Firstcash Holdings Inc.

04/24/2026 | Press release | Distributed by Public on 04/24/2026 11:30

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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 Holdings, 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 on Form 10-K for the year ended December 31, 2025.
GENERAL
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 is the leading international operator of pawn stores with locations in the U.S., Latin America and the U.K. 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 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 completed the acquisition of H&T, the leading pawn operator in the United Kingdom, on August 14, 2025, the date which the balance sheet and operating results of H&T were included in the Company's consolidated financial results.
The Company is also a leading provider of customer payment solutions at the POS for retailers of consumer goods and services, which it conducts solely through its subsidiary, AFF. The Company's customer payment solutions business line focuses on LTO products and facilitating other retail financing payment options across a large network of traditional and e-commerce merchant partners in the U.S. 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.
The Company's two business lines are organized into four reportable segments. The U.S. pawn segment consists of pawn operations in the U.S.; the Latin America pawn segment consists of pawn operations in Mexico, Guatemala, El Salvador and Colombia; and the U.K. pawn segment consists of pawn operations in England, Scotland and Wales. The retail POS payment solutions segment consists of the operations of AFF in the U.S.
OPERATIONS AND LOCATIONS
Pawn Operations
As of March 31, 2026, the Company operated 3,334 pawn store locations composed of 1,207 stores in 29 U.S. states and the District of Columbia, 1,733 stores in 32 states in Mexico, 75 stores in Guatemala, 18 stores in El Salvador, 12 stores in Colombia and 289 stores in the U.K.
The following table details pawn store count activity for the three months ended March 31, 2026:
Three Months Ended March 31, 2026
U.S. Latin America U.K. Total
Total locations, beginning of period 1,207 1,837 286 3,330
New locations opened
- 4 3 7
Locations acquired 1 - - 1
Consolidation of existing pawn locations (1)
(1) (3) - (4)
Total locations, end of period 1,207 1,838 289 3,334
(1)Store consolidations, which include certain acquired locations that have been combined with overlapping stores, represent closings for which the Company expects to maintain a significant portion of the customer base in the consolidated location.
POS Payment Solutions
As of March 31, 2026, AFF provided LTO and retail POS payment solutions for consumer goods and services through a network of approximately 16,600 active retail merchant partner locations located in all 50 U.S. states and the District of Columbia, up from approximately 14,500 locations at March 31, 2025.
CRITICAL ACCOUNTING ESTIMATES
The financial statements have been prepared in accordance with GAAP. The significant accounting policies and estimates 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 2025 Annual Report on Form 10-K. There have been no changes to the Company's significant accounting policies for the three months ended March 31, 2026.
RESULTS OF OPERATIONS (unaudited)
Operating Results for the Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025
The following tables and related discussion set forth key operating and financial data for the Company's operations by reporting segment as of and for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 (in thousands).
Operating expenses of the three pawn segments include salary and benefit expenses of store-level employees, occupancy costs, bank and other treasury fees, security, insurance, utilities, supplies and other costs incurred by the pawn stores. Operating expenses of the AFF segment include salary and benefit expenses of operations-focused departments, payment processing charges, data analytics and decisioning costs, information technology costs, advertising costs and other operational costs incurred by AFF.
Corporate expenses and income, which include administrative expenses, corporate depreciation and amortization, interest expense, interest income, gain on foreign exchange, merger and acquisition expenses, and other income, net, are presented on a consolidated basis and are not allocated between the segments. Intersegment transactions related to AFF's LTO payment solution product offered in U.S. pawn stores are eliminated from consolidated totals.
Three Months Ended March 31, 2026
U.S.
Pawn
Latin
America
Pawn
U.K.
Pawn
Retail POS
Payment
Solutions
Corporate/
Intersegment
Eliminations
Consolidated
Revenue:
Retail merchandise sales $ 283,829 $ 159,841 $ 21,845 $ - $ (681) $ 464,834
Pawn loan fees 157,808 76,646 32,244 - - 266,698
Leased merchandise income - - - 130,187 - 130,187
Interest and fees on retail finance products
- - - 74,335 - 74,335
Wholesale scrap jewelry sales 47,369 20,632 44,480 - - 112,481
Other revenue - - 3,116 - - 3,116
Total revenue 489,006 257,119 101,685 204,522 (681) 1,051,651
Cost of revenue:
Cost of retail merchandise sold 158,956 104,066 15,379 - (352) 278,049
Depreciation of leased merchandise - - - 81,352 (293) 81,059
Provision for lease losses - - - 29,931 (187) 29,744
Provision for loan losses - - - 42,844 - 42,844
Cost of wholesale scrap jewelry sold 36,097 16,860 23,770 - - 76,727
Other cost of revenue - - 846 - - 846
Total cost of revenue 195,053 120,926 39,995 154,127 (832) 509,269
Net revenue 293,953 136,193 61,690 50,395 151 542,382
Expenses and other income:
Operating expenses 143,857 80,727 21,089 23,756 - 269,429
Administrative expenses - - - - 65,778 65,778
Depreciation and amortization 8,696 4,585 1,447 720 16,068 31,516
Interest expense - - - - 34,528 34,528
Interest income - - - - (227) (227)
Gain on foreign exchange
- - - - (1,102) (1,102)
Merger and acquisition expenses - - - - 865 865
Other income, net
- - - - (3,533) (3,533)
Total expenses and other income 152,553 85,312 22,536 24,476 112,377 397,254
Income (loss) before income taxes $ 141,400 $ 50,881 $ 39,154 $ 25,919 $ (112,226) $ 145,128
Three Months Ended March 31, 2025
U.S.
Pawn 		Latin
America
Pawn 		U.K.
Pawn 		Retail POS
Payment
Solutions
Corporate/
Intersegment
Eliminations
Consolidated
Revenue:
Retail merchandise sales $ 251,225 $ 120,532 $ - $ - $ (701) $ 371,056
Pawn loan fees 137,948 53,923 - - - 191,871
Leased merchandise income - - - 156,918 - 156,918
Interest and fees on retail finance products
- - - 73,413 - 73,413
Wholesale scrap jewelry sales 33,492 9,673 - - - 43,165
Total revenue 422,665 184,128 - 230,331 (701) 836,423
Cost of revenue:
Cost of retail merchandise sold 145,758 78,739 - - (373) 224,124
Depreciation of leased merchandise - - - 89,143 (324) 88,819
Provision for lease losses - - - 27,604 (42) 27,562
Provision for loan losses - - - 36,360 - 36,360
Cost of wholesale scrap jewelry sold 27,224 8,131 - - - 35,355
Total cost of revenue 172,982 86,870 - 153,107 (739) 412,220
Net revenue 249,683 97,258 - 77,224 38 424,203
Expenses and other income:
Operating expenses 128,951 61,417 - 24,218 - 214,586
Administrative expenses - - - - 48,523 48,523
Depreciation and amortization 7,600 4,436 - 705 12,761 25,502
Interest expense - - - - 27,471 27,471
Interest income - - - - (1,229) (1,229)
Gain on foreign exchange
- - - - (14) (14)
Merger and acquisition expenses - - - - 462 462
Other income, net
- - - - (2,315) (2,315)
Total expenses and other income 136,551 65,853 - 24,923 85,659 312,986
Income (loss) before income taxes $ 113,132 $ 31,405 $ - $ 52,301 $ (85,621) $ 111,217
The following tables detail earning assets, which consist of pawn loans and inventories as well as other earning asset metrics of the Company's pawn segments, as of March 31, 2026 compared to March 31, 2025 (dollars in thousands, except as otherwise noted):
As of March 31, 2026
U.S.
Pawn
Latin America
Pawn
U.K.
Pawn
Total
Pawn
Earning assets:
Pawn loans $ 441,628 $ 194,116 $ 215,381 $ 851,125
Inventories 311,579 144,013 83,199 538,791
$ 753,207 $ 338,129 $ 298,580 $ 1,389,916
Average outstanding pawn loan amount (in ones) $ 328 $ 115 $ 854 $ 260
Composition of pawn collateral:
Jewelry 75 % 51 % 99 % 76 %
General merchandise 25 % 49 % 1 % 24 %
100 % 100 % 100 % 100 %
Composition of inventories:
Jewelry 66 % 50 % 99 % 67 %
General merchandise 34 % 50 % 1 % 33 %
100 % 100 % 100 % 100 %
Percentage of inventory aged greater than one year 1.7 % 1.3 % 10.2 % 2.9 %
Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories) 2.8 times 3.9 times 2.4 times 3.0 times
Store count 1,207 1,838 289 3,334
Weighted-average store count for the three months ended March 31
1,207 1,838 289 3,334
As of March 31, 2025
U.S.
Pawn 		Latin America
Pawn 		U.K.
Pawn 		Total
Pawn
Earning assets:
Pawn loans $ 365,972 $ 133,738 $ - $ 499,710
Inventories 246,237 88,463 - 334,700
$ 612,209 $ 222,201 $ - $ 834,410
Average outstanding pawn loan amount (in ones) $ 289 $ 86 $ - $ 177
Composition of pawn collateral:
Jewelry 73 % 42 % - % 64 %
General merchandise 27 % 58 % - % 36 %
100 % 100 % - % 100 %
Composition of inventories:
Jewelry 61 % 38 % - % 55 %
General merchandise 39 % 62 % - % 45 %
100 % 100 % - % 100 %
Percentage of inventory aged greater than one year 1.7 % 1.5 % - % 1.7 %
Inventory turns (trailing twelve months cost of merchandise sales divided by average inventories) 2.8 times 4.2 times - 3.2 times
Store count 1,197 1,826 - 3,023
Weighted-average store count for the three months ended March 31
1,199 1,826 - 3,025
U.S. Pawn Segment
Merchandise Sales Operations
U.S. retail merchandise sales increased 13% to $283.8 million during the first quarter of 2026 compared to $251.2 million for the first quarter of 2025. Same-store retail sales increased 9% in the first quarter of 2026 compared to the first quarter of 2025. The increase in total and same-store retail sales was primarily due to continued strong demand for value priced merchandise and increased inventory levels during the first quarter of 2026 compared to the first quarter of 2025. The gross profit margin on retail merchandise sales in the U.S. increased to 44% during the first quarter of 2026 compared to 42% during the first quarter of 2025.
U.S. wholesale scrap jewelry revenue, consisting primarily of gold sales, increased 41% to $47.4 million during the first quarter of 2026 compared to $33.5 million during the first quarter of 2025. The scrap gross profit margin in the U.S. was 24% compared to the prior-year margin of 19%. The increase in wholesale scrap jewelry revenue was primarily due to increases in pawn lending activity over the past several quarters, which created more forfeited collateral to scrap, and the increase in gold prices over the past year.
U.S. inventories increased 27% to $311.6 million at March 31, 2026 compared to $246.2 million at March 31, 2025. The increase was primarily due to increases in pawn lending activity over the past several quarters, which created more forfeited inventory available for sale. Inventories aged greater than one year in the U.S. were 1.7% at both March 31, 2026 and 2025.
Pawn Lending Operations
U.S. pawn loan receivables as of March 31, 2026 increased 21% in total and 19% on a same-store basis compared to March 31, 2025. The Company believes the increase in same-store pawn receivables was primarily due to continued strong customer demand from a combination of more customer transactions and an increase in the average loan amount requested by customers.
U.S. pawn loan fees increased 14% to $157.8 million during the first quarter of 2026 compared to $137.9 million for the first quarter of 2025. Same-store pawn loan fees increased 13% in the first quarter of 2026 compared to the first quarter of 2025. The increase in total and same-store pawn loan fees was due to the higher pawn receivable balances.
Segment Expenses
U.S. operating expenses increased 12% to $143.9 million during the first quarter of 2026 compared to $129.0 million during the first quarter of 2025 while same-store operating expenses increased 10% compared with the prior-year period. The increase in operating expenses was primarily due to increased labor and variable compensation expenses.
Segment Pre-Tax Operating Income
The U.S. segment pre-tax operating income for the first quarter of 2026 was $141.4 million, which generated a pre-tax segment operating margin of 29% compared to $113.1 million and 27% in the prior year, respectively. The increase in the segment pre-tax operating income and margin reflected increased net revenue, partially offset by an increase in segment expenses.
Latin America Pawn Segment
Latin America segment pre-tax operating income for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 benefited from a 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 March 31, 2026 compared to March 31, 2025 also benefited from an 11% favorable change in the end-of-period Mexican peso compared to the U.S. dollar. 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. See the "Constant Currency Results" section in "Non-GAAP Financial Information" below for additional discussion of constant currency operating results.
Merchandise Sales Operations
Latin America retail merchandise sales increased 33% (15% on a constant currency basis) to $159.8 million during the first quarter of 2026 compared to $120.5 million for the first quarter of 2025. Same-store retail sales also increased 33% (15% on a constant currency basis) during the first quarter of 2026 compared to the first quarter of 2025. The increase in constant currency total and same-store retail sales was primarily due to strong demand for value priced merchandise and increased inventory levels during the first quarter of 2026 compared to the first quarter of 2025. The gross profit margin on retail merchandise sales was 35% during both the first quarter of 2026 and 2025.
Latin America wholesale scrap jewelry revenue, consisting primarily of gold sales, increased 113% to $20.6 million during the first quarter of 2026 compared to $9.7 million during the first quarter of 2025. The scrap gross profit margin in Latin America was 18% compared to the prior-year margin of 16%. The increase in wholesale scrap jewelry revenue was primarily due to increases in pawn lending activity over the past several quarters, which created more forfeited collateral to scrap, and the increase in gold prices over the past year.
Latin America inventories increased 63% (46% on a constant currency basis) to $144.0 million at March 31, 2026 compared to $88.5 million at March 31, 2025. The increase in constant currency inventories was primarily due to increased pawn lending activity over the past several quarters, creating more forfeited inventory and a slightly increased mix of higher value jewelry inventory. Inventories aged greater than one year in Latin America were 1.3% at March 31, 2026 compared to 1.5% at March 31, 2025.
Pawn Lending Operations
Latin America pawn loan receivables increased 45% (30% on a constant currency basis) as of March 31, 2026 compared to March 31, 2025. On a same-store basis, pawn loan receivables also increased 45% (30% on a constant currency basis) as of March 31, 2026 compared to March 31, 2025. The increase in constant currency total and same-store pawn receivables is primarily due to increased number of pawn loans and larger average loan sizes, driven in part by an increased mix of higher value jewelry loans.
Latin America pawn loan fees increased 42% (23% on a constant currency basis), totaling $76.6 million during the first quarter of 2026 compared to $53.9 million for the first quarter of 2025. Same-store pawn fees also increased 42% (23% on a constant currency basis) in the first quarter of 2026 compared to the first quarter of 2025. The constant currency increase in total and same-store pawn loan fees was primarily due to increased constant currency pawn receivables.
Segment Expenses
Operating expenses increased 31% (14% on a constant currency basis) to $80.7 million during the first quarter of 2026 compared to $61.4 million during the first quarter of 2025. Same-store operating expenses also increased 31% (14% on a constant currency basis) compared to the prior-year period. The constant currency increase in total and same-store operating expenses was primarily driven by general inflationary impacts and continued increases in the federally mandated minimum wage.
Segment Pre-Tax Operating Income
The segment pre-tax operating income for the first quarter of 2026 was $50.9 million, which generated a pre-tax segment operating margin of 20% compared to $31.4 million and 17% in the prior year, respectively. The increase in the segment pre-tax operating income and margin reflected increased net revenue, partially offset by an increase in segment expenses.
U.K. Pawn Segment
The Company completed the H&T Acquisition on August 14, 2025, and the results of operations of H&T have been consolidated since the acquisition date.
The U.K. pawn segment contributed $101.7 million in revenue and $39.2 million in segment pre-tax operating income for the first quarter of 2026. The resulting segment pre-tax operating margin was 39%.
U.K. pawn loan receivables were $215.4 million and inventories were $83.2 million as of March 31, 2026.
Retail POS Payment Solutions Segment
The following table details retail POS payment solutions gross transaction volumes originated during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 (in thousands):
Three Months Ended
March 31,
2026 2025
Leased merchandise $ 96,702 $ 94,305
Finance receivables (1)
145,477 141,262
Total gross transaction volume $ 242,179 $ 235,567
(1) For the three months ended March 31, 2026, includes $14.4 million of OBS Loans.
The following table details retail POS payment solutions earning assets as of March 31, 2026 as compared to March 31, 2025 (in thousands):
As of March 31,
2026 2025
Leased merchandise, net:
Leased merchandise, before allowance for lease losses $ 158,542 $ 172,886
Less allowance for lease losses (61,248) (69,077)
Leased merchandise, net (1)
$ 97,294 $ 103,809
Finance receivables, net:
Finance receivables, before allowance for loan losses (2)
$ 243,867 $ 263,421
Less allowance for loan losses (104,571) (118,342)
Finance receivables, net $ 139,296 $ 145,079
(1)Includes less than $0.1 million and $0.2 million of intersegment transactions as of March 31, 2026 and 2025, respectively, related to the Company offering AFF's LTO payment solution in its U.S. pawn stores that are eliminated upon consolidation.
(2)Does not include $32.9 million of outstanding OBS Loans held by AFF's bank partner as of March 31, 2026. Combined finance receivables, before allowance for loan losses, and OBS Loans totaled $276.8 million as of March 31, 2026. See the "OBS Loans" section in Note 8 of Notes to Consolidated Financial Statements.
The following table details certain retail POS payment solutions portfolio metrics for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025:
Three Months Ended
March 31,
2026 2025
Leased merchandise portfolio metrics:
Provision rate (1)
31.0 % 29.3 %
Average monthly net charge-off rate (2)
6.6 % 6.8 %
Delinquency rate (3)
24.3 % 22.6 %
Finance receivables portfolio metrics:
Provision rate (1)
29.5 % 25.7 %
Average monthly net charge-off rate (2)
4.9 % 4.4 %
Delinquency rate (3)
20.5 % 19.3 %
(1)Calculated as provision for lease or loan losses as a percentage of the respective gross transaction volume originated.
(2)Calculated as charge-offs, net of recoveries, as a percentage of the respective average earning asset balance before allowance for lease or loan losses.
(3)Calculated as the percentage of the respective contractual earning asset balance owed that is 1 to 89 days past due (the Company charges off leases and finance receivables when they are 90 days or more contractually past due).
LTO Operations
Leased merchandise, before allowance for lease losses, decreased 8% to $158.5 million as of March 31, 2026 compared to $172.9 million as of March 31, 2025. The decrease was primarily due to decreased gross transaction volumes originated throughout 2025 resulting from the bankruptcy filings in late 2024 for two of AFF's larger retail furniture merchant partners.
The allowance for lease losses decreased 11% to $61.2 million as of March 31, 2026 compared to $69.1 million as of March 31, 2025, which was primarily due to the decrease in leased merchandise balances outstanding. As a percentage of leased merchandise, the allowance was 39% at March 31, 2026 and 40% at March 31, 2025.
Leased merchandise income decreased 17% to $130.2 million during the first quarter of 2026 compared to $156.9 million during the first quarter of 2025, which was primarily due to lower average leased merchandise balances outstanding during the first quarter of 2026 compared to the first quarter of 2025.
Depreciation of leased merchandise decreased 9% to $81.4 million during the first quarter of 2026 compared to $89.1 million during the first quarter of 2025, primarily due to the decrease in leased merchandise balances outstanding partially offset by increased early buyout activity resulting in an increase in accelerated depreciation during the first quarter of 2026 compared to the first quarter of 2025. As a percentage of leased merchandise income, depreciation of leased merchandise increased to 62% during the first quarter of 2026 from 57% during the first quarter of 2025.
Provision for lease losses increased 8% to $29.9 million during the first quarter of 2026 compared to $27.6 million during the first quarter of 2025, which was primarily due to the 3% increase in gross transaction volumes and slightly higher lease loss provisioning rates used during the first quarter of 2026 compared to the first quarter of 2025. As a percentage of gross transaction volume, the provision for lease losses increased to 31% during the first quarter of 2026 compared to 29% during the first quarter of 2025.
Retail Finance Operations
Finance receivables, before allowance for loan losses, decreased 7% as of March 31, 2026 compared to March 31, 2025. The decrease was primarily due to a shift in a number of finance receivable transaction volumes to OBS Loans, which are not included on the Company's balance sheet. As of March 31, 2026, the outstanding amount of OBS Loans originated and held by the Company's bank partner was $32.9 million. Including the OBS Loans, finance receivables, before allowance for loan losses would have increased 5% as of March 31, 2026 compared to March 31, 2025, which is consistent with the 3% increase in gross transaction volume, which includes OBS Loans originated.
The allowance for loan losses decreased 12% to $104.6 million as of March 31, 2026 compared to $118.3 million as of March 31, 2025, which was primarily due to the decrease in finance receivables outstanding. As a percentage of finance receivables, the allowance was 43% at March 31, 2026 compared to 45% at March 31, 2025.
Interest and fees on retail finance products increased 1% to $74.3 million during the first quarter of 2026 compared to $73.4 million during the first quarter of 2025. The increase was primarily due to higher combined average finance receivable and OBS Loan balances outstanding during the first quarter of 2026 compared to the first quarter of 2025, partially offset by a slight decline in portfolio yield primarily as a result of AFF expanding its offerings and merchant relationships in certain services sector verticals over the past twelve months, some of which are provided at lower interest rates.
Provision for loan losses increased 18% to $42.8 million during the first quarter of 2026 compared to $36.4 million during the first quarter of 2025, which was primarily due to the 3% increase in gross transaction volumes, $7.6 million in provision expense related to the off-balance sheet credit exposure of the OBS Loans, and slightly higher loan loss provisioning rates used during the first quarter of 2026 compared to the first quarter of 2025. As a percentage of gross transaction volume, the provision for loan losses increased to 29% during the first quarter of 2026 from 26% during the first quarter of 2025.
Segment Expenses
Operating expenses decreased 2% to $23.8 million during the first quarter of 2026 compared to $24.2 million during the first quarter of 2025. As a percentage of segment revenues, operating expenses increased to 12% during the first quarter of 2026 compared to 11% during the first quarter of 2025.
Segment Pre-Tax Operating Income
The retail POS payment solutions segment pre-tax operating income for the first quarter of 2026 was $25.9 million compared to $52.3 million in the first quarter of 2025. The decrease was primarily the result of the decrease in segment net revenue, partially offset by a decrease in operating expenses.
Corporate Expenses and Taxes
Administrative expenses increased 36% to $65.8 million during the first quarter of 2026 compared to $48.5 million in the first quarter of 2025, primarily due to the addition of administrative expenses of H&T, increased variable compensation, general inflationary impacts and a 14% change in the average value of the Mexican peso resulting in higher U.S. dollar translated administrative expenses in Latin America. As a percentage of revenue, administrative expenses were 6% in both the first quarter of 2026 and 2025.
Depreciation and amortization increased 26% to $16.1 million during the first quarter of 2026 compared to $12.8 million in the first quarter of 2025, primarily due to the addition of depreciation and amortization expenses of H&T during the first quarter of 2026.
Interest expense increased 26% to $34.5 million during the first quarter of 2026 compared to $27.5 million in the first quarter of 2025, primarily due to increased outstanding long-term debt balances. See Note 7 of Notes to Consolidated Financial Statements and "Liquidity and Capital Resources."
LIQUIDITY AND CAPITAL RESOURCES
Material Capital Requirements
The Company's primary capital requirements include the:
•Expansion of pawn operations through growth of pawn receivables and inventories in existing stores, new store openings, strategic acquisitions of pawn stores and purchases of underlying real estate at new and existing locations;
•Growth of earning assets in the retail POS payment solutions operations through transaction volumes generated from new and existing merchant partners; and
•Return of capital to shareholders through dividends and stock repurchases.
Other material capital requirements include operating expenses (see Note 3 of Notes to Consolidated Financial Statements regarding operating lease commitments), maintenance capital expenditures related to its facilities, technology platforms, general corporate operating activities, income tax payments and debt service, among others. The Company believes that net cash provided by operating activities and available and unused funds under its revolving credit facilities will be adequate to meet its liquidity and capital needs for these items over the next 12 months and also in the longer-term beyond the next 12 months.
Expand Pawn Operations
The Company intends to continue expansion of its pawn operations through growth of pawn receivables and inventories in existing stores along with new store openings and acquisitions.
During the three months ended March 31, 2026, the Company opened four new stores in Latin America, three new stores in the U.K. and acquired one pawn store in the U.S. The Company evaluates potential acquisitions based upon growth potential, purchase price, available liquidity, strategic fit and quality of management personnel, among other factors. Future store openings and acquisitions are subject to the Company's ability to identify acquisition opportunities and new location sites in markets with attractive demographics and favorable regulatory environments. The Company currently has no other contractual commitments for materially significant future acquisitions, business combinations or capital commitments.
The Company also incurred, and expects to incur, additional costs, expenses and fees for professional services, financing and other transaction and integration costs in connection with the H&T Acquisition. The substantial majority of these costs will be non-recurring expenses relating to the H&T Acquisition. The Company financed the H&T Acquisition and other costs with available funds under the Credit Facility.
Although viewed by management as a discretionary expenditure not required to operate its pawn stores, the Company may continue to strategically purchase real estate from its landlords at existing stores or in conjunction with pawn store acquisitions as opportunities arise at reasonable valuations. During the three months ended March 31, 2026, the Company purchased the real estate at 15 store locations, primarily from landlords at existing stores, for a cumulative purchase price of $30.5 million. As of March 31, 2026, the Company owned the real estate at a total of 458 pawn locations, primarily in the U.S., along with its corporate headquarters building in Fort Worth, Texas.
Expand Retail POS Payment Solutions Operations
AFF expects to expand its business primarily by promoting and expanding relationships with both new and existing customers and retail merchant partners. In addition, AFF has made, and intends to continue to make, investments in its customer and merchant support operations and facilities, its technology platforms and its proprietary decisioning platforms and processes. In addition to utilizing cash flows generated from its own operations to fund expected 2026 growth, AFF has access to the additional sources of liquidity described below if needed to fund further expansion activities.
Return of Capital to Shareholders
During the three months ended March 31, 2026, the Company paid quarterly cash dividends to its shareholders totaling $18.5 million. In April 2026, the Company's Board of Directors declared a $0.42 per share second quarter cash dividend on common shares outstanding, or an aggregate of $18.4 million based on the March 31, 2026 share count, to be paid on May 29, 2026 to stockholders of record as of May 15, 2026. While the Company currently expects to continue the payment of quarterly cash dividends, the amount, 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, debt covenant restrictions and other relevant factors.
During the three months ended March 31, 2026, the Company repurchased a total of 261,000 shares of common stock at an aggregate cost of $50.0 million and an average cost per share of $191.79. The Company incurred $0.5 million of excise taxes during the three months ended March 31, 2026.
In October 2025, the Board of Directors authorized a common stock repurchase program for up to $150.0 million of the Company's outstanding common stock, of which $100.0 million is currently remaining. The Company intends to continue repurchases under its active share repurchase program, including through open market transactions under trading plans in accordance with Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), subject to a variety of factors, including, but not limited to, the level of cash balances, liquidity needs, credit availability, debt covenant restrictions, general business and economic conditions, regulatory requirements, the market price of the Company's stock, the Company's dividend policy and the availability of acquisitions or other alternative investment opportunities.
Sources of Liquidity
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. As of March 31, 2026, the Company's primary sources of liquidity were $130.7 million in cash and cash equivalents, $124.5 million of available and unused funds under the Company's revolving unsecured credit facilities and $5.9 million of available and unused funds under the Company's revolving secured credit facility, subject to certain financial covenants (see Note 7 of Notes to Consolidated Financial Statements). The Company had working capital of $1,505.6 million as of March 31, 2026.
The Company's cash and cash equivalents as of March 31, 2026 included $46.8 million held by its foreign subsidiaries. These cash balances, which are primarily held in Mexican pesos and British pound sterling, are associated with foreign earnings the Company has asserted are indefinitely reinvested and which the Company plans to use to support its continued growth plans outside the U.S. through funding of capital expenditures, acquisitions, operating expenses or other similar cash needs of the Company's foreign operations.
The Company's liquidity is affected by a number of factors, including changes in general customer traffic and demand, pawn loan balances, collection of pawn fees, merchandise sales, inventory levels, LTO merchandise, finance receivable balances, collection of lease and finance receivable payments, seasonality, operating expenses, administrative expenses, expenses related to merger and acquisition activities, litigation-related expenses, tax rates, gold prices, foreign currency exchange rates and the pace of new pawn store expansion and acquisitions. Additionally, a prolonged reduction in earnings and EBITDA could limit
the Company's future ability to fully borrow on its credit facilities under current leverage covenants. Regulatory developments affecting the Company's operations may also impact profitability and liquidity. See "Governmental Regulation."
If needed, the Company could seek to raise additional funds from a variety of sources, including, but not limited to, the sale of assets, reductions in operating expenses, capital expenditures and dividends, the forbearance or deferral of certain operating expenses, the issuance of debt or equity securities, utilizing other structured financing arrangements, the leveraging of 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 67% of total inventory, give the Company flexibility to quickly increase cash flow if necessary.
Cash Flows and Liquidity Metrics
The following tables set forth certain historical information with respect to the Company's sources and uses of cash and other key indicators of liquidity (dollars in thousands):
Three Months Ended March 31,
2026 2025
Cash flow provided by operating activities
$ 153,628 $ 126,640
Cash flow used in investing activities
$ (115,873) $ (50,147)
Cash flow used in financing activities
$ (31,599) $ (105,317)
As of March 31,
2026 2025
Working capital $ 1,505,565 $ 1,024,447
Current ratio 4.8:1 4.4:1
Cash Flow Provided by Operating Activities
Net cash provided by operating activities increased $27.0 million, or 21%, from $126.6 million for the three months ended March 31, 2025 to $153.6 million for the three months ended March 31, 2026 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 $24.1 million.
Cash Flow Used in Investing Activities
Net cash used in investing activities increased $65.7 million, or 131%, from $50.1 million for the three months ended March 31, 2025 to $115.9 million for the three months ended March 31, 2026. Cash flows from investing activities are utilized primarily to fund pawn store acquisitions, purchase furniture, fixtures, equipment and improvements, which includes capital expenditures for improvements to existing stores and for new pawn store openings and other corporate assets, and discretionary purchases of store real property. In addition, cash flows related to the funding of new pawn loans, net of cash repayments and recovery of principal through the sale of inventories acquired from forfeiture of pawn collateral and changes in net finance receivables, are included in investing activities. The Company paid $20.1 million for furniture, fixtures, equipment and improvements and $30.5 million for discretionary pawn store real property purchases during the three months ended March 31, 2026 compared to $12.9 million and $6.9 million in the prior-year period, respectively. The Company paid $3.7 million in cash related to pawn store acquisitions during the three months ended March 31, 2026 compared to $29.2 million during the three months ended March 31, 2025. The Company funded a net increase in pawn loans of $46.6 million during the three months ended March 31, 2026 and received funds from a net decrease of $19.4 million during the three months ended March 31, 2025. The Company funded a net increase in finance receivables of $14.9 million during the three months ended March 31, 2026 and $20.6 million during the three months ended March 31, 2025.
Cash Flow Used in Financing Activities
Net cash used in financing activities decreased $73.7 million, or 70%, from $105.3 million for the three months ended March 31, 2025 to $31.6 million for the three months ended March 31, 2026. Net borrowings on credit facilities were $48.1 million during the three months ended March 31, 2026 compared to net payments of $23.0 million during the three months ended March 31, 2025. The Company funded $50.0 million of share repurchases during the three months ended March 31, 2026 compared to $59.6 million during the three months ended March 31, 2025. The Company paid dividends of $18.5 million during the three months ended March 31, 2026 compared to $16.9 million during the three months ended March 31, 2025. In
addition, the Company paid withholding taxes of $11.2 million on net share settlements of restricted stock awards during the three months ended March 31, 2026 compared to $5.8 million during the three months ended March 31, 2025.
GOVERNMENTAL REGULATION
The Company's pawn and retail POS payment solutions businesses are subject to significant regulation 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 2025 Annual Report on Form 10-K filed with the SEC on February 9, 2026 and in subsequent documents filed with the SEC. There have been no changes to the significant regulation that the Company's businesses are subject to that the Company believes would have a material impact on its businesses or results of operation from those described in the Annual Report on Form 10-K for the year ended December 31, 2025.
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.
The Company has adjusted the applicable financial calculations to exclude merger and acquisition expenses, amortization of acquired intangible assets and certain other income and expenses. The Company does not consider these items to be related to the organic operations of the Company's businesses or its continuing operations and are generally not relevant to assessing or estimating the long-term performance of the Company. In addition, excluding these items allows for more accurate comparisons of the financial results to prior periods. Merger and 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.
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 are not representative of the Company's core operating performance. In addition, management believes the adjustments shown below are useful to investors in order to allow them to compare the Company's financial results for the current periods presented with the prior periods presented.
The following table provides a reconciliation between net income and diluted earnings per share calculated in accordance with GAAP to adjusted net income and adjusted diluted earnings per share, which are shown net of tax (in thousands, except per share amounts):
Three Months Ended March 31,
2026 2025 2026 2025
In Thousands In Thousands Per Share Per Share
Net income and diluted earnings per share, as reported $ 107,702 $ 83,591 $ 2.43 $ 1.87
Adjustments, net of tax:
Merger and acquisition expenses 646 354 0.02 -
Amortization of acquired intangible assets
11,554 9,258 0.26 0.21
Other income, net
(854) (422) (0.02) (0.01)
Adjusted net income and diluted earnings per share $ 119,048 $ 92,781 $ 2.69 $ 2.07
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 as a starting point in the calculation of the consolidated total debt ratio as defined in the Company's senior unsecured notes. The following table provides a reconciliation of net income to EBITDA and adjusted EBITDA (in thousands):
Trailing Twelve
Three Months Ended Months Ended
March 31, March 31,
2026 2025 2026 2025
Net income $ 107,702 $ 83,591 $ 354,486 $ 281,038
Income taxes 37,426 27,626 126,988 91,070
Depreciation and amortization (1)
31,516 25,502 117,820 104,416
Interest expense 34,528 27,471 128,350 107,279
Interest income (227) (1,229) (1,933) (2,421)
EBITDA 210,945 162,961 725,711 581,382
Adjustments:
Merger and acquisition expenses 865 462 14,772 2,093
CFPB litigation settlement - - 11,000 -
Other (income) expense, net
(1,179) (543) (5,343) 6,250
Adjusted EBITDA $ 210,631 $ 162,880 $ 746,140 $ 589,725
(1)Includes $15.1 million and $56.5 million of amortization expense related to identifiable intangible assets for the three months and trailing twelve months ended March 31, 2026, respectively. Includes $12.0 million and $49.3 million of amortization expense related to identifiable intangible assets for the three months and trailing twelve months ended March 31, 2025, respectively.
Free Cash Flow and Adjusted Free Cash Flow
For purposes of its internal liquidity assessments, the Company considers free cash flow and adjusted free cash flow. The Company defines free cash flow as cash flow from operating activities less purchases of furniture, fixtures, equipment and improvements and net fundings/repayments of pawn loan and finance receivables, which are considered to be operating in nature by the Company but are included in cash flow from investing activities. Adjusted free cash flow is defined as free cash flow adjusted for merger and acquisition expenses paid that management considers to be non-operating in nature.
Free cash flow and adjusted free cash flow are commonly used by investors as additional measures 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, that may be available to invest in future growth through new business development activities or acquisitions, repurchase stock, pay cash dividends or repay debt obligations prior to their maturities. These metrics can also be used to evaluate the Company's ability to generate cash flow from business operations and the impact that this cash flow has on the Company's liquidity. However, free cash flow and adjusted free cash flow have limitations as analytical tools and should not be considered in isolation or as a substitute for cash flow from operating activities or other income statement data prepared in accordance with GAAP. The following table reconciles cash flow from operating activities to free cash flow and adjusted free cash flow (in thousands):
Trailing Twelve
Three Months Ended Months Ended
March 31, March 31,
2026 2025 2026 2025
Cash flow from operating activities $ 153,628 $ 126,640 $ 612,930 $ 544,066
Cash flow from certain investing activities:
Pawn loans made (661,711) (422,375) (2,333,564) (1,899,202)
Pawn loans repaid 403,654 273,880 1,326,812 1,081,973
Recovery of pawn loan principal through sale of forfeited collateral 211,478 167,935 802,876 739,521
Investments in finance receivables (102,568) (114,493) (428,651) (455,072)
Proceeds from finance receivables 87,642 93,927 335,987 310,503
Purchases of furniture, fixtures, equipment and improvements (20,116) (12,914) (62,108) (54,732)
Free cash flow 72,007 112,600 254,282 267,057
Merger and acquisition expenses paid, net of tax benefit 646 354 12,563 1,603
Adjusted free cash flow $ 72,653 $ 112,954 $ 266,845 $ 268,660
Constant Currency Results
The Company's reporting currency is the U.S. dollar, however, certain performance metrics discussed in this report are presented on a "constant currency" basis, which is considered a non-GAAP financial measure. The Company's management uses constant currency results to evaluate operating results of business operations in Latin America and the U.K., which are transacted in local currencies in Mexico, Guatemala, Colombia and the U.K. The Company also has operations in El Salvador, where the reporting and functional currency is the U.S. dollar.
The Company believes constant currency results provide valuable supplemental information regarding the underlying performance of its business operations in Latin America and the U.K., consistent with how the Company's management evaluates such performance and operating results. Constant currency results reported herein are calculated by translating certain balance sheet and income statement items denominated in local currencies using the exchange rate from the prior-year comparable period, as opposed to the current comparable period, in order to exclude the effects of foreign currency rate fluctuations for purposes of evaluating period-over-period comparisons.
The following table presents operating results for the Latin America pawn segment using the exchange rate from the prior-year comparable period (in thousands):
Three Months Ended March 31, 2026
Currency Constant
U.S. Exchange Currency
Dollar Rate Basis
Basis Fluctuations (Non-GAAP)
Revenue:
Retail merchandise sales $ 159,841 $ (21,208) $ 138,633
Pawn loan fees 76,646 (10,193) 66,453
Wholesale scrap jewelry sales 20,632 - 20,632
Total revenue 257,119 (31,401) 225,718
Cost of revenue:
Cost of retail merchandise sold 104,066 (13,740) 90,326
Cost of wholesale scrap jewelry sold 16,860 (2,283) 14,577
Total cost of revenue 120,926 (16,023) 104,903
Net revenue 136,193 (15,378) 120,815
Segment expenses:
Operating expenses 80,727 (10,432) 70,295
Depreciation 4,585 (575) 4,010
Total segment expenses 85,312 (11,007) 74,305
Segment pre-tax operating income $ 50,881 $ (4,371) $ 46,510
The following table presents earning assets for the Latin America pawn segment using the exchange rate from the prior-year comparable period (in thousands):
As of March 31, 2026
Currency
Constant Currency
Exchange Rate
Basis
U.S. Dollar Basis
Fluctuations
(Non-GAAP)
Earning assets:
Pawn loans $ 194,116 $ (20,386) $ 173,730
Inventories 144,013 (15,164) 128,849
$ 338,129 $ (35,550) $ 302,579
The following table provides exchange rates for the Mexican peso, Guatemalan quetzal, Colombian peso and British pound sterling for the current and prior-year periods:
March 31, Favorable /
2026 2025 (Unfavorable)
U.S. dollar / Mexican peso exchange rate:
End-of-period 18.1 20.3 11 %
Three months ended 17.6 20.4 14 %
U.S. dollar / Guatemalan quetzal exchange rate:
End-of-period 7.6 7.7 1 %
Three months ended 7.7 7.7 - %
U.S. dollar / Colombian peso exchange rate:
End-of-period 3,670 4,193 12 %
Three months ended 3,699 4,191 12 %
British pound sterling / U.S. dollar exchange rate:
End-of-period 1.32 1.29 2 %
Three months ended 1.35 1.26 7 %
Firstcash Holdings Inc. published this content on April 24, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 24, 2026 at 17:31 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]