

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 June 30, ~~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 July ~~21, 2020,~~20, 2021, there were ~~41,440,498~~40,451,966 shares of common stock outstanding.


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FIRSTCASH, INC.

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2021

INDEX


PART I.			FINANCIAL INFORMATION

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

~~FIRSTCASH, INC.~~

~~FORM 10-Q FOR THE QUARTER ENDED~~ ~~JUNE 30, 2020~~1

~~INDEX~~



SIGNATURES						42


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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~~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 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, potential changes in consumer behavior and shopping patterns which could impact demand for both the Company’s pawn loan and retail products, ~~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, and other reports filed subsequently by the Company with the ~~SEC, including the Company’s quarterly report on Form 10-Q filed with the SEC on April 27, 2020.~~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)

June 30, December 31,
2020 2019 2019
ASSETS
Cash and cash equivalents $ 70,956
$ 67,012
$ 46,527
Fees and service charges receivable 30,418
46,991
46,686
Pawn loans 230,383
375,167
369,527
Consumer loans, net 176
3,850
751
Inventories 179,967
266,440
265,256
Income taxes receivable 4,988
1,041
875
Prepaid expenses and other current assets 10,689
9,590
11,367
Total current assets 527,577
770,091
740,989

Property and equipment, net 341,114
290,725
336,167
Operating lease right of use asset 283,063
293,357
304,549
Goodwill 929,575
940,653
948,643
Intangible assets, net 84,389
87,200
85,875
Other assets 9,037
10,890
11,506
Deferred tax assets 7,764
11,570
11,711
Total assets $ 2,182,519
$ 2,404,486
$ 2,439,440

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued liabilities $ 69,810
$ 71,410
$ 72,398
Customer deposits 35,439
40,665
39,736
Income taxes payable 13,230
317
4,302
Lease liability, current 83,580
84,513
86,466
Total current liabilities 202,059
196,905
202,902

Revolving unsecured credit facilities 200,000
340,000
335,000
Senior unsecured notes 296,923
296,222
296,568
Deferred tax liabilities 67,842
60,069
61,431
Lease liability, non-current 182,915
184,348
193,504
Total liabilities 949,739
1,077,544
1,089,405

Stockholders’ equity:
Common stock 493
493
493
Additional paid-in capital 1,226,512
1,227,478
1,231,528
Retained earnings 763,810
660,845
727,476
Accumulated other comprehensive loss (172,150 ) (103,932 ) (96,969 )
Common stock held in treasury, at cost (585,885 ) (457,942 ) (512,493 )
Total stockholders’ equity 1,232,780
1,326,942
1,350,035
Total liabilities and stockholders’ equity $ 2,182,519
$ 2,404,486
$ 2,439,440

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


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

	June 30,				December 31,
	2021		2020		2020
ASSETS
Cash and cash equivalents	$	50,061	$	70,956	$	65,850
Fees and service charges receivable	40,183		30,418		41,110
Pawn loans	312,166		230,383		308,231

Inventories	216,955		179,967		190,352
Income taxes receivable	7,324		4,988		9,634
Prepaid expenses and other current assets	11,698		10,865		9,388

Total current assets	638,387		527,577		624,565

Property and equipment, net	404,283		341,114		373,667
Operating lease right of use asset	299,223		283,063		298,957
Goodwill	1,017,273		929,575		977,381
Intangible assets, net	83,372		84,389		83,651
Other assets	9,406		9,037		9,818
Deferred tax assets	4,489		7,764		4,158
Total assets	$	2,456,433	$	2,182,519	$	2,372,197

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts payable and accrued liabilities	$	103,331	$	69,810	$	81,917
Customer deposits	44,486		35,439		34,719
Income taxes payable	369		13,230		1,148
Lease liability, current	89,027		83,580		88,622
Total current liabilities	237,213		202,059		206,406

Revolving unsecured credit facilities	163,000		200,000		123,000

Senior unsecured notes	493,303		296,923		492,916
Deferred tax liabilities	75,912		67,842		71,173
Lease liability, non-current	196,189		182,915		194,887

Total liabilities	1,165,617		949,739		1,088,382

Stockholders’ equity:

Common stock	493		493		493
Additional paid-in capital	1,219,948		1,226,512		1,221,788
Retained earnings	828,040		763,810		789,303
Accumulated other comprehensive loss	(115,790)		(172,150)		(118,432)
Common stock held in treasury, at cost	(641,875)		(585,885)		(609,337)
Total stockholders’ equity	1,290,816		1,232,780		1,283,815
Total liabilities and stockholders’ equity	$	2,456,433	$	2,182,519	$	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 Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Revenue:
Retail merchandise sales $ 287,400
$ 278,754
$ 584,029
$ 562,995
Pawn loan fees 101,990
136,923
244,105
278,115
Wholesale scrap jewelry sales 22,785
24,981
49,156
56,691
Consumer loan and credit services fees 571
5,356
1,946
15,817
Total revenue 412,746
446,014
879,236
913,618

Cost of revenue:
Cost of retail merchandise sold 171,511
176,272
356,206
355,621
Cost of wholesale scrap jewelry sold 18,357
23,934
41,204
54,287
Consumer loan and credit services loss provision (223 ) 1,503
(584 ) 3,606
Total cost of revenue 189,645
201,709
396,826
413,514

Net revenue 223,101
244,305
482,410
500,104

Expenses and other income:
Store operating expenses 141,051
148,347
294,551
295,199
Administrative expenses 28,386
31,696
61,288
63,850
Depreciation and amortization 10,324
10,510
20,998
20,384
Interest expense 6,974
8,548
15,392
16,918
Interest income (525 ) (155 ) (710 ) (359 )
Merger and other acquisition expenses 134
556
202
705
(Gain) loss on foreign exchange (614 ) (483 ) 2,071
(722 )
Write-offs and impairments of certain lease intangibles and other assets 182
—
5,712
—
Total expenses and other income 185,912
199,019
399,504
395,975

Income before income taxes 37,189
45,286
82,906
104,129

Provision for income taxes 11,316
12,238
24,115
28,426

Net income $ 25,873
$ 33,048
$ 58,791
$ 75,703

Earnings per share:
Basic $ 0.62
$ 0.77
$ 1.41
$ 1.75
Diluted $ 0.62
$ 0.76
$ 1.41
$ 1.74

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				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Revenue:
Retail merchandise sales	$	265,567	$	287,400	$	537,609	$	584,029
Pawn loan fees	109,909		101,990		225,431		244,105
Wholesale scrap jewelry sales	14,102		22,785		34,477		49,156
Consumer loan and credit services fees	0		571		0		1,946
Total revenue	389,578		412,746		797,517		879,236

Cost of revenue:
Cost of retail merchandise sold	153,424		171,511		310,577		356,206
Cost of wholesale scrap jewelry sold	11,932		18,357		29,129		41,204
Consumer loan and credit services loss provision	0		(223)		0		(584)
Total cost of revenue	165,356		189,645		339,706		396,826

Net revenue	224,222		223,101		457,811		482,410

Expenses and other income:
Store operating expenses	139,128		141,051		276,452		294,551
Administrative expenses	27,398		28,386		58,397		61,288
Depreciation and amortization	10,902		10,324		21,514		20,998
Interest expense	7,198		6,974		14,428		15,392
Interest income	(119)		(525)		(277)		(710)
Merger and acquisition expenses	1,086		134		1,252		202
(Gain) loss on foreign exchange	(577)		(614)		(310)		2,071

Write-off of certain Cash America merger related lease intangibles	401		182		1,279		3,812
Impairment of certain other assets	0		0		0		1,900
Total expenses and other income	185,417		185,912		372,735		399,504

Income before income taxes	38,805		37,189		85,076		82,906

Provision for income taxes	10,378		11,316		22,934		24,115

Net income	$	28,427	$	25,873	$	62,142	$	58,791

Earnings per share:
Basic	$	0.70	$	0.62	$	1.52	$	1.41
Diluted	$	0.70	$	0.62	$	1.52	$	1.41

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				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net income	$	28,427	$	25,873	$	62,142	$	58,791
Other comprehensive income (loss):
Currency translation adjustment	14,977		8,322		2,642		(75,181)
Comprehensive income (loss)	$	43,404	$	34,195	$	64,784	$	(16,390)

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 Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Net income $ 25,873
$ 33,048
$ 58,791
$ 75,703
Other comprehensive income (loss):
Currency translation adjustment 8,322
3,762
(75,181 ) 9,185
Comprehensive income (loss) $ 34,195
$ 36,810
$ (16,390 ) $ 84,888

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



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

Six Months Ended June 30, 2020
Six Months Ended June 30, 2021																					Six Months Ended June 30, 2021
	Common Stock			Additional Paid-In Capital			Retained Earnings			Accum- ulated Other Compre- hensive Loss			Common Stock Held in Treasury					Total Stock- holders’ Equity				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								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		)
As of 12/31/2020																					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																					Shares issued under share-based compensation plan, net of 28 shares net-settled		—	—		(7,090)		—		—		(73)	5,427		(1,663)

Share-based compensation expense	—	—		2,851			—			—			—		—			2,851			Share-based compensation expense		—	—		3,625		—		—		—	—		3,625
Net income	—	—		—			32,918			—			—		—			32,918			Net income		—	—		—		33,715		—		—	—		33,715
Cash dividends ($0.27 per share)	—	—		—			(11,268		)	—			—		—			(11,268		)	Cash dividends ($0.27 per share)		—	—		—		(11,097)		—		—	—		(11,097)
Currency translation adjustment	—	—		—			—			(83,503		)	—		—			(83,503		)	Currency translation adjustment		—	—		—		—		(12,335)		—	—		(12,335)
Purchases of treasury stock	—	—		—			—			—			981		(80,331		)	(80,331		)	Purchases of treasury stock		—	—		—		—		—		84	(4,967)		(4,967)
As of 3/31/2020	49,276	$	493	$	1,224,113		$	749,126		$	(180,472	)	7,835		$	(585,885	)	$	1,207,375

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

Share-based compensation expense	—	—		2,399			—			—			—		—			2,399			Share-based compensation expense		—	—		1,625		—		—		—	—		1,625
Net income	—	—		—			25,873			—			—		—			25,873			Net income		—	—		—		28,427		—		—	—		28,427
Cash dividends ($0.27 per share)	—	—		—			(11,189		)	—			—		—			(11,189		)
Cash dividends ($0.30 per share)																					Cash dividends ($0.30 per share)		—	—		—		(12,308)		—		—	—		(12,308)
Currency translation adjustment	—	—		—			—			8,322			—		—			8,322			Currency translation adjustment		—	—		—		—		14,977		—	—		14,977
As of 6/30/2020	49,276	$	493	$	1,226,512		$	763,810		$	(172,150	)	7,835		$	(585,885	)	$	1,232,780
Purchases of treasury stock																					Purchases of treasury stock		—	—		—		—		—		452	(32,998)		(32,998)

As of 6/30/2021																					As of 6/30/2021		49,276	$	493	$	1,219,948	$	828,040	$	(115,790)	8,701	$	(641,875)	$	1,290,816


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

Six Months Ended June 30, 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
Exercise of stock options —
—
(319 ) —
—
(10 ) 719
400
Share-based compensation expense —
—
2,315
—
—
—
—
2,315
Net income —
—
—
33,048
—
—
—
33,048
Cash dividends ($0.25 per share) —
—
—
(10,777 ) —
—
—
(10,777 )
Currency translation adjustment —
—
—
—
3,762
—
—
3,762
Purchases of treasury stock —
—
—
—
—
328
(30,222 ) (30,222 )
As of 6/30/2019 49,276
$ 493
$ 1,227,478
$ 660,845
$ (103,932 ) 6,313
$ (457,942 ) $ 1,326,942

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)

Six Months Ended June 30, 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



Share-based compensation expense		—	—		2,399		—		—		—	—		2,399
Net income		—	—		—		25,873		—		—	—		25,873
Cash dividends ($0.27 per share)		—	—		—		(11,189)		—		—	—		(11,189)
Currency translation adjustment		—	—		—		—		8,322		—	—		8,322


As of 6/30/2020		49,276	$	493	$	1,226,512	$	763,810	$	(172,150)	7,835	$	(585,885)	$	1,232,780
























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)
	Six Months Ended
	June 30,
	2021		2020
Cash flow from operating activities:
Net income	$	62,142	$	58,791
Adjustments to reconcile net income to net cash flow provided by operating activities:
Non-cash portion of consumer loan credit loss provision	0		(833)
Share-based compensation expense	5,250		5,250
Depreciation and amortization expense	21,514		20,998
Amortization of debt issuance costs	793		772


Write-off of certain Cash America merger related lease intangibles	1,279		3,812
Impairment of certain other assets	0		1,900

Deferred income taxes, net	4,444		8,557
Changes in operating assets and liabilities, net of business combinations:
Fees and service charges receivable	1,369		14,265
Inventories purchased directly from customers, wholesalers or manufacturers	(9,173)		21,143
Prepaid expenses and other assets	(2,107)		271
Accounts payable, accrued liabilities and other liabilities	26,748		4,294
Income taxes	1,490		4,079
Net cash flow provided by operating activities	113,749		143,299
Cash flow from investing activities:
Loan receivables, net (1)	(8,492)		178,279
Purchases of furniture, fixtures, equipment and improvements	(21,025)		(20,476)
Purchases of store real property	(29,096)		(19,596)

Acquisitions of pawn stores, net of cash acquired	(49,334)		(7,764)

Net cash flow (used in) provided by investing activities	(107,947)		130,443
Cash flow from financing activities:
Borrowings from unsecured credit facilities	227,000		143,925
Repayments of unsecured credit facilities	(187,000)		(282,433)





Debt issuance costs paid	0		(134)
Purchases of treasury stock	(36,427)		(80,331)


Payment of withholding taxes on net share settlements of restricted stock awards	(1,663)		(3,327)
Dividends paid	(23,405)		(22,457)
Net cash flow used in financing activities	(21,495)		(244,757)
Effect of exchange rates on cash	(96)		(4,556)
Change in cash and cash equivalents	(15,789)		24,429
Cash and cash equivalents at beginning of the period	65,850		46,527
Cash and cash equivalents at end of the period	$	50,061	$	70,956

FIRSTCASH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Six Months Ended
June 30,
2020 2019
Cash flow from operating activities:
Net income $ 58,791
$ 75,703
Adjustments to reconcile net income to net cash flow provided by operating activities:
Non-cash portion of credit loss provision (833 ) 2,262
Share-based compensation expense 5,250
4,630
Depreciation and amortization expense 20,998
20,384
Amortization of debt issuance costs 772
949
Non-cash write-offs and impairments of certain lease intangibles and other assets 5,712
—
Deferred income taxes, net 8,557
5,594
Changes in operating assets and liabilities, net of business combinations:
Fees and service charges receivable 14,265
(537 )
Inventories purchased directly from customers, wholesalers or manufacturers 21,143
4,461
Prepaid expenses and other assets 271
508
Accounts payable, accrued liabilities and other liabilities 4,294
(7,879 )
Income taxes 4,079
(102 )
Net cash flow provided by operating activities 143,299
105,973
Cash flow from investing activities:
Loan receivables, net ⁽¹⁾
178,279
19,574
Purchases of furniture, fixtures, equipment and improvements (20,476 ) (22,904 )
Purchases of store real property (19,596 ) (31,894 )
Acquisitions of pawn stores, net of cash acquired (7,764 ) (38,241 )
Net cash flow provided by (used in) investing activities 130,443
(73,465 )
Cash flow from financing activities:
Borrowings from unsecured credit facilities 143,925
144,000
Repayments of unsecured credit facilities (282,433 ) (99,000 )
Debt issuance costs paid (134 ) —
Purchases of treasury stock (80,331 ) (61,554 )
Proceeds from exercise of stock options —
400
Payment of withholding taxes on net share settlements of restricted stock unit awards (3,327 ) —
Dividends paid (22,457 ) (21,668 )
Net cash flow used in financing activities (244,757 ) (37,822 )
Effect of exchange rates on cash (4,556 ) 533
Change in cash and cash equivalents 24,429
(4,781 )
Cash and cash equivalents at beginning of the period 46,527
71,793
Cash and cash equivalents at end of the period $ 70,956
$ 67,012

⁽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.

(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 - 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 June 30, ~~2020~~2021 and ~~2019,~~2020, and for the three month and six month periods ended June 30, ~~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 periods ended June 30, ~~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.

Continuing Impact of COVID-19

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 a pandemic. 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 in an effort to reduce the spread of COVID-19, as well as instituting broad based stimulus packages in an effort to limit the resulting economic impact.

The COVID-19 pandemic impacted the Company’s business ~~depends heavily on the uninterrupted operation~~and results of ~~its stores. In most jurisdictions where the Company has stores, pawnshops have been designated an essential service by federal guidelines and/or local regulations and remained open during~~operations in a variety of ways beginning in the second quarter ~~with enhanced safety protocols. However, retail sales in all~~ of ~~the Company’s stores in Mexico were prohibited by regulators during the last three weeks of May, all 13 stores in El Salvador were closed from late March through the end of May~~2020 and ~~all 13 stores in Colombia were closed from late March through various dates in June and early July as a result of broad government imposed lock-downs.~~

As most of the Company’s pawn stores were able to remain open as an essential business, retail sales benefited from strong demand for stay-at-home products such as consumer electronics, tools and sporting goods. Retail sales in the U.S. were further enhanced by federal stimulus payments, which drove additional demand across most categories including jewelry. These positive impacts on retail sales in Latin America were largely offset by the three-week regulatory prohibition of retail transactions in Mexico and the closures of stores in El Salvador and Colombia.

Conversely, pawn lending activities declined in the U.S. and Latin America due to an increase in pawn loan redemptions and a decrease in pawn loan originations, which the Company attributes to significantly reduced levels of personal spending due to broad shutdowns of the economy as a result of COVID-19. Pawn loan balances were further impacted in the U.S. by federal stimulus payments, forbearance programs and enhanced unemployment benefits, and in Latin America by increased cross-border remittance payments from the U.S. The resulting impact of the lower pawn loan balances was a negative impact to pawn loan fee revenue during the quarter.



~~Table of Contents~~

In addition, the economic global uncertainty resulting from COVID-19 has resulted in increased currency volatility that has resulted in adverse currency rate fluctuations, especially with respect to the Mexican peso.

continuing into 2021. 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 adoption rate 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. In particular, government stimulus and other transfer programs have and may continue to have a material adverse impact ~~among others.~~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 reported amounts of assets and liabilities, and related revenue and expenses, and the disclosure of gain and loss contingencies at the date of the financial statements. ~~The extent to which COVID-19 impacts the Company’s operations, results of operations, liquidity and financial condition, including~~Such estimates and assumptions ~~used by~~are subject to a number of risks and uncertainties, which may cause actual results to differ materially from the ~~Company~~Company’s estimates.

Reclassification

Certain amounts in the ~~calculation~~consolidated financial statements as of and ~~evaluation of~~for the accrual for earned but uncollected pawn loan fees, impairment of goodwill and other intangible assets and current and deferred tax assets and liabilities, 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 takensix months ended June 30, 2020 have been reclassified in order 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 material impactsconform to the ~~Company’s financial statements in future reporting periods.~~2021 presentation.

~~Recent Accounting Pronouncements~~

In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. In November 2018, 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 and ASU 2020-02 (collectively, “ASC 326”) are effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. The adoption of ASC 326 did not have a material impact on the Company’s recognition of financial instruments within the scope of the standard.

In January 2017, the Financial Accounting Standards Board issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which eliminates step two from the goodwill impairment test 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 impairment tests 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 the Company’s current financial position, results of operations or financial statement disclosures.

In August 2018, the Financial Accounting Standards Board issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes 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.



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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 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 iswas 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 Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Numerator:
Net income $ 25,873
$ 33,048
$ 58,791
$ 75,703

Denominator:
Weighted-average common shares for calculating basic earnings per share 41,440
43,081
41,676
43,298
Effect of dilutive securities:
Stock options and restricted stock unit awards 91
175
93
158
Weighted-average common shares for calculating diluted earnings per share 41,531
43,256
41,769
43,456

Earnings per share:
Basic $ 0.62
$ 0.77
$ 1.41
$ 1.75
Diluted $ 0.62
$ 0.76
$ 1.41
$ 1.74



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	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Numerator:
Net income	$	28,427	$	25,873	$	62,142	$	58,791



Denominator:
Weighted-average common shares for calculating basic earnings per share	40,754		41,440		40,893		41,676
Effect of dilutive securities:
Stock options and restricted stock unit awards	48		91		36		93
Weighted-average common shares for calculating diluted earnings per share	40,802		41,531		40,929		41,769

Earnings per share:
Basic	$	0.70	$	0.62	$	1.52	$	1.41
Diluted	$	0.70	$	0.62	$	1.52	$	1.41

Note 3 - Acquisitions

Consistent with the Company’s strategy to continue its expansion of pawn stores in ~~selected~~strategic markets, during the six months ended June 30, ~~2020,~~2021, the Company acquired 4028 pawn stores in ~~Mexico~~the U.S. in 2 separate transactions. The aggregate purchase price for these acquisitions totaled ~~$6.7~~$50.7 million, net of cash acquired and subject to future post-closing adjustments. The aggregate purchase price was composed of ~~$5.5~~$48.4 million in cash paid ~~during the six months ended June 30, 2020~~at closing and remaining short-term amounts payable to the ~~seller~~sellers of approximately ~~$1.2~~$2.3 million.

The purchase price of each of the ~~2020~~2021 acquisitions 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 these acquisitions consists largely of the synergies and economies of scale expected from combining the operations of the Company and the pawn stores acquired. These acquisitions were not material individually or in the aggregate to the Company’s consolidated financial statements.


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The estimated fair value of the assets acquired and liabilities assumed are preliminary, as the Company is gathering information to finalize the valuation of these assets and liabilities. The preliminary allocation of the aggregate purchase prices for these individually immaterial acquisitions during the six months ended June 30, 2021 is as follows (in thousands):


Pawn loans	$	5,658
Pawn loan fees receivable	306

Inventories	5,481
Other current assets	161
Property and equipment	839
Goodwill (1)	38,920
Intangible assets	620

Current liabilities	(1,271)


Aggregate purchase price	$	50,714

(1)Substantially all of the goodwill is expected to be deductible for U.S. income tax purposes.

The results of operations for the acquired stores have been consolidated since the respective acquisition dates. During 2021, revenue from the acquired stores was $3.7 million and the loss from the combined acquisitions since the acquisition dates (including $0.9 million of transaction and integration costs, net of tax) was approximately $0.1 million.

Note 4 - 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 June 30, 2021 and 2020 was 4.1 years and ~~2019 was~~ 3.9 ~~years.~~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 June 30, 2021 and 2020 was 6.6% and ~~2019 was~~ 7.6% ~~and 7.4%~~, 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 gain of ~~$0.4~~$0.7 million and ~~$0.2~~$0.4 million during the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, related to the remeasurement of these U.S. dollar denominated operating leases, which is included in (gain) loss on foreign exchange in the accompanying consolidated statements of income. During the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, the Company recognized a foreign currency gain of $0.1 million and a loss of $3.9 million, ~~and a gain of $0.5 million, respectively.~~respectively, related to these U.S. dollar denominated leases.



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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 and six months ended June 30, ~~2020~~2021 and ~~2019~~2020 (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Operating lease expense	$	31,374	$	29,425	$	62,439	$	60,635
Variable lease expense (1)	3,939		3,403		7,773		6,948
Total operating lease expense	$	35,313	$	32,828	$	70,212	$	67,583

Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Operating lease expense $ 29,425
$ 31,292
$ 60,635
$ 62,272
Variable lease expense ⁽¹⁾
3,403
2,179
6,948
4,254
Total operating lease expense $ 32,828
$ 33,471
$ 67,583
$ 66,526

(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 June 30, ~~2020~~2021 (in thousands):

Six months ending December 31, 2020 $ 52,555
2021 90,527
2022 68,117
2023 49,021
2024 27,972
Thereafter 19,033
Total $ 307,225
Less amount of lease payments representing interest (40,730 )
Total present value of lease payments $ 266,495


Six months ending December 31, 2021	$	55,118
2022	93,320
2023	73,240
2024	49,834
2025	24,806
Thereafter	29,285
Total	$	325,603
Less amount of lease payments representing interest	(40,387)
Total present value of lease payments	$	285,216

The following table details supplemental cash flow information related to operating leases for the six months ended June 30, ~~2020~~2021 and ~~2019~~2020 (in thousands):

Six Months Ended
June 30,
2020 2019
Cash paid for amounts included in the measurement of operating lease liabilities $ 56,165
$ 58,336
Leased assets obtained in exchange for new operating lease liabilities $ 46,096
$ 16,628


	Six Months Ended
	June 30,
	2021		2020
Cash paid for amounts included in the measurement of operating lease liabilities	$	56,570	$	56,165
Leased assets obtained in exchange for new operating lease liabilities	$	49,209	$	46,096



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Note 5 - 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 June 30,				As of December 31,
	2021		2020		2020

Revolving unsecured credit facility, maturing 2024 (1)	163,000		200,000		123,000
5.375% senior unsecured notes due 2024 (2)	0		296,923		0
4.625% senior unsecured notes due 2028 (3)	493,303		0		492,916

Total long-term debt	$	656,303	$	496,923	$	615,916

As of June 30, As of December 31,
2020 2019 2019
Revolving unsecured credit facility, maturing 2024 ⁽¹⁾
$ 200,000
$ 340,000
$ 335,000
5.375% senior unsecured notes due 2024 ⁽²⁾
296,923
296,222
296,568
Total long-term debt $ 496,923
$ 636,222
$ 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 June 30, 2020, deferred debt issuance costs of $3.1 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 June 30, 2021 and December 31, 2020, deferred debt issuance costs of $6.7 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 June 30, 2020, 2019 and December 31, 2019, deferred debt issuance costs of $3.1 million, $3.8 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 June 30, ~~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 June 30, ~~2020,~~2021, the Company had ~~$200.0~~$163.0 million in outstanding borrowings and ~~$3.3~~$3.4 million in outstanding letters of credit under the Credit Facility, leaving ~~$296.7~~$333.6 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 June 30, ~~2020~~2021 was ~~2.63%~~2.66% 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 June 30, ~~2020.~~2021. During the six months ended June 30, ~~2020,~~2021, the Company ~~made~~received net ~~payments~~proceeds of ~~$135.0~~$40.0 million from borrowings pursuant to the Credit Facility.

Revolving Unsecured Uncommitted Credit Facility

~~During March 2020,~~As of June 30, 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 bears interest at the Mexican Central Bank’s interbank equilibrium rate (“TIIE”) plus a fixed spread of 2.5% and matures on March 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 June 30, ~~2020.~~2021. At June 30, ~~2020,~~2021, the Company had 0 amount outstanding under the Mexico Credit Facility and $600.0 million Mexican pesos available for borrowings.


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Senior Unsecured Notes Due 2028

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



~~Table of Contents~~

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 6 - 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 June 30, 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 six months ended June 30, 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 June 30, 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
	June 30,		June 30,		Fair Value Measurements Using
	2021		2021		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	50,061	$	50,061	$	50,061	$	0	$	0
Fees and service charges receivable	40,183		40,183		0		0		40,183
Pawn loans	312,166		312,166		0		0		312,166

	$	402,410	$	402,410	$	50,061	$	0	$	352,349

Financial liabilities:
Revolving unsecured credit facilities	$	163,000	$	163,000	$	0	$	163,000	$	0
Senior unsecured notes (outstanding principal)	500,000		521,000		0		521,000		0
	$	663,000	$	684,000	$	0	$	684,000	$	0

Carrying Value Estimated Fair Value
June 30, June 30, Fair Value Measurements Using
2020 2020 Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $ 70,956
$ 70,956
$ 70,956
$ —
$ —
Fees and service charges receivable 30,418
30,418
—
—
30,418
Pawn loans 230,383
230,383
—
—
230,383
Consumer loans, net 176
176
—
—
176
$ 331,933
$ 331,933
$ 70,956
$ —
$ 260,977

Financial liabilities:
Revolving unsecured credit facilities $ 200,000
$ 200,000
$ —
$ 200,000
$ —
Senior unsecured notes (outstanding principal) 300,000
300,000
—
300,000
—
$ 500,000
$ 500,000
$ —
$ 500,000
$ —


	Carrying Value		Estimated Fair Value
	June 30,		June 30,		Fair Value Measurements Using
	2020		2020		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	70,956	$	70,956	$	70,956	$	0	$	0
Fees and service charges receivable	30,418		30,418		0		0		30,418
Pawn loans	230,383		230,383		0		0		230,383

	$	331,757	$	331,757	$	70,956	$	0	$	260,801

Financial liabilities:
Revolving unsecured credit facilities	$	200,000	$	200,000	$	0	$	200,000	$	0
Senior unsecured notes (outstanding principal)	300,000		300,000		0		300,000		0
	$	500,000	$	500,000	$	0	$	500,000	$	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



Table of Contents

Carrying Value Estimated Fair Value
June 30, June 30, Fair Value Measurements Using
2019 2019 Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $ 67,012
$ 67,012
$ 67,012
$ —
$ —
Fees and service charges receivable 46,991
46,991
—
—
46,991
Pawn loans 375,167
375,167
—
—
375,167
Consumer loans, net 3,850
3,850
—
—
3,850
$ 493,020
$ 493,020
$ 67,012
$ —
$ 426,008

Financial liabilities:
Revolving unsecured credit facility $ 340,000
$ 340,000
$ —
$ 340,000
$ —
Senior unsecured notes (outstanding principal) 300,000
308,000
—
308,000
—
$ 640,000
$ 648,000
$ —
$ 648,000
$ —

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 June 30, 2021, 2020 ~~2019~~ and December 31, ~~2019.~~2020. The fair value of the unsecured credit facilities 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 7 - Segment Information

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

•U.S. operations

•Latin America operations - ~~Includes~~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~~ (gain) loss 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 and six month periods ended June 30, ~~2020~~2021 and ~~2019~~2020 (in thousands):


	Three Months Ended June 30, 2020												Three Months Ended June 30, 2021
	U.S. Operations			Latin America Operations		Corporate			Consolidated				U.S. Operations		Latin America Operations		Corporate		Consolidated
Revenue:												Revenue:
Retail merchandise sales	$	208,944		$	78,456	$	—		$	287,400		Retail merchandise sales	$	173,254	$	92,313	$	0	$	265,567
Pawn loan fees	71,900			30,090		—			101,990			Pawn loan fees	66,942		42,967		0		109,909
Wholesale scrap jewelry sales	9,557			13,228		—			22,785			Wholesale scrap jewelry sales	6,846		7,256		0		14,102
Consumer loan and credit services fees	571			—		—			571

Total revenue	290,972			121,774		—			412,746			Total revenue	247,042		142,536		0		389,578

Cost of revenue:												Cost of revenue:
Cost of retail merchandise sold	121,661			49,850		—			171,511			Cost of retail merchandise sold	95,599		57,825		0		153,424
Cost of wholesale scrap jewelry sold	8,432			9,925		—			18,357			Cost of wholesale scrap jewelry sold	5,387		6,545		0		11,932
Consumer loan and credit services loss provision	(223		)	—		—			(223		)

Total cost of revenue	129,870			59,775		—			189,645			Total cost of revenue	100,986		64,370		0		165,356

Net revenue	161,102			61,999		—			223,101			Net revenue	146,056		78,166		0		224,222

Expenses and other income:												Expenses and other income:
Store operating expenses	103,302			37,749		—			141,051			Store operating expenses	93,574		45,554		0		139,128
Administrative expenses	—			—		28,386			28,386			Administrative expenses	0		0		27,398		27,398
Depreciation and amortization	5,561			3,602		1,161			10,324			Depreciation and amortization	5,347		4,534		1,021		10,902
Interest expense	—			—		6,974			6,974			Interest expense	0		0		7,198		7,198
Interest income	—			—		(525		)	(525		)	Interest income	0		0		(119)		(119)
Merger and other acquisition expenses	—			—		134			134
Merger and acquisition expenses												Merger and acquisition expenses	0		0		1,086		1,086
Gain on foreign exchange	—			—		(614		)	(614		)	Gain on foreign exchange	0		0		(577)		(577)
Write-offs and impairments of certain lease intangibles and other assets	—			—		182			182

Write-off of certain Cash America merger related lease intangibles												Write-off of certain Cash America merger related lease intangibles	0		0		401		401

Total expenses and other income	108,863			41,351		35,698			185,912			Total expenses and other income	98,921		50,088		36,408		185,417

Income (loss) before income taxes	$	52,239		$	20,648	$	(35,698	)	$	37,189		Income (loss) before income taxes	$	47,135	$	28,078	$	(36,408)	$	38,805


	Three Months Ended June 30, 2020
	U.S. Operations		Latin America Operations		Corporate		Consolidated
Revenue:
Retail merchandise sales	$	208,944	$	78,456	$	0	$	287,400
Pawn loan fees	71,900		30,090		0		101,990
Wholesale scrap jewelry sales	9,557		13,228		0		22,785
Consumer loan and credit services fees	571		0		0		571
Total revenue	290,972		121,774		0		412,746

Cost of revenue:
Cost of retail merchandise sold	121,661		49,850		0		171,511
Cost of wholesale scrap jewelry sold	8,432		9,925		0		18,357
Consumer loan and credit services loss provision	(223)		0		0		(223)
Total cost of revenue	129,870		59,775		0		189,645

Net revenue	161,102		61,999		0		223,101

Expenses and other income:
Store operating expenses	103,302		37,749		0		141,051
Administrative expenses	0		0		28,386		28,386
Depreciation and amortization	5,561		3,602		1,161		10,324
Interest expense	0		0		6,974		6,974
Interest income	0		0		(525)		(525)
Merger and acquisition expenses	0		0		134		134
Gain on foreign exchange	0		0		(614)		(614)
Write-off of certain Cash America merger related lease intangibles	0		0		182		182


Total expenses and other income	108,863		41,351		35,698		185,912

Income (loss) before income taxes	$	52,239	$	20,648	$	(35,698)	$	37,189

Three Months Ended June 30, 2019

U.S.
Operations

Latin America
Operations
Corporate Consolidated
Revenue:
Retail merchandise sales $ 168,918
$ 109,836
$ —
$ 278,754
Pawn loan fees 90,126
46,797
—
136,923
Wholesale scrap jewelry sales 15,788
9,193
—
24,981
Consumer loan and credit services fees 5,356
—
—
5,356
Total revenue 280,188
165,826
—
446,014

Cost of revenue:
Cost of retail merchandise sold 104,662
71,610
—
176,272
Cost of wholesale scrap jewelry sold 14,853
9,081
—
23,934
Consumer loan and credit services loss provision 1,503
—
—
1,503
Total cost of revenue 121,018
80,691
—
201,709

Net revenue 159,170
85,135
—
244,305

Expenses and other income:
Store operating expenses 103,009
45,338
—
148,347
Administrative expenses —
—
31,696
31,696
Depreciation and amortization 5,269
3,579
1,662
10,510
Interest expense —
—
8,548
8,548
Interest income —
—
(155 ) (155 )
Merger and other acquisition expenses —
—
556
556
Gain on foreign exchange —
—
(483 ) (483 )
Total expenses and other income 108,278
48,917
41,824
199,019

Income (loss) before income taxes $ 50,892
$ 36,218
$ (41,824 ) $ 45,286


	Six Months Ended June 30, 2021
	U.S. Operations		Latin America Operations		Corporate		Consolidated
Revenue:
Retail merchandise sales	$	363,211	$	174,398	$	0	$	537,609
Pawn loan fees	143,339		82,092		0		225,431
Wholesale scrap jewelry sales	16,049		18,428		0		34,477

Total revenue	522,599		274,918		0		797,517

Cost of revenue:
Cost of retail merchandise sold	202,129		108,448		0		310,577
Cost of wholesale scrap jewelry sold	12,900		16,229		0		29,129

Total cost of revenue	215,029		124,677		0		339,706

Net revenue	307,570		150,241		0		457,811

Expenses and other income:
Store operating expenses	188,821		87,631		0		276,452
Administrative expenses	0		0		58,397		58,397
Depreciation and amortization	10,729		8,797		1,988		21,514
Interest expense	0		0		14,428		14,428
Interest income	0		0		(277)		(277)
Merger and acquisition expenses	0		0		1,252		1,252
Gain on foreign exchange	0		0		(310)		(310)

Write-off of certain Cash America merger related lease intangibles	0		0		1,279		1,279

Total expenses and other income	199,550		96,428		76,757		372,735

Income (loss) before income taxes	$	108,020	$	53,813	$	(76,757)	$	85,076

Six Months Ended June 30, 2020

U.S.
Operations

Latin America
Operations
Corporate Consolidated
Revenue:
Retail merchandise sales $ 404,910
$ 179,119
$ —
$ 584,029
Pawn loan fees 169,757
74,348
—
244,105
Wholesale scrap jewelry sales 25,035
24,121
—
49,156
Consumer loan and credit services fees 1,946
—
—
1,946
Total revenue 601,648
277,588
—
879,236

Cost of revenue:
Cost of retail merchandise sold 241,190
115,016
—
356,206
Cost of wholesale scrap jewelry sold 22,438
18,766
—
41,204
Consumer loan and credit services loss provision (584 ) —
—
(584 )
Total cost of revenue 263,044
133,782
—
396,826

Net revenue 338,604
143,806
—
482,410

Expenses and other income:
Store operating expenses 211,008
83,543
—
294,551
Administrative expenses —
—
61,288
61,288
Depreciation and amortization 10,962
7,665
2,371
20,998
Interest expense —
—
15,392
15,392
Interest income —
—
(710 ) (710 )
Merger and other acquisition expenses —
—
202
202
Loss on foreign exchange —
—
2,071
2,071
Write-offs and impairments of certain lease intangibles and other assets —
—
5,712
5,712
Total expenses and other income 221,970
91,208
86,326
399,504

Income (loss) before income taxes $ 116,634
$ 52,598
$ (86,326 ) $ 82,906


	Six Months Ended June 30, 2020
	U.S. Operations		Latin America Operations		Corporate		Consolidated
Revenue:
Retail merchandise sales	$	404,910	$	179,119	$	0	$	584,029
Pawn loan fees	169,757		74,348		0		244,105
Wholesale scrap jewelry sales	25,035		24,121		0		49,156
Consumer loan and credit services fees	1,946		0		0		1,946
Total revenue	601,648		277,588		0		879,236

Cost of revenue:
Cost of retail merchandise sold	241,190		115,016		0		356,206
Cost of wholesale scrap jewelry sold	22,438		18,766		0		41,204
Consumer loan and credit services loss provision	(584)		0		0		(584)
Total cost of revenue	263,044		133,782		0		396,826

Net revenue	338,604		143,806		0		482,410

Expenses and other income:
Store operating expenses	211,008		83,543		0		294,551
Administrative expenses	0		0		61,288		61,288
Depreciation and amortization	10,962		7,665		2,371		20,998
Interest expense	0		0		15,392		15,392
Interest income	0		0		(710)		(710)
Merger and acquisition expenses	0		0		202		202
Loss on foreign exchange	0		0		2,071		2,071
Write-off of certain Cash America merger related lease intangibles	0		0		3,812		3,812
Impairment of certain other assets	0		0		1,900		1,900

Total expenses and other income	221,970		91,208		86,326		399,504

Income (loss) before income taxes	$	116,634	$	52,598	$	(86,326)	$	82,906

Six Months Ended June 30, 2019

U.S.
Operations

Latin America
Operations
Corporate Consolidated
Revenue:
Retail merchandise sales $ 355,733
$ 207,262
$ —
$ 562,995
Pawn loan fees 188,002
90,113
—
278,115
Wholesale scrap jewelry sales 38,573
18,118
—
56,691
Consumer loan and credit services fees 15,817
—
—
15,817
Total revenue 598,125
315,493
—
913,618

Cost of revenue:
Cost of retail merchandise sold 222,406
133,215
—
355,621
Cost of wholesale scrap jewelry sold 36,123
18,164
—
54,287
Consumer loan and credit services loss provision 3,606
—
—
3,606
Total cost of revenue 262,135
151,379
—
413,514

Net revenue 335,990
164,114
—
500,104

Expenses and other income:
Store operating expenses 206,893
88,306
—
295,199
Administrative expenses —
—
63,850
63,850
Depreciation and amortization 10,314
6,884
3,186
20,384
Interest expense —
—
16,918
16,918
Interest income —
—
(359 ) (359 )
Merger and other acquisition expenses —
—
705
705
Gain on foreign exchange —
—
(722 ) (722 )
Total expenses and other income 217,207
95,190
83,578
395,975

Income (loss) before income taxes $ 118,783
$ 68,924
$ (83,578 ) $ 104,129

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. References in this quarterly report on Form 10-Q to “year-to-date” refer to the six month period from January 1, 2020 to June 30,~~ 2020.

The Company is a leading operator of retail-based pawn stores with over ~~2,700~~2,800 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 ~~non-recourse~~ pawn loans and held by the Company over the typical 30-day term of the loan plus a stated grace period.

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 six month periods ended June 30, 2020 and 2019, respectively.

Effective June 30, 2020, the Company ceased offering domestic payday and installment loans and no longer has any unsecured consumer lending or credit services operations in the U.S. or Latin America. 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 six month periods ended June 30, 2020 and 2019, respectively.

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

OPERATIONS AND LOCATIONS

As of June 30, ~~2020,~~2021, the Company had ~~2,745~~2,804 store locations composed of ~~1,035~~1,071 stores in 24 U.S. states and the District of Columbia, ~~1,628~~1,645 stores in 32 states in Mexico, 5660 stores in Guatemala, 15 stores in Colombia and 13 stores in El ~~Salvador and 13 stores in Colombia.~~Salvador.

The following tables detail store count activity:


	Three Months Ended June 30, 2021
	U.S.	Latin America
	Operations Segment	Operations Segment	Total Locations
Total locations, beginning of period	1,046	1,725	2,771
New locations opened	1	11	12
Locations acquired	26	—	26


Consolidation of existing pawn locations (1)	(2)	(3)	(5)

Total locations, end of period	1,071	1,733	2,804


	Six Months Ended June 30, 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	1	35	36
Locations acquired	28	—	28


Consolidation of existing pawn locations (1)	(4)	(4)	(8)

Total locations, end of period	1,071	1,733	2,804

(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.

Three Months Ended June 30, 2020
U.S. Latin America

Operations Segment ⁽²⁾

Operations Segment ⁽³⁾
Total Locations
Total locations, beginning of period 1,052
1,688
2,740
New locations opened —
20
20
Locations acquired —
4
4
Locations closed or consolidated ⁽¹⁾
(17 ) (2 ) (19 )
Total locations, end of period 1,035
1,710
2,745

Six Months Ended June 30, 2020
U.S. Latin America

Operations Segment ⁽²⁾

Operations Segment ⁽³⁾
Total Locations
Total locations, beginning of period 1,056
1,623
2,679
New locations opened —
51
51
Locations acquired —
40
40
Locations closed or consolidated ⁽¹⁾
(21 ) (4 ) (25 )
Total locations, end of period 1,035
1,710
2,745

Three Months Ended Six Months Ended
June 30, 2020 June 30, 2020
First Cash Advance stores in Texas (credit services only) 6 6
Cashland stores in Ohio and Indiana (former consumer loan stores) 6 7
Consolidation of other pawn stores 5 8
Total locations closed or consolidated 17 21

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 six months ended June 30, ~~2020.~~2021.

RESULTS OF OPERATIONS (unaudited)

Continuing Impact of COVID-19

~~In December 2019,~~The COVID-19 pandemic impacted the Company’s business and results of operations in a ~~novel strain~~variety of ~~coronavirus (“COVID-19”) surfaced~~ways beginning in ~~China, which has and is continuing to spread throughout~~ the ~~world. In March~~second quarter of 2020 ~~the World Health Organization declared the outbreak a pandemic.~~and continuing into 2021. 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 adoption rate 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 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, precautionary measures in accordance with the guidelines of the Centers for Disease Controlimpact. In particular, government stimulus and other ~~federal, state~~transfer programs have and ~~local authorities. This includes the adoption of strict social distancing and hygiene protocols within all of the Company’s store locations and corporate offices intended~~may continue 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 operating at this time and the Company is not aware of any state or local jurisdictions that have determined its stores to be non-essential. In Latin America, almost all stores are currently operating as well. 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~~impact on ~~the Company’s operations and financial condition.~~

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.

~~Second Quarter Overview and Trends~~

In most jurisdictions where the Company has stores, pawnshops were designated by federal guidelines and/or local regulations as providers of essential services and remained open during the second quarter with enhanced safety protocols. However, retail sales in all of the Company’s stores in Mexico were prohibited by regulators during the last three weeks of May, all 13 stores in El Salvador were closed from late March through the end of May and all 13 stores in Colombia were closed from late March through various dates in June and early July as a result of broad government imposed lock-downs.

~~As most of the Company’s pawn stores were able to remain open as an essential business, retail sales benefited from strong~~ demand for ~~stay-at-home products such as consumer electronics, tools and sporting goods. Retail sales~~pawn loans in the U.S. were further enhanced by federal stimulus payments, which drove additional demand across most categories including jewelry. The positive impacts on retail sales in Latin America were largely offset by the three-week regulatory prohibition of retail transactions in Mexico and the closures of stores in El Salvador and Colombia.future periods.

Conversely, pawn lending activities declined in the U.S. and Latin America due to an increase in pawn loan redemptions and a decrease in pawn loan originations, which the Company attributes to significantly reduced levels of personal spending due to broad shutdowns of the economy as a result of COVID-19. Pawn loan balances in the U.S. were further impacted by federal stimulus payments, forbearance programs and enhanced unemployment benefits, and in Latin America by increased cross-border remittance payments from the U.S. The resulting impact of the lower pawn loan balances was a negative impact to pawn loan fee revenue during the quarter.

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:


	June 30,
	2021	2020	Favorable
Mexican peso / U.S. dollar exchange rate:
End-of-period	19.8	23.0		14	%
Three months ended	20.1	23.4		14	%
Six months ended	20.2	21.6		6	%

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

Colombian peso / U.S. dollar exchange rate:
End-of-period	3,757	3,759		—	%
Three months ended	3,690	3,846		4	%
Six months ended	3,622	3,689		2	%

June 30, Favorable /
2020 2019 (Unfavorable)
Mexican peso / U.S. dollar exchange rate:
End-of-period 23.0
19.2
(20 )%
Three months ended 23.4
19.1
(23 )%
Six months ended 21.6
19.2
(13 )%

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

Colombian peso / U.S. dollar exchange rate:
End-of-period 3,759
3,206
(17 )%
Three months ended 3,846
3,240
(19 )%
Six months ended 3,689
3,188
(16 )%

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 June 30, ~~2020~~2021 Compared to the Three Months Ended June 30, ~~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 June 30, ~~2020~~2021 compared to June 30, ~~2019~~2020 (dollars in thousands, except as otherwise noted):


	As of June 30,
	2021			2020			Increase
U.S. Operations Segment
Earning assets:
Pawn loans	$	203,838		$	158,253			29	%
Inventories		144,083			120,408			20	%
	$	347,921		$	278,661			25	%

Average outstanding pawn loan amount (in ones)	$	209		$	190			10	%

Composition of pawn collateral:
General merchandise	35		%	31		%
Jewelry	65		%	69		%
	100		%	100		%

Composition of inventories:
General merchandise	49		%	38		%
Jewelry	51		%	62		%
	100		%	100		%

Percentage of inventory aged greater than one year	1		%	3		%

Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories)	3.1 times			3.2 times

As of June 30, Increase /
2020 2019 (Decrease)
U.S. Operations Segment
Earning assets:
Pawn loans $ 158,253
$ 262,356
(40 )%
Inventories 120,408
172,875
(30 )%
Consumer loans, net ⁽¹⁾
176
3,850
(95 )%
$ 278,837
$ 439,081
(36 )%

Average outstanding pawn loan amount (in ones) $ 190
$ 166
14 %

Composition of pawn collateral:
General merchandise 31 % 37 %
Jewelry 69 % 63 %
100 % 100 %

Composition of inventories:
General merchandise 38 % 44 %
Jewelry 62 % 56 %
100 % 100 %

Percentage of inventory aged greater than one year 3 % 4 %

Inventory turns (trailing twelve months retail sales divided by average inventories) 3.2 times 2.8 times

The following table presents segment pre-tax operating income and other operating metrics of the U.S. operations segment for the three months ended June 30, ~~2020~~2021 compared to the three months ended June 30, ~~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
	June 30,
	2021			2020			Decrease
U.S. Operations Segment
Revenue:
Retail merchandise sales	$	173,254		$	208,944			(17)	%
Pawn loan fees		66,942			71,900			(7)	%
Wholesale scrap jewelry sales		6,846			9,557			(28)	%
Consumer loan and credit services fees (1)		—			571			(100)	%
Total revenue		247,042			290,972			(15)	%

Cost of revenue:
Cost of retail merchandise sold		95,599			121,661			(21)	%
Cost of wholesale scrap jewelry sold		5,387			8,432			(36)	%
Consumer loan and credit services loss provision (1)		—			(223)			(100)	%
Total cost of revenue		100,986			129,870			(22)	%

Net revenue		146,056			161,102			(9)	%

Segment expenses:
Store operating expenses		93,574			103,302			(9)	%
Depreciation and amortization		5,347			5,561			(4)	%
Total segment expenses		98,921			108,863			(9)	%

Segment pre-tax operating income	$	47,135		$	52,239			(10)	%

Operating metrics:
Retail merchandise sales margin	45		%	42		%
Wholesale scrap jewelry sales margin	21		%	12		%
Net revenue margin	59		%	55		%
Segment pre-tax operating margin	19		%	18		%

Three Months Ended
June 30, Increase /
2020 2019 (Decrease)
U.S. Operations Segment
Revenue:
Retail merchandise sales $ 208,944
$ 168,918
24 %
Pawn loan fees 71,900
90,126
(20 )%
Wholesale scrap jewelry sales 9,557
15,788
(39 )%
Consumer loan and credit services fees ⁽¹⁾
571
5,356
(89 )%
Total revenue 290,972
280,188
4 %

Cost of revenue:
Cost of retail merchandise sold 121,661
104,662
16 %
Cost of wholesale scrap jewelry sold 8,432
14,853
(43 )%
Consumer loan and credit services loss provision⁽¹⁾
(223 ) 1,503
(115 )%
Total cost of revenue 129,870
121,018
7 %

Net revenue 161,102
159,170
1 %

Segment expenses:
Store operating expenses 103,302
103,009
— %
Depreciation and amortization 5,561
5,269
6 %
Total segment expenses 108,863
108,278
1 %

Segment pre-tax operating income $ 52,239
$ 50,892
3 %

(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 24%~~decreased 17% to ~~$208.9~~$173.3 million during the second quarter of ~~2020~~2021 compared to ~~$168.9~~$208.9 million for the second quarter of ~~2019.~~2020. Same-store retail sales ~~also increased 24%~~decreased 19% in the second quarter of ~~2020~~2021 compared to the second quarter of ~~2019.~~2020. The ~~increase~~decrease in total and same-store retail sales was primarily due to higher than normal retail sales during the ~~designation~~second quarter of 2020 which resulted from the Company’s U.S. stores asbeing designated essential businesses, allowing the stores to remain open ~~during~~when many other non-essential retailers were closed due to the quarter and offer popular stay-at-home products such as, laptops, tablets, monitors, gaming systems and sporting goods. Retail sales in the U.S. were further enhanced by federal stimulus payments, which drove demand across all inventory categories including higher margin jewelry sales. pandemic.

During the second quarter of ~~2020,~~2021, the gross profit margin on retail merchandise sales in the U.S. was ~~42%~~45% compared to a margin of ~~38%~~42% during the second quarter of ~~2019, which resulted in a 36% increase in net revenue (gross profit) from retail sales for the second quarter of 2020 compared to the second 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, ~~and~~which limited the need for ~~discounting merchandise given strong retail demand.~~normal discounting.

U.S. inventories ~~decreased 30%~~increased 20% from ~~$172.9 million at June 30, 2019 to~~ $120.4 million at June 30, ~~2020.~~2020 to $144.1 million at June 30, 2021. The ~~decrease~~increase was primarily ~~a result~~due to lower than normal inventory balances at June 30, 2020 due to the higher than normal retail sales during the second quarter of ~~the increase in retail sales~~2020 as noted above and the pandemic related decline in pawn receivable balances, as noted below, creating less forfeited inventory ~~as noted below.~~during the second quarter of 2020. Inventories aged greater than one year in the U.S. were 1% at June 30, 2021 compared to 3% at June 30, ~~2020 compared to 4% at June 30, 2019.~~2020.

Pawn Lending Operations

U.S. pawn loan fees decreased 20% to $71.9 million during the second quarter of 2020 compared to $90.1 million for the second quarter of 2019. Same-store pawn fees in the second quarter of 2020 also decreased 20% compared to the second quarter of 2019. Pawn loan receivables as of June 30, ~~2020 decreased 40%~~2021 increased 29% in total and 24% on a same-store basis compared to June 30, ~~2019.~~2020. The ~~decline~~increase in total and same-store pawn receivables was primarily due to ~~improved customer liquidity~~lower than normal pawn receivable balances at June 30, 2020 primarily due to ~~reduced levels of personal spending~~higher redemption rates and less demand for pawn loans during the second quarter of 2020 as a result of ~~quarantines, shelter-in-place orders and non-essential business closures due~~the pandemic-driven improved customer liquidity. Pawn loan demand continued to ~~COVID-19. Customer liquidity was also enhanced by federal stimulus payments, forbearance programs and enhanced unemployment benefits.~~recover during the second quarter of 2021 towards pre-pandemic levels.

U.S. pawn loan fees decreased 7% to $66.9 million during the second quarter of 2021 compared to $71.9 million for the second quarter of 2020. Same-store pawn fees in the second quarter of 2021 decreased 9% compared to the second quarter of 2020. The decline in total and same-store pawn fee revenue ~~was less than the decline in pawn~~is primarily due to higher average loan balances ~~reflecting~~and elevated ~~collections~~pawn yields in the second quarter of ~~fees and principal on loans outstanding at the beginning of the quarter and a smaller percentage of forfeited loans during the quarter.~~2020 due to higher than normal redemptions.

Wholesale Scrap Jewelry Operations

U.S. wholesale scrap jewelry revenue, consisting primarily of gold sales, decreased ~~39%~~28% to $6.8 million during the second quarter of 2021 compared to $9.6 million during the second quarter of ~~2020 compared to $15.8 million during the second quarter of 2019.~~2020. The decline in scrap revenue relates primarily to ~~reductions in~~lower scrapping volumes due to lower than normal inventory ~~levels as discussed above.~~levels. The scrap jewelry gross profit margin in the U.S. was ~~12%~~21% compared to the prior-year margin of ~~6%. The~~12%, with the increase in scrap margin ~~was~~ primarily due to an increase in the average selling price of gold during the second quarter of ~~2020~~2021 compared to ~~2019.~~2020.

~~Consumer Lending Operations~~

The Company ceased offering unsecured consumer lending and credit services products (collectively, consumer lending operations), including all payday and installment loans, in the U.S. effective June 30, 2020. Service fees from U.S. consumer lending operations decreased 89% to $0.6 million during the second quarter of 2020 compared to $5.4 million for the second quarter of 2019. Net revenue (gross profit) from U.S. consumer lending operations decreased 79% to $0.8 million during the second quarter of 2020 compared to $3.9 million for the second 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 second quarter of 2020 compared to 2% during the second quarter of 2019.

Segment Expenses and Segment Pre-Tax Operating Income

U.S. store operating expenses ~~were flat at~~decreased 9% to $93.6 million during the second quarter of 2021 compared to $103.3 million during the second quarter of 2020 ~~compared to $103.0 million during the second quarter of 2019~~ and same-store operating expenses ~~increased 3%~~decreased 11% compared with the prior-year period. The ~~increase~~decrease in total and same-store operating expenses was primarily due to ~~an increase~~cost saving initiatives in ~~store-level incentive based compensation as a result of the significant increase in retail sales and margins during the second quarter of 2020.~~response to COVID-19.

~~U.S. store depreciation and amortization increased 6% to $5.6 million during the second quarter of 2020 compared to $5.3 million during the second quarter of 2019.~~

The U.S. segment pre-tax operating income for the second quarter of ~~2020~~2021 was ~~$52.2~~$47.1 million, which generated a pre-tax segment operating margin of ~~18%~~19% compared to ~~$50.9~~$52.2 million and 18% in the prior year, respectively. The ~~increase~~decrease in the segment pre-tax operating income reflected ~~increases~~pandemic-driven decreases in gross profit from retail sales and pawn fee revenue, partially offset by an increase in gross profit from scrap sales and a decrease in operating expenses. The increase in the pre-tax segment operating margin was primarily due to increased retail sales margins and ~~an increase to yields on pawn receivables, partially offset by declines~~a decrease in ~~pawn fee revenue as a result of the decline in pawn loan receivables and net revenue from consumer lending operations.~~operating expenses.

Latin America Operations Segment

Latin American results of operations for the three months ended June 30, ~~2020~~2021 compared to the three months ended June 30, ~~2019 were impacted by~~2020 benefited from a ~~23% unfavorable~~14% favorable 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 June 30, ~~2020~~2021 compared to June 30, ~~2019 was also impacted by~~2020 benefited from a ~~20% unfavorable~~14% 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 June 30, ~~2020~~2021 compared to June 30, ~~2019~~2020 (dollars in thousands, except as otherwise noted):


										Constant Currency Basis
										As of
										June 30,
	As of June 30,									2021		Increase
	2021			2020			Increase			(Non-GAAP)		(Non-GAAP)
Latin America Operations Segment
Earning assets:
Pawn loans	$	108,328		$	72,130			50	%	$	94,098		30	%
Inventories		72,872			59,559			22	%	63,300			6	%

	$	181,200		$	131,689			38	%	$	157,398		20	%

Average outstanding pawn loan amount (in ones)	$	80		$	59			36	%	$	69		17	%

Composition of pawn collateral:
General merchandise	67		%	66		%
Jewelry	33		%	34		%
	100		%	100		%

Composition of inventories:
General merchandise	64		%	61		%
Jewelry	36		%	39		%
	100		%	100		%

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

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

Constant Currency Basis
As of
June 30, Increase /
As of June 30, 2020 (Decrease)
2020 2019 Decrease (Non-GAAP) (Non-GAAP)
Latin America Operations Segment
Earning assets:
Pawn loans $ 72,130
$ 112,811
(36 )% $ 85,373
(24 )%
Inventories 59,559
93,565
(36 )% 70,959
(24 )%
$ 131,689
$ 206,376
(36 )% $ 156,332
(24 )%

Average outstanding pawn loan amount (in ones) $ 59
$ 69
(14 )% $ 70
1 %

Composition of pawn collateral:
General merchandise 66 % 73 %
Jewelry 34 % 27 %
100 % 100 %

Composition of inventories:
General merchandise 61 % 74 %
Jewelry 39 % 26 %
100 % 100 %

Percentage of inventory aged greater than one year 2 % 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 June 30, ~~2020~~2021 compared to the three months ended June 30, ~~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											June 30,			Increase /
		June 30,							Increase /				2021			(Decrease)
		2021				2020			(Decrease)				(Non-GAAP)			(Non-GAAP)
Latin America Operations Segment
Revenue:
Retail merchandise sales		$	92,313			$	78,456			18	%		$	79,905			2	%
Pawn loan fees		42,967				30,090				43	%		37,175				24	%
Wholesale scrap jewelry sales		7,256				13,228				(45)	%		7,256				(45)	%

Total revenue		142,536				121,774				17	%		124,336				2	%

Cost of revenue:
Cost of retail merchandise sold		57,825				49,850				16	%		50,076				—	%
Cost of wholesale scrap jewelry sold		6,545				9,925				(34)	%		5,645				(43)	%

Total cost of revenue		64,370				59,775				8	%		55,721				(7)	%

Net revenue		78,166				61,999				26	%		68,615				11	%

Segment expenses:
Store operating expenses		45,554				37,749				21	%		39,793				5	%
Depreciation and amortization		4,534				3,602				26	%		3,995				11	%
Total segment expenses		50,088				41,351				21	%		43,788				6	%

Segment pre-tax operating income		$	28,078			$	20,648			36	%		$	24,827			20	%

Operating metrics:
Retail merchandise sales margin	37			%	36			%				37			%
Wholesale scrap jewelry sales margin	10			%	25			%				22			%
Net revenue margin	55			%	51			%				55			%
Segment pre-tax operating margin	20			%	17			%				20			%

Constant Currency Basis
Three Months
Ended
Three Months Ended June 30, Increase /
June 30, Increase / 2020 (Decrease)
2020 2019 (Decrease) (Non-GAAP) (Non-GAAP)
Latin America Operations Segment
Revenue:
Retail merchandise sales $ 78,456
$ 109,836
(29 )% $ 95,441
(13 )%
Pawn loan fees 30,090
46,797
(36 )% 36,542
(22 )%
Wholesale scrap jewelry sales 13,228
9,193
44 % 13,228
44 %
Total revenue 121,774
165,826
(27 )% 145,211
(12 )%

Cost of revenue:
Cost of retail merchandise sold 49,850
71,610
(30 )% 60,612
(15 )%
Cost of wholesale scrap jewelry sold 9,925
9,081
9 % 11,998
32 %
Total cost of revenue 59,775
80,691
(26 )% 72,610
(10 )%

Net revenue 61,999
85,135
(27 )% 72,601
(15 )%

Segment expenses:
Store operating expenses 37,749
45,338
(17 )% 45,096
(1 )%
Depreciation and amortization 3,602
3,579
1 % 4,280
20 %
Total segment expenses 41,351
48,917
(15 )% 49,376
1 %

Segment pre-tax operating income $ 20,648
$ 36,218
(43 )% $ 23,225
(36 )%

Retail Merchandise Sales Operations

Latin America retail merchandise sales ~~decreased 29% (13%~~increased 18% (2% on a constant currency basis) to ~~$78.5~~$92.3 million during the second quarter of ~~2020~~2021 compared to ~~$109.8~~$78.5 million for the second quarter of ~~2019.~~2020. Same-store retail sales increased 16% (1% on a constant currency basis) during the second quarter of 2021 compared to the second quarter of 2020. The ~~decrease~~increase was primarily due to the prohibition of all retail sales in Mexico during the last three weeks of May 2020 and ~~other limited~~ store closures in certain markets during the second quarter of 2020 as a result of COVID-19 government imposed regulations ~~partially offset by~~coupled with additional revenue contributions from ~~recent acquisitions and~~ new store ~~openings. Same-store retail sales decreased 31% (16% on a constant currency basis).~~ openings and partially offset by lower than normal inventory levels in the second quarter of 2021.

The gross profit margin on retail merchandise sales was 37% during the second quarter of 2021 compared to 36% during the second quarter of ~~2020 compared to 35% during the second quarter of 2019.~~2020.

Inventories in Latin America ~~decreased 36% (24%~~increased 22% (6% on a constant currency basis) from ~~$93.6 million at June 30, 2019 to~~ $59.6 million at June 30, ~~2020.~~2020 to $72.9 million at June 30, 2021. The ~~decrease~~increase in inventories was primarily due to ~~the decline in pawn receivable balances creating less forfeited inventory as noted below and~~ an increase in ~~scrapping activities.~~pawn loan receivables generating more inventory from forfeited pawn loans and increased buying of merchandise directly from customers compared to the prior-year quarter. The growth in inventory typically lags the growth in pawn loan receivables. Inventories aged greater than one year in Latin America were 1% at June 30, 2021 and 2% at June 30, ~~2020 and 1% at June 30, 2019.~~2020.

Pawn Lending Operations

Pawn loan fees in Latin America ~~decreased 36% (22%~~increased 43% (24% on a constant currency basis), totaling ~~$30.1~~$43.0 million during the second quarter of ~~2020~~2021 compared to ~~$46.8~~$30.1 million for the second quarter of ~~2019.~~2020. Same-store pawn fees ~~decreased 39% (25%~~increased 42% (23% on a constant currency basis) in the second quarter of ~~2020~~2021 compared to the second quarter of ~~2019.~~2020. Pawn loan receivables ~~decreased 36% (24%~~increased 50% (30% on a constant currency basis) as of June 30, ~~2020~~2021 compared to June 30, ~~2019, while~~2020 on both a total and same-store ~~pawn receivables decreased 38% (27% on a constant currency basis).~~basis. The ~~decline~~increase in total and same-store constant currency pawn receivables and resulting pawn loan fees was primarily due to ~~improved customer liquidity resulting from reduced levels of personal spending~~the increased pawn loan originations during the second quarter ~~as a result~~ of quarantines, shelter-in-place and other orders mandating non-essential business closures in an effort to reduce the spread of COVID-19. While there were limited government stimulus programs in the region in response to the pandemic, an increase in cross-border remittance payments from the U.S. also provided additional liquidity to consumers.2021.

Wholesale Scrap Jewelry Operations

Latin America wholesale scrap jewelry revenue, consisting primarily of gold sales, ~~increased 44%~~decreased 45% (also ~~44%~~45% on a constant currency basis) to $7.3 million during the second quarter of 2021 compared to $13.2 million during the second quarter of ~~2020 compared~~2020. The decrease was primarily due to ~~$9.2 million~~an increase in general scrapping volumes during the second quarter of 2019. The increase was primarily due to increased volume contributions from recently acquired stores which carried a greater percentage of jewelry inventories as well as an increase in general scrapping volumes2020 as a result of retail restrictions related to COVID-19. The scrap jewelry gross profit margin in Latin America was ~~25% (9%~~10% (22% on a constant currency basis) during the second quarter of ~~2020~~2021 compared to ~~1% during~~ the ~~second quarter~~prior-year margin of ~~2019. The increase in scrap margin was primarily due to an increase in the average selling price of gold during the second quarter of 2020 compared to 2019.~~25%.

Segment Expenses and Segment Pre-Tax Operating Income

Store operating expenses ~~decreased 17% (1%~~increased 21% (5% on a constant currency basis) to $45.6 million during the second quarter of 2021 compared to $37.7 million during the second quarter of ~~2020 compared to $45.3 million during the second quarter of 2019. Total~~2020. Currency adjusted store operating expenses ~~decreased~~increased primarily due to ~~cost saving initiatives as a result of COVID-19, partially offset by~~ the 8%2% increase in the Latin America weighted-average store count. Same-store operating expenses ~~decreased 21% (6%~~increased 19% (4% on a constant currency basis) ~~compared to the prior-year period, primarily due to cost saving initiatives as a result of COVID-19.~~.

Latin America store depreciation and amortization increased ~~1% (20%~~26% (11% on a constant currency basis) to $4.5 million during the second quarter of 2021 compared to $3.6 million during the second quarter of 2020, ~~compared to $3.6 million during the second quarter of 2019,~~ primarily due to the increase in the store count.

The segment pre-tax operating income for the second quarter of ~~2020~~2021 was ~~$20.6~~$28.1 million, which generated a pre-tax segment operating margin of ~~17%~~20% compared to ~~$36.2~~$20.6 million and ~~22%~~17% in the prior year, respectively. The ~~decline~~increase in the segment pre-tax operating income and margin was primarily due to ~~declines~~an increase in ~~retail sales and~~ pawn loan fees ~~in part due to the 23% unfavorable~~and a 14% favorable change in the average value of the Mexican peso, partially offset by an increase in ~~gross profit from scrapping activities and declines in~~ store operating ~~expenses.~~expenses and depreciation expense.

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 June 30, ~~2020~~2021 compared to the three months ended June 30, ~~2019~~2020 (dollars in thousands):


	Three Months Ended
	June 30,				Increase /
	2021		2020		(Decrease)
Consolidated Results of Operations
Segment pre-tax operating income:
U.S. operations	$	47,135	$	52,239		(10)	%
Latin America operations	28,078		20,648			36	%
Consolidated segment pre-tax operating income	75,213		72,887			3	%

Corporate expenses and other income:
Administrative expenses	27,398		28,386			(3)	%
Depreciation and amortization	1,021		1,161			(12)	%
Interest expense	7,198		6,974			3	%
Interest income	(119)		(525)			(77)	%
Merger and acquisition expenses	1,086		134			710	%
Gain on foreign exchange	(577)		(614)			(6)	%

Write-off of certain Cash America merger related lease intangibles	401		182			120	%

Total corporate expenses and other income	36,408		35,698			2	%

Income before income taxes	38,805		37,189			4	%

Provision for income taxes	10,378		11,316			(8)	%

Net income	$	28,427	$	25,873		10	%

Three Months Ended
June 30, Increase /
2020 2019 (Decrease)
Consolidated Results of Operations
Segment pre-tax operating income:
U.S. operations $ 52,239
$ 50,892
3 %
Latin America operations 20,648
36,218
(43 )%
Consolidated segment pre-tax operating income 72,887
87,110
(16 )%

Corporate expenses and other income:
Administrative expenses 28,386
31,696
(10 )%
Depreciation and amortization 1,161
1,662
(30 )%
Interest expense 6,974
8,548
(18 )%
Interest income (525 ) (155 ) 239 %
Merger and other acquisition expenses 134
556
(76 )%
Gain on foreign exchange (614 ) (483 ) 27 %
Write-offs and impairments of certain lease intangibles and other assets 182
—
— %
Total corporate expenses and other income 35,698
41,824
(15 )%

Income before income taxes 37,189
45,286
(18 )%

Provision for income taxes 11,316
12,238
(8 )%

Net income $ 25,873
$ 33,048
(22 )%

Corporate Expenses and Taxes

Administrative expenses decreased ~~10%~~3% to ~~$28.4~~$27.4 million during the second quarter of ~~2020~~2021 compared to ~~$31.7~~$28.4 million in the second quarter of ~~2019,~~2020, primarily due to reduced travel costs and other cost saving initiatives asin response to COVID-19, partially offset by a ~~result of COVID-19 and a 23% unfavorable~~14% favorable change in the average value of the Mexican peso resulting in ~~lower~~higher U.S. dollar translated expenses ~~partially offset by~~and a 4%2% increase in the consolidated weighted-average store ~~count, resulting in additional management and supervisory compensation and other support expenses required for such growth.~~count. Administrative expenses were 7% of revenue during both the second quarter of ~~2020~~2021 and ~~2019.~~2020.

Interest expense ~~decreased 18%~~increased 3% to ~~$7.0~~$7.2 million during the second quarter of ~~2020~~2021 compared to ~~$8.5~~$7.0 million in the second quarter of ~~2019~~2020, primarily due to an increase in the Company’s outstanding senior unsecured notes, partially offset by lower average balances outstanding on the Company’s unsecured credit facilities and lower average interest rates during the second quarter of ~~2020~~2021 compared to the second quarter of ~~2019.~~2020. See Note 5 of Notes to Consolidated Financial Statements and “Liquidity and Capital Resources.”

Merger and acquisition expenses increased to $1.1 million during second quarter of 2021 compared to $0.1 million in the second quarter of 2020, primarily as a result of a 26-store acquisition completed during the second quarter of 2021.

Consolidated effective income tax rates for the second quarter of 2021 and 2020 were 26.7% and ~~2019 were~~ 30.4% ~~and 27.0%~~, respectively. The ~~increase~~decrease in the effective tax rate was primarily due ~~in part~~ to the ~~increased~~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 ~~certain non-deductible expenses resulting from~~ the ~~Tax Cuts and Jobs Act and to~~incremental GILTI tax on the ~~establishment of a valuation allowance for net operating losses of a foreign subsidiary during the second quarter of 2020.~~Company.

Operating Results for the Six Months Ended June 30, ~~2020~~2021 Compared to the Six Months Ended June 30, ~~2019~~2020

Operating results for the six months ended June 30, 2020 were significantly impacted by COVID-19 during the months of April, May and June as described in the “Operating Results for the Three Months Ended June 30, 2020 Compared to the Three Months Ended June 30, 2019” section above.

U.S. Operations Segment

The following table presents segment pre-tax operating income and other operating metrics of the U.S. operations segment for the six months ended June 30, ~~2020~~2021 compared to the six months ended June 30, ~~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.


	Six Months Ended
	June 30,
	2021			2020			Decrease
U.S. Operations Segment
Revenue:
Retail merchandise sales	$	363,211		$	404,910			(10)	%
Pawn loan fees		143,339			169,757			(16)	%
Wholesale scrap jewelry sales		16,049			25,035			(36)	%
Consumer loan and credit services fees (1)		—			1,946			(100)	%
Total revenue		522,599			601,648			(13)	%

Cost of revenue:
Cost of retail merchandise sold		202,129			241,190			(16)	%
Cost of wholesale scrap jewelry sold		12,900			22,438			(43)	%
Consumer loan and credit services loss provision (1)		—			(584)			(100)	%
Total cost of revenue		215,029			263,044			(18)	%

Net revenue		307,570			338,604			(9)	%

Segment expenses:
Store operating expenses		188,821			211,008			(11)	%
Depreciation and amortization		10,729			10,962			(2)	%
Total segment expenses		199,550			221,970			(10)	%

Segment pre-tax operating income	$	108,020		$	116,634			(7)	%

Operating metrics:
Retail merchandise sales margin	44		%	40		%
Wholesale scrap jewelry sales margin	20		%	10		%
Net revenue margin	59		%	56		%
Segment pre-tax operating margin	21		%	19		%

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

Six Months Ended
June 30, Increase /
2020 2019 (Decrease)
U.S. Operations Segment
Revenue:
Retail merchandise sales $ 404,910
$ 355,733
14 %
Pawn loan fees 169,757
188,002
(10 )%
Wholesale scrap jewelry sales 25,035
38,573
(35 )%
Consumer loan and credit services fees ⁽¹⁾
1,946
15,817
(88 )%
Total revenue 601,648
598,125
1 %

Cost of revenue:
Cost of retail merchandise sold 241,190
222,406
8 %
Cost of wholesale scrap jewelry sold 22,438
36,123
(38 )%
Consumer loan and credit services loss provision ⁽¹⁾
(584 ) 3,606
(116 )%
Total cost of revenue 263,044
262,135
— %

Net revenue 338,604
335,990
1 %

Segment expenses:
Store operating expenses 211,008
206,893
2 %
Depreciation and amortization 10,962
10,314
6 %
Total segment expenses 221,970
217,207
2 %

Segment pre-tax operating income $ 116,634
$ 118,783
(2 )%

Retail Merchandise Sales Operations

U.S. retail merchandise sales ~~increased 14%~~decreased 10% to ~~$404.9~~$363.2 million during the six months ended June 30, ~~2020~~2021 compared to ~~$355.7~~$404.9 million for the six months ended June 30, ~~2019.~~2020. Same-store retail sales ~~increased 13%~~decreased 12% during the six months ended June 30, ~~2020~~2021 compared to the six months ended June 30, ~~2019.~~ 2020. The decrease in total and same-store retail sales was primarily due to higher than normal retail sales during the second quarter of 2020, as noted in the quarter-to-date section above.

During the six months ended June 30, ~~2020,~~2021, the gross profit margin on retail merchandise sales in the U.S. was ~~40%~~44% compared to a margin of ~~37%~~40% during the six months ended June 30, ~~2019, which resulted in a 23%~~2020. The increase in ~~net revenue (gross profit)~~margin was primarily a result of continued retail demand for value-priced pre-owned merchandise, increased buying of merchandise directly from ~~retail sales~~customers and lower levels of aged inventory, which limited the need for normal discounting.

Pawn Lending Operations

U.S. pawn loan fees decreased 16%, totaling $143.3 million during the six months ended June 30, 2021 compared to $169.8 million for the six months ended June 30, ~~2020~~2020. Same-store pawn fees decreased 17% during the six months ended June 30, 2021 compared to the six months ended June 30, ~~2019. The increase in retail sales and retail sales margin was primarily driven by the impacts of COVID-19 during the second quarter as described in the quarter-to-date section above.~~

~~Pawn Lending Operations~~

U.S. pawn loan fees decreased 10%, totaling $169.8 million during the six months ended June 30, 2020 compared to $188.0 million for the six months ended June 30, 2019. Same-store pawn fees also decreased 10% during the six months ended June 30, 2020 compared to the six months ended June 30, 2019. Pawn loan receivables as of June 30, 2020 decreased 40% in total and on a same-store basis compared to June 30, 2019.2020. The decline in total and same-store pawn ~~receivables and pawn~~loan fees ~~relates~~was primarily due to the ~~impacts~~significantly lower than normal beginning pawn loan levels and reduced origination activity during the first quarter of ~~COVID-19~~2021 as a result of improved customer liquidity due to the two additional government stimulus payments made during the quarter, partially offset by the continued recovery in pawn loan demand towards pre-pandemic levels during the second quarter ~~as described in the quarter-to-date section above.~~of 2021.

Wholesale Scrap Jewelry Operations

U.S. wholesale scrap jewelry revenue, consisting primarily of gold sales, decreased ~~35%~~36% to $16.0 million during the six months ended June 30, 2021 compared to $25.0 million during the six months ended June 30, ~~2020 compared to $38.6 million during the six months ended June 30, 2019.~~2020. The decline in scrap revenue relates primarily to ~~reductions in~~lower scrapping volumes due to lower than normal inventory ~~levels as discussed in the quarter-to-date section above.~~levels. The scrap jewelry gross profit margin in the U.S. was ~~10%~~20% compared to the prior-year margin of ~~6%. The~~10%, with the increase in scrap margin ~~was~~ primarily due to an increase in the average selling price of gold during the six months ended June 30, ~~2020~~2021 compared to ~~2019.~~2020.

~~Consumer Lending Operations~~Segment Expenses and Segment Pre-Tax Operating Income

~~The Company ceased offering unsecured consumer lending and credit services products (collectively, consumer lending operations), including all payday and installment loans, in the~~ U.S. ~~effective June 30, 2020. Service fees from U.S. consumer lending operations~~store operating expenses decreased ~~88%~~11% to ~~$1.9~~$188.8 million during the six months ended June 30, ~~2020~~2021 compared to $15.8 million for the six months ended June 30, 2019. Net revenue (gross profit) from U.S. consumer lending operations decreased 79% to $2.5 million during the six months ended June 30, 2020 compared to $12.2 million for the six months ended June 30, 2019. Revenue and gross profit from consumer lending operations accounted for less than 1% of both total U.S. revenue and gross profit, respectively, during the six months ended June 30, 2020 compared to 3% and 4%, respectively, during the six months ended June 30, 2019.

~~Segment Expenses and Segment Pre-Tax Operating Income~~

~~U.S. store operating expenses increased 2%~~ to $211.0 million during the six months ended June 30, 2020 ~~compared to $206.9 million during the six months ended June 30, 2019~~ and same-store operating expenses ~~increased 4%~~decreased 12% compared with the prior-year period. The ~~increase~~decrease in total and same-store operating expenses was primarily due to ~~an increase~~cost saving initiatives in ~~store-level incentive based compensation as a result of the significant increase in retail sales and margins during the second quarter of 2020.~~response to COVID-19.

~~U.S. store depreciation and amortization increased 6% to $11.0 million during the six months ended June 30, 2020 compared to $10.3 million during the six months ended June 30, 2019.~~

The U.S. segment pre-tax operating income for the six months ended June 30, ~~2020~~2021 was ~~$116.6~~$108.0 million, which generated a pre-tax segment operating margin of ~~19%~~21% compared to ~~$118.8~~$116.6 million and ~~20%~~19% in the prior year, respectively. The decrease in the segment pre-tax operating income reflected ~~the decline~~decreases in gross profit from retail sales, pawn fee revenue and net revenue from consumer loan and credit services products as a result of discontinuing consumer lending operations ~~and increases~~ in ~~operating expenses and depreciation and amortization,~~2020, partially offset by an increase in ~~net revenue~~gross profit from ~~pawn operations.~~scrap sales and a decrease in operating expenses. The increase in the pre-tax segment operating margin was primarily due to increased retail sales margins and a decrease in operating expenses.

Latin America Operations Segment

Latin American results of operations for the six months ended June 30, ~~2020~~2021 compared to the six months ended June 30, ~~2019 were impacted by~~2020 benefited from a ~~13% unfavorable~~6% favorable change in the average value of the Mexican peso compared to the U.S. dollar.

The following table presents segment pre-tax operating income and other operating metrics of the Latin America operations segment for the six months ended June 30, ~~2020~~2021 compared to the six months ended June 30, ~~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
													Six Months
													Ended
		Six Months Ended											June 30,			Increase /
		June 30,							Increase /				2021			(Decrease)
		2021				2020			(Decrease)				(Non-GAAP)			(Non-GAAP)
Latin America Operations Segment
Revenue:
Retail merchandise sales		$	174,398			$	179,119			(3)	%		$	163,529			(9)	%
Pawn loan fees		82,092				74,348				10	%		76,951				4	%
Wholesale scrap jewelry sales		18,428				24,121				(24)	%		18,428				(24)	%

Total revenue		274,918				277,588				(1)	%		258,908				(7)	%

Cost of revenue:
Cost of retail merchandise sold		108,448				115,016				(6)	%		101,709				(12)	%
Cost of wholesale scrap jewelry sold		16,229				18,766				(14)	%		15,210				(19)	%

Total cost of revenue		124,677				133,782				(7)	%		116,919				(13)	%

Net revenue		150,241				143,806				4	%		141,989				(1)	%

Segment expenses:
Store operating expenses		87,631				83,543				5	%		82,513				(1)	%
Depreciation and amortization		8,797				7,665				15	%		8,310				8	%
Total segment expenses		96,428				91,208				6	%		90,823				—	%

Segment pre-tax operating income		$	53,813			$	52,598			2	%		$	51,166			(3)	%

Operating metrics:
Retail merchandise sales margin	38			%	36			%				38			%
Wholesale scrap jewelry sales margin	12			%	22			%				17			%
Net revenue margin	55			%	52			%				55			%
Segment pre-tax operating margin	20			%	19			%				20			%

Constant Currency Basis
Six Months
Ended
Six Months Ended June 30, Increase /
June 30, Increase / 2020 (Decrease)
2020 2019 (Decrease) (Non-GAAP) (Non-GAAP)
Latin America Operations Segment
Revenue:
Retail merchandise sales $ 179,119
$ 207,262
(14 )% $ 201,133
(3 )%
Pawn loan fees 74,348
90,113
(17 )% 83,425
(7 )%
Wholesale scrap jewelry sales 24,121
18,118
33 % 24,121
33 %
Total revenue 277,588
315,493
(12 )% 308,679
(2 )%

Cost of revenue:
Cost of retail merchandise sold 115,016
133,215
(14 )% 129,110
(3 )%
Cost of wholesale scrap jewelry sold 18,766
18,164
3 % 21,078
16 %
Total cost of revenue 133,782
151,379
(12 )% 150,188
(1 )%

Net revenue 143,806
164,114
(12 )% 158,491
(3 )%

Segment expenses:
Store operating expenses 83,543
88,306
(5 )% 92,987
5 %
Depreciation and amortization 7,665
6,884
11 % 8,517
24 %
Total segment expenses 91,208
95,190
(4 )% 101,504
7 %

Segment pre-tax operating income $ 52,598
$ 68,924
(24 )% $ 56,987
(17 )%

Retail Merchandise Sales Operations

Latin America retail merchandise sales decreased ~~14% (3%~~3% (9% on a constant currency basis) to ~~$179.1~~$174.4 million during the six months ended June 30, ~~2020~~2021 compared to ~~$207.3~~$179.1 million for the six months ended June 30, 2019. The decrease was primarily due to the prohibition of all retail sales in Mexico during the last three weeks of May and other limited store closures as a result of COVID-19 government imposed regulations, partially offset by additional revenue contributions from recent acquisitions and new store openings.2020. Same-store retail sales decreased ~~18% (8% on a constant currency basis). The gross profit margin on retail merchandise sales was 36% during both the six months ended June 30, 2020 and the six months ended June 30, 2019.~~

~~Pawn Lending Operations~~

Pawn loan fees in Latin America decreased 17% (7% on a constant currency basis) totaling $74.3 million during the six months ended June 30, 2020 compared to $90.1 million for the six months ended June 30, 2019. Same-store pawn fees decreased 22% (12%5% (11% on a constant currency basis) during the six months ended June 30, ~~2020~~2021 compared to six months ended June 30, 2020. The decrease in retail sales was primarily a result of significantly lower than normal inventory levels at the beginning of 2021, which limited retail sales during first half of 2021, partially offset by the government imposed COVID-19 retail restrictions discussed above, which limited retail sales during the second quarter of 2020. Partially offsetting the declines in retail sales revenue, the gross profit margin on retail merchandise sales was 38% during the six months ended June 30, 2021 compared to 36% during the six months ended June 30, 2020.

Pawn Lending Operations

Pawn loan fees in Latin America increased 10% (4% on a constant currency basis) totaling $82.1 million during the six months ended June 30, 2021 compared to $74.3 million for the six months ended June 30, 2020. Same-store pawn fees increased 9% (2% on a constant currency basis) during the six months ended June 30, 2021 compared to the six months ended June 30, 2019. Pawn loan receivables decreased 36% (24% on a constant currency basis) as of June 30, 2020 compared to June 30, 2019, while same-store pawn receivables decreased by 38% (27% on a constant currency basis).2020. The ~~decline~~increase in total and same-store ~~pawn receivables and resulting~~constant currency pawn loan fees was primarily due to ~~reduced levels~~the continued improvement of ~~personal spending~~pawn loan origination activity during the ~~second quarter as a result~~first half of ~~quarantines, shelter-in-place and other orders mandating non-essential business closures in an effort to reduce the spread of COVID-19 and an increase in cross-border remittance payments from the U.S.~~2021, partially offset by significantly lower than normal beginning pawn loan levels.

Wholesale Scrap Jewelry Operations

Latin America wholesale scrap jewelry revenue, consisting primarily of gold sales, ~~increased 33%~~decreased 24% (also ~~33%~~24% on a constant currency basis) to $18.4 million during the six months ended June 30, 2021 compared to $24.1 million during the six months ended June 30, ~~2020 compared~~2020. The decrease was primarily due to ~~$18.1 million~~an increase in general scrapping volumes during the six months ended June 30, 2019. The increase was primarily due to increased volume contributions from recently acquired stores which carried a greater percentage of jewelry inventories, as well as an increase in general scrapping activities during the second quarter2020 as a result of retail restrictions related to COVID-19. The scrap jewelry gross profit margin in Latin America was ~~22% (13%~~12% (17% on a constant currency basis) ~~compared to the prior-year loss of less than 1%. The increase in scrap margin was primarily due to an increase in the average selling price of gold~~ during the six months ended June 30, ~~2020~~2021 compared to the ~~six months ended June 30, 2019.~~prior-year margin of 22%.

Segment Expenses and Segment Pre-Tax Operating Income

Store operating expenses ~~decreased~~increased 5% ~~(5% increase~~(decreased 1% on a constant currency basis) to $87.6 million during the six months ended June 30, 2021 compared to $83.5 million during the six months ended June 30, ~~2020 compared to $88.3 million during the six months ended June 30, 2019.~~2020. Total store operating expenses ~~decreased~~increased primarily due to ~~cost saving initiatives as a result of COVID-19, partially offset by~~ the 9%3% increase in the Latin America weighted-average store count. Same-store operating expenses ~~decreased 12% (2%~~increased 2% (decreased 4% on a constant currency basis) compared to the prior-year ~~period,~~period.

Latin America store depreciation and amortization increased 15% (8% on a constant currency basis) to $8.8 million during the six months ended June 30, 2021 compared to $7.7 million during the six months ended June 30, 2020, primarily due to ~~cost saving initiatives as a result of COVID-19.~~the increase in the store count.

The segment pre-tax operating income for the six months ended June 30, ~~2020~~2021 was ~~$52.6~~$53.8 million, which generated a pre-tax segment operating margin of ~~19%~~20% compared to ~~$68.9~~$52.6 million and ~~22%~~19% 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, an increase in depreciation and amortization and a 13% unfavorable change in the average value of the Mexican peso, partially offset by an increase in gross profit from scrapping activities 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 six months ended June 30, ~~2020~~2021 compared to the six months ended June 30, ~~2019~~2020 (dollars in thousands):


	Six Months Ended
	June 30,				Increase /
	2021		2020		(Decrease)
Consolidated Results of Operations
Segment pre-tax operating income:
U.S. operations	$	108,020	$	116,634		(7)	%
Latin America operations	53,813		52,598			2	%
Consolidated segment pre-tax operating income	161,833		169,232			(4)	%

Corporate expenses and other income:
Administrative expenses	58,397		61,288			(5)	%
Depreciation and amortization	1,988		2,371			(16)	%
Interest expense	14,428		15,392			(6)	%
Interest income	(277)		(710)			(61)	%
Merger and acquisition expenses	1,252		202			520	%
(Gain) loss on foreign exchange	(310)		2,071			115	%

Write-off of certain Cash America merger related lease intangibles	1,279		3,812			(66)	%
Impairment of certain other assets	—		1,900			(100)	%
Total corporate expenses and other income	76,757		86,326			(11)	%

Income before income taxes	85,076		82,906			3	%

Provision for income taxes	22,934		24,115			(5)	%

Net income	$	62,142	$	58,791		6	%

Six Months Ended
June 30, Increase /
2020 2019 (Decrease)
Consolidated Results of Operations
Segment pre-tax operating income:
U.S. operations $ 116,634
$ 118,783
(2 )%
Latin America operations 52,598
68,924
(24 )%
Consolidated segment pre-tax operating income 169,232
187,707
(10 )%

Corporate expenses and other income:
Administrative expenses 61,288
63,850
(4 )%
Depreciation and amortization 2,371
3,186
(26 )%
Interest expense 15,392
16,918
(9 )%
Interest income (710 ) (359 ) 98 %
Merger and other acquisition expenses 202
705
(71 )%
Loss (gain) on foreign exchange 2,071
(722 ) (387 )%
Write-offs and impairments of certain lease intangibles and other assets 5,712
—
— %
Total corporate expenses and other income 86,326
83,578
3 %

Income before income taxes 82,906
104,129
(20 )%

Provision for income taxes 24,115
28,426
(15 )%

Net income $ 58,791
$ 75,703
(22 )%

Corporate Expenses and Taxes

Administrative expenses decreased 4%5% to $58.4 million during the six months ended June 30, 2021 compared to $61.3 million during the six months ended June 30, 2020, ~~compared to $63.9 million during the six months ended June 30, 2019,~~ primarily due to reduced travel costs and other cost saving initiatives in response to COVID-19, partially offset by a ~~13% unfavorable~~6% favorable change in the average value of the Mexican peso resulting in ~~lower~~higher U.S. dollar translated expenses ~~partially offset by~~and a 4%2% increase in the consolidated weighted-average store ~~count, resulting in additional management and supervisory compensation and other support expenses required for such growth.~~count. Administrative expenses were 7% of revenue during both the six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.

Interest expense decreased 9%6% to ~~$15.4~~$14.4 million during the six months ended June 30, ~~2020~~2021 compared to ~~$16.9~~$15.4 million for the six months ended June 30, ~~2019,~~2020, primarily due to lower average balances outstanding on the Company’s unsecured credit facilities and lower average interest rates during the six months ended June 30, ~~2020~~2021 compared to the six months ended June 30, ~~2019.~~2020, partially offset by an increase in the Company’s outstanding senior unsecured notes. See Note 5 of Notes to Consolidated Financial Statements and “Liquidity and Capital Resources.”

~~The loss on foreign exchange~~Merger and acquisition expenses increased to ~~$2.1~~$1.3 million during the six months ended June 30, ~~2020~~2021 compared to $0.2 million for the six months ended June 30, 2020, primarily as a ~~gain~~result of ~~$0.7~~a 26-store acquisition completed during the second quarter of 2021.

Gain on foreign exchange increased 115% to $0.3 million during the six months ended June 30, ~~2019. The~~2021 compared to a loss ~~was due to the significant unfavorable change~~of $2.1 million in the ~~end-of-period value~~six months ended June 30, 2020, as a result 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~~fluctuations in ~~Mexico.~~foreign exchange rates.

During the six months ended June 30, ~~2020,~~2021, the Company recorded a $1.3 million write-off of certain Cash America merger related lease intangibles compared to a $3.8 million write-off of certain Cash America merger related lease intangibles ~~and~~during the six months ended June 30, 2020. The Company also recorded a $1.9 million impairment 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. The $1.9 million impairment related to a non-operating asset ~~in which~~during the ~~Company determined that an other than temporary impairment existed as~~first quarter of ~~March 31,~~ 2020.

Consolidated effective income tax rates for the six months ended June 30, 2021 and 2020 were 27.0% and ~~2019 were~~ 29.1% ~~and 27.3%~~, respectively. The ~~increase~~decrease in the effective tax rate was primarily due to the Internal Revenue Service finalizing regulations in ~~part to an increase~~July 2020 for the GILTI provisions for foreign operations in the ~~impact of certain non-deductible expenses resulting from~~U.S. federal tax code as noted in the ~~Tax Cuts and Jobs Act, and to the establishment of a valuation allowance for net operating losses of a foreign subsidiary during the second quarter of 2020.~~quarter-to-date section above.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, ~~2020,~~2021, the Company’s primary sources of liquidity were ~~$71.0~~$50.1 million in cash and cash equivalents, ~~$322.9~~$363.9 million of available and unused funds under the Company’s revolving unsecured credit facilities, ~~$261.0~~subject to certain financial covenants, $352.3 million in customer loans and fees and service charges receivable and ~~$180.0~~$217.0 million in inventories. See Note 5 of Notes to Consolidated Financial Statements. The Company had working capital of ~~$325.5~~$401.2 million as of June 30, ~~2020.~~2021.

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

In July 2021, the Company’s Board of Directors declared a $0.30 per share third quarter cash dividend on common shares outstanding, or an aggregate of $12.2 million based on the June 30, ~~2020,~~2021 share count, which will be paid on August 27, 2021 to stockholders of record as of August 13, 2021. While the Company ~~maintained an unsecured line~~currently expects to continue the payment of ~~credit with a group~~quarterly cash dividends, the declaration and payment of ~~U.S. based commercial lenders (the “Credit Facility”)~~cash dividends in the ~~amount~~future (quarterly or otherwise) will be made by the Board of ~~$500.0 million. The Credit Facility matures on December 19, 2024, which would accelerate~~Directors, from time to ~~90 days prior~~time, subject to the ~~maturity~~Company’s financial condition, results 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. As of June 30, 2020, the Company had $200.0 million in outstanding borrowings and $3.3 million in outstanding letters of credit under the Credit Facility, leaving $296.7 million available for future borrowings. 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% on the average daily unused portion of the Credit Facility commitment. The weighted-average interest rate on amounts outstanding under the Credit Facility at June 30, 2020 was 2.63% 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 inoperations, business requirements, compliance with legal requirements, debt covenant restrictions and other relevant factors, including the ~~covenants~~impact of ~~the Credit Facility as of June 30, 2020, and currently has the capacity to borrow the remaining amount available under the Credit Facility under the most restrictive covenant.~~ COVID-19.

During the six months ended June 30, ~~2020,~~2021, the Company ~~made net payments~~repurchased a total of ~~$135.0~~536,000 shares of common stock at an aggregate cost of $38.0 million ~~pursuant to~~and an average cost per share of $70.87, and during the ~~Credit Facility.~~

During March 2020, the Company’s primary subsidiary in Mexico, First Cash S.A. de C.V., entered into 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 bears interest at the Mexican Central Bank’s interbank equilibrium rate plus a fixed spread of 2.5% and matures on March 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 June 30, 2020. Atsix months ended June 30, 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 approximately $83.9 million of remaining availability under its currently authorized stock repurchase program. While the Company ~~had no amount outstanding~~intends to continue repurchases under its active share repurchase program, future share repurchases are subject to a variety of factors, including, but not limited to, the ~~Mexico Credit Facility and $600.0 million Mexican pesos available for borrowings.~~

~~On May 30, 2017,~~level of cash balances, credit availability, debt covenant restrictions, general business conditions, regulatory requirements, the Company issued $300.0 million of 5.375% senior unsecured notes due on June 1, 2024 (the “Notes”), all of which are currently outstanding. Interest on the Notes is payable semi-annually in arrears on June 1 and December 1. The Notes are fully and unconditionally guaranteed on a senior unsecured basis jointly and severally by allmarket price of the ~~Company's existing~~Company’s stock, dividend policy, the availability of alternative investment opportunities, including acquisitions, and ~~future domestic subsidiaries that guarantee its Credit Facility.~~ the impact of COVID-19.

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~~following tables set forth certain historical information with respect to the ~~incurrence~~Company’s sources and uses of ~~any indebtedness to make such payment,~~cash and other key indicators of liquidity (dollars in thousands):


	Six Months Ended June 30,
	2021		2020
Cash flow provided by operating activities	$	113,749	$	143,299
Cash flow (used in) provided by investing activities	$	(107,947)	$	130,443
Cash flow used in financing activities	$	(21,495)	$	(244,757)

As of June 30,

2021

2020

Working capital

401,174

325,518

Current ratio

2.7:1

2.6:1

Liabilities to equity ratio

0.9:1

0.8:1

Net Debt Ratio (1)

2.6:1

1.5:1

(1)Adjusted EBITDA, a component of the ~~Company's consolidated total debt ratio (“Net Debt Ratio”) is less than 2.25 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 June 30, 2020, the Net Debt Ratio was 1.5 to 1.a non-GAAP financial measure. See “Non-GAAP Financial Information” for ~~additional information on the~~a 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 existing debt and to enter 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.

Net cash provided by operating activities decreased $29.6 million, or 21%, from $143.3 million for the six months ended June 30, 2020 to $113.7 million for the six months ended June 30, 2021 due to 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 $3.4 million.

Net cash used in investing activities increased $238.4 million, or 183%, from net cash provided by investing activities of $130.4 million for the six months ended June 30, 2020 to net cash used in investing activities of $107.9 million for the six months ended June 30, 2021. Cash flows from investing activities 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 loans are included in investing activities. The Company paid $49.3 million in cash related to current and prior-year store acquisitions, $21.0 million for furniture, fixtures, equipment and improvements and $29.1 million for discretionary store real property purchases during the six months ended June 30, 2021 compared to $7.8 million, $20.5 million and $19.6 million in the prior-year period, respectively. The Company funded a net increase in pawn loans of $8.5 million during the six months ended June 30, 2021 whereas the Company received funds from a net decrease in pawn loans of $178.3 million during the six months ended June 30, 2020.

Net cash used in financing activities decreased $223.3 million, or 91%, from $244.8 million for the six months ended June 30, 2020 to $21.5 million for the six months ended June 30, 2021. Net borrowings on the credit facilities were $40.0 million during the six months ended June 30, 2021 compared to net payments of $138.5 million during the six months ended June 30, 2020. The Company funded $36.4 million worth of share repurchases and paid dividends of $23.4 million during the six months ended June 30, 2021, compared to funding $80.3 million worth of share repurchases and dividends paid of $22.5 million during the six months ended June 30, 2020. In addition, the Company paid $1.7 million in withholding taxes on net share settlements of restricted stock awards during the six months ended June 30, 2021 compared to $3.3 million during the six months ended June 30, 2020.

The ~~rapid development~~continued developments and fluidity of the COVID-19 ~~situation makes~~pandemic make it difficult to predict the impact of COVID-19 on the Company’s liquidity and presents a material uncertainty which could adversely affect the Company’s results of operations, financial condition and cash flows in the future. The Company’s cash flows depend heavily on the uninterrupted operation of its stores with sufficient customer activity. If the Company’s pawnshops were deemed non-essential and 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 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, capital expenditures and dividends, 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 54% of total inventory, gives the Company flexibility to quickly increase cash flow, if necessary.

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 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~~Additionally, a challenging environment for financing and could create uncertainty regarding the availability of credit on acceptable terms in the event the Company needed to amend its financial debt covenants or seek additional external financing. A prolonged reduction in earnings and EBITDA could limit the Company’s future ability to fully borrow under its ~~lines of~~ credit facilities under ~~its~~ current leverage covenants. ~~The combination of 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 to add approximately 90 or more de novo full-service pawn locations in 2020, all in Latin America. A total of 51 stores were opened during the six months ended June 30, 2020 and there is a pipeline of new stores under lease and in development. While the Company is currently on pace to meet its full-year target, future store openings are 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 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.

~~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):~~

Net Debt Ratio ⁽¹⁾

Net cash provided by operating activities increased $37.3 million, or 35%, from $106.0 million for the six months ended June 30, 2019 to $143.3 million for the six months ended June 30, 2020 due to 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), partially offset by a decrease in net income of $16.9 million.

Net cash provided by investing activities increased $203.9 million, or 278%, from net cash used in investing activities of $73.5 million for the six months ended June 30, 2019 to net cash provided by investing activities of $130.4 million for the six months ended June 30, 2020. Cash flows from investing activities are utilized primarily to fund pawn store acquisitions, purchases of furniture, fixtures, equipment and improvements, which includes capital expenditures for improvements to existing stores, 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 $7.8 million in cash related to current and prior-year store acquisitions, $20.5 million for furniture, fixtures, equipment and improvements and $19.6 million for discretionary store real property purchases during the six months ended June 30, 2020 compared to $38.2 million, $22.9 million and $31.9 million in the prior-year period, respectively. The Company received funds from a net decrease in pawn and consumer loans of $178.3 million during the six months ended June 30, 2020 compared to $19.6 million during the six months ended June 30, 2019.

Net cash used in financing activities increased $206.9 million, or 547%, from $37.8 million for the six months ended June 30, 2019 to $244.8 million for the six months ended June 30, 2020. Net payments on the Credit Facilities were $138.5 million during the six months ended June 30, 2020 compared to net borrowings of $45.0 million during the six months ended June 30, 2019. The Company funded $80.3 million worth of share repurchases and paid dividends of $22.5 million during the six months ended June 30, 2020, compared to funding $61.6 million worth of share repurchases and dividends paid of $21.7 million during the six months ended June 30, 2019. In addition, the Company paid $3.3 million in withholding taxes on net share settlements of restricted stock unit awards during the six months ended June 30, 2020.

In July 2020, the Company’s Board of Directors declared a $0.27 per share third quarter cash dividend on common shares outstanding, or an aggregate of $11.2 million based on the June 30, 2020 share count, which will be paid on August 28, 2020 to stockholders of record as of August 14, 2020. 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, the Company has temporarily suspended its current stock repurchase program, which will likely continue through the end of 2020. The resumption of stock 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 and the impact of COVID-19.

As of June 30, 2020, the Company had contractual commitments to deliver a total of 31,500 gold ounces between the months of July 2020 and July 2021 at a weighted-average price of $1,611 per ounce. Subsequent to June 30, 2020, the Company committed to delivering an additional 5,000 gold ounces between the months of November 2020 and August 2021 at a weighted-average price of $1,795 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 ceased offering unsecured consumer lending and credit services products, including all payday and installment loans, in the U.S. Effective June 30, 2020, the Company no longer has any unsecured consumer lending or credit services operations in the U.S. or Latin America. The Company remains subject to significant regulation of its pawn 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. Other than as described below, there~~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 (“PLPA”) that caps annual effective interest rates at 36% on most consumer loans, including payday and car title loans. On ~~July 7, 2020,~~March 23, 2021, the ~~Consumer Financial Protection Bureau (“CFPB”) published revisions~~governor of Illinois signed the PLPA into law, making it effective immediately. The Company does not believe the PLPA applies to ~~its regulation on payday, vehicle title, and certain small-dollar loans originally issued~~collateralized pawn loans. The Company had 25 pawn stores located in ~~2017. Traditional possessory, non-recourse pawn loans were not covered under the CFPB’s original 2017 regulation and remain excluded under the revised regulation.~~Illinois as of June 30, 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 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):

Non-cash write-off of certain merger related lease intangibles ⁽¹⁾

Non-cash impairment of certain other assets ⁽²⁾

Non-cash impairment of certain other assets (1)

⁽¹⁾

(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 tables provide 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 June 30,
	2021						2020
	Pre-tax		Tax		After-tax		Pre-tax		Tax		After-tax
Merger and acquisition expenses	$	1,086	$	260	$	826	$	134	$	38	$	96
Non-cash foreign currency gain related to lease liability	(749)		(225)		(524)		(440)		(132)		(308)

Non-cash write-off of certain Cash America merger related lease intangibles	401		92		309		182		42		140


Consumer lending wind-down costs and asset impairments	—		—		—		92		21		71

Total adjustments	$	738	$	127	$	611	$	(32)	$	(31)	$	(1)


	Six Months Ended June 30,
	2021						2020
	Pre-tax		Tax		After-tax		Pre-tax		Tax		After-tax
Merger and acquisition expenses	$	1,252	$	310	$	942	$	202	$	56	$	146
Non-cash foreign currency (gain) loss related to lease liability	(147)		(44)		(103)		3,944		1,183		2,761

Non-cash write-off of certain Cash America merger related lease intangibles	1,279		294		985		3,812		877		2,935
Non-cash impairment of certain other assets	—		—		—		1,900		437		1,463

Consumer lending wind-down costs and asset impairments	—		—		—		92		21		71

Total adjustments	$	2,384	$	560	$	1,824	$	9,950	$	2,574	$	7,376

Three Months Ended June 30,
2020 2019
Pre-tax Tax After-tax Pre-tax Tax After-tax
Merger and other acquisition expenses $ 134
$ 38
$ 96
$ 556
$ 130
$ 426
Non-cash foreign currency gain related to lease liability (440 ) (132 ) (308 ) (195 ) (59 ) (136 )
Non-cash write-off of certain merger related lease intangibles 182
42
140
—
—
—
Consumer lending wind-down costs and asset impairments 92
21
71
2,544
585
1,959
Total adjustments $ (32 ) $ (31 ) $ (1 ) $ 2,905
$ 656
$ 2,249

Six Months Ended June 30,
2020 2019
Pre-tax Tax After-tax Pre-tax Tax After-tax
Merger and other acquisition expenses $ 202
$ 56
$ 146
$ 705
$ 175
$ 530
Non-cash foreign currency loss (gain) related to lease liability 3,944
1,183
2,761
(535 ) (161 ) (374 )
Non-cash write-off of certain merger related lease intangibles 3,812
877
2,935
—
—
—
Non-cash impairment of certain other assets 1,900
437
1,463
—
—
—
Consumer lending wind-down costs and asset impairments 92
21
71
2,544
585
1,959
Total adjustments $ 9,950
$ 2,574
$ 7,376
$ 2,714
$ 599
$ 2,115

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				Six Months Ended				Months Ended
	June 30,				June 30,				June 30,
	2021		2020		2021		2020		2021			2020
Net income	$	28,427	$	25,873	$	62,142	$	58,791	$	109,930		$	147,706
Income taxes		10,378		11,316		22,934		24,115		35,939			55,682
Depreciation and amortization		10,902		10,324		21,514		20,998		42,621			42,518
Interest expense		7,198		6,974		14,428		15,392		28,380			32,509
Interest income		(119)		(525)		(277)		(710)		(1,107)			(1,406)
EBITDA		56,786		53,962		120,741		118,586		215,763			277,009
Adjustments:
Merger and acquisition expenses		1,086		134		1,252		202		2,366			1,263
Non-cash foreign currency (gain) loss related to lease liability		(749)		(440)		(147)		3,944		(2,842)			3,546
Loss on extinguishment of debt		—		—		—		—		11,737			—
Non-cash write-off of certain Cash America merger related lease intangibles		401		182		1,279		3,812		4,522			3,812
Non-cash impairment of certain other assets		—		—		—		1,900		—			1,900

Consumer lending wind-down costs and asset impairments		—		92		—		92		17			1,002

Adjusted EBITDA	$	57,524	$	53,930	$	123,125	$	128,536	$	231,563		$	288,532

Net Debt Ratio calculation:
Total debt (outstanding principal)									$	663,000		$	500,000
Less: cash and cash equivalents										(50,061)			(70,956)
Net debt									$	612,939		$	429,044
Adjusted EBITDA									$	231,563		$	288,532
Net Debt Ratio (Net Debt divided by Adjusted EBITDA)									2.6		:1	1.5		:1



~~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	4
			Consolidated Statements of Cash Flows	6
			Notes to Consolidated Financial Statements	7
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations	1918
Item 3.			Quantitative and Qualitative Disclosures About Market Risk	4339
Item 4.			Controls and Procedures	4339

PART II.			OTHER INFORMATION

Item 1.			Legal Proceedings	4339
Item 1A.			Risk Factors	4339
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	4440
Item 3.			Defaults Upon Senior Securities	4440
Item 4.			Mine Safety Disclosures	4440
Item 5.			Other Information	4440
Item 6.			Exhibits	4541

~~SIGNATURES~~		46



Six months ending December 31, 2020	$	52,555
2021	90,527
2022	68,117
2023	49,021
2024	27,972
Thereafter	19,033
Total	$	307,225
Less amount of lease payments representing interest	(40,730		)
Total present value of lease payments	$	266,495



	As of June 30,				As of December 31,
	2020		2019		2019
Revolving unsecured credit facility, maturing 2024 ⁽¹⁾	$	200,000	$	340,000	$	335,000
5.375% senior unsecured notes due 2024 ⁽²⁾	296,923		296,222		296,568
Total long-term debt	$	496,923	$	636,222	$	631,568



	Three Months Ended June 30, 2019
	U.S. Operations		Latin America Operations		Corporate			Consolidated
Revenue:
Retail merchandise sales	$	168,918	$	109,836	$	—		$	278,754
Pawn loan fees	90,126		46,797		—			136,923
Wholesale scrap jewelry sales	15,788		9,193		—			24,981
Consumer loan and credit services fees	5,356		—		—			5,356
Total revenue	280,188		165,826		—			446,014

Cost of revenue:
Cost of retail merchandise sold	104,662		71,610		—			176,272
Cost of wholesale scrap jewelry sold	14,853		9,081		—			23,934
Consumer loan and credit services loss provision	1,503		—		—			1,503
Total cost of revenue	121,018		80,691		—			201,709

Net revenue	159,170		85,135		—			244,305

Expenses and other income:
Store operating expenses	103,009		45,338		—			148,347
Administrative expenses	—		—		31,696			31,696
Depreciation and amortization	5,269		3,579		1,662			10,510
Interest expense	—		—		8,548			8,548
Interest income	—		—		(155		)	(155		)
Merger and other acquisition expenses	—		—		556			556
Gain on foreign exchange	—		—		(483		)	(483		)
Total expenses and other income	108,278		48,917		41,824			199,019

Income (loss) before income taxes	$	50,892	$	36,218	$	(41,824	)	$	45,286



	Six Months Ended June 30, 2019
	U.S. Operations		Latin America Operations		Corporate			Consolidated
Revenue:
Retail merchandise sales	$	355,733	$	207,262	$	—		$	562,995
Pawn loan fees	188,002		90,113		—			278,115
Wholesale scrap jewelry sales	38,573		18,118		—			56,691
Consumer loan and credit services fees	15,817		—		—			15,817
Total revenue	598,125		315,493		—			913,618

Cost of revenue:
Cost of retail merchandise sold	222,406		133,215		—			355,621
Cost of wholesale scrap jewelry sold	36,123		18,164		—			54,287
Consumer loan and credit services loss provision	3,606		—		—			3,606
Total cost of revenue	262,135		151,379		—			413,514

Net revenue	335,990		164,114		—			500,104

Expenses and other income:
Store operating expenses	206,893		88,306		—			295,199
Administrative expenses	—		—		63,850			63,850
Depreciation and amortization	10,314		6,884		3,186			20,384
Interest expense	—		—		16,918			16,918
Interest income	—		—		(359		)	(359		)
Merger and other acquisition expenses	—		—		705			705
Gain on foreign exchange	—		—		(722		)	(722		)
Total expenses and other income	217,207		95,190		83,578			395,975

Income (loss) before income taxes	$	118,783	$	68,924	$	(83,578	)	$	104,129


⁽¹⁾Table of Contents			Effective June 30, 2020, the Company ceased offering unsecured consumer lending and credit services products, including all payday and installment loans, in the U.S. Store closures in the U.S. include:



	Three Months Ended		Six Months Ended
	June 30, 2020		June 30, 2020
First Cash Advance stores in Texas (credit services only)		6		6
Cashland stores in Ohio and Indiana (former consumer loan stores)		6		7
Consolidation of other pawn stores		5		8
Total locations closed or consolidated		17		21


⁽²⁾	~~The table does not include 42 check cashing locations operated by independent franchisees under franchising agreements with the Company.~~


⁽³⁾	~~The table does not include 30 Prendamex pawn locations operated by independent franchisees under franchising agreements with the Company.~~



	June 30,		Favorable /
	2020	2019	(Unfavorable)
Mexican peso / U.S. dollar exchange rate:
End-of-period	23.0	19.2		(20	)%
Three months ended	23.4	19.1		(23	)%
Six months ended	21.6	19.2		(13	)%

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

Colombian peso / U.S. dollar exchange rate:
End-of-period	3,759	3,206		(17	)%
Three months ended	3,846	3,240		(19	)%
Six months ended	3,689	3,188		(16	)%


⁽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.~~


⁽¹⁾ (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.	Certain above/below market store lease intangibles, recorded in conjunction with the Cash America merger in 2016, were written-off as a result of the Company purchasing the real estate from the landlords of the respective stores.


⁽²⁾	~~Impairment related to a non-operating asset in which the Company determined that an other than temporary impairment existed as of March 31, 2020.~~


⁽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.~~


	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




April 1 through April 30, 2021	182,000	$	71.89	182,000	$	103,768
May 1 through May 31, 2021	249,000	73.60		249,000	85,453
June 1 through June 30, 2021	21,000	76.90		21,000	83,862
Total	452,000	73.06		452,000


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	May 4, 2021	$	100,000	318,000	$	21,827	$	—
January 27, 2021	Currently active	100,000		218,000	16,138		83,862
Total				536,000	$	37,965	$	83,862



Dated: July 23, 2021		FIRSTCASH, INC.
~~Dated: July 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)