About FirstCash

FirstCash Holdings, Inc., along with its wholly owned subsidiaries, operates pawn stores in the U.S. and Latin America. The company is also a provider of technology-driven, retail point-of-sale (‘POS’) payment solutions focused on serving credit-constrained consumers in the U.S. and Puerto Rico. The company operates two business lines, pawn operations and retail POS payment solutions, which are organized into three reportable segments. The U.S. pawn segment consists of pawn operations in 29 U.S. states and the District of Columbia, while the Latin America pawn segment consists of pawn operations in Mexico, Guatemala, Colombia and El Salvador. The retail POS payment solutions segment consists of the operations of American First Finance, LLC (‘AFF’) in all 50 states in the U.S., the District of Columbia and Puerto Rico. The company’s primary line of business is the operation of retail pawn stores, also known as ‘pawnshops,’ which focus on serving cash and credit-constrained consumers. The company operates pawnshops across its network. Pawn stores help customers meet small, short-term cash 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 and held as collateral for the pawn loans over the typical 30-day term of the loan. Pawn stores also generate retail sales primarily from the merchandise acquired through collateral forfeitures and over-the-counter purchases from customers. The company’s retail POS payment solutions business line solely consists of the operations of AFF, which it acquired in 2021 (the ‘AFF Acquisition’). AFF focuses on LTO products and facilitating other retail financing payment options across a large network of traditional and e-commerce merchant partners. AFF’s retail partners provide consumer goods and services to their customers and use AFF’s LTO and retail finance solutions to facilitate payments on such transactions. As one of the largest omni-channel providers of ‘no credit required’ payment options, AFF’s technology set provides consumers with seamless leasing and financing experiences in-store, online, in-cart and on mobile devices. Pawn Operations Pawn stores are neighborhood-based retail locations that buy and sell pre-owned consumer products, such as jewelry, electronics, tools, appliances, sporting goods and musical instruments. Pawn stores also provide a quick and convenient source of small, secured consumer loans, also known as pawn loans, to unbanked, under-banked and credit-constrained customers. Pawn loans are safe and affordable non-recourse loans for which the customer has no legal obligation to repay. The company does not engage in post-default collection efforts, does not take legal actions against its customers for defaulted loans, does not ban its customers for nonpayment, nor does it report any negative credit information to credit reporting agencies, but rather relies only on the resale of the pawn collateral for recovery. Pawnshop customers are typically value-conscious consumers and/or borrowers who are not effectively or efficiently served by traditional lenders, such as banks, credit unions, credit card providers or other small loan providers. The pawn industry in the U.S. is well established, with the highest concentration of pawn stores located in states that have favorable customer demographics, high population growth and maintain regulations most conducive to profitable pawn operations. Generally, these states are located in the Southeast, the Midwest, Southwest and Mountain West regions of the country, which is where the majority of the company’s U.S. stores are located. A majority of the company’s pawn stores opened in Latin America are larger format, full-service stores similar to the U.S. stores, which buy, sell and lend on a wide array of merchandise. Services Offered by the company’s Pawn Operations Pawn Merchandise Sales The company’s pawn merchandise sales are primarily retail sales to the general public from its pawn store locations. The items sold generally consist of pre-owned consumer products, such as jewelry, electronics, tools, appliances, sporting goods and musical instruments. The company also melts certain quantities of scrap jewelry and sells the gold, silver and diamonds in the commodity markets. Merchandise inventory is acquired primarily through forfeited pawn loan collateral, and to a lesser extent, through purchases of used goods directly from the general public. The company also acquires limited quantities of new or refurbished general merchandise inventories directly from wholesalers and manufacturers. Retail customers can use cash or credit cards for retail purchases or can purchase merchandise on an interest-free ‘layaway’ plan. Should the customer fail to make a required payment pursuant to a layaway plan, the item is returned to inventory and all or a portion of previous payments are typically forfeited to the company. Deposits and interim payments from customers on layaway sales are recorded as deferred revenue and subsequently recorded as retail merchandise sales revenue when the merchandise is delivered to the customer upon receipt of final payment or when previous payments are forfeited to the company. In addition, the company offers a LTO option at its U.S. pawn stores through AFF. Pawn Lending The company’s pawn store locations make pawn loans to customers in order to help them meet instant or short-term cash needs. All pawn loans are collateralized by personal property, such as jewelry, electronics, tools, appliances, sporting goods, musical instruments and other items. The pledged collateral provides the only security to the company for the repayment of the loan. The company does not investigate the creditworthiness of the borrower, primarily relying instead on the marketability and expected sales value of pledged goods as a basis for the amount loaned. Pawn loans are non-recourse loans, and a customer does not have a legal obligation to repay a pawn loan. There is no collections process, and the decision to not repay the loan will not affect the customer’s credit score with any credit reporting agency and rarely affects their ability to obtain a subsequent pawn loan from the company. The company typically experiences seasonal growth in its pawn loan balances in the third and fourth quarters (year ended December 2023) preceded by lower balances in the first two quarters due to the typical repayment of pawn loans associated with statutory bonuses received by customers in the fourth quarter in Mexico and with tax refund proceeds typically received by customers in the first quarter in the U.S. Pawn Business Strategy The company’s business strategy is to continue growing pawn 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. The key elements of the company’s strategy include opening new stores in under-served markets and neighborhoods; acquisition opportunities that will continue to arise in both the U.S. and Latin America; and enhancing productivity of existing and newly opened stores. Pawn Store Locations The company’s typical large format pawn store is a freestanding building or part of a retail shopping center with dedicated available parking. Many of the company’s acquired stores in Latin America tend to be smaller than its U.S. stores, especially those located in dense urban markets that may not have dedicated parking. The company operates pawn store locations in 29 U.S. states and the District of Columbia, in 32 states in Mexico, in Guatemala, in Colombia, and in El Salvador. Retail POS Payment Solutions Operations AFF facilitates customized LTO and retail finance programs to its merchant partners, allowing those merchant partners to complete sales by providing their customers with a retail POS payment solution. Customers can apply for AFF’s products online or through their mobile devices and complete the process electronically or in person at one of AFF’s merchant partner locations. AFF primarily serves customers who are credit-constrained who may not qualify for prime or near prime retail payment options. Products Offered by AFF AFF’s merchant partners may provide consumer goods and services to their customers using one of AFF’s retail POS payment options, including a LTO product, a merchant-based retail installment sales agreement (‘RISA’) or a bank-originated installment loan, to facilitate payments on such transactions. The merchant partners provide a single retail POS payment solution from one of these three available options to offer to all of their customers at a given location. The merchant’s selection of the appropriate retail POS payment option depends upon applicable regulations in the state in which the merchant operates, including which payment options are allowable under applicable state law, whether AFF’s bank partner makes loans in the state where the merchant is located and which type of products or services are offered by the merchant. The majority of AFF’s originations are facilitated with the LTO product, with retailers of furniture and other tangible personal property most commonly using the LTO product. The RISA and bank-originated products are more commonly offered in situations where services are being offered by the merchant. Each of these retail POS payment options is subject to AFF’s (or AFF’s partner bank’s) proprietary technology-driven decisioning process as further described below. AFF’s ability to customize the technology and offer a choice between retail POS payment options provides its merchant partners the ability to identify the most effective solution for its business and customers. The following is a description of the three primary retail POS payment options offered by AFF: LTO — LTO transactions involve the purchase by AFF of tangible personal property directly from the merchant partner and a subsequent lease of that merchandise by AFF to the customer through a consumer rental purchase agreement under applicable state laws. Customers can cancel their agreements at any time, without penalty, by returning the merchandise. The terms of the leased merchandise contracts generally provide for weekly, bi-weekly, semi-monthly, or monthly rental periods and give the customers the option to acquire ownership of the merchandise over a fixed term, typically between six and 24 months, if the customer leases the merchandise through that term. The customer has the right to acquire ownership of the leased merchandise either through an early buyout option, through another early purchase option after the early buyout option expires, or through payment of all required lease renewal payments. To take advantage of the early buyout option, the customer generally has between 90 and 101 days to pay the cash price of the leased merchandise, plus a nominal early buyout fee. The customer can still utilize an early purchase option after the early buyout period ends and obtain ownership before the end of the lease by paying a certain percentage of the remaining lease renewal payments (usually established by applicable state law). The customer can also obtain ownership of the merchandise by simply paying all of the remaining lease renewal payments as they become due. Conversely, the customer has the right to choose not to renew the lease at any time by returning the merchandise. AFF offers the LTO retail POS payment option to merchant partners in 45 U.S. states, the District of Columbia and Puerto Rico. RISA — The RISA transaction involves the purchase of either tangible personal property or services from the merchant partner by the customer. The customer enters into a RISA with the merchant, and AFF subsequently purchases the RISA from the merchant partner and services the account through the end of the contractual term. The customer can take advantage of an early payoff discount, whereby the customer generally has between 90 and 101 days to pay the original principal amount, plus a nominal early payoff discount fee (equal to or less than the accrued interest charges), without incurring any additional interest charges. RISA finance receivables typically have a term ranging from six to 24 months, and when utilized for the purchase of tangible personal property, are generally secured by such tangible personal property. AFF facilitates the RISA retail POS payment option with merchant partners in 20 U.S. states. Bank-originated installment loans — The customer enters into an installment loan directly with a Utah state-chartered non-member bank (the ‘bank’), for the purchase of a good or service from the merchant partner. After origination of the loan by the bank, AFF purchases the rights to the cash flows of the loan from the bank but does not purchase the loan itself. AFF then assumes responsibility for sub-servicing the loan on behalf of the bank for the remaining term of the loan. The customer can take advantage of an early payoff discount, whereby the customer generally has between 90 and 101 days to pay the original principal amount (including any origination fee) without paying any interest charges. Bank-originated loans typically have a term ranging from six to 24 months and can be either secured by tangible personal property or unsecured. Approximately 71% of these loans are related to the purchase of property or services while approximately 29% are loans with cash proceeds issued directly to the customer. The bank-originated installment loan retail POS payment option is made available to merchant partners in 34 U.S. states. Merchant Relationships AFF’s highly customizable LTO, RISA and bank loan products offer significant value to merchant partners. AFF’s products can help drive further sales for these merchants by helping them reach credit-constrained customers through the offer of AFF’s financing solutions. AFF also constantly monitors consumer preferences and trends to ensure that the solutions offered through their merchant partners are aligned with the needs of the merchant partner and its customers. AFF attracts and sources new merchants through various channels, including field sales representatives, national sales, independent sales representatives, buying groups, AFF’s website and strategic integrations via waterfall lending platforms. To ensure merchant quality, each prospective merchant goes through a vetting and approval process, and once approved, they must sign a merchant agreement that identifies the roles and responsibilities of both the merchant and AFF. Merchants also receive appropriate training so they can properly represent AFF’s retail POS payment solutions to their customers and ensure regulatory compliance. Approved merchant partners are subject to regular monitoring. AFF’s monitoring procedures are designed to identify merchant partners that do not meet AFF’s merchant standards. Merchant partners are subject to suspension and/or termination if, based upon the results of AFF’s monitoring, they are found to be out of compliance with the merchant agreement, have low lease or loan quality performance, have elevated customer complaint volume or fail to comply with applicable laws. AFF has approximately 11,600 active retail merchant partner locations and e-commerce platforms offering its leasing and financing products. Those merchant partners offer a wide array of goods and services spanning 26 vertical channels. A significant portion of AFF’s revenue is concentrated with its top merchant partners. Retail POS Payment Solutions Business Strategy AFF’s business strategy is to continue building market share through additional expansion of both its brick-and-mortar and online merchant base while increasing customer utilization rates by continuous improvement and enhancement of its omni-channel user experience. AFF continues to expand its digital marketing and search engine optimization strategies to harvest more consumer searches and to drive quality repeat customers back to its merchant partners. With an ongoing focus toward improving application conversion rates for qualified applicants combined with an enhanced risk segmentation of its applications, AFF has numerous opportunities to gain additional market share and expand its large and fast-growing merchant and customer base to achieve greater levels of revenue and profitability. Governmental Regulation The U.S. government and its agencies have significant regulatory authority over the company’s activities, and its business is subject to a variety of federal laws, including but not limited to the following: Federal Trade Commission (‘FTC’) Act and Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (‘Dodd-Frank Act’); Equal Credit Opportunity Act; Electronic Fund Transfer Act; MLA; Servicemembers Civil Relief Act; Truth in Lending Act; Anti-Money Laundering and Economic Sanctions; Gramm-Leach-Bliley Act; Anti-Corruption; and Brady Handgun Violence Prevention Act. The company is subject to certain provisions of the USA PATRIOT Act and the Bank Secrecy Act under which it must maintain an anti-money laundering compliance program covering certain of its business activities. The company is subject to the Fair Credit Reporting Act and its implementing regulation known as Regulation V, which regulate the use of consumer reports and reporting of information to credit reporting agencies. The company also has implemented an identity theft prevention program to fulfill the requirements of the Red Flags Regulations and Guidelines issued under the Fair and Accurate Credit Transactions Act (‘FACTA’). The company is subject to the U.S. Foreign Corrupt Practices Act (‘FCPA’) and other similar laws in other jurisdictions, which generally prohibit companies and their agents or intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business and/or other benefits. In addition, the company must also comply with various state law provisions and the regulations of the U.S. Department of Justice-Bureau of Alcohol, Tobacco and Firearms that require each pawn lending location dealing in guns to obtain a Federal Firearm License (‘FFL’) and maintain a permanent record of all receipts and dispositions of firearms. The company is subject to the Telephone Consumer Protection Act and its implementing regulations (together, the ‘TCPA’) and the regulations of the Federal Communications Commission. The company’s pawn business in Mexico is regulated by PROFECO (Procuraduria Federal del Consumidor), Mexico’s primary federal consumer protection agency, which requires the company to annually register its pawn stores, approve pawn contracts and disclose the interest rates and fees charged on pawn transactions. History The company was founded in 1988 as a Texas corporation. It was incorporated in 1988. In 1991, the company was reincorporated as a Delaware corporation. The company was formerly known as First Cash Financial Services, Inc. and changed its name to FirstCash, Inc. in 2016 and then to FirstCash Holdings, Inc. in 2021.