~2020~~2021 was ~~3.16%~~2.82% based on 1 week LIBOR. Under the terms of the Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Credit Facility also contains customary restrictions on the Company’s ability to incur additional debt, grant liens, make investments, consummate acquisitions and similar negative covenants with customary carve-outs and baskets. The Company was in compliance with the covenants of the Credit Facility as of March 31, ~~2020.~~2021. During the three months ended March 31, ~~2020,~~2021, the Company made net payments of ~~$5.0~~$79.0 million pursuant to the Credit Facility.

Revolving Unsecured Uncommitted Credit Facility

~~During~~As of March ~~2020,~~31, 2021, the Company’s primary subsidiary in Mexico, First Cash S.A. de C.V., ~~entered into~~maintained an unsecured and uncommitted line of credit guaranteed by FirstCash, Inc. with a bank in Mexico (the “Mexico Credit Facility”) in the amount of $600.0 million Mexican pesos. The Mexico Credit Facility ~~matures on March 9, 2023 and, as of March 31, 2020, was fully drawn, leaving no availability for future borrowings. The Mexico Credit Facility~~ bears interest at the Mexican Central Bank’s interbank equilibrium rate (“TIIE”) plus a fixed spread of 2.5%~~. The interest rate~~ and matures on ~~the amount outstanding under the Mexico Credit Facility at~~ March ~~31, 2020 was 9.71%.~~9, 2023. Under the terms of the Mexico Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Company was in compliance with the covenants of the Mexico Credit Facility as of March 31, ~~2020. During the three months ended~~2021. At March 31, ~~2020,~~2021, the Company ~~received net proceeds of~~had 0 amount outstanding under the Mexico Credit Facility and $600.0 million Mexican pesos ~~from borrowings pursuant to the Mexico Credit Facility.~~available for borrowings.


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Senior Unsecured Notes Due 2028



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incurrence of any indebtedness to make such payment, the Company's consolidated total debt ratio (“Net Debt Ratio”) is less than ~~2.25~~2.75 to 1.1. The Net Debt Ratio is defined generally in the indenture governing the Notes as the ratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelve months EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement period.

The Company utilized the net proceeds from the offering of the Notes to redeem all of the $300.0 million aggregate principal amount of the Company’s 5.375% senior notes due 2024 and to repay a portion of the Company’s Credit Facility.

Note 65 - Fair Value of Financial Instruments

The fair value of financial instruments is determined by reference to various market data and other valuation techniques, as appropriate. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The three fair value levels are (from highest to lowest):

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Recurring Fair Value Measurements

As of March 31, 2021, 2020 ~~2019~~ and December 31, ~~2019,~~2020, the Company did not have any financial assets or liabilities measured at fair value on a recurring basis.

Fair Value Measurements on a Non-Recurring Basis

The Company measures non-financial assets and liabilities, such as property and equipment and intangible assets, at fair value on a non-recurring basis, or when events or circumstances indicate that the carrying amount of the assets may be impaired. During the three months ended March 31, 2020, the Company recorded a $1.9 million impairment related to a non-financial, non-operating asset that was included in other assets in the consolidated balance sheets.


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Financial Assets and Liabilities Not Measured at Fair Value

The Company’s financial assets and liabilities as of March 31, 2021, 2020 ~~2019~~ and December 31, ~~2019~~2020 that are not measured at fair value in the consolidated balance sheets are as follows (in thousands):


	Carrying Value		Estimated Fair Value
	March 31,		March 31,		Fair Value Measurements Using
	2021		2021		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	54,641	$	54,641	$	54,641	$	0	$	0
Fees and service charges receivable	35,334		35,334		0		0		35,334
Pawn loans	265,438		265,438		0		0		265,438

	$	355,413	$	355,413	$	54,641	$	0	$	300,772

Financial liabilities:
Revolving unsecured credit facilities	$	44,000	$	44,000	$	0	$	44,000	$	0
Senior unsecured notes (outstanding principal)	500,000		506,000		0		506,000		0
	$	544,000	$	550,000	$	0	$	550,000	$	0


	Carrying Value		Estimated Fair Value									Carrying Value		Estimated Fair Value
	March 31,		March 31,		Fair Value Measurements Using							March 31,		March 31,		Fair Value Measurements Using
	2020		2020		Level 1		Level 2		Level 3			2020		2020		Level 1		Level 2		Level 3
Financial assets:											Financial assets:
Cash and cash equivalents	$	75,464	$	75,464	$	75,464	$	—	$	—	Cash and cash equivalents	$	75,464	$	75,464	$	75,464	$	0	$	0
Fees and service charges receivable	40,121		40,121		—		—		40,121		Fees and service charges receivable	40,121		40,121		0		0		40,121
Pawn loans	314,296		314,296		—		—		314,296		Pawn loans	314,296		314,296		0		0		314,296
Consumer loans, net	410		410		—		—		410

	$	430,291	$	430,291	$	75,464	$	—	$	354,827		$	429,881	$	429,881	$	75,464	$	0	$	354,417

Financial liabilities:											Financial liabilities:
Revolving unsecured credit facilities	$	355,519	$	355,519	$	—	$	355,519	$	—	Revolving unsecured credit facilities	$	355,519	$	355,519	$	0	$	355,519	$	0
Senior unsecured notes (outstanding principal)	300,000		276,000		—		276,000		—		Senior unsecured notes (outstanding principal)	300,000		276,000		0		276,000		0
	$	655,519	$	631,519	$	—	$	631,519	$	—		$	655,519	$	631,519	$	0	$	631,519	$	0


	Carrying Value		Estimated Fair Value
	December 31,		December 31,		Fair Value Measurements Using
	2020		2020		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	65,850	$	65,850	$	65,850	$	0	$	0
Fees and service charges receivable	41,110		41,110		0		0		41,110
Pawn loans	308,231		308,231		0		0		308,231

	$	415,191	$	415,191	$	65,850	$	0	$	349,341

Financial liabilities:
Revolving unsecured credit facilities	$	123,000	$	123,000	$	0	$	123,000	$	0
Senior unsecured notes (outstanding principal)	500,000		516,000		0		516,000		0
	$	623,000	$	639,000	$	0	$	639,000	$	0



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Carrying Value Estimated Fair Value
March 31, March 31, Fair Value Measurements Using
2019 2019 Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $ 49,663
$ 49,663
$ 49,663
$ —
$ —
Fees and service charges receivable 43,993
43,993
—
—
43,993
Pawn loans 345,200
345,200
—
—
345,200
Consumer loans, net 11,017
11,017
—
—
11,017
$ 449,873
$ 449,873
$ 49,663
$ —
$ 400,210

Financial liabilities:
Revolving unsecured credit facility $ 255,000
$ 255,000
$ —
$ 255,000
$ —
Senior unsecured notes (outstanding principal) 300,000
306,000
—
306,000
—
$ 555,000
$ 561,000
$ —
$ 561,000
$ —

Carrying Value Estimated Fair Value
December 31, December 31, Fair Value Measurements Using
2019 2019 Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $ 46,527
$ 46,527
$ 46,527
$ —
$ —
Fees and service charges receivable 46,686
46,686
—
—
46,686
Pawn loans 369,527
369,527
—
—
369,527
Consumer loans, net 751
751
—
—
751
$ 463,491
$ 463,491
$ 46,527
$ —
$ 416,964

Financial liabilities:
Revolving unsecured credit facility $ 335,000
$ 335,000
$ —
$ 335,000
$ —
Senior unsecured notes (outstanding principal) 300,000
310,000
—
310,000
—
$ 635,000
$ 645,000
$ —
$ 645,000
$ —

As cash and cash equivalents have maturities of less than three months, the carrying value of cash and cash equivalents approximates fair value. Due to their short-term maturities, the carrying value of pawn loans and fees and service charges receivable approximate fair value. Consumer loans, net are carried net of the allowance for estimated loan losses, which is calculated by applying historical loss rates combined with recent default trends to the gross consumer loan balance. Therefore, the carrying value approximates the fair value.

The carrying value of the unsecured credit facilities approximate fair value as of March 31, 2021, 2020 ~~2019~~ and December 31, ~~2019.~~2020. The fair value of the unsecured credit facilities ~~are~~is estimated based on market values for debt issuances with similar characteristics or rates currently available for debt with similar terms. In addition, the unsecured credit facilities have a variable interest rate based on a fixed spread over LIBOR or TIIE and reprice with any changes in LIBOR or TIIE. The fair value of the senior unsecured notes is estimated based on quoted prices in markets that are not active.



~~Table of Contents~~

Note 76 - Segment Information

The Company organizes its operations into 2 reportable segments as follows:

•U.S. operations ~~- Includes all pawn and consumer loan operations in the U.S.~~

•Latin America operations - ~~Includes all pawn operations in Latin America, which~~ includes operations in Mexico, Guatemala, Colombia and El Salvador ~~and Colombia.~~

Corporate expenses and income, which include administrative expenses, corporate depreciation and amortization, interest expense, interest income, merger and ~~other~~ acquisition expenses, ~~and~~ loss ~~(gain)~~ on foreign exchange, write-offs of certain lease intangibles and impairments of certain other assets, are incurred or earned in both the U.S. and Latin America, but presented on a consolidated basis and are not allocated between the U.S. operations segment and Latin America operations segment.

The following tables present reportable segment information for the three month period ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands):


	Three Months Ended March 31, 2020												Three Months Ended March 31, 2021
	U.S. Operations			Latin America Operations		Corporate			Consolidated				U.S. Operations		Latin America Operations		Corporate		Consolidated
Revenue:												Revenue:
Retail merchandise sales	$	195,966		$	100,663	$	—		$	296,629		Retail merchandise sales	$	189,957	$	82,085	$	0	$	272,042
Pawn loan fees	97,857			44,258		—			142,115			Pawn loan fees	76,397		39,125		0		115,522
Wholesale scrap jewelry sales	15,478			10,893		—			26,371			Wholesale scrap jewelry sales	9,203		11,172		0		20,375
Consumer loan and credit services fees	1,375			—		—			1,375

Total revenue	310,676			155,814		—			466,490			Total revenue	275,557		132,382		0		407,939

Cost of revenue:												Cost of revenue:
Cost of retail merchandise sold	119,529			65,166		—			184,695			Cost of retail merchandise sold	106,530		50,623		0		157,153
Cost of wholesale scrap jewelry sold	14,006			8,841		—			22,847			Cost of wholesale scrap jewelry sold	7,513		9,684		0		17,197
Consumer loan and credit services loss provision	(361		)	—		—			(361		)

Total cost of revenue	133,174			74,007		—			207,181			Total cost of revenue	114,043		60,307		0		174,350

Net revenue	177,502			81,807		—			259,309			Net revenue	161,514		72,075		0		233,589

Expenses and other income:												Expenses and other income:
Store operating expenses	107,706			45,794		—			153,500			Store operating expenses	95,247		42,077		0		137,324
Administrative expenses	—			—		32,902			32,902			Administrative expenses	0		0		30,999		30,999
Depreciation and amortization	5,401			4,063		1,210			10,674			Depreciation and amortization	5,382		4,263		967		10,612
Interest expense	—			—		8,418			8,418			Interest expense	0		0		7,230		7,230
Interest income	—			—		(185		)	(185		)	Interest income	0		0		(158)		(158)
Merger and other acquisition expenses	—			—		68			68
Merger and acquisition expenses												Merger and acquisition expenses	0		0		166		166
Loss on foreign exchange	—			—		2,685			2,685			Loss on foreign exchange	0		0		267		267
Write-offs and impairments of certain lease intangibles and other assets	—			—		5,530			5,530

Write-off of certain Cash America merger related lease intangibles												Write-off of certain Cash America merger related lease intangibles	0		0		878		878

Total expenses and other income	113,107			49,857		50,628			213,592			Total expenses and other income	100,629		46,340		40,349		187,318

Income (loss) before income taxes	$	64,395		$	31,950	$	(50,628	)	$	45,717		Income (loss) before income taxes	$	60,885	$	25,735	$	(40,349)	$	46,271


	Three Months Ended March 31, 2020
	U.S. Operations		Latin America Operations		Corporate		Consolidated
Revenue:
Retail merchandise sales	$	195,966	$	100,663	$	0	$	296,629
Pawn loan fees	97,857		44,258		0		142,115
Wholesale scrap jewelry sales	15,478		10,893		0		26,371
Consumer loan and credit services fees (1)	1,375		0		0		1,375
Total revenue	310,676		155,814		0		466,490

Cost of revenue:
Cost of retail merchandise sold	119,529		65,166		0		184,695
Cost of wholesale scrap jewelry sold	14,006		8,841		0		22,847
Consumer loan and credit services loss provision (1)	(361)		0		0		(361)
Total cost of revenue	133,174		74,007		0		207,181

Net revenue	177,502		81,807		0		259,309

Expenses and other income:
Store operating expenses	107,706		45,794		0		153,500
Administrative expenses	0		0		32,902		32,902
Depreciation and amortization	5,401		4,063		1,210		10,674
Interest expense	0		0		8,418		8,418
Interest income	0		0		(185)		(185)
Merger and acquisition expenses	0		0		68		68
Loss on foreign exchange	0		0		2,685		2,685
Write-off of certain Cash America merger related lease intangibles	0		0		3,630		3,630
Impairment of certain other assets	0		0		1,900		1,900

Total expenses and other income	113,107		49,857		50,628		213,592

Income (loss) before income taxes	$	64,395	$	31,950	$	(50,628)	$	45,717

Three Months Ended March 31, 2019

U.S.
Operations

Latin America
Operations
Corporate Consolidated
Revenue:
Retail merchandise sales $ 186,815
$ 97,426
$ —
$ 284,241
Pawn loan fees 97,876
43,316
—
141,192
Wholesale scrap jewelry sales 22,785
8,925
—
31,710
Consumer loan and credit services fees 10,461
—
—
10,461
Total revenue 317,937
149,667
—
467,604

Cost of revenue:
Cost of retail merchandise sold 117,744
61,605
—
179,349
Cost of wholesale scrap jewelry sold 21,270
9,083
—
30,353
Consumer loan and credit services loss provision 2,103
—
—
2,103
Total cost of revenue 141,117
70,688
—
211,805

Net revenue 176,820
78,979
—
255,799

Expenses and other income:
Store operating expenses 103,884
42,968
—
146,852
Administrative expenses —
—
32,154
32,154
Depreciation and amortization 5,045
3,305
1,524
9,874
Interest expense —
—
8,370
8,370
Interest income —
—
(204 ) (204 )
Merger and other acquisition expenses —
—
149
149
Gain on foreign exchange —
—
(239 ) (239 )
Total expenses and other income 108,929
46,273
41,754
196,956

Income (loss) before income taxes $ 67,891
$ 32,706
$ (41,754 ) $ 58,843

(1)Effective June 30, 2020, the Company no longer offers an unsecured consumer loan product in the U.S.

~~Note 8 - Subsequent Event~~

In December 2019, a novel strain of coronavirus (“COVID-19”) surfaced in China, which has and is continuing to spread throughout the world. In March of 2020, the World Health Organization declared the outbreak as a pandemic. The extent to which COVID-19 impacts the Company’s operations, results of operations, liquidity and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration, severity and scope of the outbreak, and the actions taken to contain its impact, as well as actions taken to limit the resulting economic impact, among others.

The health and safety of customers and employees of the Company are of the utmost importance. The operation of the Company’s stores is critically dependent on the ability of customers and employees to safely conduct transactions in each location. The Company has taken, and will continue to take, temporary precautionary measures in accordance with the guidelines of the Centers for Disease Control and other federal, state and local authorities. This includes the adoption of strict social distancing and hygiene protocols within all of the Company’s store locations intended to help minimize the risk of COVID-19 to its customers and employees. Also, in an effort to improve social distancing, the Company has temporarily allowed the majority of its work force at its corporate offices to work remotely.

In addition, consumer fears about becoming ill with COVID-19 may continue, and consumer behavior may change as a result of COVID-19, which could materially and adversely affect traffic to the Company’s stores. Consumer spending and loan demand generally may also be impacted by general macroeconomic conditions and consumer confidence, including the impacts of any recession and other uncertainties from the effects of government stimulus programs resulting from the COVID-19 pandemic.

The economic global uncertainty resulting from COVID-19 has also resulted in increased currency volatility that has resulted in adverse currency rate fluctuations, especially with respect to the Mexican peso. There is no guarantee these adverse currency rate fluctuations will not continue or accelerate in the future.

The rapid development and fluidity of this situation makes it nearly impossible to predict the ultimate adverse impact of COVID-19 on the Company’s business and operations. Nevertheless, COVID-19 presents a material uncertainty which could adversely affect the Company’s results of operations, financial condition and cash flows in the future.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of financial condition, results of operations, liquidity and capital resources of FirstCash, Inc. and its wholly-owned subsidiaries (together, the “Company”) should be read in conjunction with the Company’s consolidated financial statements and accompanying notes included under Part I, Item 1 of this quarterly report on Form 10-Q, as well as with the audited consolidated financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s ~~annual report~~Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

The Company is a leading operator of retail-based pawn stores with over ~~2,700~~2,770 store locations in the U.S. and Latin America. The Company’s pawn stores generate retail sales primarily from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers. ~~The~~In addition, the stores ~~also offer pawn loans to~~ help customers meet small short-term cash ~~needs.~~needs by providing non-recourse pawn loans and buying merchandise directly from customers. Personal property, such as jewelry, electronics, tools, appliances, sporting goods and musical instruments, is pledged as collateral for the pawn loans and held by the Company over the typical 30-day term of the loan plus a stated grace period. ~~In addition, a small number of the Company’s pawn stores offer credit services products or unsecured consumer loans.~~

The Company’s ~~strategy~~long-term business plan is to grow revenues and income by opening new (“de novo”) retail pawn locations, acquiring existing pawn stores in strategic markets and increasing revenue and operating profits in existing stores. Pawn operations, which include retail merchandise sales, pawn loan fees and wholesale scrap jewelry sales, accounted for more than 99% and approximately 98% of the Company’s consolidated revenue during the three month periods ended March 31, 2020 and 2019, respectively.

The Company operates six stand-alone consumer finance stores in the U.S. which provide credit services and/or consumer loans. In addition, 40 of the Company’s pawn stores also offer credit services and/or consumer loans as ancillary products. These products have been deemphasized by the Company in recent years due to regulatory constraints and increased internet based competition for such products. The Company ceased offering unsecured consumer lending and credit services products in all of its Ohio locations on April 26, 2019 and closed 52 Ohio locations during the second quarter of 2019. See “Results of Operations - Consumer Lending Operations” for further discussion. Consumer loan and credit services revenue accounted for less than 1% and approximately 2% of consolidated revenue during the three month periods ended March 31, 2020 and 2019, respectively.

The Company organizes its operations into two reportable segments. The U.S. operations segment consists of all ~~pawn and consumer loan~~ operations in the U.S. and the Latin America operations segment consists of all ~~pawn operations in Latin America, which includes~~ operations in Mexico, Guatemala, Colombia and El ~~Salvador and Colombia.~~Salvador.

OPERATIONS AND LOCATIONS

As of March 31, ~~2020,~~2021, the Company had ~~2,740~~2,771 store locations composed of ~~1,052~~1,046 stores in 24 U.S. states and the District of Columbia, ~~1,608~~1,637 stores in 32 states in Mexico, 5560 stores in Guatemala, 15 stores in Colombia and 13 stores in El ~~Salvador and 12 stores in Colombia.~~Salvador.

The following table details store count activity:


	Three Months Ended March 31, 2021
	U.S.	Latin America
	Operations Segment	Operations Segment	Total Locations
Total locations, beginning of period	1,046	1,702	2,748
New locations opened	—	24	24
Locations acquired	2	—	2


Consolidation of existing pawn locations (1)	(2)	(1)	(3)

Total locations, end of period	1,046	1,725	2,771

Three Months Ended March 31, 2020
U.S. Latin America

Operations Segment ⁽¹⁾

Operations Segment ⁽²⁾
Total Locations
Total locations, beginning of period 1,056
1,623
2,679
New locations opened —
31
31
Locations acquired —
36
36
Locations closed or consolidated (4 ) (2 ) (6 )
Total locations, end of period 1,052
1,688
2,740
(1)Store consolidations were primarily acquired locations over the past four years which have been combined with overlapping stores and for which the Company expects to maintain a significant portion of the acquired customer base in the consolidated location.

CRITICAL ACCOUNTING POLICIES

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The significant accounting policies that the Company believes are the most critical to aid in fully understanding and evaluating its reported financial results have been reported in the Company’s ~~2019 annual report~~2020 Annual Report on Form 10-K. There have been no changes to the Company’s significant accounting policies for the three months ended March 31, ~~2020.~~2021.

RESULTS OF OPERATIONS (unaudited)

Continuing Impact of COVID-19

The onset of COVID-19 in March 2020 in the U.S. and shortly thereafter in Latin America significantly impacted the Company’s operations and earnings results. Most countries, states and other local government officials reacted by instituting quarantines, shelter-in-place and other orders mandating non-essential business closures, travel restrictions and other measures in an effort to reduce the spread of COVID-19. These measures significantly reduced normal levels of consumer spending, and combined with broad-based stimulus programs and enhanced unemployment benefits in the U.S., provided significant and unprecedented liquidity to many of the Company’s customers, which greatly suppressed normal demand for pawn loans beginning in the second quarter of 2020. As the broad shutdowns in response to COVID-19 began to ease late in the second half of 2020, pawn lending activity began to slowly recover. Even so, resulting pawn balances at December 31, 2020 were still down 17% compared to the prior year end.

During the first quarter of 2021, two additional federal stimulus payments in the U.S. caused further declines in U.S. pawn lending demand while pawn lending activity in Latin America continued recovering to near pre-pandemic levels given the limited government stimulus programs in the region. As of March 31, 2021, consolidated pawn loan balances were still down 16% compared to the prior-year quarter. Resulting pawn loan fees were negatively impacted during the first quarter of 2021 as a result of the lower pawn loan balances.

In most markets where the Company operates, pawnshops were designated as “essential businesses” and remained open during the broad shutdowns in response to COVID-19. As a result, the Company experienced strong customer demand for “stay-at-home” products such as consumer electronics and sporting goods. In addition, federal stimulus payments to consumers in the U.S. during 2020 also drove retail demand for most products. However, the increased retail volumes and less forfeited inventory from lower pawn receivables negatively impacted inventory balances in the second half of 2020. Resulting inventory balances at December ~~2019, a novel strain~~31, 2020 were down 28% compared to the prior year end. The lower beginning inventory levels negatively impacted retail sales during the first quarter of ~~coronavirus (“COVID-19”) surfaced~~2021 but were partially offset by additional retail demand in ~~China, which has and is continuing to spread throughout~~ the ~~world. In March of 2020, the World Health Organization declared the outbreak~~U.S. as a ~~pandemic.~~ result of the enhanced consumer liquidity caused by the two additional federal stimulus payments during the first quarter of 2021. In addition, retail sales margins increased significantly during the first quarter of 2021 in both the U.S. and Latin America compared to the prior-year quarter as a result of continued retail demand for value-priced pre-owned merchandise, increased buying of merchandise directly from customers and lower levels of aged inventory, all of which limited the need for normal discounting. Resulting gross profit from retail sales for the first quarter of 2021 increased 3% over the prior-year quarter.

The extent to which COVID-19 ~~impacts~~continues to impact the Company’s operations, results of operations, liquidity and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the unknown duration ~~severity~~ and ~~scope~~severity of the ~~outbreak,~~COVID-19 pandemic, which may be impacted by variants of the COVID-19 virus and the timing, availability and efficacy of the COVID-19 vaccines in the jurisdictions in which the Company operates, and the actions taken to contain ~~its~~the impact of COVID-19, as well as further actions taken to limit the resulting economic ~~impact, among others.~~

~~The health~~impact. In particular, government stimulus and ~~safety of customers~~other transfer programs have and employees of the Company are of the utmost importance. The operation of the Company’s stores is critically dependent on the ability of customers and employees to safely conduct transactions in each location. The Company has taken, and willmay continue to ~~take, temporary precautionary measures~~have a material adverse impact on demand for pawn loans in ~~accordance with the guidelines of the Centers~~future periods.

for Disease Control and other federal, state and local authorities.This includes the adoption of strict social distancing and hygiene protocols within all of the Company’s store locations intended to help minimize the risk of COVID-19 to its customers and employees, Also, in an effort to improve social distancing, the Company has temporarily allowed the majority of its work force at its corporate offices to work remotely.

The global impact of the pandemic has been rapidly evolving and many countries, states and other local government officials have reacted by instituting quarantines, shelter-in-place and other orders mandating non-essential business closures and restricting travel. The Company’s business depends heavily on the uninterrupted operation of its stores. All of the U.S. stores are currently open and, at this time, the Company is not aware of any state or local jurisdictions that have determined its stores to be non-essential. In Mexico, where we have 1,608 locations, pawn stores have been deemed an essential operation by PROFECO, the federal regulator for all retailers, including FirstCash. Currently there are approximately 30 stores in Mexico that are closed primarily due to orders by local authorities. In addition, there are approximately 100 stores in Mexico which are able to provide all lending services but have restrictions on most retailing activities at this time. In Central and South America, 27 of the Company’s stores are currently closed, due primarily to broad-based lock-downs of almost all business activities in Colombia and El Salvador for the time being. However, there can be no assurance that pawnshops will remain designated as an essential service or that government officials will not expand business closures to include pawnshops, which would have a material adverse effect on the Company’s operations and financial condition.

~~First Quarter and Early April 2020 Overview and Trends~~

In the U.S., the seasonal impact from the normal first quarter tax refunds, which averaged approximately $3,125 per household, was slightly greater than expected. The refunds contributed to better than expected retail sales volumes and margins in February and March along with higher than expected seasonal pay-downs of pawn receivables of 17% over the full quarter. This compares to the typical first quarter reduction in pawn loans of approximately 15%.

The U.S. business has been further impacted in April as customers started receiving federal stimulus payments, which are in effect a “second tax refund,” assuming a stimulus payment of $3,400 for the typical family of four. Despite the severe and broad-based economic impacts of COVID-19 on so many businesses and individuals, many of the Company’s U.S. customers appear to be somewhat more liquid than would be expected given increased unemployment rates. In addition to stimulus payments, the Company believes that many of its customers have temporarily reduced their normal levels of spending significantly, as they adhere to strict “shelter-in-place” regulations resulting in reduced expenditures on gasoline, dining out, travel, entertainment, childcare and other services.

Accordingly, the U.S. results so far in April have seen both significantly elevated retail sales and loan redemptions, coupled with a lower than normal volume of new loans being written. Currently, U.S. pawn loans have declined approximately 14% since the beginning of April, when normal seasonal trends for the month would typically see flat to slightly increased pawn balances. While the increased volume of loan redemptions is to date driving an approximate 12% increase in collected pawn fees for April compared to last year, expected fee income after April will be impacted by the reduced loan balances.

Offsetting much of the near term impact of lower pawn balances is the U.S. retail business, where same-store retail sales in the first three weeks of April were up approximately 29% versus the same period last year with margins consistent with the first quarter. Much of the retail sales growth has been driven by strong demand for essential “stay at home” product categories, including electronics utilized for remote work or online learning and other ��home-based” recreational products, such as gaming consoles and sporting goods.

In Latin America, retail sales increased 3% (7% on a constant currency basis) during the first quarter and retail margins were 35%, which was an improvement over the prior sequential quarter margins of 32%, while scrap jewelry margins and pawn yields improved as well.

Thus far in April, the Company saw trends in Latin America being similar to those in the U.S., though less pronounced given the lack of large, broad-based direct payment stimulus programs thus far in the Company’s Latin America markets. Pawn loans outstanding in Mexico have declined approximately 8% since the beginning of April, when the Company would normally experience slight seasonal growth. Retail sales in Latin America were slightly higher than expected, excluding locations where stores are currently closed or have restricted retail operations. Similar to consumer behavior in the U.S., the Company also believes that many of its Latin American customers are staying close to home, and as a result, are limiting personal spending and borrowing activities to some extent.

Adding to the uncertainty is increased volatility of foreign currencies, including the Mexican peso, resulting from the economic disruption caused by COVID-19. Although the Company reinvests its LatAm earnings in-market, currency volatility will have a significant impact on the Company’s earnings when translated into U.S. dollars.

Constant Currency Results

The Company’s management reviews and analyzes operating results in Latin America on a constant currency basis because the Company believes this better represents the Company’s underlying business trends. Constant currency results are non-GAAP financial measures, which exclude the effects of foreign currency translation and are calculated by translating current-year results at prior-year average exchange rates. The wholesale scrap jewelry sales in Latin America are priced and settled in U.S. dollars and are not affected by foreign currency translation, as are a small percentage of the operating and administrative expenses in Latin America, which are billed and paid in U.S. dollars.

Business operations in Mexico, Guatemala and Colombia are transacted in Mexican pesos, Guatemalan quetzales and Colombian ~~pesos, respectively.~~pesos. The Company also has operations in El Salvador where the reporting and functional currency is the U.S. dollar. The following table provides exchange rates for the Mexican peso, Guatemalan quetzal and Colombian peso for the current and prior-year periods:


	March 31,		Favorable /
	2021	2020	(Unfavorable)
Mexican peso / U.S. dollar exchange rate:
End-of-period	20.6	23.5		12	%
Three months ended	20.3	19.9		(2)	%


Guatemalan quetzal / U.S. dollar exchange rate:
End-of-period	7.7	7.7		—	%
Three months ended	7.8	7.7		(1)	%


Colombian peso / U.S. dollar exchange rate:
End-of-period	3,737	4,065		8	%
Three months ended	3,553	3,533		(1)	%

March 31, Favorable /
2020 2019 (Unfavorable)
Mexican peso / U.S. dollar exchange rate:
End-of-period 23.5 19.4 (21 )%
Three months ended 19.9 19.2 (4 )%

Guatemalan quetzal / U.S. dollar exchange rate:
End-of-period 7.7 7.7 — %
Three months ended 7.7 7.7 — %

Colombian peso / U.S. dollar exchange rate:
End-of-period 4,065 3,175 (28 )%
Three months ended 3,533 3,137 (13 )%

Amounts presented on a constant currency basis are denoted as such. See “Non-GAAP Financial Information” for additional discussion of constant currency operating results.

Operating Results for the Three Months Ended March 31, ~~2020~~2021 Compared to the Three Months Ended March 31, ~~2019~~2020

U.S. Operations Segment

The following table details earning assets, which consist of pawn loans ~~inventories~~ and ~~unsecured consumer loans, net,~~inventories, as well as other earning asset metrics of the U.S. operations segment as of March 31, ~~2020 as~~2021 compared to March 31, ~~2019~~2020 (dollars in thousands, except as otherwise noted):


	As of March 31,						Increase /
	2021			2020			(Decrease)
U.S. Operations Segment
Earning assets:
Pawn loans	$	169,642		$	224,121			(24)	%
Inventories		128,308			162,142			(21)	%
	$	297,950		$	386,263			(23)	%

Average outstanding pawn loan amount (in ones)	$	215		$	182			18	%

Composition of pawn collateral:
General merchandise	30		%	31		%
Jewelry	70		%	69		%
	100		%	100		%

Composition of inventories:
General merchandise	44		%	42		%
Jewelry	56		%	58		%
	100		%	100		%

Percentage of inventory aged greater than one year	2		%	3		%

Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)	3.3 times			2.9 times

Consumer loans, net ⁽¹⁾

The following table presents segment pre-tax operating income and other operating metrics of the U.S. operations segment for the three months ended March 31, ~~2020 as~~2021 compared to the three months ended March 31, ~~2019~~2020 (dollars in thousands). Store operating expenses include salary and benefit expense of store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the stores.


	Three Months Ended
	March 31,
	2021			2020			Decrease
U.S. Operations Segment
Revenue:
Retail merchandise sales	$	189,957		$	195,966			(3)	%
Pawn loan fees		76,397			97,857			(22)	%
Wholesale scrap jewelry sales		9,203			15,478			(41)	%
Consumer loan and credit services fees (1)		—			1,375			(100)	%
Total revenue		275,557			310,676			(11)	%

Cost of revenue:
Cost of retail merchandise sold		106,530			119,529			(11)	%
Cost of wholesale scrap jewelry sold		7,513			14,006			(46)	%
Consumer loan and credit services loss provision (1)		—			(361)			(100)	%
Total cost of revenue		114,043			133,174			(14)	%

Net revenue		161,514			177,502			(9)	%

Segment expenses:
Store operating expenses		95,247			107,706			(12)	%
Depreciation and amortization		5,382			5,401			—	%
Total segment expenses		100,629			113,107			(11)	%

Segment pre-tax operating income	$	60,885		$	64,395			(5)	%

Operating metrics:
Retail merchandise sales margin	44		%	39		%
Wholesale scrap jewelry sales margin	18		%	10		%
Net revenue margin	59		%	57		%
Segment pre-tax operating margin	22		%	21		%

Three Months Ended
March 31, Increase /
2020 2019 (Decrease)
U.S. Operations Segment
Revenue:
Retail merchandise sales $ 195,966
$ 186,815
5 %
Pawn loan fees 97,857
97,876
— %
Wholesale scrap jewelry sales 15,478
22,785
(32 )%
Consumer loan and credit services fees ⁽¹⁾
1,375
10,461
(87 )%
Total revenue 310,676
317,937
(2 )%

Cost of revenue:
Cost of retail merchandise sold 119,529
117,744
2 %
Cost of wholesale scrap jewelry sold 14,006
21,270
(34 )%
Consumer loan and credit services loss provision⁽¹⁾
(361 ) 2,103
(117 )%
Total cost of revenue 133,174
141,117
(6 )%

Net revenue 177,502
176,820
— %

Segment expenses:
Store operating expenses 107,706
103,884
4 %
Depreciation and amortization 5,401
5,045
7 %
Total segment expenses 113,107
108,929
4 %

Segment pre-tax operating income $ 64,395
$ 67,891
(5 )%
(1)Effective June 30, 2020, the Company no longer offers an unsecured consumer loan product in the U.S.

Retail Merchandise Sales Operations

U.S. retail merchandise sales ~~increased 5%~~decreased 3% to ~~$196.0~~$190.0 million during the first quarter of ~~2020~~2021 compared to ~~$186.8~~$196.0 million for the first quarter of ~~2019.~~2020. Same-store retail sales ~~increased 4%~~decreased 5% in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019. The increase~~2020. Offsetting the small decline in ~~total and same-store~~ retail sales ~~was primarily due to increased sales associated with seasonal first quarter tax refunds during the current-year quarter compared to the prior-year quarter. During the first quarter of 2020,~~revenue, the gross profit margin on retail merchandise sales in the U.S. was ~~39%~~44% during the first quarter of 2021 compared to a margin of ~~37%~~39% during the first quarter of ~~2019,~~2020, which resulted in ~~an 11%~~a 9% increase in net revenue (gross profit) from retail sales for the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019.~~2020. The increase in ~~retail sales~~ margin was primarily ~~driven by~~a result of continued retail demand for value-priced pre-owned merchandise, increased buying of merchandise directly from customers and lower levels of aged inventory, which limited the ~~continued optimization of inventory acquisition and pricing strategies in the legacy Cash America locations.~~need for normal discounting.

U.S. inventories decreased 7%21% from ~~$175.2 million at March 31, 2019 to~~ $162.1 million at March 31, ~~2020. The decrease was primarily a result of the increase in retail sales as noted above and the strategic reductions in inventory levels in the legacy Cash America stores.~~2020 to $128.3 million at March 31, 2021. Inventories aged greater than one year in the U.S. were 2% at March 31, 2021 compared to 3% at March 31, ~~2020~~2020. The decrease in inventories was primarily a result of significantly lower than normal beginning inventory levels, less inventory being generated from forfeited pawn loans and additional retail demand created by two additional federal stimulus payments made directly to consumers, partially offset by an increase in merchandise purchased directly from customers during the quarter compared to ~~4% at March 31, 2019.~~the prior-year quarter.

Pawn Lending Operations

U.S. pawn loan fees ~~were flat, totaling $97.9~~decreased 22% to $76.4 million during ~~both~~ the first quarter of ~~2020 and 2019.~~2021 compared to $97.9 million for the first quarter of 2020. Same-store pawn fees in the first quarter of ~~2020 were consistent with~~2021 decreased 23% compared to the first quarter of ~~2019.~~2020. Pawn loan receivables as of March 31, ~~2020~~2021 decreased 4%24% in total and 25% on a same-store basis compared to March 31, ~~2019.~~ 2020.

The decline in total and same-store pawn receivables ~~were~~and resulting pawn loan fees was primarily due to ~~an increase in seasonal redemptions~~the significantly lower than normal beginning pawn loan levels and reduced origination activity during the first quarter of ~~pawn loans during tax refund season in the current-year quarter compared~~2021 as a result of improved customer liquidity due to the ~~prior-year~~two additional government stimulus payments made during the quarter.

Wholesale Scrap Jewelry Operations

U.S. wholesale scrap jewelry revenue, consisting primarily of gold sales, decreased ~~32%~~41% to $9.2 million during the first quarter of 2021 compared to $15.5 million during the first quarter of ~~2020 compared to $22.8 million during the first quarter of 2019.~~2020. The decline in scrap revenue relates primarily to reductions in inventory levels as discussed above. The scrap jewelry gross profit margin in the U.S. was ~~10%~~18% compared to the prior-year margin of ~~7%. The~~10%, with the increase in scrap margin ~~was~~ primarily due to an increase in the average selling price of gold during the first quarter of ~~2020~~2021 compared to ~~2019. Scrap jewelry profits accounted for less than 1% of U.S. net revenue (gross profit) for both the first quarter of 2020 and 2019.~~2020.

~~Consumer Lending Operations~~

Service fees from U.S. unsecured consumer loans and credit services transactions (collectively, consumer lending operations) decreased 87% to $1.4 million during the first quarter of 2020 compared to $10.5 million for the first quarter of 2019. Net revenue (gross profit) from U.S. consumer lending operations decreased 79% to $1.7 million during the first quarter of 2020 compared to $8.4 million for the first quarter of 2019. Revenue and gross profit from consumer lending operations accounted for less than 1% of both total U.S. revenue and gross profit during the first quarter of 2020 compared to 3% and 5%, respectively, during the first quarter of 2019.

The decrease in consumer lending activity was primarily the result of regulatory changes in the state of Ohio, which significantly restricted unsecured consumer lending activities in Ohio beginning in April 2019. As a result, the Company elected to stop offering unsecured consumer lending and credit services products in all 119 Ohio locations on April 26, 2019, resulting in the closure of 52 of the Ohio locations during the second quarter of 2019. In addition to the discontinuance of consumer lending activities in Ohio, the Company ceased offering unsecured consumer loans and/or credit services as ancillary products in 113 other pawnshops located outside of Ohio since March 31, 2019.

Segment Expenses and Segment Pre-Tax Operating Income

U.S. store operating expenses ~~increased 4%~~decreased 12% to $95.2 million during the first quarter of 2021 compared to $107.7 million during the first quarter of 2020 ~~compared to $103.9 million during the first quarter of 2019~~ and same-store operating expenses ~~increased 5%~~also decreased 12% compared with the prior-year period. The ~~increase~~decrease in total and ~~same store~~same-store operating expenses was primarily due to ~~an increase~~cost saving initiatives in ~~store employee incentive compensation during the second quarter of 2019.~~response to COVID-19.

~~U.S. store depreciation and amortization increased 7% to $5.4 million during the first quarter of 2020 compared to $5.0 million during the first quarter of 2019.~~

The U.S. segment pre-tax operating income for the first quarter of ~~2020~~2021 was ~~$64.4~~$60.9 million, which generated a pre-tax segment operating margin of ~~21%~~22% compared to ~~$67.9~~$64.4 million and 21% in the prior year, respectively. The decrease in the segment pre-tax operating income reflected ~~declines~~decreases in pawn fee revenue as a result of the decline in pawn loan receivables and net revenue from consumer loan and credit services products as a result of discontinuing consumer lending operations ~~substantially~~in 2020, partially offset by ~~improvements~~an increase in gross profit from both retail and scrap sales ~~margins~~ and ~~yields on pawn receivables.~~a decrease in operating expenses.

Latin America Operations Segment

Latin American results of operations for the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019~~2020 were impacted by a 4%2% unfavorable change in the average value of the Mexican peso compared to the U.S. dollar. The translated value of Latin American earning assets as of March 31, ~~2020~~2021 compared to March 31, ~~2019 also was impacted by~~2020 benefited from a ~~21% unfavorable~~12% favorable change in the end-of-period value of the Mexican peso compared to the U.S. dollar.

The following table details earning assets, which consist of pawn loans and inventories as well as other earning asset metrics of the Latin America operations segment as of March 31, ~~2020 as~~2021 compared to March 31, ~~2019~~2020 (dollars in thousands, except as otherwise noted):


										Constant Currency Basis
										As of
										March 31,		Increase /
	As of March 31,						Increase /			2021		(Decrease)
	2021			2020			(Decrease)			(Non-GAAP)		(Non-GAAP)
Latin America Operations Segment
Earning assets:
Pawn loans	$	95,796		$	90,175			6	%	$	84,498		(6)	%
Inventories		57,028			65,734			(13)	%	50,324			(23)	%

	$	152,824		$	155,909			(2)	%	$	134,822		(14)	%

Average outstanding pawn loan amount (in ones)	$	76		$	56			36	%	$	67		20	%

Composition of pawn collateral:
General merchandise	66		%	70		%
Jewelry	34		%	30		%
	100		%	100		%

Composition of inventories:
General merchandise	58		%	62		%
Jewelry	42		%	38		%
	100		%	100		%

Percentage of inventory aged greater than one year	2		%	1		%

Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)	4.4 times			3.9 times

Constant Currency Basis
As of
March 31,
As of March 31, 2020 Decrease
2020 2019 Decrease (Non-GAAP) (Non-GAAP)
Latin America Operations Segment
Earning assets:
Pawn loans $ 90,175
$ 111,551
(19 )% $ 108,337
(3 )%
Inventories 65,734
82,567
(20 )% 79,030
(4 )%
$ 155,909
$ 194,118
(20 )% $ 187,367
(3 )%

Average outstanding pawn loan amount (in ones) $ 56
$ 68
(18 )% $ 67
(1 )%

Composition of pawn collateral:
General merchandise 70 % 74 %
Jewelry 30 % 26 %
100 % 100 %

Composition of inventories:
General merchandise 62 % 70 %
Jewelry 38 % 30 %
100 % 100 %

Percentage of inventory aged greater than one year 1 % 1 %

Inventory turns (trailing twelve months retail sales divided by average inventories) 3.9 times 3.8 times

The following table presents segment pre-tax operating income and other operating metrics of the Latin America operations segment for the three months ended March 31, ~~2020 as~~2021 compared to the three months ended March 31, ~~2019~~2020 (dollars in thousands). Store operating expenses include salary and benefit expense of store-level employees, occupancy costs, bank charges, security, insurance, utilities, supplies and other costs incurred by the stores.


													Constant Currency Basis
													Three Months
													Ended
		Three Months Ended											March 31,			Increase /
		March 31,							Increase /				2021			(Decrease)
		2021				2020			(Decrease)				(Non-GAAP)			(Non-GAAP)
Latin America Operations Segment
Revenue:
Retail merchandise sales		$	82,085			$	100,663			(18)	%		$	83,937			(17)	%
Pawn loan fees		39,125				44,258				(12)	%		40,010				(10)	%
Wholesale scrap jewelry sales		11,172				10,893				3	%		11,172				3	%

Total revenue		132,382				155,814				(15)	%		135,119				(13)	%

Cost of revenue:
Cost of retail merchandise sold		50,623				65,166				(22)	%		51,763				(21)	%
Cost of wholesale scrap jewelry sold		9,684				8,841				10	%		9,902				12	%

Total cost of revenue		60,307				74,007				(19)	%		61,665				(17)	%

Net revenue		72,075				81,807				(12)	%		73,454				(10)	%

Segment expenses:
Store operating expenses		42,077				45,794				(8)	%		42,960				(6)	%
Depreciation and amortization		4,263				4,063				5	%		4,350				7	%
Total segment expenses		46,340				49,857				(7)	%		47,310				(5)	%

Segment pre-tax operating income		$	25,735			$	31,950			(19)	%		$	26,144			(18)	%

Operating metrics:
Retail merchandise sales margin	38			%	35			%				38			%
Wholesale scrap jewelry sales margin	13			%	19			%				11			%
Net revenue margin	54			%	53			%				54			%
Segment pre-tax operating margin	19			%	21			%				19			%

Retail Merchandise Sales Operations

Latin America retail merchandise sales ~~increased 3% (7%~~decreased 18% (17% on a constant currency basis) to ~~$100.7~~$82.1 million during the first quarter of ~~2020~~2021 compared to ~~$97.4~~$100.7 million for the first quarter of ~~2019. The increase was primarily due to additional revenue contributions from the combination of recent acquisitions and new store openings, while same-store~~2020. Same-store retail sales decreased ~~3% (flat~~21% (19% on a constant currency basis)~~. The~~ during the first quarter of 2021 compared to the first quarter of 2020. Partially offsetting the declines in retail sales revenue, the gross profit margin on retail merchandise sales was 38% during the first quarter of 2021 compared to 35% during the first quarter of ~~2020 compared to 37% during the first quarter of 2019.~~2020.

Inventories in Latin America decreased ~~20% (4%~~13% (23% on a constant currency basis) from ~~$82.6 million at March 31, 2019 to~~ $65.7 million at March 31, ~~2020. The decrease was primarily due an increase in retail sales as mentioned above and increased inventory turns.~~2020 to $57.0 million at March 31, 2021. Inventories aged greater than one year in Latin America were 2% at March 31, 2021 and 1% at ~~both~~ March 31, ~~2020 and 2019.~~2020.

The decrease in inventories, which limited retail sales during the first quarter, was primarily a result of significantly lower than normal beginning inventory levels and less inventory being generated from forfeited pawn loans partially offset by an increase in merchandise purchased directly from customers during the quarter compared to the prior-year quarter. The lower retail sales volume was partially offset by an increase in retail sales margin, which was primarily a result of continued retail demand for value-priced pre-owned merchandise and increased buying of merchandise directly from customers, which limited the need for normal discounting.

Pawn Lending Operations

Pawn loan fees in Latin America ~~increased 2% (5%~~decreased 12% (10% on a constant currency basis), totaling ~~$44.3~~$39.1 million during the first quarter of ~~2020~~2021 compared to ~~$43.3~~$44.3 million for the first quarter of ~~2019.~~2020. Same-store pawn fees decreased ~~4% (flat~~13% (11% on a constant currency basis) in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019.~~2020. Pawn loan receivables ~~decreased 19% (3%~~increased 6% (decreased 6% on a constant currency basis) as of March 31, ~~2020~~2021 compared to March 31, ~~2019,~~2020, while same-store pawn receivables ~~decreased 24% (8%~~increased 5% (decreased 7% on a constant currency basis).

The ~~Company believes the~~ decline in total and same-store constant currency pawn receivables and resulting pawn loan fees was primarily due to ~~limited personal spending~~the significantly lower than normal beginning pawn loan levels, partially offset by ~~Latin America consumers due to COVID-19.~~the continued improvement of pawn loan origination activity during the first quarter of 2021.

Wholesale Scrap Jewelry Operations

Latin America wholesale scrap jewelry revenue, consisting primarily of gold sales, increased ~~22%~~3% (also ~~22%~~3% on a constant currency basis) to $11.2 million during the first quarter of 2021 compared to $10.9 million during the first quarter of 2020 compared to $8.9 million during the first quarter of 2019. The increase was primarily due to increased volume contributions from recently acquired stores which carried a greater percentage of jewelry inventories.2020. The scrap jewelry gross profit margin in Latin America was ~~19% (16%~~13% (11% on a constant currency basis) during the first quarter of 2021 compared to the prior-year margin ~~loss~~ of 2%19%. The increase in scrap margin was primarily due to an increase in the average selling price of gold during the first quarter of 2020 compared to 2019. Scrap jewelry profits accounted for 3% of net revenue (gross profit) for the first quarter of 2020 and less than 1% in the first quarter of 2019.

Segment Expenses and Segment Pre-Tax Operating Income

Store operating expenses ~~increased 7% (10%~~decreased 8% (6% on a constant currency basis) to $42.1 million during the first quarter of 2021 compared to $45.8 million during the first quarter of ~~2020 compared to $43.0 million during the first quarter of 2019.~~2020. Total store operating expenses ~~increased~~decreased primarily due to cost saving initiatives in response to COVID-19, partially offset by the ~~11%~~3% increase in the Latin America weighted-average store count. Same-store operating expenses decreased ~~2% (1% increase~~11% (9% on a constant currency basis) ~~compared to the prior-year period.~~.

Latin America store depreciation and amortization increased ~~23% (27%~~5% (7% on a constant currency basis) to $4.3 million during the first quarter of 2021 compared to $4.1 million during the first quarter of 2020, ~~compared to $3.3 million during the first quarter of 2019,~~ primarily due to the increase in the store count.

The segment pre-tax operating income for the first quarter of ~~2020~~2021 was ~~$32.0~~$25.7 million, which generated a pre-tax segment operating margin of ~~21%~~19% compared to ~~$32.7~~$32.0 million and ~~22%~~21% in the prior year, respectively. The decline in the segment pre-tax operating income and margin was primarily due to declines in retail sales and pawn loan fees and a 2% unfavorable change in the average value of the Mexican peso, partially offset by an increase in retail sales margins and declines in store operating expenses.

Consolidated Results of Operations

The following table reconciles pre-tax operating income of the Company’s U.S. operations segment and Latin America operations segment discussed above to consolidated net income for the three months ended March 31, ~~2020 as~~2021 compared to the three months ended March 31, ~~2019~~2020 (dollars in thousands):


	Three Months Ended
	March 31,				Increase /
	2021		2020		(Decrease)
Consolidated Results of Operations
Segment pre-tax operating income:
U.S. operations	$	60,885	$	64,395		(5)	%
Latin America operations	25,735		31,950			(19)	%
Consolidated segment pre-tax operating income	86,620		96,345			(10)	%

Corporate expenses and other income:
Administrative expenses	30,999		32,902			(6)	%
Depreciation and amortization	967		1,210			(20)	%
Interest expense	7,230		8,418			(14)	%
Interest income	(158)		(185)			(15)	%
Merger and acquisition expenses	166		68			144	%
Loss on foreign exchange	267		2,685			(90)	%

Write-off of certain Cash America merger related lease intangibles	878		3,630			(76)	%
Impairment of certain other assets	—		1,900			(100)	%
Total corporate expenses and other income	40,349		50,628			(20)	%

Income before income taxes	46,271		45,717			1	%

Provision for income taxes	12,556		12,799			(2)	%

Net income	$	33,715	$	32,918		2	%

Corporate Expenses and Taxes

Administrative expenses ~~increased 2%~~decreased 6% to ~~$32.9~~$31.0 million during the first quarter of ~~2020~~2021 compared to ~~$32.2~~$32.9 million in the first quarter of ~~2019,~~2020, primarily due to ~~a 5% increase in the consolidated weighted-average store count, resulting in additional management and supervisory compensation~~reduced travel costs and other ~~support expenses required for such growth, offset by~~cost saving initiatives in response to COVID-19 and a 4%2% unfavorable change in the average value of the Mexican ~~peso.~~peso resulting in lower U.S. dollar translated expenses, partially offset by a 2% increase in the consolidated weighted-average store count. Administrative expenses were 7%8% of revenue during ~~both~~the first quarter of 2021 and 7% during the first quarter of 2020.

Interest expense decreased 14% to $7.2 million during the first quarter of 2021 compared to $8.4 million in the first quarter of 2020, ~~and 2019.~~

~~Interest expense totaled $8.4 million in both the first quarter of 2020 and 2019 as higher~~primarily due to lower average balances outstanding on the Company’s unsecured credit facilities ~~during the first quarter of 2020 compared to the first quarter of 2019 were offset by~~and lower average interest rates during the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019.~~2020. See “Liquidity and Capital Resources.”

~~The loss~~Loss on foreign exchange ~~increased~~decreased 90% to $0.3 million during the first quarter of 2021 compared to $2.7 million in the first quarter of 2020, ~~compared to~~as a ~~gain~~result of ~~$0.2 million~~fluctuations in the first quarter of 2019. The increase was due to the significant unfavorable change in the end-of-period value of the Mexican peso compared to the U.S. dollar as discussed above, impacting the remeasurement of U.S. dollar denominated monetary assets and liabilities in Mexico.foreign exchange rates.

During the first quarter of ~~2020,~~2021, the Company recorded a $0.9 million write-off of certain merger related lease intangibles compared to a $3.6 million write-off of certain merger related lease intangibles ~~and a $1.9 million impairment~~during the first quarter of other assets. The lease intangibles, which subsequent to the adoption of ASC 842 are included in the operating lease right of use asset on the consolidated balance sheets (see Note 4 of Notes to Consolidated Financial Statements), were recorded in conjunction with the Cash America merger in 2016 and were written-off as a result of the Company purchasing the store real estate from the landlords of certain existing legacy Cash America stores.2020. The Company also recorded a $1.9 million

impairment related to a non-operating asset ~~in which the Company determined that an other than temporary impairment existed as of March 31, 2020.~~

~~For~~during the first quarter of ~~2020 and 2019, the Company’s consolidated~~2020.

Consolidated effective income tax rates for the first quarter of 2021 and 2020 were ~~28.0%~~27.1% and ~~27.5%~~28.0%, respectively. The decrease in the effective tax rate was primarily due to the Internal Revenue Service finalizing regulations in July 2020 for the

global intangible low-taxed income tax (“GILTI”) provisions for foreign operations in the U.S. federal tax code, which essentially eliminated the impact of the incremental GILTI tax on the Company.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, ~~2020,~~2021, the Company’s primary sources of liquidity were ~~$75.5~~$54.6 million in cash and cash equivalents, ~~$166.7~~$481.8 million of available and unused funds under the Company’s revolving unsecured credit facilities, ~~$354.8~~subject to certain financial covenants, $300.8 million in customer loans and fees and service charges receivable and ~~$227.9~~$185.3 million in inventories. The Company had working capital of ~~$466.1~~$345.6 million as of March 31, ~~2020.~~2021.

As of March 31, ~~2020,~~2021, the Company maintained an unsecured line of credit with a group of U.S. based commercial lenders (the “Credit Facility”) in the amount of $500.0 million. The Credit Facility matures on December 19, 2024, which would accelerate to 90 days prior to the maturity of the Company’s senior unsecured notes due June 1, 2024 if the Company’s senior unsecured notes have not been refinanced or otherwise extended past December 19, 2024 by such date.2024. As of March 31, ~~2020,~~2021, the Company had ~~$330.0~~$44.0 million in outstanding borrowings and ~~$3.3~~$3.4 million in outstanding letters of credit under the Credit Facility, leaving ~~$166.7~~$452.6 million available for future ~~borrowings.~~borrowings, subject to certain financial covenants. The Credit Facility is unsecured and bears interest, at the Company’s option, of either (1) the prevailing London Interbank Offered Rate (“LIBOR”) (with interest periods of 1 week or 1, 2, 3 or 6 months at the Company’s option) plus a fixed spread of 2.5% or (2) the prevailing prime or base rate plus a fixed spread of 1.5%. The agreement has a LIBOR floor of 0%. Additionally, the Company is required to pay an annual commitment fee of ~~0.50%~~0.325% on the average daily unused portion of the Credit Facility commitment. The weighted-average interest rate on amounts outstanding under the Credit Facility at March 31, ~~2020~~2021 was ~~3.16%~~2.82% based on 1 week LIBOR. Under the terms of the Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Credit Facility also contains customary restrictions on the Company’s ability to incur additional debt, grant liens, make investments, consummate acquisitions and similar negative covenants with customary carve-outs and baskets. The Company was in compliance with the covenants of the Credit Facility as of March 31, ~~2020,~~2021, and ~~believes it~~currently has the capacity to borrow a significant amount of the ~~remaining amount available~~availability under the Credit Facility under the most restrictive covenant. During the three months ended March 31, ~~2020,~~2021, the Company made net payments of ~~$5.0~~$79.0 million pursuant to the Credit Facility.

~~During~~As of March ~~2020,~~31, 2021, the Company’s primary subsidiary in Mexico, First Cash S.A. de C.V., ~~entered into~~maintained an unsecured and uncommitted line of credit guaranteed by FirstCash, Inc. with a bank in Mexico (the “Mexico Credit Facility”) in the amount of $600.0 million Mexican pesos. The Mexico Credit Facility ~~matures on March 9, 2023 and, as of March 31, 2020, was fully drawn, leaving no availability for future borrowings. The Mexico Credit Facility~~ bears interest at the Mexican Central Bank’s interbank equilibrium rate ~~(“TIIE”)~~ plus a fixed spread of 2.5%~~. The interest rate~~ and matures on ~~the amount outstanding under the Mexico Credit Facility at~~ March ~~31, 2020 was 9.71%.~~9, 2023. Under the terms of the Mexico Credit Facility, the Company is required to maintain certain financial ratios and comply with certain financial covenants. The Company was in compliance with the covenants of the Mexico Credit Facility as of March 31, ~~2020. During the three months ended~~2021. At March 31, ~~2020,~~2021, the Company ~~received net proceeds of~~had no amount outstanding under the Mexico Credit Facility and $600.0 million Mexican pesos ~~from borrowings pursuant to the Mexico Credit Facility.~~available for borrowings.

On ~~May 30, 2017,~~August 26, 2020, the Company issued ~~$300.0~~$500.0 million of ~~5.375%~~4.625% senior unsecured notes due on ~~June~~September 1, ~~2024~~2028 (the “Notes”), all of which are currently outstanding. Interest on the Notes is payable semi-annually in arrears on ~~June~~March 1 and ~~December~~September 1. The Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by all of the Company's existing and future domestic subsidiaries that guarantee its Credit Facility. The Notes will permit the Company to make restricted payments, such as purchasing shares of its stock and paying cash dividends, in an unlimited amount if, after giving pro forma effect to the incurrence of any indebtedness to make such payment, the Company's consolidated total debt ratio (“Net Debt Ratio”) is less than ~~2.25~~2.75 to 1. The Net Debt Ratio is defined generally in the indenture governing the Notes as the ratio of (1) the total consolidated debt of the Company minus cash and cash equivalents of the Company to (2) the Company’s consolidated trailing twelve months EBITDA, as adjusted to exclude certain non-recurring expenses and giving pro forma effect to operations acquired during the measurement period. As of March 31, ~~2020,~~2021, the Net Debt Ratio was ~~1.9~~2.1 to 1. See “Non-GAAP Financial Information” for additional information on the calculation of the Net Debt Ratio.

The Company regularly evaluates opportunities to optimize its capital structure, including through consideration of the issuance of debt or equity, ~~to refinance~~the refinancing, repayment or restructuring of existing debt and ~~to enter~~the entry into interest rate hedge transactions, such as interest rate swap agreements, to fund ongoing cash needs, such as general corporate purposes, growth initiatives and its dividend and stock repurchase program.

The ~~rapid development~~continued developments and fluidity of the COVID-19 ~~situation makes~~pandemic make it ~~very~~ difficult to predict the ~~ultimate~~ impact of COVID-19 on the Company’s ~~business, operations and~~ liquidity and presents a material uncertainty which could adversely affect the Company’s results of operations, financial condition and cash flows in the future. Many countries, states and other local government officials have reacted by instituting quarantines, shelter-in-place and other orders mandating non-essential business closures and restricting travel. The Company’s ~~business depends~~cash flows depend heavily on the uninterrupted operation of its ~~stores. In general, in most jurisdictions where~~stores with sufficient customer activity, as the Company ~~has stores, pawnshops have been designated~~does not currently offer an ~~essential service by federal guidelines and/~~online pawn lending or local regulations and allowed to remain open. However, there can be no assurance that the pawn stores will remain designated as an essential service or that government officials will not expand business closures to include pawnshops, which would have a material adverse effect on the Company’s operations and financial condition.payment platform. If the ~~Company’s pawnshops were deemed non-essential and~~Company became subject to closure or customer demand for the Company’s retail and lending products materially declines, the Company’s cash flows would be materially impaired and the Company could seek to raise or retain additional funds from a variety of sources, including but not limited to, repatriation of excess cash held in Latin America, the sale of assets, reductions in operating expenses, ~~and~~ capital expenditures, dividends and share repurchases, the forbearance or deferral of operating expenses, the issuance of debt or equity securities, leveraging currently unencumbered real estate owned by the Company and/or changes to its management of current assets. The characteristics of the Company’s current assets, specifically the ability to rapidly liquidate gold jewelry inventory, which accounts for approximately 52% of total inventory, gives the Company flexibility to quickly increase cash flow, if necessary.

~~As long as the Company’s stores generally remain designated as essential businesses and remain open with sufficient customer activity,~~Other factors such as changes in general customer traffic and demand, loan balances, loan-to-value ratios, collection of pawn fees, merchandise sales, inventory levels, seasonality, operating expenses, administrative expenses, expenses related to merger and acquisition activities, tax rates, gold prices, foreign currency exchange rates and the pace of new store ~~expansions~~expansion and acquisitions, affect the Company’s liquidity. Regulatory developments affecting the Company’s operations may also impact profitability and liquidity. See “Regulatory Developments.” ~~Further, deteriorating economic conditions globally have created a challenging environment for financing~~A prolonged reduction in earnings and EBITDA could ~~create uncertainty regarding~~limit the ~~availability of~~Company’s future ability to fully borrow under its credit ~~in the event the Company needed to seek additional external financing. The combination of~~facilities under current leverage covenants. Additionally, potential disruptions to the Company’s business resulting from COVID-19 ~~and volatile credit markets~~ could adversely impact the Company’s liquidity in the future.

The Company intends to continue expansion through new store openings ~~originally expecting~~primarily in Latin America and through acquisitions both in the U.S. and Latin America. Additionally, as opportunities arise at reasonable valuations, the Company may continue to ~~add approximately 90~~purchase real estate from its landlords at existing stores or in conjunction with pawn store acquisitions.

A total of 24 new stores were opened during the three months ended March 31, 2021. The impacts of COVID-19 will likely limit the number of 2021 openings to ~~100~~a total of 50 to 60 de novo full-service pawn locations in ~~2020, all in~~ Latin America. A total of 31 stores were opened in the first quarter and there is a pipeline of new stores under lease and in development. While the Company is currently on pace to meet its original full-year target, futureFuture store openings ~~are~~remain subject to uncertainties related to the COVID-19 pandemic, including but not limited to, the ability to continue construction projects and obtain necessary licenses and permits, utility services, store equipment, supplies and staffing. ~~These uncertainties make it impractical at this time~~

The Company continually looks for, and is presented with, potential acquisition opportunities and will evaluate potential acquisitions based upon growth potential, purchase price, available liquidity, debt covenant restrictions, strategic fit and quality of management personnel, among other factors. The Company acquired two pawn stores in the U.S. during the three months ended March 31, 2021 for a purchase price of $1.3 million, net of cash acquired and subject to ~~estimate the number of de novo stores the Company will actually open and the total purchases of furniture, fixtures, equipment and improvements for 2020.~~

future post-closing adjustments. In addition, the Company ~~has temporarily suspended its share repurchase program in an effort to proactively manage cash on hand and its liquidity position. The Company will continue to closely monitor~~purchased the ~~COVID-19 situation and its impact on~~real estate at 12 store locations, primarily from landlords at existing stores, for a cumulative purchase price of $14.4 million during the ~~Company’s liquidity as it relates to the resumption of share repurchases.~~three months ended March 31, 2021.

The following tables set forth certain historical information with respect to the Company’s sources and uses of cash and other key indicators of liquidity (dollars in thousands):


	Three Months Ended
	March 31,
	2021		2020
Cash flow provided by operating activities	$	69,174	$	77,385
Cash flow provided by investing activities	$	17,258	$	26,604
Cash flow used in financing activities	$	(96,727)	$	(72,804)

As of March 31,

2021

2020

Working capital

345,644

466,052

Current ratio

2.6:1

3.3:1

Liabilities to equity ratio

0.8:1

0.9:1

Net Debt Ratio (1)

2.1:1

1.9:1

Three Months Ended
March 31,
2020 2019
Cash flow provided by operating activities $ 77,385
$ 71,697
Cash flow provided by (used in) investing activities $ 26,604
$ (14,107 )
Cash flow used in financing activities $ (72,804 ) $ (80,490 )

(1)Adjusted EBITDA, a component of the Net Debt Ratio, is a non-GAAP financial measure. See “Non-GAAP Financial Information” for a calculation of the Net Debt Ratio.

Net Debt Ratio ⁽¹⁾

Net cash provided by operating activities ~~increased $5.7~~decreased $8.2 million, or 8%11%, from ~~$71.7 million for the three months ended March 31, 2019 to~~ $77.4 million for the three months ended March 31, 2020 to $69.2 million for the three months ended March 31, 2021 due to ~~a decrease in net income of $9.7 million,~~ net changes in certain non-cash adjustments to reconcile net income to operating cash flow and net changes in other operating assets and liabilities (as detailed in the consolidated statements of cash flows)., and an increase in net income of $0.8 million.

Net cash provided by investing activities ~~increased $40.7~~decreased $9.3 million, or ~~289%~~35%, from ~~net cash used in investing activities of $14.1 million for the three months ended March 31, 2019 to net cash provided by investing activities of~~ $26.6 million for the three months ended March 31, ~~2020.~~2020 to $17.3 million for the three months ended March 31, 2021. Cash flows from investing activities ~~are utilized primarily to fund~~included funding of pawn store acquisitions, purchases of furniture, fixtures, equipment and improvements, which includes capital expenditures for improvements to existing stores and for new store openings and other corporate assets, and discretionary purchases of store real property. In addition, cash flows related to net fundings/repayments of pawn ~~and consumer~~ loans are included in investing activities. The Company paid ~~$5.5~~$1.2 million in cash related to current and prior-year store acquisitions, ~~$10.6~~$9.5 million for furniture, fixtures, equipment and improvements and ~~$9.6~~$14.4 million for discretionary store real property purchases during the three months ended March 31, ~~2020~~2021 compared to ~~$24.5~~$5.5 million, ~~$9.7~~$10.6 million and ~~$22.1~~$9.6 million in the prior-year period, respectively. The Company received funds from a net decrease in pawn ~~and consumer~~ loans of $42.4 million during the three months ended March 31, 2021 compared to a net decrease of $52.3 million during the three months ended March 31, ~~2020 compared to $42.2 million during the three months ended March 31, 2019.~~2020.

Net cash used in financing activities ~~decreased $7.7~~increased $23.9 million, or ~~10%~~33%, from ~~$80.5 million for the three months ended March 31, 2019 to~~ $72.8 million for the three months ended March 31, ~~2020.~~2020 to $96.7 million for the three months ended March 31, 2021. Net ~~borrowings~~payments on the ~~Credit Facilities~~credit facilities were $79.0 million during the three months ended March 31, 2021 compared to net borrowings of $18.9 million during the three months ended March 31, ~~2020 compared to net payments~~2020. The Company funded $5.0 million worth of ~~$40.0~~share repurchases and paid dividends of $11.1 million during the three months ended March 31, ~~2019. The Company funded~~2021, compared to funding $80.3 million worth of share repurchases and dividends paid ~~dividends~~ of $11.3 million during the three months ended March 31, ~~2020, compared to funding $29.6~~2020. In addition, the Company paid $1.7 million ~~worth~~in withholding taxes on net share settlements of ~~share repurchases and dividends paid of $10.9 million~~restricted stock unit awards during the three months ended March 31, ~~2019.~~2021.

In April ~~2020,~~2021, the Company’s Board of Directors declared a ~~$0.27~~$0.30 per share second quarter cash dividend on common shares outstanding, or an aggregate of ~~$11.2~~$12.3 million based on the March 31, ~~2020~~2021 share count, which will be paid on May ~~29, 2020~~28, 2021 to stockholders of record as of May ~~15, 2020.~~14, 2021. While the Company currently expects to continue the payment of quarterly cash dividends, the declaration and payment of cash dividends in the future (quarterly or otherwise) will be made by the Board of Directors, from time to time, subject to the Company’s financial condition, results of operations, business requirements, compliance with legal requirements, ~~expected liquidity,~~ debt covenant restrictions and other relevant factors, including the impact of COVID-19. ~~In addition,~~

During the three months ended March 31, 2021, the Company repurchased a total of 84,000 shares of common stock at an aggregate cost of $5.0 million and an average cost per share of $59.06, and during three months ended March 31, 2020, repurchased 981,000 shares of common stock at an aggregate cost of $80.3 million and an average cost per share of $81.84. The Company has ~~temporarily suspended~~approximately $116.9 million of remaining availability under its ~~current~~currently authorized stock repurchase ~~program. The resumption of stock~~programs. While the Company intends to continue repurchases under its active share repurchase programs, future share repurchases are subject to a variety of factors, including, but not limited to, the level of cash balances, credit availability, debt covenant restrictions, general business conditions, regulatory requirements, the market price of the Company’s stock, dividend policy, the availability of alternative investment opportunities, including acquisitions, and the impact of COVID-19.

The following table provides purchases made by the Company of shares of its common stock under each share repurchase program in effect during the three months ended March 31, 2021 (dollars in thousands):


Plan Authorization Date	Plan Completion Date	Dollar Amount Authorized		Shares Purchased in 2021	Dollar Amount Purchased in 2021		Remaining Dollar Amount Authorized For Future Purchases
January 28, 2020	Currently active	$	100,000	84,000	$	4,967	$	16,860
January 27, 2021	Currently active	100,000		—	—		100,000
Total				84,000	$	4,967	$	116,860

As of March 31, ~~2020,~~2021, the Company had contractual commitments to deliver a total of ~~36,500~~12,000 gold ounces between the months of April ~~2020~~2021 and ~~February~~December 2021 at a weighted-average price of $1,533 per ounce. Subsequent to March 31, 2020, the Company committed to delivering an additional 10,000 gold ounces between the months of September 2020 and July 2021 at a weighted-average price of $1,720$1,855 per ounce. The ounces required to be delivered over this time period are within historical scrap gold volumes and the Company expects to have the required gold ounces to meet the commitments as they come due.

REGULATORY DEVELOPMENTS

The Company isremains subject to significant regulation of its pawn ~~consumer loan~~ and general business operations in all of the jurisdictions in which it operates. Existing regulations and regulatory developments are further and more completely described under “Governmental Regulation” in Part I, Item 1 of the Company’s ~~2019 annual report~~2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February ~~3, 2020.~~1, 2021. There have been no material changes in regulatory developments directly affecting the Company since December 31, ~~2019.~~2020.

In January 2021, the Illinois General Assembly passed the Predatory Loan Prevention Act (“PDLA”) that caps annual effective interest rates at 36% on most consumer loans, including payday and car title loans. On March 23, 2021, the governor of Illinois signed the PDLA into law, making it effective immediately. The Company does not believe the PDLA applies to collateralized pawn loans, and to date no effort has been made by regulators to assert that it applies. However, there can be no assurance that the Illinois authorities or other interested stakeholders will in the future interpret the PDLA to include collateralized pawn loans. The Company had 25 pawn stores located in Illinois as of March 31, 2021.

NON-GAAP FINANCIAL INFORMATION

The Company uses certain financial calculations such as adjusted net income, adjusted diluted earnings per share, EBITDA, adjusted EBITDA, free cash flow, adjusted free cash flow and constant currency results as factors in the measurement and evaluation of the Company’s operating performance and period-over-period growth. The Company derives these financial calculations on the basis of methodologies other than GAAP, primarily by excluding from a comparable GAAP measure certain items the Company does not consider to be representative of its actual operating performance. These financial calculations are “non-GAAP financial measures” as defined under the SEC rules. The Company uses these non-GAAP financial measures in operating its business because management believes they are less susceptible to variances in actual operating performance that can result from the excluded items, other infrequent charges and currency fluctuations. The Company presents these financial measures to investors because management believes they are useful to investors in evaluating the primary factors that drive the Company’s core operating performance and provide greater transparency into the Company’s results of operations. However, items that are excluded and other adjustments and assumptions that are made in calculating these non-GAAP financial measures are significant components in understanding and assessing the Company’s financial performance. These non-GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, the Company’s GAAP financial measures. Further, because these non-GAAP financial measures are not determined in accordance with GAAP and are thus susceptible to varying calculations, the non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures of other companies.

While acquisitions are an important part of the Company’s overall strategy, the Company has adjusted the applicable financial calculations to exclude merger and ~~other~~ acquisition expenses to allow more accurate comparisons of the financial results to prior periods. In addition, the Company does not consider these merger and ~~other~~ acquisition expenses to be related to the organic operations of the acquired businesses or its continuing operations and such expenses are generally not relevant to assessing or estimating the long-term performance of the acquired businesses. Merger and ~~other~~ acquisition expenses include incremental costs directly associated with merger and acquisition activities, including professional fees, legal expenses, severance, retention and other employee-related costs, contract breakage costs and costs related to the consolidation of technology systems and corporate facilities, among others.

The Company has certain leases in Mexico which are denominated in U.S. dollars. The lease liability of these U.S. dollar denominated leases, which is considered a monetary liability, is remeasured into Mexican pesos using current period exchange rates ~~which results~~resulting in the recognition of foreign currency exchange gains or losses. The Company has adjusted the applicable financial measures to exclude these remeasurement gains or losses because they are non-cash, non-operating items that could create volatility in the Company’s consolidated results of operations due to the magnitude of the end of period lease liability being remeasured and to improve comparability of current periods presented with prior periods.

In conjunction with the Cash America merger in 2016, the Company recorded certain lease intangibles related to above or below market lease liabilities of Cash America which are included in the operating lease right of use asset on the consolidated balance sheets. As the Company continues to opportunistically purchase real estate from landlords at certain Cash America stores, the associated lease intangible, if any, is written-off and gain or loss is recognized. The Company has adjusted the applicable financial measures to exclude these gains or losses given the variability in size and timing of these transactions and because they are non-cash, non-operating gains or losses. The Company believes this improves comparability of operating results for current periods ~~due to the adoption of ASC 842 on January 1, 2019.~~

presented with prior periods.

Adjusted Net Income and Adjusted Diluted Earnings Per Share

Management believes the presentation of adjusted net income and adjusted diluted earnings per share provides investors with greater transparency and provides a more complete understanding of the Company’s financial performance and prospects for the future by excluding items that management believes are non-operating in nature and not representative of the Company’s core operating performance of its continuing operations. In addition, management believes the adjustments shown below are useful to investors in order to allow them to compare the Company’s financial results for the current periods presented with the prior periods presented.

The following table provides a reconciliation between net income and diluted earnings per share calculated in accordance with GAAP to adjusted net income and adjusted diluted earnings per share, which are shown net of tax (in thousands, except per share amounts):


	Three Months Ended March 31,
	2021				2020
	In Thousands		Per Share		In Thousands		Per Share
Net income and diluted earnings per share, as reported	$	33,715	$	0.82	$	32,918	$	0.78
Adjustments, net of tax:




Merger and acquisition expenses	116		—		50		—
Non-cash foreign currency loss related to lease liability	421		0.01		3,069		0.07

Non-cash write-off of certain Cash America merger related lease intangibles	676		0.02		2,795		0.07
Non-cash impairment of certain other assets (1)	—		—		1,463		0.04



Adjusted net income and diluted earnings per share	$	34,928	$	0.85	$	40,295	$	0.96

Three Months Ended March 31,
2020 2019
In Thousands Per Share In Thousands Per Share
Net income and diluted earnings per share, as reported $ 32,918
$ 0.78
$ 42,655
$ 0.98
Adjustments, net of tax:
Merger and other acquisition expenses 50
—
104
—
Non-cash foreign currency loss (gain) related to lease liability 3,069
0.07
(238 ) (0.01 )
Non-cash write-off of certain merger related lease intangibles ⁽¹⁾
2,795
0.07
—
—
Non-cash impairment of certain other assets ⁽²⁾
1,463
0.04
—
—
Adjusted net income and diluted earnings per share $ 40,295
$ 0.96
$ 42,521
$ 0.97

(1)Impairment related to a non-operating asset in which the Company determined that an other than temporary impairment existed as of March 31, 2020.

The following table provides a reconciliation of the gross amounts, the impact of income taxes and the net amounts for the adjustments included in the table above (in thousands):


	Three Months Ended March 31,
	2021						2020
	Pre-tax		Tax		After-tax		Pre-tax		Tax		After-tax
Merger and acquisition expenses	$	166	$	50	$	116	$	68	$	18	$	50
Non-cash foreign currency loss related to lease liability	602		181		421		4,384		1,315		3,069

Non-cash write-off of certain Cash America merger related lease intangibles	878		202		676		3,630		835		2,795
Non-cash impairment of certain other assets	—		—		—		1,900		437		1,463



Total adjustments	$	1,646	$	433	$	1,213	$	9,982	$	2,605	$	7,377

Three Months Ended March 31,
2020 2019
Pre-tax Tax After-tax Pre-tax Tax After-tax
Merger and other acquisition expenses $ 68
$ 18
$ 50
$ 149
$ 45
$ 104
Non-cash foreign currency loss (gain) related to lease liability 4,384
1,315
3,069
(340 ) (102 ) (238 )
Non-cash write-off of certain merger related lease intangibles 3,630
835
2,795
—
—
—
Non-cash impairment of certain other assets 1,900
437
1,463
—
—
—
Total adjustments $ 9,982
$ 2,605
$ 7,377
$ (191 ) $ (57 ) $ (134 )

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA

The Company defines EBITDA as net income before income taxes, depreciation and amortization, interest expense and interest income and adjusted EBITDA as EBITDA adjusted for certain items as listed below that management considers to be non-operating in nature and not representative of its actual operating performance. The Company believes EBITDA and adjusted EBITDA are commonly used by investors to assess a company’s financial performance, and adjusted EBITDA is used in the calculation of the Net Debt Ratio as defined in the Company’s senior unsecured notes covenants. The following table provides a reconciliation of net income to EBITDA and adjusted EBITDA (dollars in thousands):


							Trailing Twelve
	Three Months Ended				Months Ended
	March 31,				March 31,
	2021		2020			2021		2020
Net income	$	33,715	$	32,918			$	107,376		$	154,881
Income taxes		12,556		12,799				36,877			56,604
Depreciation and amortization		10,612		10,674				42,043			42,704
Interest expense		7,230		8,418				28,156			34,083
Interest income		(158)		(185)				(1,513)			(1,036)
EBITDA		63,955		64,624				212,939			287,236
Adjustments:
Merger and acquisition expenses		166		68				1,414			1,685
Non-cash foreign currency loss (gain) related to lease liability		602		4,384				(2,533)			3,791
Loss on extinguishment of debt		—		—				11,737			—
Non-cash write-off of certain Cash America merger related lease intangibles		878		3,630				4,303			3,630
Non-cash impairment of certain other assets		—		1,900				—			1,900

Consumer lending wind-down costs and asset impairments		—		—				109			3,454

Adjusted EBITDA	$	65,601	$	74,606			$	227,969		$	301,696

Net Debt Ratio calculation:
Total debt (outstanding principal)							$	544,000		$	655,519
Less: cash and cash equivalents								(54,641)			(75,464)
Net debt							$	489,359		$	580,055
Adjusted EBITDA							$	227,969		$	301,696
Net Debt Ratio (Net Debt divided by Adjusted EBITDA)							2.1		:1	1.9		:1

Trailing Twelve
Three Months Ended Months Ended
March 31, March 31,
2020 2019 2020 2019
Net income $ 32,918
$ 42,655
$ 154,881
$ 154,226
Income taxes 12,799
16,188
56,604
54,147
Depreciation and amortization 10,674
9,874
42,704
41,552
Interest expense 8,418
8,370
34,083
31,345
Interest income (185 ) (204 ) (1,036 ) (1,667 )
EBITDA 64,624
76,883
287,236
279,603
Adjustments:
Merger and other acquisition expenses 68
149
1,685
7,553
Non-cash foreign currency loss (gain) related to lease liability 4,384
(340 ) 3,791
(340 )
Non-cash write-off of certain merger related lease intangibles 3,630
—
3,630
—
Non-cash impairment of certain other assets 1,900
—
1,900
—
Ohio consumer lending wind-down costs and asset impairments —
—
3,454
1,514
Adjusted EBITDA $ 74,606
$ 76,692
$ 301,696
$ 288,330

Net Debt Ratio calculation:
Total debt (outstanding principal) $ 655,519
$ 555,000
Less: cash and cash equivalents (75,464 ) (49,663 )
Net debt $ 580,055
$ 505,337
Adjusted EBITDA $ 301,696
$ 288,330
Net Debt Ratio (Net Debt divided by Adjusted EBITDA) 1.9 :1 1.8 :1

Free Cash Flow and Adjusted Free Cash Flow

For purposes of its internal liquidity assessments, the Company considers free cash flow and adjusted free cash flow. The Company defines free cash flow as cash flow from operating activities less purchases of furniture, fixtures, equipment and improvements and net fundings/repayments of ~~pawn and consumer loans,~~loan receivables, which are considered to be operating in nature by the Company but are included in cash flow from investing activities. Adjusted free cash flow is defined as free cash flow adjusted for merger and ~~other~~ acquisition expenses paid that management considers to be non-operating in nature.

Free cash flow and adjusted free cash flow are commonly used by investors as an additional measure of cash generated by business operations that may be used to repay scheduled debt maturities and debt service or, following payment of such debt obligations and other non-discretionary items, may be available to invest in future growth through new business development activities or acquisitions, repurchase stock, pay cash dividends or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company’s ability to generate cash flow from business operations and the impact that this cash flow has on the Company’s liquidity. However, free cash flow and adjusted free cash flow have limitations as analytical tools and should not

be considered in isolation or as a substitute for cash flow from operating activities or other income statement data prepared in accordance with GAAP. The following table reconciles cash flow from operating activities to free cash flow and adjusted free cash flow (in thousands):


						Trailing Twelve
	Three Months Ended				Months Ended
	March 31,				March 31,
	2021		2020			2021		2020
Cash flow from operating activities	$	69,174	$	77,385		$	214,053	$	237,284
Cash flow from certain investing activities:
Loan receivables, net (1)	42,394		52,279			97,123		44,469
Purchases of furniture, fixtures, equipment and improvements	(9,491)		(10,581)			(36,453)		(45,234)
Free cash flow	102,077		119,083			274,723		236,519
Merger and acquisition expenses paid, net of tax benefit	116		50			1,057		1,222
Adjusted free cash flow	$	102,193	$	119,133		$	275,780	$	237,741

Trailing Twelve
Three Months Ended Months Ended
March 31, March 31,
2020 2019 2020 2019
Cash flow from operating activities $ 77,385
$ 71,697
$ 237,284
$ 223,810
Cash flow from investing activities:
Loan receivables, net of cash repayments 52,279
42,216
44,469
(3,879 )
Purchases of furniture, fixtures, equipment and improvements (10,581 ) (9,658 ) (45,234 ) (39,947 )
Free cash flow 119,083
104,255
236,519
179,984
Merger and other acquisition expenses paid, net of tax benefit 50
104
1,222
5,608
Adjusted free cash flow $ 119,133
$ 104,359
$ 237,741
$ 185,592
(1)Includes the funding of new loans net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral.

Constant Currency Results

The Company’s reporting currency is the U.S. dollar. However, certain performance metrics discussed in this report are presented on a “constant currency” basis, which is considered a non-GAAP financial measure. The Company’s management uses constant currency results to evaluate operating results of business operations in Latin America, which are primarily transacted in local currencies.

The Company believes constant currency results provide ~~investors with~~ valuable supplemental information regarding the underlying performance of its business operations in Latin America, consistent with how the Company’s management evaluates such performance and operating results. Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in local currencies using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons. Business operations in Mexico, Guatemala and Colombia are transacted in Mexican pesos, Guatemalan quetzales and Colombian ~~pesos, respectively.~~pesos. The Company also has operations in El Salvador where the reporting and functional currency is the U.S. dollar. See the Latin America operations segment tables in “Results of Operations” above for additional reconciliation of certain constant currency amounts to as reported GAAP amounts.

Market risks relating to the Company’s operations result primarily from changes in interest rates, gold prices and foreign currency exchange rates, and are described in detail in the Company’s ~~2019~~ ~~annual report~~2020 Annual Report on Form 10-K. The impact of current-year fluctuations in gold prices and foreign currency exchange rates, in particular, are further discussed in Part I, Item 2 herein. The Company does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes. There have been no material changes to the Company’s exposure to market risks since December 31, ~~2019.~~2020.

Evaluation of Disclosure Controls and Procedures

The Company’s management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934) ~~(the “Exchange Act”)~~ as of March 31, ~~2020~~2021 (the “Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or internal controls will prevent all possible error and fraud. The Company’s disclosure controls and procedures are, however, designed to provide reasonable assurance of achieving their objectives, and the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective at that reasonable assurance level.

There have been no material changes in the status of legal proceedings previously reported in the Company’s ~~2019 annual report~~2020 Annual Report on Form 10-K.

Important risk factors that could materially affect the Company’s business, financial condition or results of operations in future periods are described in Part I, Item 1A, “Risk Factors” of the Company’s ~~2019 annual report~~2020 Annual Report on Form 10-K. These factors are supplemented by those discussed under “Management’s Discussion And Analysis Of Financial Condition And Results Of Operations” and “Regulatory Developments” in Part I, Item 2 of this quarterly report and in “Governmental Regulation” in Part I, Item 1 of the Company’s ~~2019 annual report~~2020 Annual Report on Form 10-K. ~~Other than the risk factor set forth below, there~~There have been no material changes in the Company’s risk factors from those in Part I, Item 1A, “Risk Factors” of the Company’s ~~2019 annual report~~2020 Annual Report on Form 10-K.

Public health outbreaks, epidemics or pandemics such as COVID-19 could adversely affect consumer traffic and demand for pawn loans and have a material adverse effect on the Company’s results of operations. The extent to which COVID-19 impacts the Company’s operations, results of operations, liquidity and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration, severity, scope of the outbreak, and the actions taken to contain its impact, as well as actions taken to limit the resulting economic impact, among others.

During the three months ended March 31, ~~2020,~~2021, the Company repurchased a total of ~~981,000~~84,000 shares of common stock at an aggregate cost of ~~$80.3~~$5.0 million and an average cost per share of ~~$81.84.~~$59.06. The Company intends to continue repurchases under its active share repurchase programs, including through open market transactions under trading plans in accordance with Rule 10b5-1 and Rule 10b-18 under the Exchange Act of 1934, as amended, subject to a variety of factors, including, but not limited to, the level of cash balances, credit availability, debt covenant restrictions, general business conditions, regulatory requirements, the market price of the Company’s stock, dividend policy, the availability of alternative investment opportunities, including acquisitions, and the impact of COVID-19.

The following table provides the information with respect to purchases made by the Company of shares of its common stock during each month a share program was in effect during the three months ended March 31, ~~2020~~2021 (dollars in thousands, except per share amounts):


	Total Number Of Shares Purchased	Average Price Paid Per Share		Total Number Of Shares Purchased As Part Of Publicly Announced Plans	Approximate Dollar Value Of Shares That May Yet Be Purchased Under The Plans
January 1 through January 31, 2021	—	$	—	—	$	121,827
February 1 through February 28, 2021	84,000	59.06		84,000	116,860
March 1 through March 31, 2021	—	—		—	116,860
Total	84,000	59.06		84,000

The following table provides purchases made by the Company of shares of its common stock under each share repurchase program in effect during the three months ended March 31, ~~2020~~2021 (dollars in thousands):


Plan Authorization Date	Plan Completion Date	Dollar Amount Authorized		Shares Purchased in 2021	Dollar Amount Purchased in 2021		Remaining Dollar Amount Authorized For Future Purchases
January 28, 2020	Currently active	$	100,000	84,000	$	4,967	$	16,860
January 27, 2021	Currently active	100,000		—	—		100,000
Total				84,000	$	4,967	$	116,860

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Incorporated by Reference

Exhibit No.

Exhibit Description

Form

File No.

Exhibit

Filing Date

Filed Herewith

3.1

Amended and Restated Certificate of Incorporation

DEF 14A

0-19133

04/29/2004

3.2

Amendment to Amended and Restated Certificate of Incorporation

8-K

001-10960

3.1

09/02/2016

3.3

Amended and Restated Bylaws

31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by Rick L. Wessel, Chief Executive Officer

31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by R. Douglas Orr, Chief Financial Officer

32.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 provided by Rick L. Wessel, Chief Executive Officer

32.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 provided by R. Douglas Orr, Chief Financial Officer

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101)

Incorporated by Reference
Exhibit No. Exhibit Description Form File No. Exhibit Filing Date Filed Herewith
3.1
Amended and Restated Certificate of Incorporation
DEF 14A 0-19133 B 04/29/2004
3.2
Amendment to Amended and Restated Certificate of Incorporation
8-K 001-10960 3.1 09/02/2016
3.3
Amended and Restated Bylaws
8-K 001-10960 3.1 04/24/2019
31.1
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by Rick L. Wessel, Chief Executive Officer
X
31.2
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by R. Douglas Orr, Chief Financial Officer
X
32.1
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 provided by Rick L. Wessel, Chief Executive Officer
X
32.2
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 provided by R. Douglas Orr, Chief Financial Officer
X
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X
104 Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101) X

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



~~PART I.~~Consolidated Balance Sheets	~~FINANCIAL INFORMATION~~

~~Item 1.~~	~~Financial Statements (Unaudited)~~	1
			~~Consolidated Balance Sheets~~	1
	Consolidated Statements of Income	2
			Consolidated Statements of Comprehensive Income (Loss)	3
			Consolidated Statements of Changes in Stockholders’ Equity	34
			Consolidated Statements of Cash Flows	56
			Notes to Consolidated Financial Statements	67
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.			Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.			Controls and Procedures	3332

PART II.			OTHER INFORMATION

Item 1.			Legal Proceedings	3332
Item 1A.			Risk Factors	3332
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	3433
Item 3.			Defaults Upon Senior Securities	3533
Item 4.			Mine Safety Disclosures	3533
Item 5.			Other Information	3533
Item 6.			Exhibits	3534

~~SIGNATURES~~		36



Nine months ending December 31, 2020	$	76,393
2021	84,670
2022	62,293
2023	43,372
2024	23,004
Thereafter	15,886
Total	$	305,618
Less amount of lease payments representing interest	(41,476		)
Total present value of lease payments	$	264,142



	Three Months Ended March 31, 2019
	U.S. Operations		Latin America Operations		Corporate			Consolidated
Revenue:
Retail merchandise sales	$	186,815	$	97,426	$	—		$	284,241
Pawn loan fees	97,876		43,316		—			141,192
Wholesale scrap jewelry sales	22,785		8,925		—			31,710
Consumer loan and credit services fees	10,461		—		—			10,461
Total revenue	317,937		149,667		—			467,604

Cost of revenue:
Cost of retail merchandise sold	117,744		61,605		—			179,349
Cost of wholesale scrap jewelry sold	21,270		9,083		—			30,353
Consumer loan and credit services loss provision	2,103		—		—			2,103
Total cost of revenue	141,117		70,688		—			211,805

Net revenue	176,820		78,979		—			255,799

Expenses and other income:
Store operating expenses	103,884		42,968		—			146,852
Administrative expenses	—		—		32,154			32,154
Depreciation and amortization	5,045		3,305		1,524			9,874
Interest expense	—		—		8,370			8,370
Interest income	—		—		(204		)	(204		)
Merger and other acquisition expenses	—		—		149			149
Gain on foreign exchange	—		—		(239		)	(239		)
Total expenses and other income	108,929		46,273		41,754			196,956

Income (loss) before income taxes	$	67,891	$	32,706	$	(41,754	)	$	58,843


⁽²⁾	~~The table does not include 37 Mexico pawn locations operated by independent franchisees under franchising agreements with the Company.~~


⁽¹⁾	The Company has been discontinuing the offering of unsecured consumer lending products in its stores as it continues to strategically deemphasize its consumer lending operations. See “— Consumer Lending Operations” for further discussion.



		As of March 31,
		2020			2019
Working capital		$	466,052		$	508,253
Current ratio	3.3:1			3.4:1
Liabilities to equity ratio	0.9:1			0.8:1
Net Debt Ratio ⁽¹⁾	1.9:1			1.8:1


⁽¹⁾	~~Adjusted EBITDA, a component of the Net Debt Ratio, is a non-GAAP financial measure. See “Non-GAAP Financial Information” for a calculation of the Net Debt Ratio.~~


⁽²⁾	~~The Company recorded a $1.5 million impairment, net of tax, related to a non-operating asset in which the Company determined that an other than temporary impairment existed as of March 31, 2020.~~



Dated: April 26, 2021		FIRSTCASH, INC.
~~Dated: April 27, 2020~~		~~FIRSTCASH, INC.~~(Registrant)
		~~(Registrant)~~

	/s/ RICK L. WESSEL
		Rick L. Wessel
		Chief Executive Officer
		(On behalf of the Registrant)

		/s/ R. DOUGLAS ORR
		R. Douglas Orr
		Executive Vice President and Chief Financial Officer
		(As Principal Financial and Accounting Officer)