Delaware (State or other jurisdiction of incorporation) | 001-10960 (Commission File Number) | 75-2237318 (IRS Employer Identification No.) |
Dated: October 26, 2017 | FIRSTCASH, INC. |
(Registrant) | |
/s/ R. DOUGLAS ORR | |
R. Douglas Orr | |
Executive Vice President and Chief Financial Officer | |
(As Principal Financial and Accounting Officer) |
• | The Company reported the following consolidated results for the three and nine months ended September 30, 2017 (in thousands, except per share amounts): |
Three Months Ended September 30, | ||||||||||||||||
2017 | 2016 | |||||||||||||||
As Reported | Adjusted | As Reported | Adjusted | |||||||||||||
(GAAP) * | (Non-GAAP) | (GAAP) * | (Non-GAAP) | |||||||||||||
Revenue | $ | 435,412 | $ | 435,412 | $ | 261,153 | $ | 261,153 | ||||||||
Net income (loss) | $ | 28,274 | $ | 28,861 | $ | (1,412 | ) | $ | 20,126 | |||||||
Diluted earnings per share | $ | 0.59 | $ | 0.61 | $ | (0.04 | ) | $ | 0.58 | |||||||
EBITDA (non-GAAP measure) | $ | 61,150 | $ | 62,081 | $ | 12,639 | $ | 42,290 | ||||||||
Weighted avg diluted shares | 47,668 | 47,668 | 34,631 | 34,631 |
* | Other than EBITDA, which is a non-GAAP financial measure. See the detailed reconciliation of non-GAAP financial measures provided elsewhere in this release. |
Nine Months Ended September 30, | ||||||||||||||||
2017 | 2016 | |||||||||||||||
As Reported | Adjusted | As Reported | Adjusted | |||||||||||||
(GAAP) * | (Non-GAAP) | (GAAP) * | (Non-GAAP) | |||||||||||||
Revenue | $ | 1,299,617 | $ | 1,299,617 | $ | 626,335 | $ | 626,335 | ||||||||
Net income | $ | 76,158 | $ | 87,044 | $ | 23,435 | $ | 47,884 | ||||||||
Diluted earnings per share | $ | 1.58 | $ | 1.81 | $ | 0.77 | $ | 1.58 | ||||||||
EBITDA (non-GAAP measure) | $ | 174,770 | $ | 192,048 | $ | 67,718 | $ | 101,848 | ||||||||
Weighted avg diluted shares | 48,117 | 48,117 | 30,372 | 30,372 |
* | Other than EBITDA, which is a non-GAAP financial measure. See the detailed reconciliation of non-GAAP financial measures provided elsewhere in this release. |
• | Adjusted earnings measures exclude merger related expenses in both the 2017 and 2016 periods, the loss on extinguishment of debt as a result of the senior notes refinancing in May of 2017 and certain other adjustments, which are further described in the detailed reconciliation of non-GAAP financial measures provided elsewhere in this release. |
• | Results of operations for the three month and nine month periods ended September 30, 2017 include the results of operations for Cash America which merged with FirstCash on September 1, 2016 (the “Merger”). The comparable prior-year periods include the results of operations for Cash America for the period September 2, 2016 to September 30, 2016, affecting comparability of 2017 and 2016 amounts. Unless noted otherwise, same-store results reported herein exclude Cash America results, as the stores were not in the comparative base for the full prior-year quarter or the year-to-date period. |
• | Despite an unprecedented series of hurricanes and earthquakes in the third quarter, which impacted approximately 250 locations in markets that included coastal Texas, Florida, Louisiana, Alabama, Georgia, South Carolina and central and southern Mexico, the Company was able to quickly reopen most stores, resulting in no material impact to reported earnings results for the quarter. |
• | For the trailing twelve months ended September 30, 2017, consolidated revenues totaled $1.8 billion, net income totaled $113 million and adjusted EBITDA totaled $270 million. EBITDA and adjusted EBITDA are non-GAAP measures and are calculated in the detailed reconciliation of non-GAAP financial measures provided elsewhere in this release. |
• | Consolidated core pawn revenues grew 64% for the quarter and 99% for the year-to-date period (61% and 101%, respectively, on a constant currency basis) compared to the respective prior-year periods, primarily due to the Merger and continued revenue growth in Latin America. |
• | U.S. segment revenues for the third quarter totaled $307 million, an increase of 94% compared to the third quarter of 2016, due primarily to the Merger. U.S. same-store core pawn revenues in the legacy First Cash stores increased by 1% for the quarter. |
• | In the U.S. segment, same-store pawn fee revenues for the quarter in the legacy First Cash stores increased 3%, driven by 5% growth in same-store pawn receivables, while same-store retail sales in these stores declined 1% compared to the prior-year quarter. Same-store retail sales in the legacy Cash America stores improved on a sequential basis to down 1% compared to a decline of 3% in the second quarter of 2017. While same-store pawn fee revenues for the quarter in these stores declined 11% compared to the prior-year quarter, they have stabilized sequentially and the pawn yield is improving compared to the prior year. |
• | Latin America segment revenues for the third quarter totaled $129 million, an increase of 25% on a U.S. dollar translated basis and 20% on a constant currency basis as compared to the third quarter of 2016, driven by strong same-store sales results, which included a same-store retail sales increase of 59%, or 52% on a constant currency basis, in the Maxi Prenda stores, and contributions from new stores. |
• | Latin America same-store core pawn revenues for the quarter increased 23% on a U.S. dollar translated basis, driven by a 24% increase in retail sales and a 20% increase in pawn fees compared to the prior-year quarter. On a constant currency basis, Latin America same-store core pawn revenues for the quarter increased 17% with a 19% increase in retail sales and a 14% increase in pawn fees compared to the prior-year quarter. |
• | Retail margins in Latin America for the quarter remained strong at 37%, especially given the significant volume of consumer electronic sales. U.S. segment retail margins for the quarter were 33%, which reflected the expected impact of the Merger, including the current focus on clearing aged inventory levels in the Cash America stores. |
• | Pawn loans in Latin America totaled $90 million at September 30, 2017 and increased by 24% on a U.S. dollar translated basis and 16% on a constant currency basis from September 30, 2016. Same-store pawn loans in Latin America at quarter end increased 22% on a dollar translated basis and increased 14% on a constant currency basis compared to the prior-year. |
• | U.S. segment pawn loans outstanding at September 30, 2017 totaled $281 million, which included $209 million from the Cash America locations. Pawn loans in the legacy U.S. First Cash stores increased 5% on a same-store basis from September 30, 2016, marking the fourth sequential quarter of positive year-over-year comparisons, and was significantly better than the 3% decline at this point a year ago. Excluding coastal Texas markets affected by the hurricane, Cash America same-store pawn receivables declined 11%, which was a sequential improvement over the 13% decline last quarter. The year-over-year decrease was driven in large part by continued efforts to improve portfolio yields and optimize loan-to-value ratios. |
• | Total inventories at September 30, 2017 were reduced to $309 million, compared to $333 million a year ago, as the Company continues to make significant progress in optimizing inventory levels in the Cash America operations. As of September 30, 2017, inventories aged greater than one year in the Latin America stores remained extremely low at 1% while they were 9% in the U.S. Aged inventories in the legacy First Cash U.S. stores were 5%, while aged inventories in the Cash America stores were 11%, a significant sequential improvement over the 14% aged level last quarter. |
• | During the third quarter of 2017, the Company added nine new stores in Mexico and one new location in the U.S. For the nine months ended September 30, 2017, the Company added 37 pawn stores in Latin America and three pawn stores in the U.S. |
• | In Colombia, the Company has signed leases for one store and a corporate office and has additional retail locations in the leasing pipeline. Additionally, the Company has started hiring key local employees with the expectation for the first store to open in early 2018. |
• | As of September 30, 2017, FirstCash operated 2,106 stores, composed of 989 stores in Latin America and 1,117 stores in the U.S. In addition, there were 63 check cashing locations operated by independent franchisees under franchising agreements with the Company at quarter end. |
• | The Company’s Board of Directors approved an increase in the annual dividend of 5% from $0.76 per share to $0.80 per share, or $0.20 per share quarterly, beginning in the fourth quarter of 2017. The $0.20 per share fourth quarter cash dividend on common shares outstanding declared by the Board of Directors will be paid on November 30, 2017 to stockholders of record as of November 13, 2017. Any future dividends are subject to approval by the Company’s Board of Directors. |
• | Under the Company’s current $100 million share repurchase authorization, the Company repurchased 1,115,000 shares consisting of 954,000 shares at quarter end and an additional 161,000 shares through October 25th at an aggregate cost of approximately $65 million, or an average repurchase price of $58.03 per share, leaving approximately $35 million available for future share repurchases under the current buyback authorization. The Company expects to complete the remaining authorization later this year or early in 2018, subject to expected liquidity, debt covenant restrictions and other relevant factors. |
• | Given the progress of repurchases under the existing plan and the strong cash flows from the business, the Company’s Board of Directors authorized an additional $100 million share repurchase program that will become effective following the completion of the current plan. |
• | The Company generated $205 million in operating cash flow and $195 million in adjusted free cash flow during the twelve months ended September 30, 2017 compared to $68 million and $46 million, respectively, during the same prior-year period. Adjusted free cash flow is a non-GAAP measure and is calculated in the detailed reconciliation of non-GAAP financial measures provided elsewhere in this release. |
• | Total outstanding debt at September 30, 2017 was $440 million which includes the $300 million senior notes due in 2024 and $140 million drawn on the $400 million unsecured credit facility. This compares to $560 million of outstanding debt at September 30, 2016. |
• | The ratio of net debt, defined as total debt less cash and cash equivalents, to trailing twelve months adjusted EBITDA, as defined in the Company’s senior notes covenants, was 1.3 to 1. |
• | As of September 30, 2017, the Company had $93 million in cash on its balance sheet and $256 million of availability for future borrowings under its long-term, unsecured credit facility. |
• | The Company is reiterating its fiscal full-year 2017 guidance for adjusted earnings per share, a non-GAAP measure that excludes Merger related expenses and the loss on extinguishment of debt as a result of the senior notes refinancing in May 2017, to be in the range of $2.60 to $2.70. |
• | The guidance for fiscal 2017 is presented on a non-GAAP basis, as it does not include the impact of Merger and other acquisition expenses or the loss on extinguishment of debt. Given the difficulty in predicting the amount and timing of future ongoing Merger expenses, the Company cannot reasonably provide a full reconciliation of adjusted guidance to GAAP guidance. |
◦ | 2017 adjusted net income, a non-GAAP measure that excludes Merger related expenses and the loss on extinguishment of debt, is projected to be in the range of approximately $124 million to $129 million versus 2016 adjusted net income of $85 million. |
◦ | Adjusted EBITDA, also a non-GAAP measure, is projected to be in the range of approximately $268 million to $275 million for fiscal 2017. This compares to adjusted EBITDA of $180 million in fiscal 2016 and $132 million in fiscal 2015. |
• | These estimates of expected adjusted earnings per share, adjusted net income and adjusted EBITDA include the following assumptions: |
◦ | An estimated fourth quarter exchange rate of 19.0 Mexican pesos / U.S. dollar, which implies a full year 2017 average rate of 19.0 Mexican pesos / U.S. dollar. |
◦ | An anticipated fourth quarter negative impact on pawn loan fees of $0.02 to $0.03 per share due to the unprecedented series of hurricanes and earthquakes experienced in the third quarter and the resulting negative impact on pawn receivables, especially in the coastal Texas markets. |
◦ | The Company discontinued its small online consumer lending operation during the third quarter. This action, combined with consumer lending store closures, are anticipated to contribute to a 10% decline in fourth quarter consumer lending revenues compared to 2016. |
◦ | Plans to open or acquire approximately 50 to 60 stores in 2017. |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenue: | ||||||||||||||||
Retail merchandise sales | $ | 246,334 | $ | 152,215 | $ | 750,150 | $ | 386,534 | ||||||||
Pawn loan fees | 132,545 | 79,505 | 383,428 | 182,816 | ||||||||||||
Wholesale scrap jewelry sales | 37,528 | 18,956 | 107,285 | 35,906 | ||||||||||||
Consumer loan and credit services fees | 19,005 | 10,477 | 58,754 | 21,079 | ||||||||||||
Total revenue | 435,412 | 261,153 | 1,299,617 | 626,335 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Cost of retail merchandise sold | 161,350 | 93,399 | 483,458 | 239,166 | ||||||||||||
Cost of wholesale scrap jewelry sold | 36,831 | 16,977 | 102,370 | 30,701 | ||||||||||||
Consumer loan and credit services loss provision | 6,185 | 3,413 | 15,419 | 5,780 | ||||||||||||
Total cost of revenue | 204,366 | 113,789 | 601,247 | 275,647 | ||||||||||||
Net revenue | 231,046 | 147,364 | 698,370 | 350,688 | ||||||||||||
Expenses and other income: | ||||||||||||||||
Store operating expenses | 138,966 | 80,574 | 412,780 | 190,563 | ||||||||||||
Administrative expenses | 29,999 | 24,500 | 93,542 | 58,277 | ||||||||||||
Depreciation and amortization | 13,872 | 7,281 | 42,804 | 17,165 | ||||||||||||
Interest expense | 6,129 | 5,073 | 17,827 | 13,859 | ||||||||||||
Interest income | (418 | ) | (138 | ) | (1,138 | ) | (636 | ) | ||||||||
Merger and other acquisition expenses | 911 | 29,398 | 3,164 | 33,877 | ||||||||||||
Loss on extinguishment of debt | 20 | — | 14,114 | — | ||||||||||||
Net loss on sale of common stock of Enova | — | 253 | — | 253 | ||||||||||||
Total expenses and other income | 189,479 | 146,941 | 583,093 | 313,358 | ||||||||||||
Income before income taxes | 41,567 | 423 | 115,277 | 37,330 | ||||||||||||
Provision for income taxes | 13,293 | 1,835 | 39,119 | 13,895 | ||||||||||||
Net income (loss) | $ | 28,274 | $ | (1,412 | ) | $ | 76,158 | $ | 23,435 | |||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | 0.59 | $ | (0.04 | ) | $ | 1.58 | $ | 0.77 | |||||||
Diluted | $ | 0.59 | $ | (0.04 | ) | $ | 1.58 | $ | 0.77 | |||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 47,628 | 34,631 | 48,090 | 30,372 | ||||||||||||
Diluted | 47,668 | 34,631 | 48,117 | 30,372 | ||||||||||||
Dividends declared per common share | $ | 0.190 | $ | 0.125 | $ | 0.570 | $ | 0.375 |
September 30, | December 31, | |||||||||||
2017 | 2016 | 2016 | ||||||||||
ASSETS | ||||||||||||
Cash and cash equivalents | $ | 93,411 | $ | 83,356 | $ | 89,955 | ||||||
Fees and service charges receivable | 45,134 | 45,708 | 41,013 | |||||||||
Pawn loans | 371,367 | 373,169 | 350,506 | |||||||||
Consumer loans, net | 24,515 | 27,792 | 29,204 | |||||||||
Inventories | 308,683 | 332,862 | 330,683 | |||||||||
Income taxes receivable | 27,867 | 36,449 | 25,510 | |||||||||
Prepaid expenses and other current assets | 23,818 | 31,935 | 25,264 | |||||||||
Investment in common stock of Enova | — | 54,786 | — | |||||||||
Total current assets | 894,795 | 986,057 | 892,135 | |||||||||
Property and equipment, net | 234,309 | 240,749 | 236,057 | |||||||||
Goodwill | 834,883 | 865,350 | 831,151 | |||||||||
Intangible assets, net | 95,991 | 106,502 | 104,474 | |||||||||
Other assets | 59,054 | 69,125 | 71,679 | |||||||||
Deferred tax assets | 12,694 | 9,912 | 9,707 | |||||||||
Total assets | $ | 2,131,726 | $ | 2,277,695 | $ | 2,145,203 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Accounts payable and accrued liabilities | $ | 94,769 | $ | 129,997 | $ | 109,354 | ||||||
Customer deposits | 37,626 | 37,591 | 33,536 | |||||||||
Income taxes payable | 3,763 | 910 | 738 | |||||||||
Total current liabilities | 136,158 | 168,498 | 143,628 | |||||||||
Revolving unsecured credit facility | 140,000 | 360,000 | 260,000 | |||||||||
Senior unsecured notes | 294,961 | 196,373 | 196,545 | |||||||||
Deferred tax liabilities | 73,203 | 42,125 | 61,275 | |||||||||
Other liabilities | 19,725 | 77,645 | 33,769 | |||||||||
Total liabilities | 664,047 | 844,641 | 695,217 | |||||||||
Stockholders’ equity: | ||||||||||||
Preferred stock | — | — | — | |||||||||
Common stock | 493 | 493 | 493 | |||||||||
Additional paid-in capital | 1,219,589 | 1,217,820 | 1,217,969 | |||||||||
Retained earnings | 436,159 | 359,926 | 387,401 | |||||||||
Accumulated other comprehensive loss | (88,445 | ) | (109,114 | ) | (119,806 | ) | ||||||
Common stock held in treasury, at cost | (100,117 | ) | (36,071 | ) | (36,071 | ) | ||||||
Total stockholders’ equity | 1,467,679 | 1,433,054 | 1,449,986 | |||||||||
Total liabilities and stockholders’ equity | $ | 2,131,726 | $ | 2,277,695 | $ | 2,145,203 |
• | U.S. operations - Includes all pawn and consumer loan operations in the U.S. |
• | Latin America operations - Includes all pawn and consumer loan operations in Latin America, which currently includes operations in Mexico, Guatemala and El Salvador |
Balance at September 30, | Increase / | |||||||||||
2017 | 2016 | (Decrease) | ||||||||||
U.S. Operations Segment | ||||||||||||
Earning assets: | ||||||||||||
Pawn loans | $ | 281,217 | $ | 300,646 | (6 | )% | ||||||
Consumer loans, net (1) | 24,108 | 27,381 | (12 | )% | ||||||||
Inventories | 240,384 | 280,429 | (14 | )% | ||||||||
$ | 545,709 | $ | 608,456 | (10 | )% | |||||||
Average outstanding pawn loan amount (in ones) | $ | 152 | $ | 145 | 5 | % | ||||||
Composition of pawn collateral: | ||||||||||||
General merchandise | 36 | % | 39 | % | ||||||||
Jewelry | 64 | % | 61 | % | ||||||||
100 | % | 100 | % | |||||||||
Composition of inventories: | ||||||||||||
General merchandise | 43 | % | 48 | % | ||||||||
Jewelry | 57 | % | 52 | % | ||||||||
100 | % | 100 | % | |||||||||
Percentage of inventory aged greater than one year | 9 | % | 6 | % |
(1) | Does not include the off-balance sheet principal portion of active CSO extensions of credit made by independent third-party lenders. These amounts, net of the Company’s estimated fair value of its liability for guaranteeing the extensions of credit, totaled $9,251 and $11,641 as of September 30, 2017 and 2016, respectively. |
Three Months Ended | |||||||||||||
September 30, | |||||||||||||
2017 | 2016 | Increase | |||||||||||
U.S. Operations Segment | |||||||||||||
Revenue: | |||||||||||||
Retail merchandise sales | $ | 160,598 | $ | 84,547 | 90 | % | |||||||
Pawn loan fees | 95,266 | 48,840 | 95 | % | |||||||||
Wholesale scrap jewelry sales | 32,397 | 15,046 | 115 | % | |||||||||
Consumer loan and credit services fees | 18,525 | 9,991 | 85 | % | |||||||||
Total revenue | 306,786 | 158,424 | 94 | % | |||||||||
Cost of revenue: | |||||||||||||
Cost of retail merchandise sold | 107,561 | 51,922 | 107 | % | |||||||||
Cost of wholesale scrap jewelry sold | 31,518 | 13,955 | 126 | % | |||||||||
Consumer loan and credit services loss provision | 6,068 | 3,275 | 85 | % | |||||||||
Total cost of revenue | 145,147 | 69,152 | 110 | % | |||||||||
Net revenue | 161,639 | 89,272 | 81 | % | |||||||||
Segment expenses: | |||||||||||||
Store operating expenses | 104,555 | 52,480 | 99 | % | |||||||||
Depreciation and amortization | 5,919 | 2,906 | 104 | % | |||||||||
Total segment expenses | 110,474 | 55,386 | 99 | % | |||||||||
Segment pre-tax operating income | $ | 51,165 | $ | 33,886 | 51 | % |
Nine Months Ended | |||||||||||||
September 30, | |||||||||||||
2017 | 2016 | Increase | |||||||||||
U.S. Operations Segment | |||||||||||||
Revenue: | |||||||||||||
Retail merchandise sales | $ | 519,116 | $ | 186,673 | 178 | % | |||||||
Pawn loan fees | 287,338 | 94,929 | 203 | % | |||||||||
Wholesale scrap jewelry sales | 91,430 | 25,910 | 253 | % | |||||||||
Consumer loan and credit services fees | 57,425 | 19,619 | 193 | % | |||||||||
Total revenue | 955,309 | 327,131 | 192 | % | |||||||||
Cost of revenue: | |||||||||||||
Cost of retail merchandise sold | 337,789 | 114,632 | 195 | % | |||||||||
Cost of wholesale scrap jewelry sold | 87,600 | 22,914 | 282 | % | |||||||||
Consumer loan and credit services loss provision | 15,115 | 5,380 | 181 | % | |||||||||
Total cost of revenue | 440,504 | 142,926 | 208 | % | |||||||||
Net revenue | 514,805 | 184,205 | 179 | % | |||||||||
Segment expenses: | |||||||||||||
Store operating expenses | 318,044 | 107,196 | 197 | % | |||||||||
Depreciation and amortization | 18,759 | 5,827 | 222 | % | |||||||||
Total segment expenses | 336,803 | 113,023 | 198 | % | |||||||||
Segment pre-tax operating income | $ | 178,002 | $ | 71,182 | 150 | % |
Constant Currency Basis | |||||||||||||||||||||
Balance at | |||||||||||||||||||||
September 30, | Increase / | ||||||||||||||||||||
Balance at September 30, | Increase / | 2017 | (Decrease) | ||||||||||||||||||
2017 | 2016 | (Decrease) | (Non-GAAP) | (Non-GAAP) | |||||||||||||||||
Latin America Operations Segment | |||||||||||||||||||||
Earning assets: | |||||||||||||||||||||
Pawn loans | $ | 90,150 | $ | 72,523 | 24 | % | $ | 84,378 | 16 | % | |||||||||||
Consumer loans, net | 407 | 411 | (1 | )% | 380 | (8 | )% | ||||||||||||||
Inventories | 68,299 | 52,433 | 30 | % | 63,855 | 22 | % | ||||||||||||||
$ | 158,856 | $ | 125,367 | 27 | % | $ | 148,613 | 19 | % | ||||||||||||
Average outstanding pawn loan amount (in ones) | $ | 67 | $ | 59 | 14 | % | $ | 63 | 7 | % | |||||||||||
Composition of pawn collateral: | |||||||||||||||||||||
General merchandise | 82 | % | 82 | % | |||||||||||||||||
Jewelry | 18 | % | 18 | % | |||||||||||||||||
100 | % | 100 | % | ||||||||||||||||||
Composition of inventories: | |||||||||||||||||||||
General merchandise | 75 | % | 80 | % | |||||||||||||||||
Jewelry | 25 | % | 20 | % | |||||||||||||||||
100 | % | 100 | % | ||||||||||||||||||
Percentage of inventory aged greater than one year | 1 | % | 1 | % |
Constant Currency Basis | ||||||||||||||||||||||
Three Months | ||||||||||||||||||||||
Ended | ||||||||||||||||||||||
Three Months Ended | September 30, | Increase / | ||||||||||||||||||||
September 30, | Increase / | 2017 | (Decrease) | |||||||||||||||||||
2017 | 2016 | (Decrease) | (Non-GAAP) | (Non-GAAP) | ||||||||||||||||||
Latin America Operations Segment | ||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||
Retail merchandise sales | $ | 85,736 | $ | 67,668 | 27 | % | $ | 81,686 | 21 | % | ||||||||||||
Pawn loan fees | 37,279 | 30,665 | 22 | % | 35,534 | 16 | % | |||||||||||||||
Wholesale scrap jewelry sales | 5,131 | 3,910 | 31 | % | 5,131 | 31 | % | |||||||||||||||
Consumer loan and credit services fees | 480 | 486 | (1 | )% | 457 | (6 | )% | |||||||||||||||
Total revenue | 128,626 | 102,729 | 25 | % | 122,808 | 20 | % | |||||||||||||||
Cost of revenue: | ||||||||||||||||||||||
Cost of retail merchandise sold | 53,789 | 41,477 | 30 | % | 51,252 | 24 | % | |||||||||||||||
Cost of wholesale scrap jewelry sold | 5,313 | 3,022 | 76 | % | 5,068 | 68 | % | |||||||||||||||
Consumer loan and credit services loss provision | 117 | 138 | (15 | )% | 111 | (20 | )% | |||||||||||||||
Total cost of revenue | 59,219 | 44,637 | 33 | % | 56,431 | 26 | % | |||||||||||||||
Net revenue | 69,407 | 58,092 | 19 | % | 66,377 | 14 | % | |||||||||||||||
Segment expenses: | ||||||||||||||||||||||
Store operating expenses | 34,411 | 28,094 | 22 | % | 32,920 | 17 | % | |||||||||||||||
Depreciation and amortization | 2,704 | 2,602 | 4 | % | 2,587 | (1 | )% | |||||||||||||||
Total segment expenses | 37,115 | 30,696 | 21 | % | 35,507 | 16 | % | |||||||||||||||
Segment pre-tax operating income | $ | 32,292 | $ | 27,396 | 18 | % | $ | 30,870 | 13 | % |
Constant Currency Basis | ||||||||||||||||||||||
Nine Months | ||||||||||||||||||||||
Ended | ||||||||||||||||||||||
Nine Months Ended | September 30, | Increase / | ||||||||||||||||||||
September 30, | Increase / | 2017 | (Decrease) | |||||||||||||||||||
2017 | 2016 | (Decrease) | (Non-GAAP) | (Non-GAAP) | ||||||||||||||||||
Latin America Operations Segment | ||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||
Retail merchandise sales | $ | 231,034 | $ | 199,861 | 16 | % | $ | 238,833 | 19 | % | ||||||||||||
Pawn loan fees | 96,090 | 87,887 | 9 | % | 99,272 | 13 | % | |||||||||||||||
Wholesale scrap jewelry sales | 15,855 | 9,996 | 59 | % | 15,855 | 59 | % | |||||||||||||||
Consumer loan and credit services fees | 1,329 | 1,460 | (9 | )% | 1,377 | (6 | )% | |||||||||||||||
Total revenue | 344,308 | 299,204 | 15 | % | 355,337 | 19 | % | |||||||||||||||
Cost of revenue: | ||||||||||||||||||||||
Cost of retail merchandise sold | 145,669 | 124,534 | 17 | % | 150,536 | 21 | % | |||||||||||||||
Cost of wholesale scrap jewelry sold | 14,770 | 7,787 | 90 | % | 15,238 | 96 | % | |||||||||||||||
Consumer loan and credit services loss provision | 304 | 400 | (24 | )% | 315 | (21 | )% | |||||||||||||||
Total cost of revenue | 160,743 | 132,721 | 21 | % | 166,089 | 25 | % | |||||||||||||||
Net revenue | 183,565 | 166,483 | 10 | % | 189,248 | 14 | % | |||||||||||||||
Segment expenses: | ||||||||||||||||||||||
Store operating expenses | 94,736 | 83,367 | 14 | % | 97,565 | 17 | % | |||||||||||||||
Depreciation and amortization | 7,723 | 7,919 | (2 | )% | 7,956 | — | % | |||||||||||||||
Total segment expenses | 102,459 | 91,286 | 12 | % | 105,521 | 16 | % | |||||||||||||||
Segment pre-tax operating income | $ | 81,106 | $ | 75,197 | 8 | % | $ | 83,727 | 11 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Consolidated Results of Operations | |||||||||||||||
U.S. operations segment pre-tax operating income | $ | 51,165 | $ | 33,886 | $ | 178,002 | $ | 71,182 | |||||||
Latin America operations segment pre-tax operating income | 32,292 | 27,396 | 81,106 | 75,197 | |||||||||||
Consolidated segment pre-tax operating income | 83,457 | 61,282 | 259,108 | 146,379 | |||||||||||
Corporate expenses and other income: | |||||||||||||||
Administrative expenses | 29,999 | 24,500 | 93,542 | 58,277 | |||||||||||
Depreciation and amortization | 5,249 | 1,773 | 16,322 | 3,419 | |||||||||||
Interest expense | 6,129 | 5,073 | 17,827 | 13,859 | |||||||||||
Interest income | (418 | ) | (138 | ) | (1,138 | ) | (636 | ) | |||||||
Merger and other acquisition expenses | 911 | 29,398 | 3,164 | 33,877 | |||||||||||
Loss on extinguishment of debt | 20 | — | 14,114 | — | |||||||||||
Net loss on sale of common stock of Enova | — | 253 | — | 253 | |||||||||||
Total corporate expenses and other income | 41,890 | 60,859 | 143,831 | 109,049 | |||||||||||
Income before income taxes | 41,567 | 423 | 115,277 | 37,330 | |||||||||||
Provision for income taxes | 13,293 | 1,835 | 39,119 | 13,895 | |||||||||||
Net income (loss) | $ | 28,274 | $ | (1,412 | ) | $ | 76,158 | $ | 23,435 |
Consumer | |||||||||
Pawn | Loan | Total | |||||||
Locations (1) | Locations (2) | Locations | |||||||
U.S. operations segment: | |||||||||
Total locations, beginning of period | 1,085 | 45 | 1,130 | ||||||
New locations opened | 2 | — | 2 | ||||||
Locations acquired | 1 | — | 1 | ||||||
Locations closed or consolidated | (15 | ) | (1 | ) | (16 | ) | |||
Total locations, end of period | 1,073 | 44 | 1,117 | ||||||
Latin America operations segment: | |||||||||
Total locations, beginning of period | 927 | 28 | 955 | ||||||
New locations opened | 32 | — | 32 | ||||||
Locations acquired | 5 | — | 5 | ||||||
Locations closed or consolidated | (3 | ) | — | (3 | ) | ||||
Total locations, end of period | 961 | 28 | 989 | ||||||
Total: | |||||||||
Total locations, beginning of period | 2,012 | 73 | 2,085 | ||||||
New locations opened | 34 | — | 34 | ||||||
Locations acquired | 6 | — | 6 | ||||||
Locations closed or consolidated | (18 | ) | (1 | ) | (19 | ) | |||
Total locations, end of period | 2,034 | 72 | 2,106 |
(1) | At September 30, 2017, 317 of the U.S. pawn stores, which are primarily located in Texas and Ohio, also offered consumer loans or credit services products, while 49 Mexico pawn stores offer consumer loan products. |
(2) | The Company’s U.S. free-standing consumer loan locations offer consumer loans and/or a credit services product and are located in Ohio, Texas, California and limited markets in Mexico. The table does not include 63 check cashing locations operated by independent franchises under franchising agreements with the Company. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||||||||
In Thousands | Per Share | In Thousands | Per Share | In Thousands | Per Share | In Thousands | Per Share | ||||||||||||||||||||||||
Net income (loss), as reported | $ | 28,274 | $ | 0.59 | $ | (1,412 | ) | $ | (0.04 | ) | $ | 76,158 | $ | 1.58 | $ | 23,435 | $ | 0.77 | |||||||||||||
Adjustments, net of tax: | |||||||||||||||||||||||||||||||
Merger related expenses: | |||||||||||||||||||||||||||||||
Transaction | — | — | 10,915 | 0.32 | — | — | 13,732 | 0.45 | |||||||||||||||||||||||
Severance and retention | 56 | — | 8,737 | 0.25 | 857 | 0.02 | 8,737 | 0.29 | |||||||||||||||||||||||
Other | 518 | 0.02 | 1,726 | 0.05 | 1,137 | 0.02 | 1,726 | 0.06 | |||||||||||||||||||||||
Total Merger related expenses | 574 | 0.02 | 21,378 | 0.62 | 1,994 | 0.04 | 24,195 | 0.80 | |||||||||||||||||||||||
Other acquisition expenses | — | — | — | — | — | — | 94 | — | |||||||||||||||||||||||
Loss on extinguishment of debt | 13 | — | — | — | 8,892 | 0.19 | — | — | |||||||||||||||||||||||
Net loss on sale of common stock of Enova | — | — | 160 | — | — | — | 160 | 0.01 | |||||||||||||||||||||||
Adjusted net income | $ | 28,861 | $ | 0.61 | $ | 20,126 | $ | 0.58 | $ | 87,044 | $ | 1.81 | $ | 47,884 | $ | 1.58 |
Three Months Ended September 30, | |||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||
Pre-tax | Tax | After-tax | Pre-tax | Tax | After-tax | ||||||||||||||||||
Merger related expenses (1) | $ | 911 | $ | 337 | $ | 574 | $ | 29,398 | $ | 8,020 | $ | 21,378 | |||||||||||
Loss on extinguishment of debt | 20 | 7 | 13 | — | — | — | |||||||||||||||||
Net loss on sale of common stock of Enova | — | — | — | 253 | 93 | 160 | |||||||||||||||||
Total adjustments | $ | 931 | $ | 344 | $ | 587 | $ | 29,651 | $ | 8,113 | $ | 21,538 |
Nine Months Ended September 30, | |||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||
Pre-tax | Tax | After-tax | Pre-tax | Tax | After-tax | ||||||||||||||||||
Merger related expenses (1) | $ | 3,164 | $ | 1,170 | $ | 1,994 | $ | 33,727 | $ | 9,532 | $ | 24,195 | |||||||||||
Other acquisition expenses | — | — | — | 150 | 56 | 94 | |||||||||||||||||
Loss on extinguishment of debt | 14,114 | 5,222 | 8,892 | — | — | — | |||||||||||||||||
Net loss on sale of common stock of Enova | — | — | — | 253 | 93 | 160 | |||||||||||||||||
Total adjustments | $ | 17,278 | $ | 6,392 | $ | 10,886 | $ | 34,130 | $ | 9,681 | $ | 24,449 |
(1) | Resulting tax benefit for the three and nine months ended September 30, 2016 is less than the statutory rate as a portion of the transaction costs were not deductible for tax purposes. |
Trailing Twelve | ||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Months Ended | ||||||||||||||||||||||
September 30, | September 30, | September 30, | ||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||
Net income (loss) | $ | 28,274 | $ | (1,412 | ) | $ | 76,158 | $ | 23,435 | $ | 112,850 | $ | 42,845 | |||||||||||
Income taxes | 13,293 | 1,835 | 39,119 | 13,895 | 58,544 | 22,112 | ||||||||||||||||||
Depreciation and amortization | 13,872 | 7,281 | 42,804 | 17,165 | 57,504 | 21,453 | ||||||||||||||||||
Interest expense | 6,129 | 5,073 | 17,827 | 13,859 | 24,288 | 18,264 | ||||||||||||||||||
Interest income | (418 | ) | (138 | ) | (1,138 | ) | (636 | ) | (1,253 | ) | (1,059 | ) | ||||||||||||
EBITDA | 61,150 | 12,639 | 174,770 | 67,718 | 251,933 | 103,615 | ||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||
Merger related expenses | 911 | 29,398 | 3,164 | 33,727 | 5,657 | 33,727 | ||||||||||||||||||
Other acquisition expenses | — | — | — | 150 | 300 | 1,850 | ||||||||||||||||||
Loss on extinguishment of debt | 20 | — | 14,114 | — | 14,114 | — | ||||||||||||||||||
Net (gain) / loss on sale of common stock of Enova | — | 253 | — | 253 | (1,552 | ) | 253 | |||||||||||||||||
Adjusted EBITDA | $ | 62,081 | $ | 42,290 | $ | 192,048 | $ | 101,848 | $ | 270,452 | $ | 139,445 | ||||||||||||
Net Debt Ratio calculated as follows: | ||||||||||||||||||||||||
Total debt (outstanding principal) | $ | 440,000 | $ | 560,000 | ||||||||||||||||||||
Less: cash and cash equivalents | (93,411 | ) | (83,356 | ) | ||||||||||||||||||||
Net debt | $ | 346,589 | $ | 476,644 | ||||||||||||||||||||
Adjusted EBITDA | $ | 270,452 | $ | 139,445 | ||||||||||||||||||||
Net Debt Ratio | 1.28 | :1 | 3.42 | :1 |
Trailing Twelve | ||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | Months Ended | ||||||||||||||||||||||
September 30, | September 30, | September 30, | ||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||
Cash flow from operating activities | $ | 46,033 | $ | 901 | $ | 148,846 | $ | 40,474 | $ | 205,226 | $ | 68,101 | ||||||||||||
Cash flow from investing activities: | ||||||||||||||||||||||||
Loan receivables, net of cash repayments | (28,702 | ) | (22,020 | ) | 5,261 | (31,486 | ) | 20,675 | (12,903 | ) | ||||||||||||||
Purchases of property and equipment | (9,194 | ) | (6,353 | ) | (26,595 | ) | (23,426 | ) | (37,032 | ) | (28,971 | ) | ||||||||||||
Free cash flow | 8,137 | (27,472 | ) | 127,512 | (14,438 | ) | 188,869 | 26,227 | ||||||||||||||||
Merger related expenses paid, net of tax benefit | 898 | 18,158 | 4,443 | 19,715 | 5,667 | 19,715 | ||||||||||||||||||
Adjusted free cash flow | $ | 9,035 | $ | (9,314 | ) | $ | 131,955 | $ | 5,277 | $ | 194,536 | $ | 45,942 |
September 30, | Favorable / | ||||||||
2017 | 2016 | (Unfavorable) | |||||||
Mexican peso / U.S. dollar exchange rate: | |||||||||
End-of-period | 18.2 | 19.5 | 7 | % | |||||
Three months ended | 17.8 | 18.7 | 5 | % | |||||
Nine months ended | 18.9 | 18.3 | (3 | )% | |||||
Guatemalan quetzal / U.S. dollar exchange rate: | |||||||||
End-of-period | 7.3 | 7.5 | 3 | % | |||||
Three months ended | 7.3 | 7.6 | 4 | % | |||||
Nine months ended | 7.4 | 7.6 | 3 | % |
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