EXHIBIT 99.4
Summary Financial and Other Data
The following table sets forth summary financial and other data as of and for each of the periods indicated below. The summary consolidated income statement data and statement of cash flows data for the years ended December 31, 2016, 2015 and 2014 and the selected consolidated balance sheet data as of December 31, 2016 and 2015 have been derived from, and are qualified by reference to, our audited consolidated financial statements incorporated by reference in this offering circular. The summary consolidated income statement data and statement of cash flows data for the years ended December 31, 2013 and 2012 and the selected consolidated balance sheet data as of December 31, 2014, 2013 and 2012 have been derived from our audited consolidated financial statements that are not included or incorporated by reference in this offering circular. The summary consolidated income statement data and statement of cash flows data for the three months ended March 31, 2017 and 2016 and the selected consolidated balance sheet data as of March 31, 2017 and 2016 have been derived from, and are qualified by reference to, our unaudited condensed consolidated financial statements incorporated by reference into this offering circular. We derived the summary pro forma income statement data for the twelve months ended March 31, 2017 by adding the pro forma income statement data for the year ended December 31, 2016 and the summary income statement data for the three months ended March 31, 2017, and subtracting the pro forma income statement data for the three months ended March 31, 2016.
The summary consolidated income statement data and statement of cash flows data for the year ended December 31, 2016 include the results of operations for Cash America for the period September 2, 2016 to December 31, 2016, and the summary consolidated income statement data and statement of cash flows data for the three months ended March 31, 2017 include the results of operations for Cash America for the entire period. The selected consolidated balance sheet data at December 31, 2016 and March 31, 2017 include preliminary valuations of the assets acquired and liabilities assumed in the Merger.
The historical results presented below are not necessarily indicative of the results to be expected for any future period. This information is only a summary and should be read in conjunction with “Risk Factors” included in this offering circular and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included in this offering circular and incorporated by reference herein from our 2016 Form 10-K and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (the “2017 First Quarter Form 10-Q”).
Pro Forma Twelve Months Ended March 31, 2017(1) | |||||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | 2016 | 2017 | |||||||||||||||||||||||||
(in thousands, except per share amounts and certain operating data) | |||||||||||||||||||||||||||||||
Income Statement Data: | |||||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||
Retail merchandise sales | $ | 287,456 | $ | 367,187 | $ | 428,182 | $ | 449,296 | $ | 669,131 | $ | 118,776 | $ | 259,994 | $ | 1,011,506 | |||||||||||||||
Pawn loan fees | 152,237 | 181,555 | 199,357 | 195,448 | 312,757 | 51,433 | 128,251 | 520,323 | |||||||||||||||||||||||
Consumer loan and credit services fees | 48,692 | 43,781 | 36,749 | 27,803 | 43,851 | 5,686 | 21,220 | 89,224 | |||||||||||||||||||||||
Wholesale scrap jewelry sales | 103,706 | 68,325 | 48,589 | 32,055 | 62,638 | 7,308 | 38,111 | 135,843 | |||||||||||||||||||||||
Total revenue | 592,091 | 660,848 | 712,877 | 704,602 | 1,088,377 | 183,203 | 447,576 | 1,756,896 | |||||||||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||||||||||
Cost of retail merchandise sold | 167,144 | 221,361 | 261,673 | 278,631 | 418,556 | 74,422 | 165,635 | 645,419 | |||||||||||||||||||||||
Consumer loan and credit services loss provision | 12,556 | 11,368 | 9,287 | 7,159 | 11,993 | 1,047 | 4,092 | 22,003 | |||||||||||||||||||||||
Cost of wholesale scrap jewelry sold | 76,853 | 58,545 | 41,044 | 27,628 | 53,025 | 5,871 | 34,949 | 125,177 | |||||||||||||||||||||||
Total cost of revenue | 256,553 | 291,274 | 312,004 | 313,418 | 483,574 | 81,340 | 204,676 | 792,599 | |||||||||||||||||||||||
Net revenue | 335,538 | 369,574 | 400,873 | 391,184 | 604,803 | 101,863 | 242,900 | 964,297 |
Pro Forma Twelve Months Ended March 31, 2017(1) | |||||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | 2016 | 2017 | |||||||||||||||||||||||||
Expenses and other income: | |||||||||||||||||||||||||||||||
Store operating expenses | 148,879 | 181,321 | 198,986 | 207,572 | 328,014 | 55,411 | 136,744 | 545,977 | |||||||||||||||||||||||
Administrative expenses | 48,902 | 47,180 | 53,588 | 51,883 | 96,537 | 17,268 | 33,238 | 149,873 | |||||||||||||||||||||||
Depreciation and amortization | 12,939 | 15,361 | 17,476 | 17,939 | 31,865 | 4,937 | 14,243 | 55,006 | |||||||||||||||||||||||
Interest expense, net | 1,272 | 3,170 | 12,845 | 15,321 | 19,569 | 4,186 | 5,786 | 26,545 | |||||||||||||||||||||||
Merger and other acquisition expenses | 1,309 | 2,350 | 998 | 2,875 | 36,670 | 400 | 647 | 947 | |||||||||||||||||||||||
Goodwill impairment – U.S. consumer loan operations | — | — | — | 7,913 | — | — | — | — | |||||||||||||||||||||||
Gain disposition of equity securities | — | — | — | — | (1,299) | — | — | (3,961) | |||||||||||||||||||||||
Total expenses and other income | 213,301 | 249,382 | 283,893 | 303,503 | 511,356 | 82,202 | 190,658 | 774,387 | |||||||||||||||||||||||
Income from continuing operations before income taxes | 122,237 | 120,192 | 116,980 | 87,681 | 93,447 | 19,661 | 52,242 | 189,910 | |||||||||||||||||||||||
Provision for income taxes | 41,375 | 35,713 | 31,542 | 26,971 | 33,320 | 6,487 | 19,597 | 67,907 | |||||||||||||||||||||||
Income from continuing operations | 80,862 | 84,479 | 85,438 | 60,710 | 60,127 | 13,174 | 32,645 | 122,003 | |||||||||||||||||||||||
Loss from discontinued operations, net of tax | (503) | (633) | (272) | — | — | — | — | — | |||||||||||||||||||||||
Net income | $ | 80,359 | $ | 83,846 | $ | 85,166 | $ | 60,710 | $ | 60,127 | $ | 13,174 | $ | 32,645 | $ | 122,003 | |||||||||||||||
Dividends declared per common share | $ — | $ — | $ — | $ — | $ | 0.565 | $ | 0.125 | $ | 0.190 | $ | 0.63 | |||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||||||||||||||
Inventories | $ | 63,345 | $ | 77,793 | $ | 91,088 | $ | 93,458 | $ | 330,683 | $ | 90,714 | $ | 308,165 | $ | 308,165 | |||||||||||||||
Pawn loans | 103,181 | 115,234 | 118,536 | 117,601 | 350,506 | 126,620 | 314,505 | 314,505 | |||||||||||||||||||||||
Net working capital | 209,132 | 236,417 | 258,194 | 279,259 | 748,507 | 240,521 | 671,048 | 671,048 | |||||||||||||||||||||||
Total assets | 506,544 | 660,999 | 711,880 | 752,895 | 2,145,203 | 753,885 | 2,043,554 | 2,043,554 | |||||||||||||||||||||||
Long-term liabilities | 122,978 | 201,889 | 234,880 | 275,338 | 551,589 | 258,669 | 438,569 | 438,569 | |||||||||||||||||||||||
Total liabilities | 154,128 | 250,650 | 277,439 | 321,513 | 695,217 | 314,598 | 556,319 | 556,319 | |||||||||||||||||||||||
Stockholders’ equity | 352,416 | 410,349 | 434,441 | 431,382 | 1,449,986 | 439,287 | 1,487,235 | 1,487,235 | |||||||||||||||||||||||
Pro Forma Twelve Months Ended March 31, 2017(1) | |||||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | 2016 | 2017 | |||||||||||||||||||||||||
Statement of Cash Flows Data: | |||||||||||||||||||||||||||||||
Net cash flows provided by (used in): | |||||||||||||||||||||||||||||||
Operating activities | $ | 88,792 | $ | 106,718 | $ | 97,679 | $ | 92,749 | $ | 96,854 | $ | 25,076 | $ | 63,865 | |||||||||||||||||
Investing activities | (159,904) | (140,726) | (85,366) | (71,676) | (25,967) | (27,095) | 58,259 | ||||||||||||||||||||||||
Financing activities | 49,525 | 54,644 | (9,098) | 9,127 | (58,713) | (28,062) | (142,177) | ||||||||||||||||||||||||
Other Financial Data(2): | |||||||||||||||||||||||||||||||
Adjusted EBITDA | 148,027 | 132,201 | 180,252 | 29,184 | 72,918 | 268,447 | |||||||||||||||||||||||||
Adjusted net income | 80,004 | 68,483 | 85,332 | 13,434 | 33,053 | 120,126 | |||||||||||||||||||||||||
Free cash flow (twelve months ended) | 71,255 | 67,960 | 46,919 | 60,630 | 145,871 | ||||||||||||||||||||||||||
Ratio of total debt (as adjusted) (3) to Adjusted EBITDA | 1.6 | ||||||||||||||||||||||||||||||
Ratio of Adjusted EBITDA to interest expense (as adjusted)(3) | 9.3 | ||||||||||||||||||||||||||||||
Location Counts: | |||||||||||||||||||||||||||||||
Pawn stores | 715 | 821 | 912 | 1,005 | 2,012 | 1,204 | 2,017 | 2,017 | |||||||||||||||||||||||
Credit services/consumer loan stores | 99 | 85 | 93 | 70 | 73 | 69 | 73 | 73 | |||||||||||||||||||||||
814 | 906 | 1,005 | 1,075 | 2,085 | 1,273 | 2,090 | 2,090 |
(1) | See “Unaudited Pro Forma Combined Financial Information.” |
(2) | These measures are non-GAAP financial measures. |
(3) | Total debt and interest expense is calculated on a pro forma basis, as adjusted to give effect to the offering of the notes. |
The Company uses certain financial calculations such as EBITDA, adjusted EBITDA, adjusted net income and free cash flow (as defined or explained below) 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 that the Company does not consider to be representative of its actual operating performance. These financial calculations are “non-GAAP financial measures” as defined in 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 operating performance and because management believes they 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 EBITDA, adjusted EBITDA, adjusted net income and free cash flow 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, EBITDA, adjusted EBITDA, adjusted net income and free cash flow as presented may not be comparable to other similarly titled measures of other companies.
The Company expects to incur additional expenses over the next two years in connection with the Merger and integration with Cash America. The Company has adjusted the applicable financial measures to exclude these items because it generally would not incur such costs and expenses as part of its continuing operations. The Merger-related expenses are predominantly incremental costs directly associated with the Merger and integration of Cash America, including professional fees, legal expenses, severance and retention payments, accelerated vesting of certain equity compensation awards, contract breakage costs and costs related to consolidation of technology systems and corporate facilities.
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 further adjusted to exclude certain items as listed below that management considers to be non-operating in nature and not representative of the Company’s actual operating performance. The Company believes EBITDA and adjusted EBITDA are commonly used by investors to assess a company’s financial performance. However, EBITDA and adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for net income or other statement of income data prepared in accordance with GAAP. The following table provides a reconciliation of net income to EBITDA and adjusted EBITDA (unaudited, in thousands):
Year Ended December 31, | Three Months Ended March 31, | Pro Forma Twelve Months Ended March 31, 2017 | |||||||||||||||||||||
2014 | 2015 | 2016 | 2016 | 2017 | |||||||||||||||||||
Net income | $ | 85,166 | $ | 60,710 | $ | 60,127 | $ | 13,174 | $ | 32,645 | $ | 122,003 | |||||||||||
Income taxes | 31,542 | 26,971 | 33,320 | 6,487 | 19,597 | 67,907 | |||||||||||||||||
Depreciation and amortization(a) | 17,476 | 17,446 | 31,865 | 4,937 | 14,243 | 55,006 | |||||||||||||||||
Interest expense | 13,527 | 16,887 | 20,320 | 4,460 | 6,113 | 27,383 | |||||||||||||||||
Interest income | (682) | (1,566) | (751) | (274) | (327) | (838) | |||||||||||||||||
EBITDA | 147,029 | 120,448 | 144,881 | 28,784 | 72,271 | 271,461 | |||||||||||||||||
Adjustments: | |||||||||||||||||||||||
Merger-related expenses | — | — | 36220 | 250 | 647 | 647 | |||||||||||||||||
Other acquisition expenses | 998 | 2,875 | 450 | 150 | — | 300 | |||||||||||||||||
Restructuring expenses related to U.S. consumer loan operations | — | 8,878 | — | — | — | — | |||||||||||||||||
Net gain on sale of common stock of Enova International, Inc. | — | — | (1,299) | — | — | (3,961) | |||||||||||||||||
Adjusted EBITDA | $ | 148,027 | $ | 132,201 | $ | 180,252 | $ | 29,184 | $ | 72,918 | $ | 268,447 |
(a) | For fiscal 2015, excludes $493 of depreciation and amortization, which is included in the restructuring expenses related to U.S. consumer loan operations. |
Adjusted Net Income
Management believes the presentation of adjusted net income provides investors with greater transparency and provides a more complete understanding of the Company’s financial performance and prospects for the future. 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 calculated in accordance with GAAP to adjusted net income, which are shown net of tax (unaudited, in thousands):
Year Ended December 31, | Three Months Ended March 31, | Pro Forma Twelve Months Ended March 31, | |||||||||||||||||||||
2014 | 2015 | 2016 | 2016 | 2017 | 2017 | ||||||||||||||||||
Net income, as reported | $ | 85,166 | $ | 60,710 | $ | 60,127 | $ | 13,174 | $ | 32,645 | $ | 122,003 | |||||||||||
Adjustments, net of tax: | |||||||||||||||||||||||
Merger-related expenses | |||||||||||||||||||||||
Transaction | — | — | 14,399 | 166 | — | — | |||||||||||||||||
Severance and retention | — | — | 9,594 | — | 354 | 354 | |||||||||||||||||
Other | — | — | 1,726 | — | 54 | 54 | |||||||||||||||||
Total Merger-related expenses | — | — | 25,719 | 166 | 408 | 408 | |||||||||||||||||
Other acquisition expenses | 679 | 1,989 | 304 | 94 | — | 210 | |||||||||||||||||
Restructuring expenses related to U.S. consumer loan operations | — | 5,784 | — | — | — | — | |||||||||||||||||
Foreign tax benefit | (5,841) | — | — | — | — | — | |||||||||||||||||
Net gain on sale of common stock of Enova | — | — | (818) | — | — | (2,495) | |||||||||||||||||
Adjusted net income | $ | 80,004 | $ | 68,483 | $ | 85,332 | $ | 13,434 | $ | 33,053 | $ | 120,126 |
The following tables provide a reconciliation of the gross amounts, the impact of income taxes and the net amounts for each of the adjustments included in the table above (unaudited, in thousands):
Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2014 | 2015 | 2016 | Pro Forma Twelve Months Ended March 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||
Pre-tax | Tax | After-tax | Pre-tax | Tax | After-tax | Pre-tax | Tax | After-tax | Pre-tax | Tax | After-tax | ||||||||||||||||||||||||||||||||||||
Merger-related expenses(a) | $ — | $ — | $ — | $ — | $ — | $ — | $ | 36,220 | $ | 10,501 | $ | 25,719 | $ | 647 | $ | 239 | $ | 408 | |||||||||||||||||||||||||||||
Other acquisition expenses | 998 | 319 | 679 | 2,875 | 886 | 1,989 | 450 | 146 | 304 | 300 | 90 | 210 | |||||||||||||||||||||||||||||||||||
Restructuring expenses related to U.S. consumer loan operations | — | — | — | 8,878 | 3,094 | 5,784 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Foreign tax benefit | — | 5,841 | (5,841) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Net gain on sale of common stock of Enova | — | — | — | — | — | — | (1,299) | (481) | (818) | (3,961) | (1,466) | (2,495) | |||||||||||||||||||||||||||||||||||
Total adjustments | $ | 998 | $ | 6,160 | $ | (5,162 | ) | $ | 11,753 | $ | 3,980 | $ | 7,773 | $ | 35,371 | $ | 10,166 | $ | 25,205 | $ | (3,014 | ) | $ | (1,137 | ) | $ | (1,877 | ) |
(a) | Resulting tax benefit for the year ended December 31, 2016 is less than the statutory rate as a portion of the transaction costs are not deductible for tax purposes. See Note 4 to the consolidated financial statements in “Financial Statements and Supplementary Date” in the 2016 Form 10-K for further information. |
Three Months Ended March 31, | |||||||||||||||||||||||
2016 | 2017 | ||||||||||||||||||||||
Pre-tax | Tax | After-tax | Pre-tax | Tax | After-tax | ||||||||||||||||||
Merger-related expenses | $ | 250 | $ | 84 | $ | 166 | $ | 647 | $ | 239 | $ | 408 | |||||||||||
Other acquisition expenses | 150 | 56 | 94 | — | — | — | |||||||||||||||||
Total adjustments | $ | 400 | $ | 140 | $ | 260 | $ | 647 | $ | 239 | $ | 408 |
Free Cash Flow
For purposes of its internal liquidity assessments, the Company considers free cash flow, which the Company defines as cash flow from operating activities reduced by purchases of property and equipment and net cash outflow from loan receivables. Free cash flow is commonly used by investors as an additional measure of cash generated by business operations that may be used to repay scheduled debt maturities and debt service or, following payment of such debt obligations and other non-discretionary items, may be available to invest in future growth through new business development activities or acquisitions, repurchase stock, pay cash dividends or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company’s ability to generate cash flow from business operations and the impact that this cash flow has on the Company’s liquidity. However, free cash flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for cash flow from operating activities, including discontinued operations, or other income statement data prepared in accordance with GAAP. The following table reconciles “net cash flow from operating activities” to “free cash flow” (in thousands):
Year Ended December 31, | Twelve Months Ended March 31, | ||||||||||||||||||
2014 | 2015 | 2016 | 2016 | 2017 | |||||||||||||||
Cash flow from operating activities | $ | 97,679 | $ | 92,749 | $ | 96,854 | $ | 90,395 | $ | 135,643 | |||||||||
Cash flow from investing activities: | |||||||||||||||||||
Loan receivables, net of cash repayments | (2,470) | (3,716) | (16,072) | (6,735) | 45,824 | ||||||||||||||
Purchases of property and equipment | (23,954) | (21,073) | (33,863) | (23,030) | (35,596) | ||||||||||||||
Free cash flow | $ | 71,255 | $ | 67,960 | $ | 46,919 | $ | 60,630 | $ | 145,871 |