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, 2021.

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 operator of pawn stores in the U.S. and
Latin America. 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.

With the AFF Acquisition, the Company is also a leading provider of
technology-driven, retail POS payment solutions focused on serving
credit-constrained consumers. The Company's retail POS payment solutions
business line consists solely of the operations of AFF, which focuses on LTO
products and facilitating other retail financing payment options across a large
network of traditional and e-commerce merchant partners in all 50 states in the
U.S., the District of Columbia and Puerto Rico. 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.

The Company's two business lines are organized into three reportable segments.
The U.S. pawn segment consists of all pawn operations in the U.S. and the Latin
America pawn segment consists of all pawn operations in Mexico, Guatemala,
Colombia and El Salvador. The retail POS payment solutions segment consists of
the operations of AFF in the U.S. and Puerto Rico.


                                       25

--------------------------------------------------------------------------------
                               Table of Contents


OPERATIONS AND LOCATIONS

As of September 30, 2022, the Company operated 2,839 pawn store locations
comprised of 1,076 stores in 25 U.S. states and the District of Columbia, 1,674
stores in 32 states in Mexico, 60 stores in Guatemala, 15 stores in Colombia and
14 stores in El Salvador.

The following tables detail pawnshop counting activity:

Three months completed September 30, 2022

                                                           U.S.                           Latin America                           Total
Total locations, beginning of period                          1,076                               1,758                                2,834
New locations opened                                              -                                   9                                    9
Locations acquired                                                2                                   -                                    2

Consolidation of existing pawn locations
(1)                                                              (2)                                 (4)                                  (6)

Total locations, end of period                                1,076                               1,763                                2,839

                                                                               Nine Months Ended September 30, 2022
                                                           U.S.                           Latin America                           Total
Total locations, beginning of period                          1,081                               1,744                                2,825
New locations opened (2)                                          -                                  28                                   28
Locations acquired                                                3                                   -                                    3

Consolidation of existing pawn locations
(1)                                                              (8)                                 (9)                                 (17)

Total locations, end of period                                1,076                               1,763                                2,839



(1)Store consolidations were primarily acquired locations over the past six
years which have been combined with overlapping stores and for which the Company
expects to maintain a significant portion of the acquired customer base in the
consolidated location.

(2)In addition to new store openings, the Company strategically relocated two
stores in the U.S. and one store in Latin America during the nine months ended
September 30, 2022.

As of September 30, 2022, AFF provided LTO and retail POS solutions for consumer
goods and services through a nationwide network of approximately 8,600 active
retail merchant partner locations.

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 2021 Annual Report on Form
10-K. There have been no changes to the Company's significant accounting
policies for the nine months ended September 30, 2022.


                                       26

--------------------------------------------------------------------------------
                               Table of Contents

RESULTS OF OPERATIONS (unaudited)

Ongoing impact of COVID-19

The COVID-19 pandemic and its contributory impacts on the economy have impacted
numerous aspects of the Company's business. In particular, the COVID-19 pandemic
and government responses thereto had an initial adverse impact on pawn loan
demand, which impacted pawn receivables, inventories and revenues. This adverse
impact in pawn loan demand was offset in large part by a positive impact in
merchandise sales. Throughout 2021 and 2022, pawn loan demand has steadily
recovered and pawn receivables, inventories and revenues are now ahead of
pre-pandemic levels.

Results in constant currency

The Company's management reviews and analyzes operating results in Latin America
on a constant currency basis because the Company believes this better represents
the Company's underlying business trends. Constant currency results are non-GAAP
financial measures, which exclude the effects of foreign currency translation
and are calculated by translating current-year results at prior-year average
exchange rates. The wholesale scrap jewelry sales in Latin America are priced
and settled in U.S. dollars and are not affected by foreign currency
translation, as are a small percentage of the operating and administrative
expenses in Latin America which are billed and paid in U.S. dollars. Amounts
presented on a constant currency basis are denoted as such. See "Non-GAAP
Financial Information" for additional discussion of constant currency operating
results.

Business operations in Mexico, Guatemala and Colombia are transacted in Mexican
pesos, Guatemalan quetzales and Colombian pesos. The Company also has operations
in El Salvador, where the reporting and functional currency is the U.S. dollar.
The following table provides exchange rates for the Mexican peso, Guatemalan
quetzal and Colombian peso for the current and prior-year periods:

                                                                              September 30,                              Favorable /
                                                                      2022                    2021                      (Unfavorable)
Mexican peso / U.S. dollar exchange rate:
End-of-period                                                              20.3                    20.3                              -  %
Three months ended                                                         20.2                    20.0                             (1) %
Nine months ended                                                          20.3                    20.1                             (1) %

Guatemalan quetzal / U.S. dollar exchange rate:
End-of-period                                                               7.9                     7.7                             (3) %
Three months ended                                                          7.8                     7.7                             (1) %
Nine months ended                                                           7.7                     7.7                              -  %

Colombian peso / U.S. dollar exchange rate:
End-of-period                                                             4,532                   3,835                            (18) %
Three months ended                                                        4,375                   3,844                            (14) %
Nine months ended                                                         4,068                   3,696                            (10) %





                                       27
--------------------------------------------------------------------------------
                               Table of Contents

Results of operations for the three months ended September 30, 2022 Compared to the three months ended September 30, 2021

WE pawn segment

The following table details earning assets, which consist of pawn loans and
inventories as well as other earning asset metrics of the U.S. pawn segment, as
of September 30, 2022 compared to September 30, 2021 (dollars in thousands,
except as otherwise noted):

                                                                          As of September 30,
                                                                   2022                          2021                         Increase
U.S. Pawn Segment
Earning assets:
Pawn loans                                               $              279,645          $          242,825                          15  %
Inventories                                                             204,359                     175,047                          17  %
                                                         $              484,004          $          417,872                          16  %

Average outstanding pawn loan amount (in ones)           $                  232          $              208                          12  %

Composition of pawn collateral:
General merchandise                                                          32  %                       36  %
Jewelry                                                                      68  %                       64  %
                                                                            100  %                      100  %

Composition of inventories:
General merchandise                                                          43  %                       48  %
Jewelry                                                                      57  %                       52  %
                                                                            100  %                      100  %

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

Inventory turns (trailing twelve months cost of
merchandise sales divided by average inventories)                        2.7 times                   2.9 times



                                       28
--------------------------------------------------------------------------------
                               Table of Contents


The following table presents segment pre-tax operating income and other
operating metrics of the U.S. pawn segment for the three months ended
September 30, 2022 compared to the three months ended September 30, 2021
(dollars in thousands). Operating expenses include salary and benefit expense of
pawn-store-level employees, occupancy costs, bank charges, security, insurance,
utilities, supplies and other costs incurred by the pawn stores.

                                                                      Three Months Ended
                                                                        September 30,
                                                              2022                            2021                          Increase
U.S. Pawn Segment
Revenue:
Retail merchandise sales                          $                 195,854          $            167,257                         17  %
Pawn loan fees                                                       96,222                        76,674                         25  %
Wholesale scrap jewelry sales                                        12,956                         4,168                        211  %
Total revenue                                                       305,032                       248,099                         23  %

Cost of revenue:
Cost of retail merchandise sold                                     114,899                        93,326                         23  %
Cost of wholesale scrap jewelry sold                                 11,338                         3,778                        200  %
Total cost of revenue                                               126,237                        97,104                         30  %

Net revenue                                                         178,795                       150,995                         18  %

Segment expenses:
Operating expenses                                                  102,508                        93,247                         10  %
Depreciation and amortization                                         5,806                         5,662                          3  %
Total segment expenses                                              108,314                        98,909                         10  %

Segment pre-tax operating income                  $                  70,481          $             52,086                         35  %

Operating metrics:
Retail merchandise sales margin                                          41  %                         44  %

Net revenue margin                                                       59  %                         61  %
Segment pre-tax operating margin                                         23  %                         21  %



Retail Merchandise Operations

U.S. retail merchandise sales increased 17% to $195.9 million during the third
quarter of 2022 compared to $167.3 million for the third quarter of 2021.
Same-store retail sales increased 16% in the third quarter of 2022 compared to
the third quarter of 2021. The increase in total and same-store retail sales was
primarily due to increased inventory levels during the third quarter of 2022
compared to the third quarter of 2021 and greater demand for value-priced
consumer goods. The gross profit margin on retail merchandise sales in the U.S.
was 41% in the third quarter of 2022 and 44% in the third quarter of 2021. The
decrease in the retail merchandise margins was primarily due to
lower-than-normal inventory levels during the third quarter of 2021, which
limited the need for normal discounting.

U.S. inventories increased 17% from $175.0 million at September 30, 2021 to
$204.4 million at September 30, 2022. The increase was primarily due to
lower-than-normal inventory balances at September 30, 2021 due to the impacts of
the COVID-19 pandemic. Inventories aged greater than one year in the U.S. were
1% at both September 30, 2022 and 2021.


                                       29

--------------------------------------------------------------------------------
                               Table of Contents


Pawn Lending Operations

U.S. pawn loan receivables as of September 30, 2022 increased 15% in total and
on a same-store basis compared to September 30, 2021. The increase in total and
same-store pawn receivables was primarily due to the continued recovery in pawn
loan demand to pre-pandemic levels combined with inflationary pressures driving
additional demand for consumer credit.

U.S. pawn loan fees increased 25% to $96.2 million during the third quarter of
2022 compared to $76.7 million for the third quarter of 2021. Same-store pawn
fees in the third quarter of 2022 also increased 25% compared to the third
quarter of 2021. The increase in total and same-store pawn loan fees was
primarily due to the continued recovery in pawn loan receivables, as described
above.

Segment Expenses

U.S. operating expenses increased 10% to $102.5 million during the third quarter
of 2022 compared to $93.2 million during the third quarter of 2021 while
same-store operating expenses increased 9% compared with the prior-year period.
The increase in total and same-store operating expenses was primarily due to
inflationary increases in wages and other certain operating costs and increased
store-level incentive compensation driven by increased revenues and store
operating profit during the third quarter of 2022.

Segment operating profit before tax

The U.S. segment pre-tax operating income for the third quarter of 2022 was
$70.5 million, which generated a pre-tax segment operating margin of 23%
compared to $52.1 million and 21% in the prior year, respectively. The increase
in the segment pre-tax operating income and margin reflected an 18% increase in
net revenue further leveraged by the 10% increase in segment expenses.

                                       30

--------------------------------------------------------------------------------
                               Table of Contents

Latin America operations segment

Latin American results of operations for the three months ended September 30,
2022 compared to the three months ended September 30, 2021 were impacted by a 1%
unfavorable 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
September 30, 2022 compared to September 30, 2021 were not affected by the
end-of-period Mexican peso compared to the U.S. dollar exchange rate as it was
unchanged compared to the prior-year period.

The following table details earning assets, which consist of pawn loans and
inventories as well as other earning asset metrics of the Latin America pawn
segment, as of September 30, 2022 compared to September 30, 2021 (dollars in
thousands, except as otherwise noted):

                                                                                                                                              Constant Currency Basis
                                                                                                                                    As of
                                                                                                                                September 30,
                                                     As of September 30,                                                                2022                    Increase
                                               2022                         2021                        Increase                  (Non-GAAP)                   (Non-GAAP)
Latin America Pawn Segment
Earning assets:
Pawn loans                           $             124,582                $   106,168                         17  %             $   124,711                             17  %
Inventories                                         91,069                     79,213                         15  %                  91,167                             15  %
                                     $             215,651                $   185,381                         16  %             $   215,878                             16  %

Average outstanding pawn loan amount
(in ones)                            $                  79                $        76                          4  %             $        79                              4  %

Composition of pawn collateral:
General merchandise                                     69  %                      68  %
Jewelry                                                 31  %                      32  %
                                                       100  %                     100  %

Composition of inventories:
General merchandise                                     71  %                      67  %
Jewelry                                                 29  %                      33  %
                                                       100  %                     100  %

Percentage of inventory aged greater
than one year                                            1  %               

1%

Inventory turns (trailing twelve
months cost of merchandise sales
divided by average inventories)                     4.0 times                  4.2 times





                                       31
--------------------------------------------------------------------------------
                               Table of Contents


The following table presents segment pre-tax operating income and other
operating metrics of the Latin America pawn segment for the three months ended
September 30, 2022 compared to the three months ended September 30, 2021
(dollars in thousands). Operating expenses include salary and benefit expense of
pawn-store-level employees, occupancy costs, bank charges, security, insurance,
utilities, supplies and other costs incurred by the pawn stores.

                                                                                                                                         Constant Currency Basis
                                                                                                                             Three Months
                                                                                                                                Ended
                                                     Three Months Ended                                                     September 30,
                                                        September 30,                            Increase /                      2022                       Increase
                                                2022                     2021                    (Decrease)                   (Non-GAAP)                   (Non-GAAP)
Latin America Pawn Segment
Revenue:
Retail merchandise sales                    $ 107,591                $ 101,469                            6  %             $   108,808                               7  %
Pawn loan fees                                 49,505                   44,691                           11  %                  50,067                              12  %
Wholesale scrap jewelry sales                   5,626                    5,415                            4  %                   5,626                               4  %
Total revenue                                 162,722                  151,575                            7  %                 164,501                               9  %

Cost of revenue:
Cost of retail merchandise sold                68,642                   64,731                            6  %                  69,415                               7  %
Cost of wholesale scrap jewelry sold            4,923                    4,750                            4  %                   4,977                               5  %
Total cost of revenue                          73,565                   69,481                            6  %                  74,392                               7  %

Net revenue                                    89,157                   82,094                            9  %                  90,109                              10  %

Segment expenses:
Operating expenses                             47,979                   45,372                            6  %                  48,527                               7  %
Depreciation and amortization                   4,566                    4,591                           (1) %                   4,630                               1  %
Total segment expenses                         52,545                   49,963                            5  %                  53,157                               6  %

Segment pre-tax operating income            $  36,612                $  32,131                           14  %             $    36,952                              15  %

Operating metrics:
Retail merchandise sales margin                    36  %                    36  %                                                   36    %

Net revenue margin                                 55  %                    54  %                                                   55    %
Segment pre-tax operating margin                   22  %                    21  %                                                   22    %



Retail Merchandise Operations

Latin America retail merchandise sales increased 6% (7% on a constant currency
basis) to $107.6 million during the third quarter of 2022 compared to $101.5
million for the third quarter of 2021. Same-store retail sales increased 5% (7%
on a constant currency basis) during the third quarter of 2022 compared to the
third quarter of 2021. The increase in total and same-store retail sales was
primarily due to increased inventory levels during the third quarter of 2022
compared to the third quarter of 2021 and greater demand for value-priced
consumer goods. The gross profit margin on retail merchandise sales was 36%
during both the third quarter of 2022 and 2021.

Latin America inventories increased 15% from $79.2 million at September 30, 2021
to $91.1 million at September 30, 2022. The increase was primarily due to
lower-than-normal inventory balances at September 30, 2021 due to the impacts of
the COVID-19 pandemic. Inventories aged greater than one year in Latin America
were 1% at both September 30, 2022 and 2021.


                                       32

--------------------------------------------------------------------------------
                               Table of Contents


Pawn Lending Operations

Latin America pawn loan receivables increased 17% as of September 30, 2022
compared to September 30, 2021, and on a same-store basis pawn loan receivables
also increased 17%. The increase in total and same-store pawn receivables was
primarily due to the continued recovery in pawn loan demand during the third
quarter of 2022 to pre-pandemic levels.

Latin America pawn loan fees increased 11% (12% on a constant currency basis),
totaling $49.5 million during the third quarter of 2022 compared to $44.7
million for the third quarter of 2021. Same-store pawn fees increased 10% (12%
on a constant currency basis) in the third quarter of 2022 compared to the third
quarter of 2021. The increase in total and same-store constant currency pawn
loan fees was primarily due to the continued recovery in pawn loan receivables,
as described above.

Segment Expenses

Operating expenses increased 6% (7% on a constant currency basis) to $48.0
million during the third quarter of 2022 compared to $45.4 million during the
third quarter of 2021, reflecting continued store growth and modest inflationary
pressure on labor and other operating expenses in the current quarter.
Same-store operating expenses increased 5% (6% on a constant currency basis)
compared to the prior-year period.

Segment operating profit before tax

The segment pre-tax operating income for the third quarter of 2022 was $36.6
million, which generated a pre-tax segment operating margin of 22% compared to
$32.1 million and 21% in the prior year, respectively. The increase in the
segment pre-tax operating income and margin reflected a 9% increase in net
revenue further leveraged by a 5% increase in segment expenses and a 1%
unfavorable change in the average value of the Mexican peso.

                                       33

--------------------------------------------------------------------------------
                               Table of Contents

Retail POS Payment Solutions Segment

The Company completed the AFF Acquisition on December 17, 2021, and the results
of operations of AFF have been consolidated since the acquisition date. As a
result of purchase accounting, AFF's as reported earning assets, consisting of
finance receivables and leased merchandise, contain significant fair value
adjustments. The fair value adjustments will be amortized over the life of the
finance receivables and lease contracts acquired at the time of acquisition.

The following table provides a detail of finance receivables as reported and as
adjusted to exclude the impacts of purchase accounting as of September 30, 2022
(in thousands):

                                                                 As of September 30, 2022
                                                As Reported                                     Adjusted
                                                   (GAAP)              Adjustments             (Non-GAAP)
Finance receivables, before allowance for
loan losses (1)                               $     190,358          $      (7,858)         $     182,500
Less allowance for loan losses                      (78,413)                     -                (78,413)
Finance receivables, net                      $     111,945          $      

(7,858) $104,087

(1) As indicated, the financial receivables acquired have been recognized at fair value together with the recognition of purchases. The adjustment represents the difference between the initial amortized cost basis and the fair value of the remaining acquired financial receivables.

The following table provides a detail of leased merchandise as reported and as
adjusted to exclude the impacts of purchase accounting as of September 30, 2022
(in thousands):

                                                                 As of September 30, 2022
                                                As Reported                                     Adjusted
                                                   (GAAP)              Adjustments             (Non-GAAP)
Leased merchandise, before allowance for
lease losses (1)                              $     210,703          $       6,709          $     217,412
Less allowance for lease losses                     (78,020)                (7,610)               (85,630)
Leased merchandise, net (2)                   $     132,683          $      

(901) $131,782



(1)As reported acquired leased merchandise was recorded at fair value (which
includes estimates for charge-offs) in conjunction with purchase accounting.
Adjustment represents the difference between the original depreciated cost and
fair value of the remaining acquired leased merchandise.

(2)Includes $0.6 million of intersegment transactions related to U.S. pawn
stores offering AFF's LTO payment solution as a payment option in its stores
that are eliminated upon consolidation. For further detail, see earning assets
detail in Note 10 of Notes to Consolidated Financial Statements.




                                       34
--------------------------------------------------------------------------------
                               Table of Contents


AFF's as reported results of operations contain significant purchase accounting
impacts. The following table presents segment pre-tax operating income as
reported and as adjusted to exclude the impacts of purchase accounting for the
three months ended September 30, 2022 (in thousands). Operating expenses include
salary and benefit expense of certain operations focused departments, merchant
partner incentives, bank and other payment processing charges, credit reporting
costs, information technology costs, advertising costs and other operational
costs incurred by AFF.

                                                                Three 

Months ended September 30, 2022

                                                        As Reported                                  Adjusted
                                                          (GAAP)               Adjustments          (Non-GAAP)
Retail POS Payment Solutions Segment
Revenue:
Leased merchandise income                            $      158,089          $          -          $  158,089
Interest and fees on finance receivables                     48,846                 7,111              55,957

Total revenue                                               206,935                 7,111             214,046

Cost of revenue:
Depreciation of leased merchandise                           86,703                  (839)             85,864
Provision for lease losses                                   32,350                     -              32,350
Provision for loan losses                                    31,956                     -              31,956

Total cost of revenue                                       151,009                  (839)            150,170

Net revenue                                                  55,926                 7,950              63,876

Segment expenses:
Operating expenses                                           35,060                     -              35,060
Depreciation and amortization                                   775                     -                 775
Total segment expenses                                       35,835                     -              35,835

Segment pre-tax operating income                     $       20,091          $      7,950          $   28,041



                                       35
--------------------------------------------------------------------------------
                               Table of Contents

© Edgar Online, source Previews