FirstCash Profit Jumps 58% as Pawn Margins Hit Record
FirstCash Holdings posted second-quarter diluted earnings of $2.12 a share, up 58% from a year earlier, as pawn receivables climbed 63% and U.S. margins reached a record 26%.
FirstCash Holdings (FCFS), the operator of pawn stores and retail point-of-sale lending across the U.S., Latin America and, since its acquisition of H&T Group, the U.K., reported second-quarter diluted earnings of $2.12 a share, up 58% from a year earlier. Adjusted earnings per share rose 40% to $2.50, and net income increased 56% to $93.5 million on a GAAP basis.
The quarter marked an acceleration from the first three months of the year, when GAAP earnings per share grew 30% year over year. Consolidated revenue rose 29% to $1.07 billion, with net revenue, or gross profit, climbing at the same rate. Adjusted EBITDA grew 39% to $201 million, faster than the 29% pace posted in the first quarter.
Pawn lending drove the results. Consolidated pawn receivables rose 63% year over year to $898 million from $551 million, while same-store receivables were up 22%. Combined pawn segment revenue grew 44%, and segment income rose 59%, outpacing revenue growth and pointing to margin expansion across the pawn business.
The U.S. pawn segment, FirstCash's largest, posted a pre-tax operating margin of 26%, a record for the segment and up from 24% a year earlier, as operating income rose 31% against revenue growth of 22%. Same-store receivables in the U.S. grew 19%, the twelfth consecutive quarter of double-digit growth, and were up 32% on a two-year stacked basis. Retail sales margin held steady at 43%, and aged inventory over one year old fell to 1.5% of total inventories from 1.9%. In Latin America, segment revenue grew 42% in dollar terms, or 29% in constant currency, aided by an 11% favorable move in the peso, while retail margin slipped slightly to 35% from 36%. The U.K. pawn segment, formed after the H&T acquisition, generated $95 million in quarterly revenue at a 35% pre-tax operating margin.
The retail point-of-sale lending business, AFF, was the weak spot. Pre-tax income of $29 million improved sequentially from the first quarter but declined from a year earlier, reflecting lost earnings tied to bankruptcies at merchant partners American Freight and Conn's. Gross transaction volume fell 14% year over year in the quarter, a worsening trend versus the 6% decline recorded through the first half, driven by weakness in the furniture sector and tighter underwriting. Net revenue at AFF fell 15%, an improvement from the 26% decline reported year-to-date, and the net charge-off rate eased to 5.2% from 5.6% in the first quarter, though it remained flat against the prior-year period.
FirstCash raised its full-year consolidated pawn segment revenue guidance for the second consecutive quarter and introduced a full-year income guidance range of $135 million to $140 million for the U.K. pawn segment. AFF guidance moved the other direction: full-year gross transaction volume is now expected to fall about 10% versus 2025, with net revenue guided down 20% to 25%.
The company continued to reduce leverage, with net debt to adjusted EBITDA improving to 2.7 times, or 2.6 times pro forma, from 2.9 times nine months earlier following the H&T deal. FirstCash completed a $750 million senior unsecured notes offering in May at a 6.125% coupon due 2034, using proceeds to pay down its U.S. revolving credit facility and retire debt assumed in the H&T acquisition. On July 16, it raised the terms of its pending Ramsdens acquisition, lifting the cash price to 675 pence a share from 600 pence and increasing the total equity value to roughly £232 million, or $308 million, from about £206 million, or $273 million, at the deal's June 23 announcement.
FirstCash completed its prior $150 million share repurchase program in under nine months and approved a new $150 million authorization on July 22. The company completed a reincorporation from Delaware to Texas on June 18 following shareholder approval. Store count reached 3,343 locations at quarter-end, up 347 over the trailing twelve months, with 20 stores added in the second quarter alone compared with eight added in the first.