Company: FCFS
Filing Date: 2025-02-03
Form Type: 10-K
Source: 0000840489-25-000032
Chunk: 38

Company: FirstCash Holdings, Inc.
Filing Date: 2025-02-03
Form: 10-K
Item: Item 7A
Chunk 38
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 component of accumulated other comprehensive income (loss) within stockholders’ equity under the caption “currency translation adjustment.” Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses in the Company’s income statement as incurred. The Company also has operations in El Salvador where the reporting and functional currency is the U.S. dollar. 

On a dollar-translated basis, Latin America revenues and cost of revenues accounted for 24% and 22%, respectively, of consolidated amounts for the year ended December 31, 2024. The majority of Latin America revenues and expenses are denominated in currencies other than the U.S. dollar, and the Company, therefore, has foreign currency risk related to these currencies, which are primarily the Mexican peso, and, to a much lesser extent, the Guatemalan quetzal and Colombian peso.

Accordingly, changes in exchange rates, and in particular a weakening of foreign currencies relative to the U.S. dollar, may negatively affect the Company’s revenue and earnings of its Latin America pawn operations as expressed in U.S. dollars. For the year ended December 31, 2024, the Company’s Latin America revenues and pre-tax operating income would have been approximately $21.3 million and $3.6 million higher, respectively, had foreign currency exchange rates remained consistent with those for the year ended December 31, 2023. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” for further discussion of Latin America constant currency results.

The Company does not use long-term foreign exchange contracts or derivatives to hedge foreign currency exposures. The volatility of exchange rates depends on many factors that it cannot forecast with reliable accuracy. The Company’s continued Latin America expansion increases exposure to exchange rate fluctuations and, as a result, such fluctuations could have a significant impact on future results of operations. The average value of the Mexican peso to the U.S. dollar exchange rate for 2024 was 18.3 to 1 compared to 17.8 to 1 in 2023 and 20.1 to 1 in 2022. A one-point change in the average Mexican peso to the U.S. dollar exchange rate would have impacted 2024 annual earnings by approximately $3.4 million. The impact of foreign exchange rates in Guatemala and Colombia is not material to the Company’s financial position or results of operations.

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Interest Rate Risk

The Company is potentially exposed to market risk