FirstCash, Inc.

The stable outlook reflects S&P Global Ratings' expectation that over the next 12 months, FirstCash's debt to EBITDA will remain at 2.0x-3.0x, while the adjusted EBITDA margin will remain around 22%. We could lower the rating if large debt-funded initiatives, weaker-than-expected markets, or adverse regulatory changes weaken the company's credit measures. Specifically, we could lower the rating if: We expect debt to EBITDA to approach 3.0x because of lower-than-expected profitability or an increase of debt-funded spending, or Operational issues or the business mix pressure adjusted EBITDA margins, pushing them closer to 15%. We may consider raising the rating if FirstCash is able to reduce its leverage sustainably closer to 1.5x, as measured by debt to adjusted EBITDA. U.S. real GDP

...We expect FirstCash Inc.'s leverage to be relatively stable at 2.0x-3.0x debt to EBITDA despite the effects of COVID-19. Leverage for 2020 hit the top of our expected range (2.5x) due to lower-than-expected earnings. The company reported lower pawn demand due to government stimulus, which was only partially offset by higher retail demand. That being said, we believe as the effects of the stimulus wane, pawn origination should return to pre-pandemic levels. We expect the company to pull back on shareholder returns. The company has a history of returning capital to shareholders through share repurchases. However, we expect the company to dial back on share repurchases to preserve liquidity until conditions normalize. Should they normalize later this year, we would expect share repurchases to return to around pre-pandemic rates....

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