UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
(Mark One)
☒
ýQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2024
or
☐
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from        to
Commission File Number: 001-38047
Rent-A-Center,Upbound Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware45-0491516
Delaware45-0491516
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
5501 Headquarters Drive, Plano, Texas75024
(Address of principal executive offices)(Zip Code)
5501 Headquarters Drive
Plano, Texas 75024(972) 801-1100
(Address, including zip code of registrant’s
principal executive offices)
Registrant’s telephone number, including area code: 972-801-1100code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $.01 par valueUPBDThe Nasdaq Global Select Market
Indicate by check mark whether the registrant:registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES   ý    NO   ¨Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES   ý    NO   ¨Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerý☒Accelerated filer¨☐
Non-accelerated filer¨☐(Do not check if a smaller reporting company)Smaller reporting company¨☐
Emerging Growth Company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES   ¨    NO   ýYes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of October 23, 2017:
April 24, 2024:
ClassOutstanding
ClassOutstanding
Common stock, $.01 par value per share53,311,80754,629,445




TABLE OF CONTENTS
Page No.
Page No.
PART I.FINANCIAL INFORMATION
1
2
3
4
45
56
1419
2629
2629
2630
2830
2830
2830
2830
2830
Exhibits
31
 





i


Item 1. Condensed Consolidated Financial Statements.
RENT-A-CENTER,UPBOUND GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
(In thousands, except per share data)Unaudited Unaudited
Revenues       
Store       
Rentals and fees$552,194
 $595,179
 $1,723,019
 $1,915,184
Merchandise sales67,566
 73,219
 266,061
 281,703
Installment sales17,276
 17,626
 51,690
 53,718
Other2,257
 2,633
 7,428
 10,001
Total store revenues639,293
 688,657
 2,048,198
 2,260,606
Franchise       
Merchandise sales2,676
 3,113
 9,211
 12,083
Royalty income and fees1,996
 2,107
 6,177
 6,459
Total revenues643,965
 693,877
 2,063,586
 2,279,148
Cost of revenues       
Store       
Cost of rentals and fees153,202
 159,454
 474,511
 504,834
Cost of merchandise sold70,551
 68,684
 256,730
 253,473
Cost of installment sales5,207
 5,553
 16,099
 17,240
Total cost of store revenues228,960
 233,691
 747,340
 775,547
Franchise cost of merchandise sold2,540
 2,960
 8,585
 11,273
Total cost of revenues231,500
 236,651
 755,925
 786,820
Gross profit412,465
 457,226
 1,307,661
 1,492,328
Operating expenses       
Store expenses       
Labor179,643
 186,289
 551,197
 595,668
Other store expenses171,995
 195,096
 546,485
 599,759
General and administrative expenses43,768
 38,187
 130,637
 121,383
Depreciation, amortization and impairment of intangibles18,679
 19,998
 55,928
 60,598
Other charges6,825
 956
 31,580
 22,240
Total operating expenses420,910
 440,526
 1,315,827
 1,399,648
Operating (loss) profit(8,445) 16,700
 (8,166) 92,680
Debt refinancing charges—
 —
 1,936
 —
Interest expense11,453
 11,710
 34,346
 35,424
Interest income(177) (141) (492) (346)
(Loss) earnings before income taxes(19,721) 5,131
 (43,956) 57,602
Income tax (benefit) expense(7,122) (1,050) (15,785) 16,414
Net (loss) earnings$(12,599) $6,181
 $(28,171) $41,188
Basic (loss) earnings per common share$(0.24) $0.12
 $(0.53) $0.78
Diluted (loss) earnings per common share$(0.24) $0.12
 $(0.53) $0.77
Cash dividends declared per common share$—
 $0.08
 $0.16
 $0.24
 Three Months Ended March 31,
 20242023
(in thousands, except per share data)
Revenues
Rentals and fees$872,539 $806,717 
Merchandise sales179,699 162,989 
Installment sales14,692 15,847 
Franchise merchandise sales20,859 22,827 
Royalty income and fees6,563 6,236 
Other1,615 1,445 
Total revenues1,095,967 1,016,061 
Cost of revenues
Cost of rentals and fees327,148 297,146 
Cost of merchandise sold213,569 184,260 
Cost of installment sales5,288 5,619 
Franchise cost of merchandise sold20,894 22,772 
Total cost of revenues566,899 509,797 
Gross profit529,068 506,264 
Operating expenses
Operating labor158,136 156,489 
Non-labor operating expenses213,802 196,711 
General and administrative expenses55,099 47,726 
Depreciation and amortization13,473 12,881 
Other gains and charges26,796 127,570 
Total operating expenses467,306 541,377 
Operating profit (loss)61,762 (35,113)
Interest expense29,991 28,100 
Interest income(803)(420)
Earnings (loss) before income taxes32,574 (62,793)
Income tax expense (benefit)4,887 (110,123)
Net earnings$27,687 $47,330 
Basic earnings per common share$0.51 $0.86 
Diluted earnings per common share$0.50 $0.84 
Cash dividends declared per common share$0.37 $0.34 

See accompanying notes to condensed consolidated financial statements.



1


RENT-A-CENTER,UPBOUND GROUP, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
(In thousands)Unaudited Unaudited
Net (loss) earnings$(12,599) $6,181
 $(28,171) $41,188
Other comprehensive (loss) income:       
Foreign currency translation adjustments(181) (921) 6,555
 152
Total other comprehensive (loss) income(181) (921) 6,555
 152
Comprehensive (loss) income$(12,780) $5,260
 $(21,616) $41,340
 Three Months Ended March 31,
 20242023
(in thousands)
Net earnings$27,687 $47,330 
Other comprehensive income:
Foreign currency translation adjustments, net of tax of $180 and $825 for the three months ended March 31, 2024 and 2023, respectively676 3,104 
Total other comprehensive income676 3,104 
Comprehensive income$28,363 $50,434 
See accompanying notes to condensed consolidated financial statements.



2


RENT-A-CENTER,UPBOUND GROUP, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 September 30, 2017 December 31, 2016
(In thousands, except share and par value data)Unaudited  
ASSETS   
Cash and cash equivalents$76,208
 $95,396
Receivables, net of allowance for doubtful accounts of $3,225 and $3,593 in 2017 and 2016, respectively62,293
 69,785
Prepaid expenses and other assets54,384
 54,989
Rental merchandise, net   
On rent670,417
 795,118
Held for rent199,768
 206,836
Merchandise held for installment sale4,429
 3,629
Property assets, net of accumulated depreciation of $562,968 and $522,101 in 2017 and 2016, respectively305,394
 316,428
Goodwill56,380
 55,308
Other intangible assets, net1,044
 5,252
Total assets$1,430,317
 $1,602,741
LIABILITIES   
Accounts payable – trade$88,206
 $108,238
Accrued liabilities328,278
 332,196
Deferred income taxes139,203
 173,144
Senior debt, net98,954
 186,747
Senior notes, net538,440
 537,483
Total liabilities1,193,081
 1,337,808
STOCKHOLDERS’ EQUITY   
Common stock, $.01 par value; 250,000,000 shares authorized; 109,681,559 and 109,519,369 shares issued in 2017 and 2016, respectively1,097
 1,095
Additional paid-in capital829,573
 827,107
Retained earnings763,920
 800,640
Treasury stock at cost, 56,369,752 shares in 2017 and 2016(1,347,677) (1,347,677)
Accumulated other comprehensive loss(9,677) (16,232)
Total stockholders' equity237,236
 264,933
Total liabilities and stockholders' equity$1,430,317
 $1,602,741
March 31, 2024December 31, 2023
(in thousands, except share and par value data)
ASSETS
Cash and cash equivalents$84,793 $93,705 
Receivables, net of allowance for doubtful accounts of $14,500 and $14,254 in 2024 and 2023, respectively108,413 111,005 
Prepaid expenses and other assets42,685 50,259 
Rental merchandise, net
On rent1,056,381 1,109,896 
Held for rent132,098 124,167 
Merchandise held for installment sale5,903 6,398 
Property assets, net of accumulated depreciation of $625,099 and $611,120 in 2024 and 2023, respectively262,527 273,118 
Operating lease right-of-use assets284,133 289,702 
Deferred tax asset71,815 72,032 
Goodwill289,750 289,750 
Other intangible assets, net288,486 301,398 
Total assets$2,626,984 $2,721,430 
LIABILITIES
Accounts payable – trade$119,832 $177,249 
Accrued liabilities308,329 322,905 
Operating lease liabilities288,115 293,435 
Deferred tax liability43,388 60,842 
Senior debt, net848,615 866,707 
Senior notes, net440,410 439,920 
Total liabilities2,048,689 2,161,058 
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value; 250,000,000 shares authorized; 125,683,878 and 125,415,059 shares issued in March 31, 2024 and December 31, 2023, respectively1,106 1,100 
Additional paid-in capital1,469,520 1,459,709 
Retained earnings1,002,322 994,892 
Treasury stock at cost, 71,060,928 and 71,060,928 shares in 2024 and 2023, respectively(1,890,966)(1,890,966)
Accumulated other comprehensive loss(3,687)(4,363)
Total stockholders' equity578,295 560,372 
Total liabilities and stockholders' equity$2,626,984 $2,721,430 
See accompanying notes to condensed consolidated financial statements.



3


RENT-A-CENTER,UPBOUND GROUP, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSSTOCKHOLDERS’ EQUITY
(Unaudited)
 Common StockAdditional
Paid-In
Capital		Retained
Earnings		Treasury
Stock		Accumulated Other Comprehensive (Loss) IncomeTotal
SharesAmount
(in thousands)
Balance at December 31, 2023125,415 $1,100 $1,459,709 $994,892 $(1,890,966)$(4,363)$560,372 
Net Earnings— — — 27,687 — — 27,687 
Other comprehensive income— — — — — 676 676 
Exercise of stock options35 — 855 — — — 855 
Vesting of restricted share units, net of shares withheld for employee taxes234 6 (6)— — — — 
Tax effect of stock awards vested and options exercised— — (2,978)— — — (2,978)
Stock-based compensation— — 11,940 — — — 11,940 
Dividends declared— — — (20,257)— — (20,257)
Balance at March 31, 2024125,684 $1,106 $1,469,520 $1,002,322 $(1,890,966)$(3,687)$578,295 
 Nine Months Ended September 30,
 2017 2016
(In thousands)Unaudited
Cash flows from operating activities   
Net (loss) earnings$(28,171) $41,188
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities   
Depreciation of rental merchandise469,483
 498,897
Bad debt expense11,051
 11,247
Stock-based compensation expense2,198
 7,439
Depreciation of property assets55,156
 58,044
Loss on sale or disposal of property assets18
 3,569
Amortization and impairment of intangibles4,667
 1,761
Amortization of financing fees3,276
 2,345
Write-off of debt financing fees1,936
 —
Deferred income taxes(33,940) (14,821)
Changes in operating assets and liabilities, net of effects of acquisitions   
Rental merchandise(339,278) (333,842)
Receivables(3,560) (1,127)
Prepaid expenses and other assets600
 101,691
Accounts payable – trade(20,032) 1,223
Accrued liabilities12,040
 (2,724)
Net cash provided by operating activities135,444
 374,890
Cash flows from investing activities   
Purchase of property assets(53,528) (46,839)
Proceeds from sale of stores3,951
 4,506
Acquisitions of businesses(2,241) (3,086)
Net cash used in investing activities(51,818) (45,419)
Cash flows from financing activities   
Exercise of stock options270
 —
Shares withheld for payment of employee tax withholdings(225) (290)
Debt issuance costs(5,258) —
Proceeds from debt216,880
 51,610
Repayments of debt(303,498) (284,868)
Dividends paid(12,811) (21,291)
Net cash used in financing activities(104,642) (254,839)
Effect of exchange rate changes on cash1,828
 (4,690)
Net (decrease) increase in cash and cash equivalents(19,188) 69,942
Cash and cash equivalents at beginning of period95,396
 60,363
Cash and cash equivalents at end of period$76,208
 $130,305
 Common StockAdditional
Paid-In
Capital		Retained
Earnings		Treasury
Stock		Accumulated Other Comprehensive (Loss) IncomeTotal
SharesAmount
(in thousands)
Balance at December 31, 2022125,028 $1,080 $1,298,094 $1,077,189 $(1,840,591)$(10,626)$525,146 
Net earnings— — — 47,330 — — 47,330 
Other comprehensive income— — — — — 3,104 3,104 
Exercise of stock options55 1 683 — — — 684 
Vesting of restricted share units, net of shares withheld for employee taxes204 31 (31)— — — — 
Tax effect of stock awards vested and options exercised— — (2,535)— — — (2,535)
Stock-based compensation— — 115,681 — — — 115,681 
Dividends declared— — — (19,068)— — (19,068)
Balance at March 31, 2023125,287 $1,112 $1,411,892 $1,105,451 $(1,840,591)$(7,522)$670,342 
See accompanying notes to condensed consolidated financial statements.



4

UPBOUND GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three Months Ended March 31,
 20242023
(in thousands)
Cash flows from operating activities
Net earnings$27,687 $47,330 
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation of rental merchandise315,015 288,434 
Bad debt expense5,533 5,861 
Stock-based compensation expense11,940 115,681 
Depreciation of property assets21,818 16,609 
Loss on sale or disposal of property assets582 332 
Amortization of intangibles12,912 14,506 
Amortization of financing fees1,585 1,574 
Deferred income taxes(17,231)(129,065)
Changes in operating assets and liabilities, net of acquired assets
Rental merchandise(269,025)(232,944)
Receivables(2,941)4,232 
Prepaid expenses and other assets7,574 1,237 
Operating lease right-of-use assets and lease liabilities250 87 
Accounts payable – trade(57,417)(36,795)
Accrued liabilities(12,861)8,338 
Net cash provided by operating activities45,421 105,417 
Cash flows from investing activities
Purchase of property assets(11,817)(9,534)
Proceeds from sale of property assets97 3 
Acquisitions of businesses— (39)
Net cash used in investing activities(11,720)(9,570)
Cash flows from financing activities
Exercise of stock options855 684 
Shares withheld for payment of employee tax withholdings(2,978)(2,535)
Proceeds from debt60,000 — 
Repayments of debt(79,188)(42,042)
Dividends paid(21,491)(25,515)
Net cash used in financing activities(42,802)(69,408)
Effect of exchange rate changes on cash189 1,118 
Net (decrease) increase in cash and cash equivalents(8,912)27,557 
Cash and cash equivalents at beginning of period93,705 144,141 
Cash and cash equivalents at end of period$84,793 $171,698 
See accompanying notes to condensed consolidated financial statements.
RENT-A-CENTER,

5
UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


Note 1 - Basis of Presentation
The interim condensed consolidated financial statements of Rent-A-Center,Upbound Group, Inc. included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”(the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP"(“GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations, although we believe the disclosures are adequate to make the information presented not misleading. We suggest these financial statements be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2016.2023. In our opinion, the accompanying unaudited interim financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary to present fairly our results of operations and cash flows for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
TheseUse of Estimates
In preparing financial statements in conformity with U.S. generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent losses and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. In applying accounting principles, we must often make individual estimates and assumptions regarding expected outcomes or uncertainties. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. However, uncertainties, including those related to recent macroeconomic trends or other factors, may affect certain estimates and assumptions inherent in the financial reporting process, which may impact reported amounts of assets and liabilities in future periods and cause actual results to differ from those estimates.
Principles of Consolidation and Nature of Operations
The financial statements included herein include the accounts of Rent-A-Center,Upbound Group, Inc. and its direct and indirect subsidiaries. All intercompany accounts and transactions have been eliminated. Unless the context indicates otherwise, references to “Rent-A-Center”“Upbound Group, Inc.” refer only to Rent-A-Center,Upbound Group, Inc., the parent, and references to the “Company”, “we,” “us” and “our” refer to the consolidated business operations of Rent-A-CenterUpbound Group and any or all of its direct and indirect subsidiaries. We report four operating segments: Core U.S., Acceptance Now,Acima, Rent-A-Center, Mexico, and Franchising.
Our Core U.S.Acima segment, which primarily operates in the United States and Puerto Rico, includes the operations of Acima Holdings and certain locations previously operating under our Acceptance Now brand and generally offers consumers who do not qualify for traditional financing the lease-to-own transaction through staffed or unstaffed kiosks located within third-party retailer locations or other virtual options. In virtual locations, customers, either directly or with the assistance of a representative of the third-party retailer, initiate the lease-to-own transaction online in the retailers’ locations using our virtual solutions.
Our Rent-A-Center segment consists of company-owned rent-to-ownlease-to-own stores in the United States Canada and Puerto Rico that lease household durable goods to customers on a rent-to-own basis.through lease purchase agreements. We also offer merchandise on an installment sales basis in certain of our stores under the names “Get It Now” and “Home Choice.”
Choice” in Minnesota and Wisconsin. Our Acceptance NowRent-A-Center segment which operates in the United Statesthrough our company-owned stores and Puerto Rico, generally offers the rent-to-own transaction to consumers who do not qualify for financing from the traditional retailere-commerce platforms through kiosks located within such retailers’ locations. Those kiosks can be staffed by an Acceptance Now employee (staffed locations) or employ a virtual solution where customers initiate the rent-to-own transaction online in the retailers' locations using our tablet computerrentacenter.com, getitnowstores.com and our virtual solution (direct locations).homechoicestores.com.
Our Mexico segment consists of our company-owned rent-to-own stores in Mexico that lease household durable goods to customers on a rent-to-ownlease-to-own basis.
Rent-A-Center Franchising International, Inc., an indirect wholly ownedwholly-owned subsidiary of Rent-A-Center,Upbound Group, Inc., is a franchisor of rent-to-ownlease-to-own stores. Our Franchising segment’s primary source of revenue is the sale of rental merchandise to itsour franchisees, who in turn offer the merchandise to the general public for rent or purchase under a rent-to-ownlease-to-own transaction. The balance of our Franchising segment’s revenue is generated primarily from royalties based on franchisees’ monthly gross revenues.
Newly Adopted Accounting Pronouncements
In March 2016,November 2023, the FASB issued ASU 2016-09, Compensation - Stock Compensation2023-07, Segment Reporting (Topic 718)280): Improvements to Employee Share-Based Payment AccountingReportable Segment Disclosures, which includes multiple provisionsrequires enhanced disclosures of significant segment expenses on a quarterly and annual basis and is intended to simplify various aspectsimprove the transparency of the accountingreportable segment disclosures. Adoption of ASU 2023-07 was required for share-based payments. Rent-A-Center adopted ASU 2016-09us beginning January 1, 2017.2024 for our fiscal year ended December 31, 2024. We adopted the recognition of excess tax benefits in the provision for income taxes rather than paid-in-capital, and the classification of excess tax benefits on the statement of cash flows on a prospective basis. We elected to continue to estimate forfeitures expected to occurwill include required disclosures in our determination of compensation cost recognized each period. Furthermore, we adopted the minimum statutory withholding requirementsannual reporting period ending December 31, 2024 and classification of employee taxes paid on the statement of cash flows oninterim reporting periods beginning after December 31, 2024 using a modified retrospective and full retrospective basis, respectively. Additional amendments included in the accounting standard update were not applicable to us. Impacts resulting from adoption were immaterial to the consolidated financial statements.
Note 2 - Senior Debt
On March 19, 2014, we entered into a Credit Agreement (the "Credit Agreement") among the Company, the several lenders from time to time parties to the Credit Agreement, Bank of America, N.A., BBVA Compass Bank, Wells Fargo Bank, N.A., and SunTrust Bank, as syndication agents, and JPMorgan Chase Bank, N.A., as administrative agent. The Credit Agreement initially provided a $900.0 million senior credit facility consisting of $225.0 million in term loans (the "Term Loans") and a $675.0 million revolving credit facility (the "Revolving Facility"). The Credit Agreement was previously amended on February 1, 2016 (the “First Amendment”), on September 30, 2016 (the “Second Amendment”), and on March 31, 2017 (the "Third Amendment and Waiver"). On June 6, 2017, we entered into a Fourth Amendment (the “Fourth Amendment”), effective as of June 6, 2017, with JPMorgan Chase Bank, N.A., as administrative agent, the other agents party thereto and the lenders party thereto, to the Credit Agreement.

approach.


56
RENT-A-CENTER,UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

Note 2- Revenues
The amounts outstandingfollowing tables disaggregate our revenue for the periods ended March 31, 2024 and 2023:
 Three Months Ended March 31, 2024
 AcimaRent-A-CenterMexicoFranchisingConsolidated
(in thousands)
Rentals and fees$423,607 $429,584 $19,348 $— $872,539 
Merchandise sales137,554 41,246 899 — 179,699 
Installment sales— 14,692 — — 14,692 
Franchise merchandise sales— — — 20,859 20,859 
Royalty income and fees— — — 6,563 6,563 
Other185 231 320 879 1,615 
Total revenues$561,346 $485,753 $20,567 $28,301 $1,095,967 
 Three Months Ended March 31, 2023
 AcimaRent-A-CenterMexicoFranchisingConsolidated
(in thousands)
Rentals and fees$364,165 $426,069 $16,483 $— $806,717 
Merchandise sales119,371 42,788 830 — 162,989 
Installment sales— 15,847 — — 15,847 
Franchise merchandise sales— — — 22,827 22,827 
Royalty income and fees— — — 6,236 6,236 
Other311 304 117 713 1,445 
Total revenues$483,847 $485,008 $17,430 $29,776 $1,016,061 
Lease Purchase Agreements
Rentals and Fees. Rental merchandise is leased to customers pursuant to lease-to-own agreements, which provide for weekly, bi-weekly, semi-monthly or monthly terms with non-refundable lease payments. At the expiration of each lease term, customers may renew the lease-to-own agreement for the next lease term. The customer has the right to acquire title of the merchandise either through an early purchase option or through payment of all required lease renewal terms. Customers can terminate the lease-to-own agreement and return the product at the end of any lease term without penalty. Therefore, lease-to-own agreements are accounted for as operating leases.
Lease payments received at our Rent-A-Center stores, certain Acima locations formerly operating under the Term Loans were $49.1 millionAcceptance Now brand, and $191.8 million at September 30, 2017Mexico stores must be prepaid in advance of the next lease renewal term. Under the Acima Holdings business model, in certain cases revenues may be earned prior to the lease payment due date, in which case revenue is accrued prior to receipt of the lease payment, net of estimated returns and uncollectible renewal payments. Under both models, rental revenue is recognized over the lease term. See Note 3 for additional information regarding accrued lease revenue.
Cash received for rental payments, including fees, prior to the period in which it should be recognized, is deferred and recognized according to the lease term. At March 31, 2024 and December 31, 2016, respectively. The amount outstanding2023, we had $69.3 million and $68.6 million, respectively, in deferred revenue included in accrued liabilities related to our lease-to-own agreements. Revenue related to various payment, reinstatement or late fees is recognized when paid by the customer at the point service is provided. Rental merchandise in our Rent-A-Center stores, certain Acima locations formerly operating under the Revolving Facility was $55.0 million at September 30, 2017Acceptance Now brand, and there were no outstanding borrowingsMexico stores is depreciated using the income forecasting method and recognized in cost of rentals and fees in our Condensed Consolidated Statements of Operations over the lease term. Lease merchandise under Acima Holdings is depreciated over the lease term using a straight-line depreciation method. Under the income forecasting method, the consumption of lease merchandise occurs during periods of rental and depreciation directly coincides with the receipt of rental revenue over the lease-to-own contract period. Depreciation under the Revolving Facility at December 31, 2016. Outstanding borrowings for senior debt at September 30, 2017 and December 31, 2016 were reduced by total unamortized issuance costs of $6.2 million and $5.1 million, respectively. The Term Loans are scheduled to mature on March 19, 2021, andstraight-line method is recognized each period over the Revolving Facility has a scheduled maturity of March 19, 2019.
The Term Loans are payable in consecutive quarterly installments each in an aggregate principal amount of $562,500, with a final installment equal to the remaining principal balanceterm of the Term Loans due on March 19, 2021. Inlease-to-own contract irrespective of receipt of revenue payments from the event our Consolidated Total Leverage Ratio (as such term is defined in the Credit Agreement) exceeds 2.5:1, we are also required to pay down the Term Loans by a percentage of annual excess cash flow, as defined in the Credit Agreement. Additional payments will be equal to 25% of annual excess cash flows if the Consolidated Total Leverage Ratio is between 2.5:1 and 3.0:1, increasing to 50% of annual excess cash flows if the Consolidated Total Leverage Ratio is greater than 3.0:1. We made a mandatory excess cash flow prepayment in March 2017 with respect to our results for the year ended December 31, 2016, of approximately $141 million and in March 2016 with respect to our results for the year ended December 31, 2015, of approximately $27 million. We are further required to pay down the Term Loans with proceeds from certain asset sales or borrowings as defined in the Credit Agreement.
Borrowings under the Revolving Facility bear interest at varying rates equal to either the Eurodollar rate plus 1.50% to 3.00%, or the prime rate plus 0.50% to 2.00% (ABR), at our election (pursuant to the Fourth Amendment discussed below). The margins on the Eurodollar loans and on the ABR loans for borrowings under the Revolving Facility, which were 3.00% and 2.00%, respectively, at September 30, 2017, may fluctuate based upon an increase or decrease in our Consolidated Total Leverage Ratio as defined by a pricing grid included in the Credit Agreement. The margins on the Eurodollar loans and on the ABR loans for Term Loans are 3.00% and 2.00%, respectively, but may also fluctuate in the event the all-in pricing for any subsequent incremental Term Loan exceeds the all-in pricing for prior Term Loans by more than 0.50% per annum. A commitment fee equal to 0.30% to 0.50% of the unused portion of the Revolving Facility is payable quarterly, and fluctuates dependent upon an increase or decrease in our Consolidated Total Leverage Ratio. The commitment fee during the third quarter of 2017 was equal to 0.50% of the unused portion of the Revolving Facility.
Our borrowings under the Credit Agreement are, subject to certain exceptions, secured by a security interest in substantially all of our tangible and intangible assets, including intellectual property, and are also secured by a pledge of the capital stock of our U.S. subsidiaries.
Subject to a number of exceptions, the Credit Agreement contains, without limitation, covenants that generally limit our ability and the ability of our subsidiaries to:
incur additional debt;
repurchase capital stock, repurchase 6.625% notes and 4.75% notes and/or pay cash dividends when the Consolidated Total Leverage Ratio is greater than 3.75:1 (subject to an exception for cash dividends in an amount not to exceed $15 million annually);
incur liens or other encumbrances;
merge, consolidate or sell substantially all property or business;
sell, lease or otherwise transfer assets (other than in the ordinary course of business);
make investments or acquisitions (unless they meet financial tests and other requirements); or
enter into an unrelated line of business.
Since the Consolidated Total Leverage Ratio at September 30, 2017 is greater than 3.75:1, we are limited to a maximum of $15 million in dividend payments for the fiscal year. As of September 30, 2017, we have paid dividends of $12.8 million.
The Fourth Amendment removed or modified certain covenants under the Credit Agreement, including:
the maximum Consolidated Total Leverage Ratio was removed;
the maximum Consolidated Senior Secured Leverage Ratio was removed;
the minimum Consolidated Fixed Charge Coverage Ratio was reduced from 1.50:1 to 1.10:1 and the definitions of Consolidated Fixed Charges and Consolidated Fixed Charge Coverage Ratio were modified. In addition, the sole consequence of a breach of this covenant shall be that a Minimum Availability Period shall result, which impacts the borrowing capacity under the Loans;
any guarantee obligations of Foreign Subsidiaries may not exceed an aggregate of $10 million outstanding at any time;

customer.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

indebtedness,We also offer additional optional product plans along with our lease-to-own agreements which provide customers with liability protection against significant damage or loss of a product, and club membership benefits, including Capital Lease Obligations, mortgage financingsvarious discount programs and purchase money obligations that are secured by Liens permitted underproduct service and replacement benefits in the Credit Agreement, may not exceed an aggregate outstanding amount of $10 million, unless such Indebtedness was outstanding onevent merchandise is damaged or lost, and payment waivers in the effective date ofevent eligible customers become unemployed. Customers renew product plans in conjunction with their lease term renewals, and can cancel the Fourth Amendment; and
removed certain Permitted Investments, and modified Permitted Acquisitions, whichplans at any time. Revenue for product plans is now tied to certain performance criteria, includingrecognized over the Borrowing Base.
As a result of the Fourth Amendment, we are no longer required to maintain a certain Consolidated Total Leverage Ratio or Consolidated Senior Secured Leverage Ratio, and we are prohibited from repurchasing our common stock and senior notes for the remaining term of the Credit Agreement. In addition, underplan. Costs incurred related to product plans are primarily recognized in cost of revenues.
Revenue from contracts with customers
Merchandise Sales. Merchandise sales include payments received for the Fourth Amendment, we agreed to provide additional collateral protections to secure the obligations under the Credit Agreement.
The Fourth Amendment reduced the total capacityexercise of the Revolving Facility from $675 million to $350 million. The Fourth Amendment also modified the borrowing termsearly purchase options offered through our lease-to-own agreements or merchandise sold through point-of-sale transactions. Revenue for merchandise sales is recognized when payment is received and ownership of the revolving loans under the Credit Agreement, which, as amended, establishes that the aggregate outstanding amounts (including after any draw request) not exceed the Borrowing Base. The Borrowing Base is tiedmerchandise passes to the Company’s Eligible Installment Sales Accounts, Inventory and Eligible Rental Contracts, in additioncustomer. The remaining net value of merchandise sold is recorded to Reserves and the Term Loan Reserve. We will provide to the Agent information necessary to calculate the Borrowing Base within 30 dayscost of the end of each calendar month, unless the remaining availability of the Revolving Facility is less than 20% of the maximum borrowing capacity of the Revolving Facility or $60 million, in which case the Company must provide weekly information.
The Credit Agreement as modified by the Fourth Amendment permits us to increase the amount of the Term Loans and/or the Revolving Facility from time to time on up to three occasions, in an aggregate amount of no more than $100 million. We may request an Incremental Revolving Loan or Incremental Term Loan, provided thatmerchandise sold at the time of such request, we are notthe transaction.
Installment Sales. Revenue from the sale of merchandise in default, have obtainedour retail installment stores is recognized when the consentinstallment note is signed and control of the administrative agentmerchandise has passed to the customer. The cost of merchandise sold through installment agreements is recognized in cost of installment sales at the time of the transaction. We offer optional extended service plans with our installment agreements which are administered by third parties and provide customers with product service maintenance beyond the term of the installment agreement. Payments received for extended service plans are deferred and recognized, net of related costs, when the installment payment plan is complete and the lenders providing such increase,service plan goes into effect. Customers can cancel extended service plans at any time during the installment agreement period and after giving effect thereto, (i)receive a refund for payments previously made towards the Consolidated Fixed Charge Coverage Ratioplan. At March 31, 2024 and December 31, 2023, we had $0.9 million and $1.1 million, respectively, in deferred revenue included in accrued liabilities related to extended service plans.
Franchise Merchandise Sales. Revenue from the sale of rental merchandise is recognized upon shipment of the merchandise to the franchisee.
Royalty Income and Fees. Franchise royalties, including franchisee contributions to corporate advertising funds, represent sales-based royalties calculated as a percentage of gross rental payments and sales. Royalty revenue is accrued and recognized as rental payments and merchandise sales occur. Franchise fees are initial fees charged to franchisees for new or converted franchise stores. Franchise fee revenue is recognized on a pro formastraight-line basis is no less than 1.10:1, (ii)over the Total Revolving Extensions of Credit do not exceed the Borrowing Base, and (iii) if the request occurs during a Minimum Availability Period, the Availability must be more than the Availability Threshold Amount.
The Fourth Amendment permits the Agent, in its sole discretion, to make loans to us that it deems necessary or desires (i) to preserve or protect the Collateral, (ii) to enhance the likelihood of, or maximize the amount of, repaymentterm of the Loansfranchise agreement. At March 31, 2024 and December 31, 2023, we had $2.7 million and $3.0 million, respectively, in deferred revenue included in accrued liabilities related to franchise fees.
Other. Other revenue consists of revenue generated by other Obligations, or (iii)miscellaneous product plans offered to pay anyour rental and installment customers. Revenue for other amount chargeable to or requirement to be paid by the Company pursuant toproduct plans is recognized in accordance with the terms of the applicable plan agreement.
Note 3 - Receivables and Allowance for Doubtful Accounts
Installment sales receivables consist primarily of receivables due from customers for the sale of merchandise in our retail installment stores. Installment sales receivables associated with the sale of merchandise at our Get It Now and Home Choice stores generally consist of the sales price of the merchandise purchased and any additional fees for optional services the customer has chosen, less the customer’s down payment. No interest is accrued and interest income is recognized each time a customer makes a payment, generally on a monthly basis. Interest payments received on installment agreements for each of the three months ended March 31, 2024 and 2023 was $2.7 million and $3.0 million, respectively.
Trade and notes receivables consist of amounts due from our lease-to-own customers for lease renewal payments and past due uncollected lease payments, adjusted for the probability of collection based on our assessment of historical collection rates and length of time the receivable is past due; amounts owed from our franchisees for inventory purchases, earned royalties and other obligations; and other corporate related receivables. Credit Agreement. is extended to franchisees based on an evaluation of each franchisee’s financial condition and collateral is generally not required. Trade receivables are generally due within 30 days.

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UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Receivables consist of the following:
(in thousands)March 31, 2024December 31, 2023
Installment sales receivables$60,404 $62,901 
Trade and notes receivables(1)
62,509 62,358 
Total receivables122,913 125,259 
Less allowance for doubtful accounts(2)
(14,500)(14,254)
Total receivables, net of allowance for doubtful accounts$108,413 $111,005 
(1) Trade and notes receivables includes accrued revenue, adjusted for the probability of collection, related to our lease-to-own agreements of $35.5 million and $36.8 million at March 31, 2024 and December 31, 2023, respectively.
(2) Lease receivables are accrued on a net basis, adjusted for the probability of collection based on our assessment of historical collection rates, as described above. Therefore, we do not maintain a separate allowance for doubtful accounts related to our lease receivables.
We have established an allowance for doubtful accounts for our installment notes receivable. Our policy for determining the allowance is primarily based on historical loss experience, as well as the results of management’s review and analysis of the payment and collection of the installment notes receivable within the previous year. We believe our allowance is adequate to absorb all expected losses. Our policy is to charge off installment notes receivable that are 120 days or more past due. Charge-offs are applied as a reduction to the allowance for doubtful accounts and any recoveries of previously charged off balances are recognized as contra-bad debt expense in our Condensed Consolidated Statements of Operations.
The aggregate amountallowance for our Franchising trade and notes receivables is determined by considering a number of factors, including the length of time receivables are past due, previous loss history, the franchisee’s current ability to pay its obligation, and the condition of the general economy and the industry as a whole. Trade receivables that are more than 90 days past due are either written-off or fully reserved in our allowance for doubtful accounts. Payments subsequently received on such Protective Advancesreceivables are recognized as contra-bad debt expense in our Condensed Consolidated Statements of Operations.
The allowance for doubtful accounts related to Franchising trade and notes receivables was $1.5 million and $1.2 million at March 31, 2024 and December 31, 2023, respectively, and the allowance for doubtful accounts related to installment sales receivables was $13.0 million at both March 31, 2024 and December 31, 2023.
Changes in our allowance for doubtful accounts are as follows:
(in thousands)March 31, 2024
Beginning allowance for doubtful accounts$14,254 
Bad debt expense(1)
5,532 
Accounts written off, net of recoveries(5,286)
 Ending allowance for doubtful accounts$14,500 
(1) Uncollectible installment payments, franchisee obligations, and other corporate receivables are recognized in non-labor operating expenses in our condensed consolidated financial statements.
Note 4 - Income Taxes
The effective tax rate was 15.0% for the three months ended March 31, 2024, compared to 175.4% for the corresponding period in 2023. The reduction in the effective tax rate for the three months ended March 31, 2024 was primarily attributable to a lower tax impact of stock compensation expense related to stock consideration issued to the former owners of Acima Holdings in the form of restricted stock awards compared to the prior year period, as well as a favorable adjustment related to foreign deferred tax assets. Please reference Note 8 for additional information regarding the recognition of these restricted stock awards in our condensed consolidated financial statements. For tax purposes, restricted stock awards subject to restricted stock agreements issued to the former owners of Acima Holdings were recorded as goodwill and are amortized over a period of 15 years from the date of acquisition.
Note 5 - Senior Debt
On February 17, 2021, we entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and lenders party thereto, providing for a seven-year $875 million senior secured term loan facility (the “Term Loan Facility”) and an Asset Based Loan Credit Facility (the “ABL Credit Facility”) providing for a five-year asset-based revolving credit facility with commitments of $550 million and a letter of credit sublimit of $150 million. Commitments under the ABL Credit Facility may be increased, at our option and under certain conditions, by up to an additional $125 million in the aggregate.

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UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
Proceeds from the Term Loan Facility were net of original issue discount of $4.4 million upon issuance from the lenders. In addition, in connection with the closing of the Term Loan Facility and the ABL Credit Facility, we incurred approximately $30.2 million in debt issuance costs, including bank financing fees and third party legal and other professional fees, of which $25.3 million was capitalized in accordance with ASC Topic 470, “Debt” and recorded as a reduction of our outstanding atsenior debt, net in our Condensed Consolidated Balance Sheets.
On September 21, 2021 we entered into a First Amendment to the Term Loan Facility, effective as of September 21, 2021. The amendment effected a repricing of the applicable margin under the Term Loan Facility by reducing the LIBOR floor by 25 basis points from 0.75% to 0.50%, and the applicable margin, with respect to any time may not exceed $35 million.initial term loans, by 75 basis points from 4.00% to 3.25%.
In connection with the Fourthexecution of the First Amendment, and in accordance with ASC Topic 470, “Debt”, we recorded a write-downapproximately $5.4 million in write-offs of previously unamortized debt issuance costs and original issue discount previously capitalized upon the issuance of approximately $1.9 millionthe Term Loan Facility on February 17, 2021.
On August 10, 2022, we entered into a First Amendment to the ABL Credit Facility, effective as of August 10, 2022. The amendment effected the replacement of LIBOR with Term Secured Overnight Financing Rate (“Term SOFR”) as the benchmark rate of interest thereunder.
On June 15, 2023, we entered into a Second Amendment to the Term Loan Facility, effective as of June 15, 2023. The amendment effected the replacement of LIBOR with Term SOFR as the benchmark rate of interest.
In connection with the First Amendment to the ABL Credit Facility and the Second Amendment to the Term Loan Facility described above, we have elected optional expedients available under ASC Topic 848 “Reference Rate Reform”, which classifies contract amendments for the transition of LIBOR as events that do not require accounting reassessments as a contract modification.
As of March 31, 2024, the total remaining balance of unamortized debt issuance costs and original issue discount related to our senior debt reported in the second quarter of 2017. In addition, we paid arrangementCondensed Consolidated Balance Sheets was approximately $11.5 million and amendment fees to the Agent$1.8 million, respectively. Remaining unamortized debt issuance costs and the lenders that provided their consent to the Amendment of approximately $5.3 million, which were capitalized in the second quarter of 2017 andoriginal issue discount will be amortized to interest expense over the remaining term of the agreement.Term Loan Facility.
We also utilize our Revolving Facility for the issuance of letters of credit, as well as to manage normal fluctuationshad $53.0 million in operational cash flow caused by the timing of cash receipts. In that regard, we may from time to time draw funds under the Revolving Facility for general corporate purposes. Amounts are drawn as needed due to the timing of cash flows and are generally paid down as cash is generated by our operating activities. We believe the cash flow generated from operations, together with amounts availableoutstanding borrowings under our ABL Credit Agreement, will be sufficient to fund our operations during the next 12 months. AsFacility at March 31, 2024 and borrowing capacity of September 30, 2017, we have$446.6 million, net of issued letters of credit of $86approximately $50.4 million. The amount outstanding under the Term Loan Facility was $808.9 million at March 31, 2024.
ABL Credit Facility
The table below showsABL Credit Facility will mature on February 17, 2026. We may borrow only up to the requiredlesser of the level of the then-current borrowing base and actual ratiosthe aggregate amount of commitments under the ABL Credit Agreement calculated asFacility. The borrowing base is tied to the amount of September 30, 2017:
Required RatioActual Ratio
Consolidated Fixed Charge Coverage RatioNo less than1.10:10.45:1
eligible installment sales accounts, inventory and eligible lease contracts, reduced by certain reserves.
The actual Consolidated Fixed Charge Coverage ratioABL Credit Facility bears interest at a fluctuating rate determined by reference to an adjusted Term SOFR rate plus an applicable margin of 1.50% to 2.00%. The total interest rate on the ABL Credit Facility at March 31, 2024 was calculated pursuant7.44%. A commitment fee equal to 0.250% to 0.375% of the unused portion of the ABL Credit Facility fluctuates dependent upon average utilization for the prior month as defined by a pricing grid included in the governing documents of the ABL Credit Facility. The commitment fee at March 31, 2024 was 0.375%. We paid $0.7 million of commitment fees during the first quarter of 2024.
Loans under the ABL Credit Facility may be borrowed, repaid and re-borrowed until February 17, 2026, at which time all amounts borrowed must be repaid. The obligations under the ABL Credit Facility are guaranteed by us and certain of our material wholly owned domestic restricted subsidiaries, subject to certain exceptions. The obligations under the ABL Credit Facility and such guarantees are secured on a first-priority basis by all of our and our subsidiary guarantors’ accounts, inventory, deposit accounts, securities accounts, cash and cash equivalents, rental agreements, general intangibles (other than equity interests in our subsidiaries), chattel paper, instruments, documents, letter of credit rights, commercial tort claims related to the foregoing and other related assets and all proceeds thereof related to the foregoing, subject to permitted liens and certain exceptions (such assets, collectively, the “ABL Priority Collateral”) and a second-priority basis in substantially all other present and future tangible and intangible personal property of ours and the subsidiary guarantors, subject to certain exceptions.
The ABL Credit Agreement by dividing the sum of consolidated EBITDA minus Unfinanced Capital Expenditures minus the excess (to the extent positive) of (i) expensesFacility contains covenants that are usual and customary for income taxes paid in cash minus (ii) cash income tax refunds received) for the 12-month period ending September 30, 2017 ($21.5 million), by consolidated fixed charges for the 12-month period ending September 30, 2017 ($47.7 million). For purposes of the calculation, “consolidated fixed charges” is defined as the sum of consolidated interest expensesimilar facilities and scheduled principal payments on indebtedness actually made during such period. The actual Consolidated Fixed Charge Coverage Ratio of 0.45:1 as of September 30, 2017 was below the minimum requirement of 1.10:1 as defined in the Fourth Amendment modifications above. As a result of being out of compliancetransactions and that, among other things, restrict our ability and our restricted subsidiaries’ ability to create certain liens and enter into certain sale and lease-back transactions; create, assume, incur or guarantee certain indebtedness; consolidate or merge with, this covenant, we must maintain $50.0 million of excess availability on the Revolving Facility. Availability under our Revolving Facility was $147.5 million at September 30, 2017, net of the $50 million of excess availability we must maintain on the Revolving Facility.

or convey, transfer or


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RENT-A-CENTER,UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

lease all or substantially all of our and our restricted subsidiaries’ assets, to another person; pay dividends or make other distributions on, or repurchase or redeem, our capital stock or certain other debt; and make other restricted payments.
EventsThe ABL Credit Facility also requires the maintenance of default undera consolidated fixed charge coverage ratio of at least 1.10 to 1.00 at the Credit Agreement include customary events, such as a cross-acceleration provisionend of each fiscal quarter only in the event that we default on other debt. In addition, an eventeither (i) certain specified events of default under the Credit Agreement would occur if a change of control occurs. Thishave occurred and are continuing or (ii) availability is definedless than or equal to include the case where a third party becomes the beneficial owner of 35% or more of our voting stock or a majority of Rent-A-Center’s Board of Directors are not Continuing Directors (all of the current members of our Board of Directors are Continuing Directors under the Credit Agreement). An event of default would also occur if one or more judgments were entered against us of $50.0 million or more and such judgments were not satisfied or bonded pending appeal within 30 days after entry.
In addition to the Revolving Facility discussed above, we maintain a $20 million unsecured, revolving line of credit with INTRUST Bank, N.A. to facilitate cash management. The availability of our INTRUST line of credit is restricted if the borrowing capacity under our Revolving Facility drops below $10 million. As of September 30, 2017, we had $1.1 million outstanding borrowings against this line of credit and no outstanding borrowings at December 31, 2016. The line of credit renews annually. Borrowings under the line of credit bear interest at the greater of $56.25 million and 15% of the line cap then in effect. These covenants are subject to a variablenumber of limitations and exceptions set forth in the governing documents of the ABL Credit Facility. The fixed charge coverage ratio as of March 31, 2024 exceeded 1.10 to 1.00.
The governing documents of the ABL Credit Facility provide for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving us and our significant subsidiaries. As of March 31, 2024, we were in compliance with all requirements and conditions set forth in our ABL Credit Facility governing documents.
Term Loan Facility
The Term Loan Facility, which matures on February 17, 2028, amortizes in equal quarterly installments at a rate of 1.00% per annum of the original principal amount thereof, with the remaining balance due at final maturity. Subject in each case to certain restrictions and conditions, we may add up to $500 million of incremental term loan facilities to the Term Loan Facility or 2.00%.utilize incremental capacity under the Term Loan Facility at any time by issuing or incurring incremental equivalent term debt.
Interest on borrowings under the Term Loan Facility is payable at a fluctuating rate of interest determined by reference to an adjusted Term SOFR rate plus an applicable margin of 3.25%, subject to a 0.50% Term SOFR floor. The total interest rate on the Term Loan Facility was 9.12% at March 31, 2024.
The Term Loan Facility is secured by a first-priority security interest in substantially all of our present and future tangible and intangible personal property, including our subsidiary guarantors, other than the ABL Priority Collateral (as defined below), and by a second-priority security interest in the ABL Priority Collateral, subject to certain exceptions. The obligations under the Term Loan Facility are guaranteed by us and our material wholly-owned domestic restricted subsidiaries that also guarantee the ABL Credit Facility.
The Term Loan Facility contains covenants that are usual and customary for similar facilities and transactions and that, among other things, restrict our ability and our restricted subsidiaries' ability to create certain liens and enter into certain sale and lease-back transactions; create, assume, incur or guarantee certain indebtedness; consolidate or merge with, or convey, transfer or lease all or substantially all of our and our restricted subsidiaries’ assets, to another person; pay dividends or make other distributions on, or repurchase or redeem, our capital stock or certain other debt; and make other restricted payments. The Term Loan Facility also includes mandatory prepayment requirements related to asset sales (subject to reinvestment), debt incurrence (other than permitted debt) and excess cash flow, subject to certain limitations described therein. These covenants are subject to a number of limitations and exceptions set forth in the governing documents of the Term Loan Facility.
In the event our Consolidated Secured Leverage Ratio (as such term is defined in the Term Loan Facility credit agreement) exceeds 1:1, we are required to prepay the loans under the Term Loan Facility by a percentage of annual excess cash flow, as more fully described in the Term Loan Facility credit agreement. We made mandatory excess cash flow prepayments of approximately $42.6 million, including $0.6 million in accrued interest, in March 2023, relating to results for the year ended December 31, 2022.
The Term Loan Facility provides for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving us and our significant subsidiaries.

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UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
The table below shows the scheduled maturity dates of our outstanding senior debt at September 30, 2017March 31, 2024 for each of the years ending December 31:
(in thousands)ABL Credit Facility
Term Loan Facility(1)
Total
2024$— $— $— 
2025— — — 
202653,000 — 53,000 
2027— — — 
2028— 808,896 808,896 
Thereafter— — — 
Total senior debt$53,000 $808,896 $861,896 
(1) Annual installment requirements were reduced by the amount of the excess cash flow payment described above, in accordance with the terms of the credit agreement governing the Term Loan Facility.
(in thousands)Term Loan Revolving Facility INTRUST Line of Credit Total
2017$562
 $—
 $1,070
 $1,632
20182,250
 —
 —
 2,250
20192,250
 55,000
 —
 57,250
20202,250
 —
 —
 2,250
202141,813
 —
 —
 41,813
Thereafter—
 —
 —
 —
Total senior debt$49,125
 $55,000
 $1,070
 $105,195
Note 36 - Subsidiary Guarantors – Senior Notes
On November 2, 2010,February 17, 2021, we issued $300.0$450 million in senior unsecured notes all of which are due November 2020,February 15, 2029, at par value, bearing interest at 6.625%6.375% (the “Notes”), pursuantthe proceeds of which were used to an indenture dated November 2, 2010, among Rent-A-Center, Inc., its subsidiary guarantors and The Bank of New York Mellon Trust Company, as trustee. Afund a portion of the proceedsconsideration upon closing of this offeringthe Acima Holdings acquisition. Interest on the Notes is payable in arrears on February 15 and August 15 of each year. In connection with the issuance of the Notes, we incurred approximately $15.7 million in debt issuance costs, including bank financing fees and third party legal and other professional fees, which were used to repay approximately $200.0 million of outstanding term debt under our Prior Credit Agreement. The remaining net proceeds were used to repurchase sharescapitalized in accordance with ASC Topic 470, “Debt” and recorded as a reduction of our common stock. Theoutstanding Notes in our Condensed Consolidated Balance Sheets. Debt issuance costs are amortized as interest expense over the term of the Notes. As of March 31, 2024, the total remaining balance of unamortized debt issuance costs related to our Notes reported in the Condensed Consolidated Balance Sheets was approximately $9.6 million.
We may redeem some or all of the Notes at any time for cash at the redemption prices set forth in the indenture governing the Notes, plus accrued and unpaid interest to, but not including, the redemption date. If we experience specific kinds of change in control, we will be required to offer to purchase the Notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest.
The Notes are our general unsecured senior obligations, and are effectively subordinated to all of our existing and future secured indebtedness to the extent of the 6.625% notes outstanding asvalue of September 30, 2017the collateral securing such indebtedness, structurally subordinated to all existing and December 31, 2016, was $292.7 million, reduced by $2.0 millionfuture indebtedness and $2.5 millionother liabilities of unamortized issuance costs, respectively.
On May 2, 2013, we issued $250.0 millionour non-guarantor subsidiaries, equal in right of payment to all of our and our guarantor subsidiaries’ existing and future senior unsecured notes due May 2021, bearing interest at 4.75%, pursuantindebtedness and senior in right of payment to an indenture dated May 2, 2013, among Rent-A-Center, Inc., its subsidiary guarantors and The Bank of New York Mellon Trust Company, as trustee. A portion of the proceeds of this offering were used to repurchase sharesall of our common stock underfuture subordinated indebtedness, if any. The Notes are jointly and severally guaranteed on a $200.0 million accelerated stock buyback program. The remaining net proceeds were used to repaysenior unsecured basis by certain of our domestic subsidiaries that have outstanding revolving debt under our Priorindebtedness or guarantee other specified indebtedness, including the ABL Credit Agreement. The principal amount ofFacility and the 4.75% notes outstanding as of September 30, 2017 and December 31, 2016, was $250.0 million, reduced by $2.3 million and $2.8 million of unamortized issuance costs, respectively.Term Loan Facility.
The indenturesindenture governing the 6.625% notes and the 4.75% notes are substantially similar. Each indentureNotes contains covenants that limit, among other things, our ability to:
incur additional debt;
and the ability of some of our restricted subsidiaries to create liens, transfer or sell assets, incur indebtedness or our subsidiaries;
grant liens to third parties;
issue certain preferred stock, pay cashdividends, redeem stock or make other distributions, make other restricted payments or investments, create restrictions on payment of dividends or repurchase stock when total leverage is greater than 2.50:1 (subjectother amounts to an exception for cash dividends in an amount not to exceed $20 million annually); and
us by our restricted subsidiaries, merge or consolidate with other entities, engage in certain transactions with affiliates and designate our subsidiaries as unrestricted subsidiaries. These covenants are subject to a mergernumber of exceptions and qualifications. The covenants limiting restricted payments, restrictions on payment of dividends or sell substantially allother amounts to us by our restricted subsidiaries, the ability to incur indebtedness, asset dispositions and transactions with affiliates will be suspended if and while the Notes have investment grade ratings from any two of our assets.Standard & Poor’s Ratings Services, Moody’s Investors Service, Inc. and Fitch, Inc.
EventsThe indenture governing the Notes also provides for events of default, under each indenture include customary events, such as a cross-acceleration provision inwhich, if any of them occurs, would permit or require the event that we default inprincipal, premium, if any, and interest on all the payment of other debtthen outstanding Notes to be due at maturity or upon acceleration for default in an amount exceeding $50.0 million, as well as in the event a judgment is entered against us in excess of $50.0 million that is not discharged, bonded or insured.
The 6.625% notes may be redeemed on or after November 15, 2015, at our option, in whole or in part, at a premium declining from 103.313%. The 6.625% notes may be redeemed on or after November 15, 2018, at our option, in whole or in part, at par. The 6.625% notes also require that upon the occurrence of a change of control (as defined in the 2010 indenture), the holders of the

and payable.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

notes have the right to require us to repurchase the notes at a price equal to 101% of the original aggregate principal amount, together with accrued and unpaid interest, if any, to the date of repurchase.
The 4.75% notes may be redeemed on or after May 1, 2016, at our option, in whole or in part, at a premium declining from 103.563%. The 4.75% notes may be redeemed on or after May 1, 2019, at our option, in whole or in part, at par. The 4.75% notes also require that upon the occurrence of a change of control (as defined in the 2013 indenture), the holders of the notes have the right to require us to repurchase the notes at a price equal to 101% of the original aggregate principal amount, together with accrued and unpaid interest, if any, to the date of repurchase.
Any mandatory repurchase of the 6.625% notes and/or the 4.75% notes would trigger an event of default under our Credit Agreement. We are not required to maintain any financial ratios under either of the indentures.
Rent-A-Center and its subsidiary guarantors have fully, jointly and severally, and unconditionally guaranteed the obligations of Rent-A-Center with respect to the 6.625% notes and the 4.75% notes. Rent-A-Center has no independent assets or operations, and each subsidiary guarantor is 100% owned directly or indirectly by Rent-A-Center. The only direct or indirect subsidiaries of Rent-A-Center that are not guarantors are minor subsidiaries. There are no restrictions on the ability of any of the subsidiary guarantors to transfer funds to Rent-A-Center in the form of loans, advances or dividends, except as provided by applicable law.
Note 47 - Fair Value
We follow a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values, in determining the fair value of our non-financial assets and non-financial liabilities, which consist primarily of goodwill. These tiers include: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. There were no changes in the methods and assumptions used in measuring fair value during the period.
At September 30, 2017, ourOur financial instruments include cash and cash equivalents, receivables, payables, senior debtborrowings against our ABL Credit Facility and senior notes.Term Loan Facility, and outstanding Notes. The carrying amount of cash and cash equivalents, receivables and payables approximates fair value at September 30, 2017March 31, 2024 and December 31, 2016,2023, because of the short maturities of these instruments. Our senior debt isIn addition, the interest rates on our Term Loan Facility and ABL Credit Facility are variable rate debt that re-prices frequently and, entails no significant change in credit risk and, as a result,therefore, we believe the carrying value of outstanding borrowings approximates their fair value approximates carrying value.
The fair value of our senior notesNotes is based on Level 1 inputs and was as follows at September 30, 2017 and DecemberMarch 31, 2016:2024:
March 31, 2024
(in thousands)Carrying ValueFair ValueDifference
Senior notes$450,000 $435,375 $(14,625)
 September 30, 2017 December 31, 2016
(in thousands)Carrying Value Fair Value Difference Carrying Value Fair Value Difference
6.625% senior notes$292,740
 $277,371
 $(15,369) $292,740
 $266,393
 $(26,347)
4.75% senior notes250,000
 226,250
 (23,750) 250,000
 206,250
 (43,750)
Total senior notes$542,740
 $503,621
 $(39,119) $542,740
 $472,643
 $(70,097)
Note 58 - Other Gains and Charges
Acceptance Now Store Closures. Acima Holdings Acquisition. On February 17, 2021, we completed the acquisition of Acima Holdings, a leading provider of virtual lease-to-own solutions. Included in the aggregate consideration issued to the former owners of Acima Holdings were 8,096,595 common shares, valued at $414.1 million, subject to 36-month vesting conditions under restricted stock agreements, which were recognized over the vesting term as stock compensation expense, in accordance with ASC Topic 718, “Stock-based Compensation”. During the first sixthree months of 2017,ended March 31, 2024 and 2023, we closed 319 Acceptance Now manned locationsrecognized approximately $4.9 million and 9 Acceptance Now direct locations,$109.5 million in stock compensation expense, respectively, related to these restricted stock agreements. See Note 10 for additional information.
The fair value of assets acquired as part of the hhgregg bankruptcytransaction included $520 million in intangible assets and liquidation plan and$170 million in developed technology. During the Conn's referral contract termination. These closures resulted in pre-tax charges of $16.4 million for the ninethree months ended September 30, 2017, consisting primarily of rental merchandise losses, disposal of fixed assets,March 31, 2024 and other miscellaneous labor2023, we recognized approximately $12.7 million and shutdown costs. In addition, we recorded a pre-tax impairment charge of$14.2 million in amortization expense, respectively, related to acquired intangible assets. We also recognized approximately $3.9 million and $4.0 million in incremental depreciation expense related to our intangibleacquired technology assets for our discontinued vendor relationship.
Corporate Cost Rationalization. Duringin during the first nine months of 2017, we executed a head count reduction that impacted approximately 10% of our field support center workforce. This resulted in pre-tax charges for severance and other payroll-related costs of approximately $3.4 million for the ninethree months ended September 30, 2017.March 31, 2024 and 2023, respectively.
Effects of Hurricanes.Internally Developed Software Depreciation. During the third quarter of 2017, Hurricanes Harvey, Irma2023, we completed initial development and Maria caused significant damagebegan pilot testing a new internally developed point-of-sale system for our Rent-A-Center lease-to-own stores. We expect to fully deploy the new system across our lease-to-own store network during 2024, at which time our existing point-of-sale software will be retired. Therefore, in the continental United States and surrounding areas, including Texas, Florida, and Puerto Rico, resulting in pre-tax expensesthird quarter of approximately $1.9 million for inventory losses, store repair costs, fixed asset write-offs, and employee assistance. Approximately $1.7 million of these pre-tax expenses related to Hurricanes Harvey and Irma, while2023, we accelerated the remaining $0.2 million relateduseful lives of our existing point-of-sale software assets to employee assistance payments for Hurricane Maria. At this time, we are unable to reasonably estimatealign with the extentcurrent deployment timeline of losses incurred due toour new point-of-sale system, which resulted in the damage caused by Hurricane Maria, but we expect to have a more complete assessment during the fourth quarterrecognition of 2017.
U.S Core Store and Acceptance Now Consolidation Plan. During the second quarteradditional depreciation expense of 2016, we closed 167 U.S. Core and 96 Acceptance Now locations, resulting in a pre-tax restructuring charge of $1.0 million and $19.9$4.6 million for the three months ended March 31, 2024. Subsequent to March 31, 2024 we expect to recognize additional depreciation expense of $1.5 million over the remaining life of these assets.
Activity with respect to Other gains and ninecharges is summarized in the below table:

Three Months Ended March 31,
(in thousands)20242023
Acima acquired assets depreciation and amortization(1)
$16,646 $18,234 
Acima equity consideration vesting(2)
4,893 109,473 
Accelerated software depreciation4,611 — 
Asset impairments646 — 
Other— (137)
Total other gains and charges$26,796 $127,570 
(1) Represents amortization of the total fair value of acquired intangible assets and incremental depreciation related to the fair value increase over net book value of acquired software assets in connection with the acquisition of Acima Holdings in 2021.
(2) Represents stock compensation expense related to common stock issued to Acima Holdings employees under restricted stock agreements as part of the acquisition proceeds subject to vesting restrictions, as described in Note 10.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

months ended September 30, 2016. Restructuring charges consisted of lease obligation costs, disposal of fixed assets, and other miscellaneous labor and shutdown costs.
Mexico Store Consolidation Plan. During the first quarter of 2016, we closed 14 stores in Mexico, resulting in pre-tax restructuring charges of $2.3 million in the Mexico segment for disposal of rental merchandise, fixed assets and leasehold improvements and other charges to decommission the stores.
Activity with respect to other charges for the nine months ended September 30, 2017 is summarized in the below table:
(Unaudited)
(in thousands) Accrued Charges at December 31, 2016 Charges & Adjustments Payments  Accrued Charges at September 30, 2017
Cash charges:       
Labor reduction costs$1,393
 $3,744
 $(2,699) $2,438
Lease obligation costs6,628
 285
 (4,135) 2,778
Other miscellaneous—
 634
 (634) —
Total cash charges$8,021
 4,663
 $(7,468) $5,216
Non-cash charges:       
Rental merchandise losses  15,548
    
Loss on sale of fixed assets  956
    
Impairment of intangible asset  3,896
    
Other(1)
  6,517
    
Total other charges  $31,580
    
(1) Other primarily includes litigation settlements, incremental legal and advisory fees related to shareholder proposals, and effects of hurricanes.
Note 69 - Segment Information
The operating segments reported below are the segments for which separate financial information is available and for which segment results are evaluated by the chief operating decision makers. Our operating segments are organized based on factors including, but not limited to, type of business transactions, geographic location and store ownership. AllWithin our operating segments, we offer merchandise for lease from fourcertain basic product categories:categories, such as: furniture, including mattresses; tires; consumer electronics, appliances, computers, furnitureelectronics; appliances; tools; handbags; computers; smartphones; and accessories. Our Core U.S. and Franchising segments also offer smartphones.
Segment information as of and for the three and nine months ended September 30, 2017March 31, 2024 and 20162023 is as follows:
Three Months Ended March 31,
(in thousands)20242023
Revenues
Acima$561,346 $483,847 
Rent-A-Center485,753 485,008 
Mexico20,567 17,430 
Franchising28,301 29,776 
Total revenues$1,095,967 $1,016,061 
Three Months Ended March 31,
(in thousands)20242023
Gross profit
Acima$169,302 $155,144 
Rent-A-Center337,643 331,725 
Mexico14,716 12,391 
Franchising7,407 7,004 
Total gross profit$529,068 $506,264 
Three Months Ended March 31,
(in thousands)20242023
Operating profit (loss)
Acima$51,911 $53,870 
Rent-A-Center74,774 68,961 
Mexico1,696 995 
Franchising3,364 4,760 
Total segments131,745 128,586 
Corporate(1)
(69,983)(163,699)
Total operating profit (loss)$61,762 $(35,113)
(1) Includes stock compensation expense of $4.9 million and $109.5 millionrecognized for the three months ended March 31, 2024 and 2023, respectively, related to common stock issued to Acima Holdings employees under restricted stock agreements as part of the acquisition consideration subject to vesting restrictions as described in Note 10.


 Three Months Ended September 30, Nine Months Ended September 30,
(in thousands)2017 2016 2017 2016
Revenues       
Core U.S.$442,763
 $481,805
 $1,390,687
 $1,596,782
Acceptance Now184,293
 194,398
 622,160
 624,310
Mexico12,237
 12,454
 35,351
 39,514
Franchising4,672
 5,220
 15,388
 18,542
Total revenues$643,965
 $693,877
 $2,063,586
 $2,279,148
14
 Three Months Ended September 30, Nine Months Ended September 30,
(in thousands)2017 2016 2017 2016
Gross profit       
Core U.S.$309,779
 $343,071
 $965,739
 $1,138,089
Acceptance Now92,088
 102,998
 310,451
 319,492
Mexico8,466
 8,897
 24,668
 27,478
Franchising2,132
 2,260
 6,803
 7,269
Total gross profit$412,465
 $457,226
 $1,307,661
 $1,492,328


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RENT-A-CENTER,UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)
 Three Months Ended September 30, Nine Months Ended September 30,
(in thousands)2017 2016 2017 2016
Operating (loss) profit       
Core U.S.$23,859
 $26,058
 $79,241
 $127,009
Acceptance Now10,379
 29,592
 49,595
 86,508
Mexico(242) 235
 (122) (1,803)
Franchising1,032
 1,430
 3,565
 4,268
Total segments35,028
 57,315
 132,279
 215,982
Corporate(43,473) (40,615) (140,445) (123,302)
Total operating (loss) profit$(8,445) $16,700
 $(8,166) $92,680
Three Months Ended March 31,
(in thousands)20242023
Depreciation and amortization
Acima(1)
$290 $427 
Rent-A-Center4,990 4,970 
Mexico346 242 
Franchising36 38 
Total segments5,662 5,677 
Corporate(2)
7,811 7,204 
Total depreciation and amortization$13,473 $12,881 
 Three Months Ended September 30, Nine Months Ended September 30,
(in thousands)2017 2016 2017 2016
Depreciation, amortization and impairment of intangibles       
Core U.S.$7,725
 $9,495
 $23,715
 $30,950
Acceptance Now568
 815
 1,983
 2,480
Mexico496
 746
 1,549
 2,549
Franchising45
 44
 133
 133
Total segments8,834
 11,100
 27,380
 36,112
Corporate9,845
 8,898
 28,548
 24,486
Total depreciation, amortization and impairment of intangibles$18,679
 $19,998
 $55,928
 $60,598
We recorded an impairment(1) Excludes amortization expense of intangibles of $3.9approximately $12.7 million inand $14.2 million for the Acceptance Now segment during the first ninethree months of 2017 that is not included in the table above. The impairment charge wasended March 31, 2024 and 2023, respectively, recorded to Other Chargesgains and charges in the Condensed Consolidated StatementStatements of Operations.Operations, related to intangible assets acquired upon closing of the Acima Holdings acquisition. See Note 8 for additional information.
(2) Excludes depreciation expense of approximately $8.5 million and $4.0 million for the three months ended March 31, 2024 and 2023, respectively, recorded to Other gains and charges in the Condensed Consolidated Statements of Operations, related to software acquired upon closing of the Acima Holdings acquisition and accelerated software depreciation. See Note 8 for additional information.
Three Months Ended March 31,
(in thousands)20242023
Capital expenditures
Acima$219 $58 
Rent-A-Center4,191 2,977 
Mexico792 716 
Franchising— 1 
Total segments5,202 3,752 
Corporate6,615 5,782 
Total capital expenditures$11,817 $9,534 
(in thousands)March 31, 2024December 31, 2023
On rent rental merchandise, net
Acima$577,865 $606,912 
Rent-A-Center453,970 478,774 
Mexico24,546 24,210 
Total on rent rental merchandise, net$1,056,381 $1,109,896 
(in thousands)March 31, 2024December 31, 2023
Held for rent rental merchandise, net
Acima$— $498 
Rent-A-Center121,449 112,129 
Mexico10,649 11,540 
Total held for rent rental merchandise, net$132,098 $124,167 

 Three Months Ended September 30, Nine Months Ended September 30,
(in thousands)2017 2016 2017 2016
Capital expenditures       
Core U.S.$6,625
 $3,864
 $21,333
 $11,092
Acceptance Now430
 860
 1,525
 1,457
Mexico56
 36
 103
 259
Total segments7,111
 4,760
 22,961
 12,808
Corporate6,258
 13,895
 30,567
 34,031
Total capital expenditures$13,369
 $18,655
 $53,528
 $46,839
15


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Segment information - Selected balance sheet data:
(Unaudited)
(in thousands)September 30, 2017 December 31, 2016
On rent rental merchandise, net   
Core U.S.$364,656
 $426,845
Acceptance Now292,247
 354,486
Mexico13,514
 13,787
Total on rent rental merchandise, net$670,417
 $795,118
(in thousands)March 31, 2024December 31, 2023
Assets by segment
Acima$1,180,078 $1,221,845 
Rent-A-Center1,018,963 1,061,107 
Mexico59,920 57,347 
Franchising19,258 18,023 
Total segments2,278,219 2,358,322 
Corporate348,765 363,108 
Total assets$2,626,984 $2,721,430 
(in thousands)September 30, 2017 December 31, 2016
Held for rent rental merchandise, net   
Core U.S.$189,029
 $192,718
Acceptance Now5,897
 7,489
Mexico4,842
 6,629
Total held for rent rental merchandise, net$199,768
 $206,836
(in thousands)September 30, 2017 December 31, 2016
Assets by segment   
Core U.S.$793,036
 $872,551
Acceptance Now363,212
 432,383
Mexico33,062
 31,415
Franchising3,094
 2,197
Total segments1,192,404
 1,338,546
Corporate237,913
 264,195
Total assets$1,430,317
 $1,602,741
Note 710 - Common Stock and Stock-Based Compensation
Stock Repurchase Program
In early December 2021, our Board of Directors authorized a stock repurchase program for up to $500 million (the “December 2021 Program”), which superseded our previous stock repurchase program. Under the December 2021 Program, we may purchase shares of our common stock from time to time in the open market or privately negotiated transactions. We are not obligated to acquire any shares under the program, and the program may be suspended or discontinued at any time. There were no repurchases of our common stock during the three months ended March 31, 2024 and 2023, and approximately $235.0 million remains available for repurchases under the current authorization at March 31, 2024.
Stock Based Compensation
We recognized $1.1$7.0 million and $2.6$6.2 million in pre-tax compensation expense related to stock optionsawards issued under the Upbound Group, Inc. Amended 2021 Long-Term Incentive Plan (the “2021 Plan”) and restricted stock units2016 Long-Term Incentive Plan (the “2016 Plan”) during the three months ended September 30, 2017March 31, 2024 and 2016, respectively, and $2.2 million and $7.4 million during the nine months ended September 30, 2017 and 2016,2023, respectively. During the ninethree months ended September 30, 2017,March 31, 2024, we granted approximately 827,000 stock options, 490,000494,944 market-based performance restricted stock units and 466,000261,475 time-vesting restricted stock units. The stock options granted were valued using a Black-Scholes pricing model withunits under the following assumptions: an expected volatility of 43.75% to 53.67%, a risk-free interest rate of 1.54% to 2.07%, an expected dividend yield of 2.73% to 3.85% and an expected term of 3.5 years to 5.75 years. The weighted-average exercise price of the options granted during the nine months ended September 30, 2017 was $9.21 and the weighted-average grant-date fair value was $2.83.2021 Plan. Performance-based restricted stock units are valued using a Monte Carlo simulation. Time-vesting restricted stock units are valued using thebased on our closing stock price on the trading day immediately preceding the daydate of the grant.grant, or as of the date of modification in the event an award is modified. The weighted-average grant date fair value of the market-based performance and time-vesting restricted stock units granted during the ninethree months ended September 30, 2017March 31, 2024 was $9.00.$38.44 and $33.81, respectively.
In connection with the acquisition of Acima Holdings, LLC in 2021, we issued to the former owners of Acima Holdings 10,779,923 of common shares valued at $51.14 per share, as of the date of closing. Of this total, 2,683,328 common shares were included in the aggregate purchase price of the transaction for financial reporting purposes, while 8,096,595 common shares, valued at $414.1 million, issued under restricted stock agreements and subject to vesting conditions, were recognized as stock compensation expense over the vesting term in accordance with ASC Topic 718, “Stock-based Compensation” and recorded to Other gains and charges in our unaudited Condensed Consolidated Statements of Operations. We recognized $4.9 million and $109.5 million in stock compensation expense related to these restricted stock agreements during the three months ended March 31, 2024 and 2023, respectively. Stock compensation expense recognized during the three months ended March 31, 2023 for these restricted stock agreements included $78.4 million attributable to the acceleration of vesting provisions, primarily related to former employee and Acima founder Aaron Allred's transition from Executive Vice President of Acima to an advisory role in early 2023.
Note 811 - Contingencies
From time to time, the Company,we, along with our subsidiaries, isare party to various legal proceedings and governmental inquiries arising in the ordinary course of business. We reserve for loss contingencies that are both probable and reasonably estimable. We regularly monitor developments related to these legal proceedings and governmental inquiries, review the adequacy of our legal reserves on a quarterly basis. We dobasis, and reserve for loss contingencies that we determine are both probable and reasonably estimable. Although we have not expectdetermined that any of these losses tomatters will have a material impact on our condensed consolidated financial statements, ifwe cannot predict the impact of future developments or provide assurances that a resolution of any such matter would not have a material and when such losses are incurred.adverse impact during a future period. In addition, claims and lawsuits against us may seek injunctive or other relief that requires changes to our business practices or operations and it is possible that any required changes may materially and adversely impact our business, financial condition, results of operations or reputation.
Unclaimed Property.We are subject to unclaimed property audits by states in the ordinary course of business. A comprehensive multi-state unclaimed property audit is currently in progress. The property subject to review in thisthe audit process includes unclaimed wages, vendor payments and customer refunds. State escheat laws

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UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
generally require entities to report and remit abandoned and unclaimed property to the state. Failure to timely report and remit the property can result in assessments that could include interest and penalties, in addition to the payment of the escheat liability itself. We routinely remit escheat payments to states and believe we are in compliance with applicable escheat laws.
Consumer Financial Protection Bureau ("CFPB") Investigation. In December 2020, prior to the execution of the definitive agreement to acquire Acima, Acima received a Civil Investigative Demand dated October 1, 2020 (the “CID”) from the CFPB requesting certain information, documents and data relating to Acima’s products, services and practices for the period from January 1, 2015 to the date on which responses to the CID are provided in full. The purpose of the CID was to determine whether Acima extends credit, offers leases, or otherwise offers or provides a consumer financial product or service and whether Acima complies with certain consumer financial protection laws. After the original CID, the CFPB issued subsequent CIDs requesting further information, documents and testimony. Acima has completed its responses to all CIDs and has been cooperating with the CFPB throughout their investigation.
On May 16, 2023, in accordance with the CFPB’s Notice and Opportunity to Respond and Advise (“NORA”) process, the CFPB staff notified Acima that the staff may allege that Acima violated the Consumer Financial Protection Act of 2010; the Truth in Lending Act and its implementing regulation, Regulation Z; the Electronic Fund Transfer Act and its implementing regulation, Regulation E; and the Fair Credit Reporting Act and its implementing regulation, Regulation V. The CFPB staff further stated that the CFPB’s Office of Enforcement may recommend that the CFPB take legal action against Acima based on these potential allegations, and, in connection therewith, the staff may seek remedies including restitution, disgorgement, damages, injunctive relief, and civil money penalties. On June 20, 2023, Acima submitted its response to the NORA notice, in which Acima asserted that the staff’s potential allegations lacked merit.
As of the date of this Quarterly Report on Form 10-Q, we have not yet received the CFPB’s response to Acima's submission in accordance with the NORA process. We do not expectare currently unable to predict the CFPB’s response to the NORA process or the ultimate timing or outcome of the auditCFPB investigation or any negotiatedlegal proceedings arising therefrom.
On the terms and subject to the conditions set forth in the definitive agreement to acquire Acima, the former owners of Acima agreed to indemnify Upbound Group, Inc. for certain losses arising after the consummation of the transaction with respect to the CID. The indemnification obligations of the former owners of Acima with respect to the CID are limited to the remaining amount of an indemnity holdback which is now approximately $45 million of a $50 million initial holdback escrowed at the closing of the transaction for the CID and other matters and will be Upbound Group, Inc.’s sole recourse against the former owners of Acima with respect to all of the indemnifiable claims under the definitive transaction agreement. On May 19, 2023, in light of the above-referenced NORA notice, we submitted an indemnification claim notice pursuant to the definitive agreement to acquire Acima.
There can be no assurance that the remaining escrowed amount will be sufficient to address all covered losses or that the CFPB’s ongoing investigation or future exercise of its enforcement, regulatory, discretionary or other powers will not result in findings or alleged violations of consumer financial protection laws that could lead to enforcement actions, proceedings or litigation, whether by the CFPB, other state or federal agencies, or other parties, and the imposition of damages, fines, penalties, restitution, other monetary liabilities, sanctions, settlements or changes to Acima’s business practices or operations that could materially and adversely affect our business, financial condition, results of operations or reputation.
Multi-State Attorneys' General Investigation. On November 1, 2021, Acima received a letter from the Nebraska Attorney General’s office stating that the Attorney General of Nebraska, along with a coalition of thirty-eight state Attorneys General, initiated a multi-state investigation into the business acts and practices of Acima and that a civil investigative demand(s) and/or subpoena(s) pursuant to respective state consumer protection laws will be forthcoming. Since receiving the letter, we have held multiple discussions with officials at the lead attorneys' general offices and, based on those discussions, it is our understanding that the investigation is looking at business practices within the virtual lease-to-own industry and includes or will include multiple companies. In April 2022, we received a material adverse impactrequest for information and documents. In March 2024, the multi-state attorneys' general group presented their findings and allegations from their investigation to Acima. Acima is currently in the process of submitting a response to the multi-state attorneys' general group regarding such findings and allegations. We are currently unable to predict the eventual timing or outcome of this matter, any future discussions with the multi-state attorneys' general group regarding the resolution of this matter or any legal proceedings arising from this matter.
New York Attorney General Investigation. The New York Attorney General (the “NYAG”) issued a subpoena to our financial statements.
OurAcima subsidiary ColorTyme Finance, Inc. (“ColorTyme Finance”), is a partyin January 2020 seeking information with respect to various business practices in connection with Acima’s lease-to-own transactions. Acima received additional subpoenas from the NYAG in August 2021 and July 2023. Since receiving the subpoenas, we have cooperated with the NYAG in connection with its investigation. In March 2023, the NYAG provided Acima with an agreement with Citibank, N.A., pursuant to which Citibank provides financing to qualifying franchiseesinitial proposed assurance of Franchising. Under the Citibank agreement, upon an eventdiscontinuance alleging violations of default

certain consumer laws, seeking injunctive


1217
RENT-A-CENTER,UPBOUND GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)

byrelief regarding certain business practices, and seeking payment of unspecified amounts for restitution and civil penalties. Acima is currently discussing resolution of this matter with the franchisee under agreements governing this financing and uponNYAG. Absent resolution, the occurrenceNYAG has indicated an intention to bring an action which is likely to allege violations of certain consumer laws, seek injunctive relief regarding certain business practices, and request restitution and civil penalties. We are currently unable to predict the ultimate timing or outcome of the NYAG investigation, the current settlement negotiations or any legal proceedings arising from this matter.
McBurnie Litigation. We are a defendant in a putative class action entitled McBurnie, et al. v. Acceptance Now, LLC, brought on behalf of individuals who entered into a rental purchase agreement with the Company’s Acceptance Now business in California and were charged a processing fee and/or an expedited fee. Plaintiffs allege that the fees they were charged were neither “reasonable” nor “actually incurred” in violation of the Karnette Rental-Purchase Act and other events, Citibank can assign the loans and the collateral securing such loans to ColorTyme Finance, with ColorTyme Finance paying or causing to be paid the outstanding debt to Citibank and then succeedingCalifornia state consumer protection laws. Plaintiffs seek unspecified actual damages pursuant to the rights of Citibank underKarnette Rental-Purchase Act; statutory damages pursuant to the debt agreements, including the right to foreclose on the collateral. Rent-A-CenterKarnette Rental-Purchase Act; attorneys’ fees and ColorTyme Finance guarantee the obligationscosts; exemplary damages; and public injunctions for alleged violations of the franchise borrowers underKarnette Rental-Purchase Act, the Citibank facility.California Consumers Legal Remedies Act, and California unfair competition laws. The maximum guarantee obligation underaction is currently pending in the United States District Court for the Northern District of California. On November 30, 2022, the District Court denied our motion to compel arbitration, and in December 2022, we filed an interlocutory appeal of that denial with the United States Court of Appeals for the Ninth Circuit, pending which the District Court proceedings were stayed. On March 14, 2024, the Court of Appeals affirmed the District Court’s denial of our motion to compel arbitration and its finding that plaintiffs’ challenge to the processing fee was not moot, while remanding the action to the District Court to consider whether plaintiffs have standing to challenge the expedited payment fee. We intend to continue to vigorously defend this agreement, excludingcase. We are currently unable to predict the effectseventual timing or outcome of any amounts that could be recovered under collateralization provisions, is $27.0 million, of which $1.1 million was outstanding as of September 30, 2017.this litigation.
Note 912 - Earnings (Loss) Per Common Share
Summarized basic and diluted earnings per common share were calculated as follows:
 Three Months Ended March 31,
(in thousands, except per share data)20242023
Numerator:
Net earnings$27,687 $47,330 
Denominator:
Weighted-average shares outstanding54,544 55,157 
Effect of dilutive stock awards(1)
1,271 1,280 
Weighted-average dilutive shares55,815 56,437 
Basic earnings per common share$0.51 $0.86 
Diluted earnings per common share(1)
$0.50 $0.84 
Anti-dilutive securities excluded from diluted earnings per common share:
Anti-dilutive restricted share units— 336 
Anti-dilutive performance share units495 790 
Anti-dilutive stock options60 418 
(1) Weighted-average dilutive shares outstanding for the three months ended March 31, 2023, includes approximately 0.7 million common shares, issued in connection with the acquisition of Acima Holdings and subject to vesting conditions under restricted stock agreements.

18
 Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share data)2017 2016 2017 2016
Numerator:       
Net (loss) earnings$(12,599) $6,181
 $(28,171) $41,188
Denominator:       
Weighted-average shares outstanding53,306
 53,155
 53,272
 53,111
Effect of dilutive stock awards(1)
—
 299
 —
 281
Weighted-average dilutive shares53,306
 53,454
 53,272
 53,392
        
Basic (loss) earnings per common share$(0.24) $0.12
 $(0.53) $0.78
Diluted (loss) earnings per common share$(0.24) $0.12
 $(0.53) $0.77
Anti-dilutive securities excluded from diluted (loss) earnings per common share:       
Anti-dilutive restricted share units1,419
 814
 1,419
 814
Anti-dilutive stock options

3,103
 3,185
 3,103
 2,618
(1)
There was no dilutive effect to the loss per common share for the three and nine months ended September 30, 2017 due to the net loss incurred for both periods.


13



RENT-A-CENTER, INC. AND SUBSIDIARIES


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995.1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “seeks” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could,” “may,” “aims,” “intends,” or “projects.” These forward-looking statements, include, without limitation, those relating to the impact of ongoing challenging macroeconomic conditions on our business, operations, financial performance and prospects, the future business prospects and financial performance of our Company as a whole and of our segments, our growth strategies, our expectations, plans and strategy relating to our capital structure and capital allocation, including any share repurchases under our share repurchase program, and other statements that are not historical facts.
A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. These forward-looking statements are all based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Our actual future results and trends may differ materially and adversely depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”Operations” below. Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. Any or all of the forward-looking statements contained in this Quarterly Report on Form 10-Q and any other public statement made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. WeExcept as required by law, we expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise. Factors that could cause or contribute to these differences include, but are not limited to:
•the general strength of the economy and other economic conditions affecting consumer preferences and spending:spending, including the availability of credit to our target consumers and to other consumers, impacts from continued inflation, central bank monetary policy initiatives to address inflation concerns, and a possible recession or slowdown in economic growth;
•factors affecting the disposable income available to our current and potential customers;
•changes in the unemployment rate;
uncertainties concerning the outcome, impact, effects•capital market conditions, including changes in interest rates and resultsavailability of the exploration offunding sources for us;
•changes in our strategic and financial alternatives;credit ratings;
•difficulties encountered in improving the financial and operational performance of our business segments;
•risks associated with pricing, value proposition and other changes and strategies being deployed in our chief executive officer and chief financial officer transitions, including businesses;
•our ability to continue to effectively operate and execute our strategies during the interim periodstrategic initiatives, including mitigating risks associated with any potential mergers and difficultiesacquisitions, or delays in identifying and/or attracting a permanent chief financial officer with the required level of experiencerefranchising opportunities;
•our ability to identify potential acquisition candidates, complete acquisitions and expertise;successfully integrate acquired companies;
•failure to manage our storeoperating labor and other store expenses;non-labor operating expenses, including merchandise losses;
our ability to develop and successfully execute strategic initiatives;
•disruptions caused by the operation of our store information management system;systems or disruptions in the systems of our host retailers;
•risks related to our virtual lease-to-own business, including our ability to continue to develop and successfully implement the necessary technologies;
•our ability to achieve the benefits expected from our integrated virtual and staffed retail partner offering and to successfully grow this business segment;
•exposure to potential operating margin degradation due to the higher cost of merchandise and higher merchandise losses in our Acima segment compared to our Rent-A-Center segment;
•our transition to more-readily scalable "cloud-based"“cloud-based” solutions;
•our ability to develop and successfully implement digital or E-commerce capabilities;capabilities, including mobile applications;

19


•our ability to protect our proprietary intellectual property;
•our ability or that of our host retailers to protect the integrity and security of customer, employee, supplier and host retailer information, which may be adversely affected by hacking, computer viruses, or similar disruptions;
•impairment of our goodwill or other intangible assets;
•disruptions in our supply chain;
•limitations of, or disruptions in, our distribution network;
•rapid inflation or deflation in the prices of our products;products and other related costs;
•allegations of product safety and quality control issues, including recalls;
•our ability to execute, andas well as the effectiveness of, a store consolidation,consolidations, including our ability to retain the revenue from customer accounts merged into another store location as a result of a store consolidation;
•our available cash flow;flow and our ability to generate sufficient cash flow to continue paying dividends;
•increased competition from traditional competitors, virtual lease-to-own competitors, online retailers, Buy-Now-Pay-Later and other fintech companies and other competitors, including subprime lenders;
•our ability to identify and successfully market products and services that appeal to our current and future targeted customer demographic;segments and to accurately estimate the size of the total addressable market;
•consumer preferences and perceptions of our brands;
uncertainties regarding the ability to open new locations;
•our ability to acquireeffectively provide consumers with additional stores or customer accounts on favorable terms;products and services beyond lease-to-own, including through third-party partnerships;
our ability to control costs and increase profitability;
•our ability to retain the revenue associated with acquired customer accounts and enhance the performance of acquired stores;
•our ability to enter into new rental or lease purchase agreements and collect on our existing rental or lease purchase agreements;
•impacts from the passageenforcement of legislationexisting laws and regulations and the enactment of new laws and regulations adversely affecting our business, including in connection with the Rent-to-Own industry;regulatory matters described in Note 11 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, and any legislative or other regulatory enforcement efforts that seek to re-characterize store-based or virtual lease-to-own transactions as credit sales and to apply consumer credit laws and regulations to our business;
•our compliance with applicable statutes or regulations governing our transactions;businesses;
•changes in interest rates;tariff policies;


14

RENT-A-CENTER, INC. AND SUBSIDIARIES


•adverse changes in the economic conditions of the industries, countries or markets that we serve;
•information technology and data security costs;
•the impact of any breaches in data security or other disturbances to our information technology and other networks and our ability to protect the integrity and security of individually identifiable data of our customers and employees;networks;
changes in our stock price, the number of shares of common stock that we may or may not repurchase, and our dividend policy and any changes thereto, if any;
•changes in estimates relating to self-insurance liabilities and income tax and litigation reserves;reserves, including in connection with the regulatory and litigation matters described in Note 11 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q;
•changes in our effective tax rate;
•fluctuations in foreign currency exchange rates;
•our ability to maintain an effective system of internal controls;
the resolution of our litigation;•litigation or administrative proceedings to which we are or may be a party to from time to time; and
•the other risks detailed from time to time in our reports tofurnished or filed with the United States Securities and Exchange Commission.Commission (the “SEC”).
Additional important factors that could cause our actual results to differ materially from our expectations are discussed under the section “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016,2023 and elsewhere in this Quarterly Report on Form 10-Q. You should not unduly rely on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.
Our Business
We are one ofa leading lease-to-own provider with operations in the largest rent-to-own operators in North America, focused on improving the quality of lifeUnited States, Puerto Rico and Mexico. We provide a critical service for our customersunderserved consumers by providing them with access to, and the opportunity to obtain ownership of, high-quality, name brand durable products such as consumer electronics, appliances, computers, (including tablets), smartphones, and furniture (including accessories), under a flexible rental purchase agreementslease-purchase agreement with no long-term debt obligation. Our Acima segment

20


offers lease-to-own solutions through retailers in stores and online enabling such retailers to grow sales by expanding their customer base utilizing our differentiated offering and allowing customers to access our flexible lease-to-own solutions at thousands of retailers and to lease a wide range of durable products. Through our Rent-A-Center segment, we provide a fully integrated customer experience through our e-commerce platform and brick and mortar presence in local communities around the country. We were incorporated in the State of Delaware in 1986.1986, and our common stock is traded on the Nasdaq Global Select Market under the ticker symbol “UPBD.”
Executive Summary
Our Growth Strategy
We areOur strategy is focused on achieving our mission to provide cash-elevate financial opportunity for all and credit-constrained consumersgrowing our business through emphasis on the following key initiatives:
•Grow penetration with affordablecurrent Acima merchants and flexible accessbuild on our strength with small to durable goods that promote a higher quality of living. On April 10, 2017,medium size businesses while also adding new national and regional merchants to our platform and expanding our direct-to-consumer channels;
•At Rent-A-Center, accelerate the shift to e-commerce, improve the fully integrated omni-channel customer experience and expand product categories, which we announced aexpect will increase brand awareness and customer loyalty;
•Leverage data analytics capabilities to attract new customers, approve more customers and comprehensive strategy to restore growth, improve profitability and maximize value. These initiatives are designed to strengthen the Core U.S. segment; optimize and grow the Acceptance Now segment; and leverage technology investments to expand distribution channelsmitigate risk across business segments;
•Upgrade and integrate retailtechnology platforms to allow for a more simplified and online offerings:seamless consumer experience, merchant and third-party waterfall integration and consumer transaction process and coworker efficiency;
Strengthen•Execute on market opportunities and enhance our competitive position across both traditional and virtual lease-to-own solutions, and implement complementary products and services that supplement our current offerings and provide our customers more financial alternatives; and
•Develop centers of excellence that will be leveraged across the Core
Enhance value proposition and facilitate ownership
Optimize product mix
Stabilize and upgrade the workforce
Improve account management
Drive efficiencies in-store
Optimize footprint
Optimize and Grow Acceptance Now
Enhance value proposition and facilitate ownership
Optimize partner relationships
Centralize account management
Grow Acceptance Now unstaffed solutions
Enhance decision engine
Embrace Technology and Channel Expansion
Leverage technology investments
Build digital capabilitiesorganization to support omni-channel platformour various business segments, utilizing best practices to drive efficiency and growth.
Expand Acceptance NowAs we pursue our strategy, we have taken, and may in the future take, advantage of joint venture, partnership, or merger and acquisition opportunities from time to new channels, customerstime that advance our key initiatives and productselevate the financial mobility of underserved consumers.


15

RENT-A-CENTER, INC. AND SUBSIDIARIES


Recent Developments
Effects of Hurricanes. In August and September 2017, Hurricanes Harvey, Irma and Maria caused significant damage in the continental United States and surrounding territories, primarily including Texas, Florida, and Puerto Rico. We incurred charges during the third quarter of 2017 as a result of the damage and displacement caused by these storms, including inventory losses, store repairs, employee assistance, and fixed asset write-offs. Storm related costs are included in other charges for the respective segment as discussed in Note 5 to the unaudited condensed consolidated financial statements. We continue to assess the full impact of damage caused by these storms and expect additional charges related to the 2017 hurricanes to be recorded in the fourth quarter of 2017.
Strategic Alternatives Announcement; Suspension of Quarterly Dividend.We On March 22, 2024, we announced on October 30, 2017 that our Boardboard of Directors, in consultation with its financial and legal advisors, has initiated a process to explore a full range of strategic and financial alternatives focused on maximizing stockholder value. We do not intend to discuss or disclose developments with respect to this process unless and until our board hasdirectors approved a definitive course of action or the process is otherwise concluded. We also announced the suspension of our quarterly cash dividend untilof $0.37 per share for the process has concluded.
Steven L. Pepper Resignation. We also announcedsecond quarter of 2024. The dividend was paid on October 30, 2017 that Steven L. Pepper resigned from his positionApril 22, 2024 to our common stockholders of record as director and Chairman of the Boardclose of business on April 3, 2024.
Business and Operational Trends
Macroeconomic Conditions. In recent years, we have experienced significant change in our business and operational trends driven by macroeconomic conditions, which have directly impacted our customers as well as our operations, including significant changes in the U.S. consumer price index, changes in demand for certain consumer retail categories, changes in consumer payment behaviors, a condensed labor market, which has also contributed to wage inflation, rapid increases in interest rates, and global supply chain disruptions resulting in reduced product availability and rising product costs.
While the lease-to-own industry has historically remained a resilient business model throughout various economic cycles, the full extent to which our risk management strategy and these macroeconomic trends (including consumer spending and payment behavior) may impact our business in future periods is uncertain. The continuation of negative and volatile macroeconomic trends may have a material adverse impact on our financial statements, including our results of operations, operating cash flows, liquidity and capital resources.
See “Risk Factors” in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2023, for additional discussion of impacts to our business and additional risks associated with macroeconomic conditions.
Rent-A-Center with his resignation taking effect on October 31, 2017. Mr. Pepper informed us that he is resigningE-commerce revenue. In recent years, e-commerce revenues have continued to increase as a resultpercentage of his disagreementtotal rentals and fees revenue in our Rent-A-Center segment. For the three months ended March 31, 2024, e-commerce revenues represented approximately 26% of total lease-to-own revenues compared to approximately 25% for the three months ended March 31, 2023. Due to recent trends in consumer shopping behaviors and expectations, we believe e-commerce solutions are an important part of our lease-to-own offering. However, we are unable to quantify the extent to which e-commerce revenues are incremental compared to what our overall revenues would have been in the absence of those e-

21


commerce transactions. In addition, the profitability of e-commerce transactions can be impacted by different merchandise loss factors compared to traditional store-based transactions in the Rent-A-Center segment. Therefore, we are unable to determine with certainty whether the continuation of this trend toward increased e-commerce transactions will have a significant impact to our board’s decisionfinancial statements in future periods or be favorable or unfavorable to initiate a process through which we will explore various strategic andour financial alternatives.results.
Results of Operations
The following discussion focuses on our results of operations and issues related to our liquidity and capital resources. You should read this discussion in conjunction with the condensed consolidated financial statements and notes thereto for the three months ended March 31, 2024 included elsewhere in Part I, Item I of this Quarterly Report on Form 10-Q.
Overview
DuringKey Metrics
Gross Merchandise Volume (“GMV”): The Company defines Gross Merchandise Volume as the first nine monthsretail value in U.S. dollars of 2017, we experienced a decline in revenues, gross profit and operating profit driven primarily by declines in same store revenue, reductions in our store base for the Core U.S. and Acceptance Now segments, impacts related to the recent hurricanes, and an increase in other charges. Other charges were primarily comprised of Acceptance Now store closures, reductions in our field support center, incremental legal and advisory fees, damages causedmerchandise acquired by the recent hurricanes, and debt refinancing costs, partially offset by litigation settlements.
The Acceptance Now segment revenues decreased by approximately $2.2 million or 0.3% primarily dueCompany that is leased to store closures for Conn's and hhgregg, and impacts from the recent hurricanes. Gross profit decreased by 2.8% primarily due to lower gross margins on merchandise sales driven by our continued focus to encourage ownership and reduce returned product. Operating profit declined 42.7% primarily due to other charges related to store closures and sales deleverage. Excluding these other charges, operating profit decreased by 17.9%.
Revenues in our Core U.S. segment decreased approximately $206.1 million for the nine months ended September 30, 2017, primarily due tocustomers through a decrease in same store revenuetransaction that occurs within a defined period, net of 9.4%, rationalization of our Core U.S. store base in the prior year, and impacts from the recent hurricanes. Gross profitestimated cancellations as a percentage of revenue decreased 1.9% due to the decrease in store revenue and pricing actions taken to right size the segment's inventory mix and changes from the new value proposition. Labor and other store expenses decreased approximately $40.2 million and $61.4 million, respectively, but were negatively affected by sales deleverage.
Gross profit for the Mexico segment as a percentage of revenue increased by 0.2% for the nine months ended September 30, 2017, driven by higher gross margin merchandise sales due to pricing initiatives.
Cash flow from operations was $135.4 million for the nine months ended September 30, 2017. We used our free cash flow to pay down debt by $86.6 million during the first nine months of the year, endingmeasurement date.
Lease Portfolio Value: Represents the periodaggregate dollar value of the expected monthly rental income associated with $76.2 millioncurrent active lease agreements from our Rent-A-Center stores and e-commerce platform at the end of cash and cash equivalents.any given period.



16

RENT-A-CENTER, INC. AND SUBSIDIARIES


The following table is a reference for the discussion that follows.
 Three Months Ended     Nine Months Ended    
 September 30, Change September 30, Change
(dollar amounts in thousands)2017 2016 $ % 2017 2016 $ %
Revenues               
Store               
Rentals and fees$552,194
 $595,179
 $(42,985) (7.2)% $1,723,019
 $1,915,184
 $(192,165) (10.0)%
Merchandise sales67,566
 73,219
 (5,653) (7.7)% 266,061
 281,703
 (15,642) (5.6)%
Installment sales17,276
 17,626
 (350) (2.0)% 51,690
 53,718
 (2,028) (3.8)%
Other2,257
 2,633
 (376) (14.3)% 7,428
 10,001
 (2,573) (25.7)%
Total store revenue639,293
 688,657
 (49,364) (7.2)% 2,048,198
 2,260,606
 (212,408) (9.4)%
Franchise               
Merchandise sales2,676
 3,113
 (437) (14.0)% 9,211
 12,083
 (2,872) (23.8)%
Royalty income and fees1,996
 2,107
 (111) (5.3)% 6,177
 6,459
 (282) (4.4)%
Total revenues643,965
 693,877
 (49,912) (7.2)% 2,063,586
 2,279,148
 (215,562) (9.5)%
Cost of revenues               
Store               
Cost of rentals and fees153,202
 159,454
 (6,252) (3.9)% 474,511
 504,834
 (30,323) (6.0)%
Cost of merchandise sold70,551
 68,684
 1,867
 2.7 % 256,730
 253,473
 3,257
 1.3 %
Cost of installment sales5,207
 5,553
 (346) (6.2)% 16,099
 17,240
 (1,141) (6.6)%
Total cost of store revenues228,960
 233,691
 (4,731) (2.0)% 747,340
 775,547
 (28,207) (3.6)%
Franchise cost of merchandise sold2,540
 2,960
 (420) (14.2)% 8,585
 11,273
 (2,688) (23.8)%
Total cost of revenues231,500
 236,651
 (5,151) (2.2)% 755,925
 786,820
 (30,895) (3.9)%
Gross profit412,465
 457,226
 (44,761) (9.8)% 1,307,661
 1,492,328
 (184,667) (12.4)%
Operating expenses               
Store expenses               
Labor179,643
 186,289
 (6,646) (3.6)% 551,197
 595,668
 (44,471) (7.5)%
Other store expenses171,995
 195,096
 (23,101) (11.8)% 546,485
 599,759
 (53,274) (8.9)%
General and administrative expenses43,768
 38,187
 5,581
 14.6 % 130,637
 121,383
 9,254
 7.6 %
Depreciation, amortization and impairment of intangibles18,679
 19,998
 (1,319) (6.6)% 55,928
 60,598
 (4,670) (7.7)%
Other charges6,825
 956
 5,869
 613.9 % 31,580
 22,240
 9,340
 42.0 %
Total operating expenses420,910
 440,526
 (19,616) (4.5)% 1,315,827
 1,399,648
 (83,821) (6.0)%
Operating (loss) profit(8,445) 16,700
 (25,145) (150.6)% (8,166) 92,680
 (100,846) (108.8)%
Debt refinancing charges—
 —
 —
 — % 1,936
 —
 1,936
 100.0 %
Interest, net11,276
 11,569
 (293) (2.5)% 33,854
 35,078
 (1,224) (3.5)%
(Loss) earnings before income taxes(19,721) 5,131
 (24,852) (484.4)% (43,956) 57,602
 (101,558) (176.3)%
Income tax (benefit) expense(7,122) (1,050) (6,072) (578.3)% (15,785) 16,414
 (32,199) (196.2)%
Net (loss) earnings$(12,599) $6,181
 $(18,780) (303.8)% $(28,171) $41,188
 $(69,359) (168.4)%
Three Months Ended September 30, 2017, compared to Three Months Ended September 30, 2016
Same Store Revenue. Total store revenue decreased by $49.4 million, or 7.2%, to $639.3 million for the three months ended September 30, 2017, from $688.7 million for the three months ended September 30, 2016. This was primarily due to decreases of approximately $39.0 million and $10.1 million in the Core U.S. and Acceptance Now segments, respectively, as discussed further in the segment performance section below.


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Sales:Same store revenue is reported on a constant currency basis andsales generally represents revenue earned in 2,663 locationsstores that were operated by us for 13 months or more excludingand are reported on a constant currency basis as a percentage of total revenue earned in stores of the segment during the indicated period. The Company excludes from the same store sales base any store that receives a certain level of customer accounts from anotherclosed stores or acquisitions. The receiving store (acquisition or merger). Receiving stores will be eligible for inclusion in the same store sales base in the twenty-fourth30th full month following the account transfer. In addition,
Lease Charge-Offs (“LCOs”) (previously referred to as "skip / stolen losses"): Represents charge-offs of the net book value of unrecoverable on-rent merchandise with lease-to-own customers who are past due. This is typically expressed as a percentage of revenues for the applicable period. For the Rent-A-Center segment, LCOs exclude Get It Now and Home Choice locations.
Overview
The following briefly summarizes certain of our financial information for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.
During the first three months of 2024, consolidated revenues and gross profit increased by approximately $79.9 million and $22.8 million, respectively, primarily due to an increase in the severityAcima segment revenues described below. Operating profit increased by approximately $96.9 million, primarily due to a decrease in Other gains and charges of the hurricane impacts, we instituted a change$100.8 million in addition to the same store sales store selection criteria to exclude storesincrease in geographically impacted regions for 18 months. Same storegross profit noted above, partially offset by an increase in non-labor operating expenses of $17.1 million, and general and administrative expenses of $7.4 million.
The Acima segment revenues decreased by $13.3 million, or 3.1%, to $417.8increased approximately $77.5 million for the three months ended September 30, 2017, as comparedMarch 31, 2024, due to $431.1increases in rentals and fees revenues and merchandise sales of $59.4 million and $18.2 million, respectively, resulting from higher GMV. Growth in 2016. The decreaseGMV was primarily due to an increase in merchant locations, merchant productivity which resulted in more leases per merchant, expanding direct-to-consumer offerings, and improved conversion rates. Operating profit decreased approximately $2.0 million for the three months ended March 31, 2024, primarily due to an increase non-labor operating expenses of approximately $17.7 million, partially offset by an increase in gross profit of $14.2 million. See "Segment Performance" below for further discussion of Acima segment operating results for the three months ended March 31, 2024.
Revenues in our Rent-A-Center segment increased approximately $0.7 million for the three months ended March 31, 2024 due to an increase in same store sales of 0.8% driven by an increase in rentals and fees revenues of $3.5 million partially offset by a decrease in merchandise sales of $1.5 million. Operating profit increased approximately $5.8 million for the three months ended March 31, 2024, primarily due to an increase in gross profit of approximately $5.9 million resulting primarily from a decrease in cost of revenues of $5.2 million. See "Segment Performance" below for further discussion of Rent-A-Center segment operating results for the three months ended March 31, 2024.
The Mexico segment revenues increased by 18.0% for the three months ended March 31, 2024, contributing to an increase in gross profit of 18.8%, or $2.3 million, primarily due to a 5.6% increase in same store sales driven by an increase in rentals and fees revenues of $2.9 million. Operating profit increased $0.7 million for the three months ended March 31, 2024, primarily due to an increase in gross profit described above, partially offset by an increase in operating labor costs of approximately $1.0 million. See "Segment Performance" below for further discussion of Mexico segment operating results for the three months ended March 31, 2024.

22


Revenues for the Franchising segment decreased $1.5 million for the three months ended March 31, 2024, primarily due to a decrease in merchandise sales of $2.0 million, partially offset by an increase in royalty income and fees of $0.3 million. See "Segment Performance" below for further discussion of Mexico segment operating results for the three months ended March 31, 2024.
Cash flow from operations was $45.4 million for the three months ended March 31, 2024. As of March 31, 2024, we held $84.8 million of cash and cash equivalents and had outstanding indebtedness of $1.3 billion.

The following table is a reference for the discussion that follows.
Three Months Ended
March 31,Change
(dollar amounts in thousands)20242023$%
Revenues
Rentals and fees$872,539 $806,717 $65,822 8.2 %
Merchandise sales179,699 162,989 16,710 10.3 %
Installment sales14,692 15,847 (1,155)(7.3)%
Franchise merchandise sales20,859 22,827 (1,968)(8.6)%
Royalty income and fees6,563 6,236 327 5.2 %
Other1,615 1,445 170 11.8 %
Total revenues1,095,967 1,016,061 79,906 7.9 %
Cost of revenues
Cost of rentals and fees327,148 297,146 30,002 10.1 %
Cost of merchandise sold213,569 184,260 29,309 15.9 %
Cost of installment sales5,288 5,619 (331)(5.9)%
Franchise cost of merchandise sold20,894 22,772 (1,878)(8.2)%
Total cost of revenues566,899 509,797 57,102 11.2 %
Gross profit529,068 506,264 22,804 4.5 %
Operating expenses
Operating labor158,136 156,489 1,647 1.1 %
Non-labor operating expenses213,802 196,711 17,091 8.7 %
General and administrative expenses55,099 47,726 7,373 15.4 %
Depreciation and amortization13,473 12,881 592 4.6 %
Other gains and charges26,796 127,570 (100,774)(79.0)%
Total operating expenses467,306 541,377 (74,071)(13.7)%
Operating profit (loss)61,762 (35,113)96,875 275.9 %
Interest, net29,188 27,680 1,508 5.4 %
Earnings (loss) before income taxes32,574 (62,793)95,367 151.9 %
Income tax expense (benefit)4,887 (110,123)115,010 104.4 %
Net earnings$27,687 $47,330 $(19,643)(41.5)%
Three Months Ended March 31, 2024, compared to Three Months Ended March 31, 2023
Revenue. Total revenues increased by $79.9 million, or 7.9%, to $1,096.0 million for the three months ended March 31, 2024, from $1,016.1 million for the three months ended March 31, 2023. This increase was primarily attributabledue to a declinean increase of approximately $77.5 million in the Core U.S.Acima segment, as discussed further in the segment performance section “Segment Performance” below.
Cost of Rentals and Fees. Cost of rentals and fees consists primarily of depreciation of rental merchandise. Cost of rentals and fees for the three months ended September 30, 2017, decreasedMarch 31, 2024 increased by $6.3$30.0 million, or 3.9%10.1%, to $153.2$327.1 million as compared to $159.5$297.1 million in 2016. This decrease in cost of rentals and feesfor the three months ended March 31, 2023. The increase was primarily attributable to decreasesan increase of $4.5 million and $1.7approximately $33.5 million in the Core U.S. and Acceptance Now segments, respectively, as a result of lowerAcima segment driven by an increase in rentals and fees revenue.revenues, partially offset by a decrease of $4.2 million in the Rent-A-Center segment. Cost of rentals and fees expressed as a percentage of rentals and fees

23


revenue increased to 27.7%was 37.5% for the three months ended September 30, 2017March 31, 2024, as compared to 26.8% in 2016.36.8% for the three months ended March 31, 2023.
Cost of Merchandise Sold. Cost of merchandise sold represents the net book value of rental merchandise at time of sale. Cost of merchandise sold increased by $1.9$29.3 million, or 2.7%15.9%, to $70.6$213.6 million for the three months ended September 30, 2017,March 31, 2024, from $68.7$184.3 million in 2016,for the three months ended March 31, 2023, primarily attributable to an increase of $2.5$29.8 million in the Acceptance Now segment.Acima segment, driven primarily by higher merchandise sales. The gross margin percent of merchandise sales decreased to (4.4)(18.8)% for the three months ended September 30, 2017,March 31, 2024, from 6.2% in 2016.(13.1)% for the three months ended March 31, 2023.
Gross Profit. Gross profit decreasedincreased by $44.8$22.8 million, or 9.8%4.5%, to $412.5$529.1 million for the three months ended September 30, 2017,March 31, 2024, from $457.2$506.3 million in 2016,for the three months ended March 31, 2023, primarily due primarily to decreasesincreases of $33.3$14.2 million and $10.9$5.9 million in the Core U.S.Acima and Acceptance NowRent-A-Center segments, respectively.respectively, as discussed further in the section “Segment Performance” below. Gross profit as a percentage of total revenue decreased to 64.1%48.3% for the three months ended September 30, 2017,March 31, 2024, as compared to 65.9% in 2016, primarily as a result of implementing targeted pricing actions49.8% for the three months ended March 31, 2023.
Operating Labor. Operating labor includes all salaries and changes from the new value proposition, as discussed further in the segment performance section below.
Store Labor. Storewages paid to operational employees and district managers, together with payroll taxes and benefits. Operating labor decreasedincreased by $6.6$1.6 million, or 3.6%1.1%, to $179.6$158.1 million for the three months ended September 30, 2017,March 31, 2024, as compared to $186.3$156.5 million in 2016,for the three months ended March 31, 2023, primarily attributabledue to decreasesan increase of $3.7 million and $2.4$1.0 million in the Core U.S. and Acceptance Now segments, respectively, as a result of a lower Core U.S. store base, and closure of Acceptance Now locations in the first half of 2017. StoreMexico segment. Operating labor expressed as a percentage of total store revenue excluding franchise merchandise sales and royalty income and fees was 28.1%14.8% for the three months ended September 30, 2017,March 31, 2024, as compared to 27.1% in 2016.15.9% for the three months ended March 31, 2023.
Other StoreNon-Labor Operating Expenses. Other store Non-labor operating expenses decreasedinclude LCO's, occupancy, delivery, advertising, selling, insurance, travel and other operating expenses. Non-labor operating expenses increased by $23.1$17.1 million, or 11.8%8.7%, to $172.0$213.8 million for the three months ended September 30, 2017,March 31, 2024, as compared to $195.1$196.7 million for the three months ended March 31, 2023, due to an increase of $17.7 million in 2016,the Acima Segment primarily attributable to a decreasean increase of $27.4$11.3 million in the Core U.S. segment as a result of lower customer stolen merchandise losses, lower store count and lower advertising expenses, partially offset by a $4.2 million increase in the Acceptance Now segment primarily due to higher customer stolen merchandise losses. Other storeNon-labor operating expenses expressed as a percentage of total store revenue were 26.9%excluding franchise merchandise sales and royalty income and fees was 20.0% for the three months ended September 30, 2017,March 31, 2024, compared to 28.3% in 2016.19.9% for the three months ended March 31, 2023.
General and Administrative Expenses. General and administrative expenses include all corporate overhead expenses related to our headquarters such as salaries, payroll taxes and benefits, stock-based compensation, occupancy, administrative and other expenses, as well as salaries and labor costs for our regional directors, divisional vice presidents and executive vice presidents. General and administrative expenses increased by $5.6$7.4 million, or 14.6%15.4%, to $43.8$55.1 million for the three months ended September 30, 2017,March 31, 2024, as compared to $38.2$47.7 million for the three months ended March 31, 2023, primarily due to increases in 2016, driven primarily by project related expenses, insurance expenses and other legal and professional fees.overhead labor. General and administrative expenses expressed as a percentage of total revenue were 6.8%5.0% and 4.7% for the three months ended September 30, 2017, compared to 5.5% in 2016.March 31, 2024 and 2023, respectively.
Other Gains and Charges. Other gains and charges increaseddecreased by $5.8$100.8 million, or 613.9%79.0%, to $6.8$26.8 million for the three months ended September 30, 2017,March 31, 2024, as compared to $1.0 million in 2016. Other charges for the three months ended September 30, 2017 and 2016 primarily included charges related to the closure of Core U.S. and Acceptance Now locations, reductions in our field support center, damage caused by hurricanes, and incremental legal and advisory fees, partially offset by a litigation claims settlement.
Operating (Loss) Profit. Operating results decreased by $25.1 million, or 150.6%, to a loss of $8.4$127.6 million for the three months ended September 30, 2017,March 31, 2023. The decrease in other gains and charges was driven primarily by stock compensation expense recognized for the three months ended March 31, 2023, related to restricted stock issued in connection with the Acima Holdings acquisition, including $74.8 million attributable to the acceleration of vesting provisions for former employee and Acima founder, Aaron Allred, upon his transition from Executive Vice President of Acima to an advisory role in early 2023, resulting in a decrease in stock compensation expense of $104.6 million for the three months ended March 31, 2024, as compared to a profit of $16.7the prior year period. This decrease was partially offset by $4.6 million in 2016,accelerated software depreciation for the three months ended March 31, 2024.
Operating Profit (Loss). Operating profit increased by $96.9 million, or 275.9%, to $61.8 million for the three months ended March 31, 2024, as compared to $(35.1) million for the three months ended March 31, 2023, primarily due to decreases of $2.2 millionthe decrease in other gains and $19.2 millioncharges and increase in the Core U.S.gross profit, partially offset by increases in non-labor operating expenses and Acceptance Now segments, respectively,general and administrative expenses as discussed further in the segment performance sections below.described above. Operating resultsprofit expressed as a percentage of total revenue was (1.3)5.6% for the three months ended March 31, 2024, compared to (3.5)% for the three months ended September 30, 2017, comparedMarch 31, 2023.
Income Tax Expense (Benefit). Income tax expense increased by $115.0 million to 2.4% in 2016, primarily due to the decrease in gross profit for the Core U.S. and Acceptance Now segments, and increases in general & administrative expenses and other charges as discussed above. Excluding other charges, operating profit was $(1.6)$4.9 million or (0.3)% of revenue for the three months ended September 30, 2017,March 31, 2024, as compared to $17.7$(110.1) million or 2.5% of revenue for the comparable period of 2016.
Income Tax. Income tax benefit for the three months ended September 30, 2017 was $7.1 million, as comparedMarch 31, 2023, primarily due to $1.1 millionthe increase in 2016. The effective tax rate was 36.1%earnings before income taxes for the three months ended September 30, 2017,March 31, 2024 compared to (20.5)%the same period in 2016, primarily due to the decrease in operating profit described above. Excluding other charges, the2023, and a lower effective tax rate was 2.9% for the three months ended September 30, 2016.

March 31, 2024, primarily attributable to a lower tax impact of stock compensation expense related to stock consideration issued to the former owners of Acima Holdings compared to the prior year period, as well as a favorable adjustment related to foreign deferred tax assets.


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Segment Performance
Nine Months Ended September 30, 2017,Acima segment
Three Months Ended
March 31,Change
(dollar amounts in thousands)20242023$%
Revenues$561,346 $483,847 $77,499 16.0 %
Gross profit169,302 155,144 14,158 9.1 %
Operating profit51,911 53,870 (1,959)(3.6)%
Gross merchandise volume(1)
417,557 348,175 69,382 19.9 %
(1) See Key Metrics described above for additional information.
Revenues. The increase in revenues for the three months ended March 31, 2024, as compared to Nine Months Ended September 30, 2016
Store Revenue. Total store revenue decreased by $212.4 million, or 9.4%, to $2,048.2 million for the ninethree months ended September 30, 2017,March 31, 2023, included increases in rentals and fees revenues and merchandise sales revenue of $59.4 million and $18.2 million, respectively, resulting from $2,260.6 million for the nine months ended September 30, 2016. Thishigher GMV. Growth in GMV was primarily due to a decrease of approximately $206.1 millionan increase in the Core U.S. segment, as discussed furthermerchant locations, merchant productivity which resulted in the segment performance section below.more leases per merchant, expanding direct-to-consumer offerings, and improved conversion rates.
Same store revenue is reported on a constant currency basis and generally represents revenue earned in 3,324 locations that were operated by us for 13 months or more, excluding any store that receives a certain level of customer accounts from another store (acquisition or merger). Receiving stores will be eligible for inclusion in the same store sales base in the twenty-fourth full month following the account transfer. In addition, due to the severity of the hurricane impacts, we instituted a change to the same store sales store selection criteria to exclude stores in geographically impacted regions for 18 months. Same store revenues decreased by $90.9 million, or 6.3%, to $1,357.5 millionGross Profit. Gross profit increased for the ninethree months ended September 30, 2017,March 31, 2024, as compared to $1,448.4 million in 2016. The decrease in same store revenues was primarily attributable to a decline in the Core U.S. segment, as discussed further in the segment performance section below.
Cost of Rentals and Fees. Cost of rentals and fees consists primarily of depreciation of rental merchandise. Cost of rentals and fees for the ninethree months ended September 30, 2017, decreased by $30.3 million, or 6.0%, to $474.5 million, as compared to $504.8 million in 2016. This decrease in cost of rentals and fees was primarily attributable to a $31.2 million decrease in the Core U.S. segment as a result of lower rentals and fees revenue. Cost of rentals and fees expressed as a percentage of rentals and fees revenue increased to 27.5% for the nine months ended September 30, 2017 as compared to 26.4% in 2016.
Cost of Merchandise Sold. Cost of merchandise sold increased by $3.3 million, or 1.3%, to $256.7 million for the nine months ended September 30, 2017, from $253.5 million in 2016, primarily attributable to an increase of $4.8 million in the Acceptance Now segment, partially offset by a decrease of $1.6 million in both the Core U.S. and Mexico segments. The gross margin percent of merchandise sales decreased to 3.5% for the nine months ended September 30, 2017, from 10.0% in 2016.
Gross Profit. Gross profit decreased by $184.7 million, or 12.4%, to $1,307.7 million for the nine months ended September 30, 2017, from $1,492.3 million in 2016, due primarily to a decrease of $172.4 million in the Core U.S. segment. Gross profit as a percentage of total revenue decreased to 63.4% for the nine months ended September 30, 2017, as compared to 65.5% in 2016.
Store Labor. Store labor decreased by $44.5 million, or 7.5%, to $551.2 million, for the nine months ended September 30, 2017, as compared to $595.7 million in 2016, primarily attributable to a decrease of $40.2 million in the Core U.S. segment as a result of our rationalization of the Core U.S. store base in the prior year and lower medical insurance expenses. Store labor expressed as a percentage of total store revenue was 26.9% for the nine months ended September 30, 2017, as compared to 26.3% in 2016.
Other Store Expenses. Other store expenses decreased by $53.3 million, or 8.9%, to $546.5 million for the nine months ended September 30, 2017, as compared to $599.8 million in 2016, primarily attributable to a decrease of $61.4 million in the Core U.S. segment as a result of our rationalization of the Core U.S. store base, partially offset by an increase of $8.4 million in the Acceptance Now segment as a result of increased customer stolen merchandise. Other store expenses expressed as a percentage of total store revenue were 26.7% for the nine months ended September 30, 2017, compared to 26.5% in 2016.
General and Administrative Expenses. General and administrative expenses increased by $9.3 million, or 7.6%, to $130.6 million for the nine months ended September 30, 2017, as compared to $121.4 million in 2016, primarily due to project related expenses, insurance expenses, legal and other professional fees. General and administrative expenses expressed as a percentage of total revenue were 6.3% for the nine months ended September 30, 2017, compared to 5.3% in 2016.
Other Charges. Other charges increased by $9.3 million, or 42.0%, to $31.6 million for the nine months ended September 30, 2017, as compared to $22.2 million in 2016. Other charges for the nine months ended September 30, 2017 and 2016 primarily included charges related to the closure of Core U.S. and Acceptance Now locations, reductions in our field support center, damage caused by hurricanes, and incremental legal and advisory fees, partially offset by litigation claims settlements.
Operating (Loss) Profit. Operating results decreased by $100.8 million, or 108.8%, to a loss of $8.2 million for the nine months ended September 30, 2017, as compared to a profit of $92.7 million in 2016 due primarily to decreases of $47.8 million and $36.9 million in the Core U.S. and Acceptance Now segments, respectively, offset by an increase of $1.7 million in the Mexico segment as discussed in the segment performance sections below. Operating loss expressed as a percentage of total revenue was (0.4)% for the nine months ended September 30, 2017, compared to operating profit expressed as a percentage of total revenue of 4.1% in 2016, primarily due to the decrease in gross profit for the Core U.S. and Acceptance Now segments, store deleverage, and increases in general & administrative expenses and other charges discussed above. Excluding other charges, operating profit was $23.4 million, or 1.1% of revenue for the nine months ended September 30, 2017, compared to $114.9 million, or 5.0% of revenue for the comparable period of 2016.
Income Tax. Income tax benefit for the nine months ended September 30, 2017 was $15.8 million, as compared to income tax expense of $16.4 million in 2016. The effective tax rate was 35.9% for the nine months ended September 30, 2017, compared to


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RENT-A-CENTER, INC. AND SUBSIDIARIES


28.5% in 2016. Excluding other charges, the effective tax rate was 36.7% for the nine months ended September 30, 2017, as compared to 37.8% in 2016.
Segment Performance
Core U.S. segment
 Three Months Ended     Nine Months Ended    
 September 30, Change September 30, Change
(dollar amounts in thousands)2017 2016 $ % 2017 2016 $ %
Revenues$442,763
 $481,805
 $(39,042) (8.1)% $1,390,687
 $1,596,782
 $(206,095) (12.9)%
Gross profit309,779
 343,071
 (33,292) (9.7)% 965,739
 1,138,089
 (172,350) (15.1)%
Operating profit23,859
 26,058
 (2,199) (8.4)% 79,241
 127,009
 (47,768) (37.6)%
Change in same store revenue      (5.1)%       (9.4)%
Stores in same store revenue calculation      2,008       2,108
Revenues. The decrease in revenue for the three and nine months ended September 30, 2017, wereMarch 31, 2023, driven primarily by a decreasethe increase in rentals and fees revenue of $34.5 million and $189.3 million, respectively, as compared to 2016. This decrease is primarily due to the decrease in same store revenue, rationalization of our Core U.S. store base in the prior year, and impacts from the recent hurricanes. The decrease in same store revenue was driven primarily by a lower portfolio balance in 2017.
Gross Profit. Gross profit decreased for the three and nine months ended September 30, 2017, as compared to 2016, primarily due to the decrease in store revenuerevenues described above and targeted pricing actions implemented to right size the inventory mix and changes from the new value proposition.above. Gross profit as a percentage of segment revenues decreased to 70.0% and 69.4%30.2% for the three and nine months ended September 30, 2017, respectively, asMarch 31, 2024, compared to 71.2% and 71.3%32.1% for the respective periodsthree months ended March 31, 2023, partly due to an increase in 2016.merchandise sales resulting from a larger portfolio at the beginning of 2024 compared to 2023, in addition to the conversion of Acceptance Now locations to the Acima Holdings Lease Management platform.
Operating Profit.Operating profit as a percentage of segment revenues was 5.4% and 5.7%decreased to 9.2% for the three and nine months ended September 30, 2017, respectively,March 31, 2024 compared to 5.4% and 8.0%11.1% for the respective periodsthree months ended March 31, 2023. The decrease in 2016,operating profit for the three months ended March 31, 2024 is primarily due to sales deleverage,an increase in non-labor operating expenses of approximately $17.7 million, partially offset by a decreasethe increase in store labor of $3.8 million and $40.2 million, and other store expenses of $27.4 million and $61.4 million, for the three and nine months ended September 30, 2017, respectively. Declines in store labor and other store expenses were driven primarily by lower store count, lower customer stolen merchandisegross profit. Merchandise losses and lower advertising expenses. Charge-offs in our Core U.S. rent-to-own storesAcima locations due to customer stolen merchandise,LCOs, expressed as a percentage of Core U.S. rent-to-ownsegment revenues, were approximately 2.4% and 2.7%9.6% for the three and nine months ended September 30, 2017, respectively,March 31, 2024, compared to 4.7% and 3.7%8.9% for the respective periods in 2016. Charge-offsthree months ended March 31, 2023. Merchandise losses in our Core U.S. rent-to-own storesAcima locations due to other merchandise losses, expressed as a percentage of Core U.S. rent-to-ownsegment revenues, were approximately 2.0% and 1.9%0.3% for the three and nine months ended September 30, 2017, respectively,March 31, 2024, compared to 2.1% and 1.8%approximately 0.2% for the respective periodsthree months ended March 31, 2023.
Rent-A-Center segment
Three Months Ended
March 31,Change
(dollar amounts in thousands)20242023$%
Revenues$485,753 $485,008 $745 0.2 %
Gross profit337,643 331,725 5,918 1.8 %
Operating profit74,774 68,961 5,813 8.4 %
Lease portfolio value(1)
139,313 140,205 (892)(0.6)%
Change in same store sales(1)
0.8 %
Stores in same store sales calculation1,764 
(1) See Key Metrics described above for additional information.
Revenues. The increase in 2016.revenue for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to an increase in same store sales of 0.8%, driven by an increase in rentals and fees revenues of $3.5 million, partially offset by decreases in merchandise sales and installment sales of $1.5 million primarily attributable to fewer customers electing early purchase options.
Gross Profit. Gross profit increased for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, driven primarily by the increase in revenues described above. Gross profit as a percentage of segment revenues was 69.5% for the three months ended March 31, 2024, as compared to 68.4% for the three months ended March 31, 2023, primarily due to mix-shift changes between lease merchandise product categories.

25


Operating Profit. Operating profit as a percentage of segment revenues was 15.4% for the three months ended March 31, 2024, compared to 14.2% for the three months ended March 31, 2023. The increase in operating margin for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily driven by the increase in gross profit described above. Merchandise losses in our Rent-A-Center lease-to-own stores due to LCOs, expressed as a percentage of Rent-A-Center lease-to-own revenues, were approximately 4.7% for the three months ended March 31, 2024, compared to 4.8% for the three months ended March 31, 2023. Other merchandise losses in our Rent-A-Center lease-to-own stores, expressed as a percentage of Rent-A-Center lease-to-own revenues, were approximately 1.1% for the three months ended March 31, 2024, compared to approximately 1.4% for the three months ended March 31, 2023. Other merchandise losses include unrepairable and missing merchandise, and loss/damage waiver claims.
Acceptance NowMexico segment
Three Months Ended
March 31,Change
(dollar amounts in thousands)20242023$%
Revenues$20,567 $17,430 $3,137 18.0 %
Gross profit14,716 12,391 2,325 18.8 %
Operating profit1,696 995 701 70.5 %
Change in same store revenue(1)
5.6 %
Stores in same store revenue calculation112
(1) See Key Metrics described above for additional information.
 Three Months Ended     Nine Months Ended    
 September 30, Change September 30, Change
(dollar amounts in thousands)2017 2016 $ % 2017 2016 $ %
Revenues$184,293

$194,398
 $(10,105) (5.2)% $622,160
 $624,310
 $(2,150) (0.3)%
Gross profit92,088

102,998
 (10,910) (10.6)% 310,451
 319,492
 (9,041) (2.8)%
Operating profit10,379

29,592
 (19,213) (64.9)% 49,595
 86,508
 (36,913) (42.7)%
Change in same store revenue      7.9 %       4.9 %
Stores in same store revenue calculation      537
       1,098
Revenues.The decrease in revenue Revenues were positively impacted by exchange rate fluctuations of approximately $1.9 million for the three and nine months ended September 30, 2017, was driven primarily by store closures for hhgregg and Conn's locations,March 31, 2024, as well as impacts fromcompared to the recent hurricanes, partially offset by higher same store revenue.
Gross profit. Gross profit decreasedthree months ended March 31, 2023. On a constant currency basis, revenues for the three and nine months ended September 30, 2017,March 31, 2024 increased approximately $1.2 million, compared to the respective periods in 2016, primarily duethree months ended March 31, 2023.
Gross Profit. Gross profit was positively impacted by exchange rate fluctuations of approximately $1.3 million for the three months ended March 31, 2024, as compared to an increase in cost of merchandise sold driventhe three months ended March 31, 2023. On a constant currency basis, gross profit for the three months ended March 31, 2024 increased by a focused effortapproximately $1.0 million as compared to encourage ownership and reduce returned product.the three months ended March 31, 2023. Gross profit as a percentage of segment revenues was 50.0% and 49.9% for the three and nine months ended September 30, 2017, respectively, compared to 53.0% and 51.2% for the respective periods in 2016.


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RENT-A-CENTER, INC. AND SUBSIDIARIES


Operating profit. Operating profit decreased by 64.9% and 42.7% for the three and nine months ended September 30, 2017, respectively, as compared to the respective periods in 2016. The decrease in operating profit for the three and nine months ended September 30, 2017 was primarily due to increased rental merchandise losses, charges incurred for store closures, and sales deleverage. Excluding other charges, operating profit decreased by 46.5% and 17.9% for the three and nine months ended September 30, 2017, respectively, as compared to the respective periods in 2016. Charge-offs in our Acceptance Now locations due to customer stolen merchandise, expressed as a percentage of revenues, were approximately 12.5% and 12.0% for the three and nine months ended September 30, 2017, respectively, compared to 8.4% and 9.2% for the respective periods in 2016. Excluding other charges, charge-offs due to customer stolen merchandise were 10.8% and 9.8% for the three and nine months ended September 30, 2017, respectively. Charge-offs in our Acceptance Now locations due to other merchandise losses, expressed as a percentage of revenues, were approximately 1.2% and 1.1% for the three and nine months ended September 30, 2017, compared to 1.3% and 1.1% for the respective periods in 2016.
Mexico segment
 Three Months Ended     Nine Months Ended    
 September 30, Change September 30, Change
(dollar amounts in thousands)2017 2016 $ % 2017 2016 $ %
Revenues$12,237
 $12,454
 $(217) (1.7)% $35,351
 $39,514
 $(4,163) (10.5)%
Gross profit8,466
 8,897
 (431) (4.8)% 24,668
 27,478
 (2,810) (10.2)%
Operating (loss) profit(242) 235
 (477) (203.0)% (122) (1,803) 1,681
 93.2 %
Change in same store revenue      (6.2)%       (6.3)%
Stores in same store revenue calculation      118
       118
Revenues. Revenues71.6% for the three months ended September 30, 2017 wereMarch 31, 2024, compared to 71.1% for the three months ended March 31, 2023.
Operating Profit. Operating profit was positively impacted by approximately $0.6 million due to exchange rate fluctuations of approximately $0.2 million for the three months ended March 31, 2024, as compared to the three months ended September 30, 2016, while revenues for the nine months ended September 30, 2017 were negatively impacted by approximately $1.2 million compared to the nine months ended September, 30 2016.March 31, 2023. On a constant currency basis, the decrease in revenue for the three and nine months ended September 30, 2017, was primarily driven by a decrease in same store revenue, compared to the same periods in 2016.
Gross Profit. Grossoperating profit for the three months ended September 30, 2017 was positively impactedMarch 31, 2024 increased by approximately $0.4$0.5 million due to exchange rate fluctuations, while gross profit for the nine months ended September 30, 2017,was negatively impacted by approximately $0.9 million compared to the same periods in 2016. On a constant currency basis, gross profit decreased primarily as a result of decreased rental revenue, partially offset by increased merchandise sales. Gross profit as a percentage of segment revenues was 69.2% and 69.8% for the three and nine months ended September 30, 2017, respectively, as compared to 71.4% and 69.5% for the respective periods in 2016.
Operating (Loss) Profit. Operating results for the three and nine months ended September 30, 2017, were minimally impacted by the exchange rate fluctuations compared to respective periods in 2016. On a constant currency basis, operating results as a percentage of segment revenues decreased to (2.0)% for the three months ended September 30, 2017, from 1.9% for the respective period in 2016, primarily driven by the declines in revenues and grossMarch 31, 2023. Operating profit described above. Operating results as a percentage of segment revenues increased to (0.3)% for the nine months ended September 30, 2017, from (4.6)% for the respective period in 2016. Operating losses for the nine months ended September 30, 2016 included other charges of $2.3 million, primarily related to store closures during the first quarter of 2016. Excluding other charges, operating results as a percentage of segment revenues would have been (0.7%) and 0.5%8.2% for the three and nine months ended September 30, 2017, respectively,March 31, 2024, compared to 1.7% and 1.3%5.7% for the respective periods in 2016.three months ended March 31, 2023, primarily due to lower LCOs.
Franchising segment
Three Months Ended
March 31,Change
(dollar amounts in thousands)20242023$%
Revenues$28,301 $29,776 $(1,475)(5.0)%
Gross profit7,407 7,004 403 5.8 %
Operating profit3,364 4,760 (1,396)(29.3)%
 Three Months Ended     Nine Months Ended    
 September 30, Change September 30, Change
(dollar amounts in thousands)2017 2016 $ % 2017 2016 $ %
Revenues$4,672
 $5,220
 $(548) (10.5)% $15,388
 $18,542
 $(3,154) (17.0)%
Gross profit2,132
 2,260
 (128) (5.7)% 6,803
 7,269
 (466) (6.4)%
Operating profit1,032
 1,430
 (398) (27.8)% 3,565
 4,268
 (703) (16.5)%
Revenues. Revenues decreased for the three and nine months ended September 30, 2017, respectively,March 31, 2024 compared to the respective periods in 2016,three months ended March 31, 2023, primarily due to lowera decrease in merchandise sales to the Company's franchise partners.purchases by franchisees of $2.0 million, partially offset by increases in royalty income and fees revenue of $0.3 million.
Gross Profit. Gross profit as a percentage of segment revenues increased to 45.6% and 44.2%26.2% for the three and nine months ended September 30, 2017, respectively, from 43.3% and 39.2%March 31, 2024, compared to 23.5% for the respective periodsthree months ended March 31, 2023, primarily due to the change in 2016.allocation of merchandise sales compared to royalty and fee revenue.


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RENT-A-CENTER, INC. AND SUBSIDIARIES


Operating Profit. Operating profit as a percentage of segment revenues decreased to 22.1%11.9% for the three months ended September 30, 2017,March 31, 2024 compared to 27.4%16.0% for the respective period in 2016, and increased to 23.2% for the ninethree months ended September 30, 2017, comparedMarch 31, 2023, primarily due to 23.0% for the respective periodan increase in 2016.segment operating expenses of $1.8 million.

26


Liquidity and Capital Resources
Overview. For the ninethree months ended September 30, 2017,March 31, 2024, we had $135.4generated $45.4 million of netin operating cash provided by operating activities. We paid down debt by $86.6 million from cash generated from operationsflow and also used cash in the amount of $53.5$79.2 million for debt repayments, $21.5 million for dividends and $11.8 million for capital expenditures, and $12.8 million for paymentpartially offset by cash proceeds from indebtedness of dividends, ending$60.0 million. We ended the nine-month periodfirst quarter of 2024 with $76.2$84.8 million of cash and cash equivalents.equivalents and outstanding indebtedness of $1.3 billion.
Analysis of Cash Flow. Cash provided by operating activities decreased $239.5by $60.0 million to $135.4$45.4 million for the ninethree months ended September 30, 2017,March 31, 2024, from $374.9$105.4 million in 2016. This wasfor the three months ended March 31, 2023, primarily attributabledue to the receipt in 2016 of income tax refunds of approximately $80.0 million, the declinea decrease in net earnings for the nine months ended September 30, 2017 compared to the same periodand an increase in 2016, and other net changes in operating assets and liabilities.our inventory purchases driven by increased consumer demand.
Cash used in investing activities increased approximately $6.4 million to $51.8$11.7 million for the ninethree months ended September 30, 2017, from $45.4March 31, 2024, compared to $9.6 million for the three months ended March 31, 2023, primarily due to higher investment in 2016, due primarily to an increasestore-related assets in capital expenditures.our Rent-A-Center segment for the three months ended March 31, 2024.
Cash used in financing activities was $104.6decreased to $42.8 million for the ninethree months ended September 30, 2017,March 31, 2024, compared to $254.8 million in 2016, a change of $150.2 million, primarily driven by our net reduction in debt of $86.6$69.4 million for the ninethree months ended September 30, 2017, as comparedMarch 31, 2023, primarily due to a net decreasean increase in borrowings under the ABL Credit Facility of $60.0 million, partially offset by an increase in debt repayments of $233.3$37.1 million for the comparable period in 2016, payment of debt issuance costs of $5.3 million related to our recent debt amendment, offset by an $8.5 million decrease in dividend payments for the ninethree months ended September 30, 2017 compared to the same period in 2016.March 31, 2024.
Liquidity Requirements. Our primary liquidity requirements are for rental merchandise purchases. As we implementpurchases, which are impacted by consumer demand for our growth strategies, the need for additional rental merchandise is expected to remain our primary capital requirement.lease-to-own solutions. Other capital requirements include expenditures for technology and property assets, and debt service. Our primary sourcessource of liquidity havehas been cash provided by operations. In the future, to provide any additional funds necessary for the continued operations and expansion of our business, we may incur from time to time additional short-term or long-term bank indebtedness and may issue, in public or private transactions, equity and debt securities. The availability and attractiveness of any outside sources of financing will depend on a number of factors, some of which relate to our financial condition and performance, and some of which are beyond our control, such as prevailing interest rates and general financing and economic conditions. There can be no assurance that additional financing will be available, or if available, that it will be on terms we find acceptable.
Should we require additional funding sources, we maintain revolving credit facilities, including a $20.0 million line of credit at INTRUST Bank, N.A. The availability of our INTRUST line of credit is restricted if the borrowing capacity under our Revolving Facility drops below $10 million. We utilize our RevolvingABL Credit Facility for the issuance of letters of credit, as well as to manage normal fluctuations in operational cash flow caused by the timing of cash receipts. In that regard, we may from time to time draw funds under the RevolvingABL Credit Facility for general corporate purposes. Amounts are drawn as needed due to the timing of cash flows and are generally paid down as cash is generated by our operating activities. We believe the cash flow generated from operations together with amounts availableand availability under our ABL Credit Agreement,Facility will be sufficient to fund our liquidity requirementsoperations during the next 12twelve months. While our operating cash flow has been strong and we expect this strength to continue, our liquidity could be negatively impacted if we do not remain as profitable as we expect. At October 23, 2017,April 24, 2024, we had $51.2approximately $39.8 million in cash on hand, and $147.5$409.6 million available under our Revolving Facility at September 30, 2017, net of the $50 million of excess availability we must maintain on the Revolving Facility as a result of being out of compliance with our Fixed Charge Coverage Ratio covenant.ABL Credit Facility.
On October 31, 2017, we renewed our line of credit at INTRUST Bank, N.A. The availability of our INTRUST line of credit following the renewal is $12.5 million.
On June 6, 2017, we amended our Credit Agreement (the “Fourth Amendment”), effective as of June 6, 2017, with JPMorgan Chase Bank, N.A., as administrative agent, the other agents party thereto and the lenders party thereto. Under the Fourth Amendment, we agreed to provide additional collateral protections to secure the obligations under the Credit Agreement. The Fourth Amendment also modified the borrowing terms of the revolving loans under the Credit Agreement, which, as amended, establishes that the aggregate outstanding amounts (including after any draw request) not exceed the Borrowing Base. The Borrowing Base is tied to the Company’s Eligible Installment Sales Accounts, Inventory and Eligible Rental Contracts, in addition to Reserves and the Term Loan Reserve. We will provide to the Agent information necessary to calculate the Borrowing Base within 30 days of the end of each calendar month, unless the remaining availability of the Revolving Facility is less than 20% of the maximum borrowing capacity of the Revolving Facility or $60 million, in which case the Company must provide weekly information.
The Fourth Amendment reduced the capacity of the Revolving Facility from $675 million to $350 million and the aggregate amount of Incremental Term Loans and Incremental Revolving Commitments from $250 million to $100 million. We may request an Incremental Revolving Loan, provided that at the time of such draw, and after giving effect thereto, (i) the Consolidated Fixed


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RENT-A-CENTER, INC. AND SUBSIDIARIES


Charge Coverage Ratio on a pro forma basis is no less than 1.10:1, (ii) the Total Revolving Extensions of Credit do not exceed the Borrowing Base, and (iii) if the draw occurs during a Minimum Availability Period, the Availability must be more than the Availability Threshold Amount.
A change in control would result in an event of default under our senior credit facilities which would allow our lenders to accelerate the indebtedness owed to them. In addition, if a change in control occurs, we may be required to offer to repurchase all of our outstanding senior unsecured notes at 101% of their principal amount, plus accrued interest to the date of repurchase. Our senior credit facilities limit our ability to repurchase the senior unsecured notes, including in the event of a change in control. In the event a change in control occurs, we cannot be sure we would have enough funds to immediately pay our accelerated senior credit facilities and senior note obligations or that we would be able to obtain financing to do so on favorable terms, if at all.
Deferred Taxes. Certain federal tax legislation enacted during the period 2009 to 2014 permitted bonus first-year depreciation deductions ranging from 50% to 100% of the adjusted basis of qualified property placed in service during such years. The depreciation benefits associated with these tax acts are now reversing. On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 ("PATH") extended the bonus depreciation to 2015 and through December 2019. The PATH act permits first-year bonus depreciation of 50% in 2015-2017, 40% in 2018, and 30% in 2019. The PATH act resulted in an estimated benefit of $154 million for us in 2016. We estimate the remaining tax deferral associated with these acts is approximately $199 million at September 30, 2017, of which approximately 75.4%, or $149 million will reverse in 2017, and the remainder will reverse between 2018 and 2019. We also estimate a benefit of $171 million resulting from bonus depreciation in 2017 which will offset the $149 million reversal, resulting in a net positive impact to cash taxes of $22 million.
Merchandise Losses. Merchandise losses consist of the following:
 Three Months Ended March 31,
 (in thousands)20242023
Lease charge-offs$81,343 $72,033 
Other merchandise losses(1)
7,001 8,090 
Total merchandise losses$88,344 $80,123 
 Three Months Ended September 30, Nine Months Ended September 30,
 (in thousands)2017 2016 2017 2016
Customer stolen merchandise (1)
$36,950
 $41,962
 $120,245
 $124,070
Other merchandise losses (2)
10,899
 12,917
 32,380
 35,420
Total merchandise losses$47,849
 $54,879
 $152,625
 $159,490
(1)Other merchandise losses include unrepairable and missing merchandise, and loss/damage waiver claims.
(1)
Customer stolen merchandise for the three and nine months ended September 30, 2017 includes inventory losses related to the closure of hhgregg and Conn's locations. See other charges in Note 5 to the condensed consolidated financial statements.
(2)
Other merchandise losses include unrepairable and missing merchandise, and loss/damage waiver claims.
Capital Expenditures. We make capital expenditures in order to maintain our existing operations, as well as foracquire new capital assets in new and acquired stores and investmentinvest in information technology. We spent $53.5$11.8 million and $46.8$9.5 million on capital expenditures during the ninethree months ended September 30, 2017March 31, 2024 and 2016,2023, respectively. The increase in capital expenditures for the nine months ended September 30, 2017, compared to the respective period in 2016,of $2.3 million is primarily due to the timing of cash payments related to information technology investmentshigher investment in 2016, and store refreshes performed during 2017.store-related assets in our Rent-A-Center segment.
Acquisitions and New Location Openings. During the first nine months of 2017, we acquired new locations and customer accounts for an aggregate purchase price of approximately $2.2 million in two different transactions.
The table below summarizes the store location activity for the nine-monththree-month period ended September 30, 2017.March 31, 2024 for our Rent-A-Center, Mexico and Franchising operating segments.
 Rent-A-CenterMexicoFranchisingTotal
Locations at beginning of period1,839 131 440 2,410 
Closed locations
Sold or closed with no surviving location(3)— (6)(9)
Locations at end of period1,836 131 434 2,401 
Senior Debt. On February 17, 2021, we entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and lenders party thereto, that provides for a five-year asset-based revolving credit facility with commitments of $550 million and a letter of credit sublimit of $150 million, which commitments may be increased, at our option and under certain conditions, by up to an additional $125 million in the aggregate (as amended on August 10, 2022, the “ABL Credit Facility”). Under the ABL Credit Facility, we may borrow only up to the lesser of the level of the then-current borrowing base and the aggregate amount of commitments under the ABL Credit Facility. The borrowing base is tied to the amount of eligible

 Core U.S. Acceptance Now Staffed Acceptance Now Direct Mexico Franchising Total
Locations at beginning of period2,463
 1,431
 478
 130
 229
 4,731
New location openings—
 196
 11
 1
 —
 208
Acquired locations remaining open—
 —
 —
 —
 3
 3
Conversions—
 (15) 15
 —
 —
 —
Closed locations           
Merged with existing locations(40) (436) (427) —
 —
 (903)
Sold or closed with no surviving location(17) (1) (1) —
 (5) (24)
Locations at end of period2,406
 1,175
 76
 131
 227
 4,015
Acquired locations closed and accounts merged with existing locations6
 —
 —
 —
 —
 6
Total approximate purchase price of acquired stores (in millions)
$2.2
 $—
 $—
 $—
 $—
 $2.2
27


23


RENT-A-CENTER, INC. AND SUBSIDIARIES



Senior Debt. See descriptioninstallment sales accounts, inventory and eligible lease contracts, reduced by certain reserves. The ABL Credit Facility bears interest at a fluctuating rate determined by reference to an adjusted Term SOFR rate plus an applicable margin of 1.50% to 2.00%, which, as of April 24, 2024, was 7.41%. A commitment fee equal to 0.250% to 0.375% of the unused portion of the ABL Credit AgreementFacility fluctuates dependent upon average utilization for the prior month as defined by a pricing grid included in Note 2the documentation governing the ABL Credit Facility. Loans under the ABL Credit Facility may be borrowed, repaid and re-borrowed until February 17, 2026, at which time all amounts borrowed must be repaid.
The obligations under the ABL Credit Facility are guaranteed by us and certain of our material wholly owned domestic restricted subsidiaries, subject to certain exceptions. The obligations under the ABL Credit Facility and such guarantees are secured on a first-priority basis by all of our and our subsidiary guarantors’ accounts, inventory, deposit accounts, securities accounts, cash and cash equivalents, rental agreements, general intangibles (other than equity interests in our subsidiaries), chattel paper, instruments, documents, letter of credit rights, commercial tort claims related to the foregoing and other related assets and all proceeds thereof related to the foregoing, subject to permitted liens and certain exceptions (such assets, collectively, the “ABL Priority Collateral”) and a second-priority basis in substantially all other present and future tangible and intangible personal property of ours and the subsidiary guarantors, subject to certain exceptions.
On February 17, 2021, we also entered into a term loan credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and lenders party thereto, that provides for a seven-year $875 million senior secured term loan facility (as amended on September 21, 2021 and June 15, 2023, the “Term Loan Facility”). Subject in each case to certain restrictions and conditions, we may add up to $500 million of incremental term loan facilities to the Term Loan Facility or utilize incremental capacity under the Term Loan Facility at any time by issuing or incurring incremental equivalent term debt. Interest on borrowings under the Term Loan Facility is payable at a fluctuating rate of interest determined by reference to an adjusted Term SOFR rate plus an applicable margin of 3.25%, subject to a 0.50% Term SOFR floor, which, as of April 24, 2024 was 9.12%.
Borrowings under the Term Loan Facility amortize in equal quarterly installments in an amount equal to 1.000% per annum of the original aggregate principal amount thereof, with the remaining balance due at final maturity. The Term Loan Facility is secured by a first-priority security interest in substantially all of present and future tangible and intangible personal property of us and our subsidiary guarantors, other than the ABL Priority Collateral, and by a second-priority security interest in the ABL Priority Collateral, subject to certain exceptions. The obligations under the Term Loan Facility are guaranteed by us and our material wholly-owned domestic restricted subsidiaries that also guarantee the ABL Credit Facility.
At April 24, 2024, we had outstanding borrowings of $808.9 million under the Term Loan Facility and available commitments of $409.6 million under our ABL Credit Facility, net of letters of credit.
See Note 5 of our condensed consolidated financial statements.statements included in this Quarterly Report on Form 10-Q for additional information regarding our senior debt.
Senior Notes. On February 17, 2021, we issued $450 million in senior unsecured notes due February 15, 2029, at par value, bearing interest at 6.375% (the “Notes”). Interest on the Notes is payable in arrears on February 15 and August 15 of each year, beginning on August 15, 2021. We may use $150 millionredeem some or all of the Revolving FacilityNotes at any time for cash at the issuanceredemption prices set forth in the indenture governing the Notes, plus accrued and unpaid interest to, but not including, the redemption date. If we experience specific kinds of letters of credit, of which $91.5 million had been so utilized as of October 23, 2017. The Term Loans are scheduledchange in control, we will be required to mature on March 19, 2021, andoffer to purchase the Revolving Facility hasNotes at a scheduled maturity of March 19, 2019. The weighted average Eurodollar rate on our outstanding debt was 1.23% at October 23, 2017.
Senior Notes. See descriptionsprice equal to 101% of the senior notes inprincipal amount thereof plus accrued and unpaid interest. See Note 3 to the6 of our condensed consolidated financial statements.statements included in this Quarterly Report on Form 10-Q for additional information regarding our senior notes.
StoreOperating Leases. We lease space for substantially all of our Core U.S.Rent-A-Center and Mexico stores andunder operating leases expiring at various times through 2034. In addition, we lease space for certain support facilities under operating leases expiring at various times through 2023.2032. Most of our store leases are five year leases and contain renewal options for additional periods ranging from three to five years at rental rates adjusted according to agreed-upon formulas. As of March 31, 2024, our total remaining obligation for existing store lease contracts was approximately $342.1 million.
Franchising Guarantees. Our subsidiary, ColorTyme Finance, Inc. ("ColorTyme Finance"), is a party to an agreementWe lease vehicles for all of our Rent-A-Center stores under operating leases with Citibank, N.A., pursuant to which Citibank provides financing to qualifying franchisees of Franchising. Underlease terms expiring twelve months after the Citibank agreement, upon an event of default by the franchisee under agreements governing this financing and upon the occurrence of certain other events, Citibank can assign the loans and the collateral securing such loans to ColorTyme Finance, with ColorTyme Finance paying or causing to be paid the outstanding debt to Citibank and then succeeding to the rights of Citibank under the debt agreements, including the right to foreclose on the collateral. Rent-A-Center and ColorTyme Finance guarantee the obligationsstart date of the franchise borrowers underlease. We classify these leases as short-term and have elected the Citibank facility. The maximum guaranteeshort-term lease exemption for our vehicle leases, and have therefore excluded them from our operating lease right-of-use assets within our Condensed Consolidated Balance Sheets. As of March 31, 2024, our total remaining minimum obligation under this agreement, excludingfor existing Rent-A-Center vehicle lease contracts was approximately $0.9 million.
We also lease vehicles for all of our Mexico stores which have terms expiring at various times through 2027 with rental rates adjusted periodically for inflation. As of March 31, 2024, our total remaining obligation for existing Mexico vehicle lease contracts was approximately $4.3 million.

28


Uncertain Tax Position. As of March 31, 2024, we have recorded $1.2 million in uncertain tax positions. Although these positions represent a potential future cash liability to us, the effectsamounts and timing of any amounts that could be recovered under collateralization provisions, is $27.0 million, of which $1.1 million was outstanding as of September 30, 2017.such payments are uncertain.
Contractual Cash Commitments. The table below summarizes debt, lease and other minimum cash obligations outstanding as of September 30, 2017:
 Payments Due by Period
(in thousands)Total 2017 2018-2019 2020-2021 Thereafter
Senior Term Debt(1)
$49,125
 $562
 $4,500
 $44,063
 $—
Revolving Facility(2)
55,000
 —
 55,000
 —
 —
INTRUST Line of Credit1,070
 1,070
 —
 —
 —
6.625% Senior Notes(3)
360,619
 9,697
 38,788
 312,134
 —
4.75% Senior Notes(4)
297,500
 5,938
 23,750
 267,812
 —
Operating Leases474,279
 42,148
 272,337
 138,389
 21,405
Total(5) 
$1,237,593
 $59,415
 $394,375
 $762,398
 $21,405
(1)
Does not include interest payments. Our senior term debt bears interest at varying rates equal to the Eurodollar rate (not less than 0.75%) plus 3.00% or the prime rate plus 2.00% at our election. The Eurodollar rate on our senior term debt at September 30, 2017, was 1.24%.
(2)
Does not include interest payments. Our Revolving Facility bears interest at varying rates equal to the Eurodollar rate plus 1.50% to 3.00% or the prime rate plus 0.50% to 2.00% at our election. The weighted average Eurodollar rate on our Revolving Facility at September 30, 2017 was 1.19%.
(3)
Includes interest payments of $9.7 million on each May 15 and November 15 of each year.
(4)
Includes interest payments of $5.9 million on each May 1 and November 1 of each year.
(5)
As of September 30, 2017, we have recorded $33.1 million in uncertain tax positions. Because of the uncertainty of the amounts to be ultimately paid as well as the timing of such payments, uncertain tax positions are not reflected in the contractual obligations table.
Seasonality. Our revenue mix is moderately seasonal, with the first quarter of each fiscal year generally providing higher merchandise sales than any other quarter during a fiscal year, primarily related to our customers' receipt of their federal income tax refunds.year. Generally, our customers will more frequently exercise the early purchase option on their existing rentallease purchase agreements in our Acima and Rent-A-Center segments or purchase pre-leased merchandise off the showroom floor in our Rent-A-Center segment during the first quarter of each fiscal year. Furthermore, we tendyear, primarily due to experience slower growththe receipt of federal income tax refunds. In contrast, our cash expenditures for our merchandise purchases for the fiscal year are generally the highest beginning in the numberlatter part of rental purchase agreements in the third quarter through the fourth quarter, primarily as a result of each fiscal year when comparedholiday promotions that lead to other quarters throughout the year. We expect these trends to continue in the future.increased demand for our lease-to-own offerings.
NewRecently Issued Accounting Pronouncements
In May 2014,December 2023, the FASB issued ASU 2014-09, Revenue from Contracts with Customers2023-09, Income Taxes (Topic 606)740): Improvements to Income Tax Disclosures, which clarifies existing accounting literature relatingis intended to how and when a company recognizes revenue. Under ASU 2014-09, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflectsimprove the consideration to which the company expects to be entitled in exchange for those goods and services. On July 9, 2015, the FASB approved a one-year deferraltransparency of the effective date. In March 2016,annual income tax disclosures by requiring specific categories in the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which amends ASU 2014-09 relatingincome tax rate reconciliation and disaggregation of income taxes paid by jurisdiction. It also includes certain other amendments to how and when a company recognizes revenue when another party is involved in providing a good or service to a customer. Under Topic 606, a


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RENT-A-CENTER, INC. AND SUBSIDIARIES


company will recognize revenue on a gross basis when it provides a good or service to a customer (acts asimprove the principal in a transaction), and on a net basis when it arranges for the good or service to be provided to the customer by another party (acts as an agent in a transaction). ASU 2016-08 provides additional guidance for determining whether a company acts as a principal or agent, depending primarily on whether a company controls goods or services before delivery to the customer. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which provides additional guidance related to the identificationeffectiveness of performance obligations within the contract, and licensing. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which provides additional guidance related to certain technical areas within ASU 2014-09. In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which provides additional guidance related to certain technical areas within ASU 2014-09. In September 2017, the FASB issued ASU 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments, which adds, amends, and supersedes SEC paragraphs related to the adoption and transition provisions of ASU 2014-09 and ASU 2016-02.income tax disclosures. The adoption of these additional ASUs must be concurrent with the adoption of ASU 2014-09, which2023-09 will be required for us for fiscal years beginning January 1, 2018, with early adoption permitted as of the original effective date. These ASUs allow adoption with either retrospective application to each prior period presented, or modified retrospective application with the cumulative effect recognized as of the date of initial application. We are currently in the process of evaluating the potential impact this new pronouncement will have on our financial statements and do not anticipate early adoption. We have not completed our evaluation and therefore cannot conclude whether the pronouncement will have a significant impact on our financial statements at this time. We expect to complete our evaluation by the end of 2017. We currently anticipate that we will utilize the modified retrospective method of adoption, however, this expectation may change following the completion of our evaluation of the impact of this pronouncement on our financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which replaces existing accounting literature relating to the classification of, and accounting for, leases. Under ASU 2016-02, a company must recognize for all leases (with the exception of leases with terms less than 12 months) a liability representing a lessee's obligation to make lease payments arising from a lease, and a right-of-use asset representing the lessee's right to use, or control the use of, a specified asset for the lease term. Lessor accounting is largely unchanged, with certain improvements to align lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The adoption of ASU 2016-02 will be required for us beginning January 1, 2019, with early adoption permitted. The ASU must be adopted using a modified retrospective transition, applying the new criteria to all leases existing or entered into after the beginning of the earliest comparative period in the consolidated financial statements.December 15, 2024. We do not expect to early adopt this standard and are currently in the process of determining what impactbelieve the adoption of this ASU will have on our financial position, results of operations and cash flows.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance on the treatment of cash receipts and cash payments for certain types of cash transactions, to eliminate diversity in practice in the presentation of the cash flow statement. The adoption of ASU 2016-15 will be required for us on a retrospective basis beginning January 1, 2018, with early adoption permitted. We do not expect to early adopt this standard or believe that the adoption of this ASU will materially affect our presentation of cash flows.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating the hypothetical purchase price allocation and instead using the difference between the carrying amount and the fair value of the reporting unit. The adoption of ASU 2017-04 will be required for us on a prospective basis beginning January 1, 2020, with early adoption permitted. We are currently in the process of determining our adoption date and whatmaterial impact the adoption of this ASU will have on our financial statements.
In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new guidance, modification accounting is required if the fair value, vesting conditions or classification (equity or liability) of the new award are different from the original award immediately before the original award is modified. The adoption of ASU 2017-09 will be required for us on a prospective basis beginning January 1, 2018, with early adoption permitted. We do not expect to early adopt this standard or believe that the adoption of this ASU will materially affect our financial statements.
From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that we adopt as of the specified effective date. UnlessAs of March 31, 2024, unless otherwise discussed (including with respect to ASU 2023-07), we believe the impact of any other recently issued standards that are not yet effective are either not applicable to us at this time, or will not have a material impact on our consolidated financial statements upon adoption.


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Item 3. Quantitative and Qualitative Disclosures Aboutabout Market Risk.
Interest Rate Sensitivity
As of September 30, 2017, we had $292.7 million in senior notes outstanding at a fixed interest rate of 6.625%, and $250.0 million in senior notes outstanding at a fixed interest rate of 4.75%. We also had $49.1 million outstanding in Term Loans, $55.0 million outstanding under our Revolving Facility and $1.1 million outstanding on our INTRUST line of credit, each at interest rates indexed to the Eurodollar rate or the prime rate. The fair value of the 6.625% senior notes, based on the closing price at September 30, 2017, was $277.4 million. The fair value of the 4.75% senior notes, based on the closing price at September 30, 2017, was $226.3 million. Carrying value approximates fair value for all other indebtedness.
Market Risk
Market risk is the potential change in an instrument’s value caused by fluctuations in interest rates. Our primary market risk exposure is fluctuations in interest rates. Monitoring and managing this risk is a continual process carried out by our senior management. We manage our market risk based on an ongoing assessment of trends in interest rates and economic developments, giving consideration to possible effects on both total return and reported earnings. As a result of such assessment, we may enter into swap contracts or other interest rate protection agreements from time to time to mitigate this risk.
Interest Rate Risk
As of March 31, 2024, we had $450 million in Notes outstanding at a fixed interest rate of 6.375%. We havealso had $808.9 million outstanding debt with variableunder the Term Loan Facility and $53.0 million outstanding under our ABL Credit Facility, each at interest rates indexed to prime or Eurodollar rates that exposes us to the risk of increased interest costs if interest rates rise. As of September 30, 2017, we have not entered into any interest rate swap agreements.Term SOFR rate. Carrying value approximates fair value for such indebtedness. Based on our overall interest rate exposure at September 30, 2017,March 31, 2024, a hypothetical 1.0% increase or decrease in market interest rates would have the effect of causing a $1.1an additional $8.6 million additional annualized pre-tax charge or credit to our consolidated statementCondensed Consolidated Statements of operations.Operations. We have not entered into any interest rate swap agreements as of March 31, 2024.
Foreign Currency Translation
We are also exposed to market risk from foreign exchange rate fluctuations of the Mexican peso to the U.S. dollar as the financial position and operating results of our stores in Mexico are translated into U.S. dollars for consolidation. Resulting translation adjustments are recorded as a separate component of stockholders’ equity.
Item 4.Controls and Procedures.
Disclosure controlsControls and proceduresProcedures. In accordance with Rule 13a-15(b) under the Securities Exchange Act of 1934, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and interim Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our management, including our Chief Executive Officer and our interim Chief Financial Officer, concluded that, as of September 30, 2017,March 31, 2024, our disclosure controls and procedures (as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934) were effective.
Changes in internal controlsInternal Controls over financial reportingFinancial Reporting. For the quarter ended September 30, 2017,March 31, 2024, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that, in the aggregate, have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

29


PART II – Other Information
Item 1. Legal Proceedings
Alan Hall, et. al. v. Rent-A-Center, Inc., et. al.; James DePalma, et. al. v. Rent-A-Center, Inc., et. al. On December 23, 2016,From time to time, we, along with our subsidiaries, are party to various legal proceedings and governmental inquiries arising in the ordinary course of business. We regularly monitor developments related to these legal proceedings and governmental inquiries, review the adequacy of our legal reserves on a putative class action was filedquarterly basis, and reserve for loss contingencies that we determine are both probable and reasonably estimable. Although we have not determined that any of these matters will have a material impact on our consolidated financial statements, we cannot predict the impact of future developments or provide assurances that a resolution of any such matter would not have a material and adverse impact during a future period. In addition, claims and lawsuits against us may seek injunctive or other relief that requires changes to our business practices or operations and it is possible that any required changes may materially and adversely impact our business, financial condition, results of operations or reputation. Please see Note 11 of our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional discussion of certain of our former officers by Alan Hall in federal court in Sherman, Texas. The complaint alleges that the defendants violated Section 10(b) and/or Section 20(a) of the Securities Exchange Act of 1934legal proceedings and Rule 10b-5 promulgated thereunder by issuing false and misleading statements and omitting material facts regarding our business, including implementation of our point-of-sale system, operations and prospects during the period covered by the complaint. The complaint purports to be brought on behalf of all purchasers of our common stock from July 27, 2015 through October 10, 2016, and seeks damages in unspecified amounts and costs, fees, and expenses. A complaint filed by James DePalma also in Sherman, Texas alleging similar claims was consolidated by the court into the Hall matter. On October 19, 2017, the magistrate judge entered a recommendation to deny our motion to dismiss the complaint to the district judge who will decide the issue. We intend to file our objections to the magistrate's recommendation by November 2, 2017, as permitted. We believe that these claims are without merit and intend to vigorously defend ourselves. However, we cannot assure you that we will be found to have no liability in this matter.governmental inquiries.


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Kevin Paul, derivatively and on behalf of Rent-A-Center, Inc. v. Robert D. Davis et. al.; Sheila Coleman, derivatively and on behalf of Rent-A-Center, Inc. v. Robert D. Davis et. al.; Michael Downing, derivatively and on behalf of Rent-A-Center, Inc. v. Mark E. Speese et. al. On March 15 and 16, 2017, substantially similar shareholder derivative suits were filed against certain current and former officers and directors and, nominally, against us, in state court in Dallas County, Texas. Another substantially similar shareholder derivative suit was filed against certain current and former officers and directors and, nominally, against us, in state court in Collin County, Texas on May 8, 2017. All three of the cases have been consolidated in state court in Dallas County, Texas. The lawsuits allege that the defendants breached their fiduciary duties owed to Rent-A-Center and otherwise mismanaged the affairs of the company as it concerns public statements made related to our point-of-sale system, operational results of our Acceptance Now segment, and our revenues and profitability. The petitions in these suits claim damages in unspecified amounts; seek an order directing the Company to make various changes to corporate governance and internal procedures, including putting forth a shareholder vote on various governance matters; restitution from the individual defendants; and cost, fees and expenses. We believe that these claims are without merit and intend to vigorously defend ourselves. However, we cannot assure you that the individual defendants will be found to have no liability in this matter.
Arnaud van der Gracht de Rommerswael, derivatively and on behalf of Rent-A-Center, Inc. v. Mark Speese et. al. On April 3, 2017, another shareholder derivative suit was filed against certain current and former officers and directors, JPMorgan Chase Bank, N.A., The Bank of New York Mellon Trust Company, N.A., and, nominally, against us, in federal court in Sherman, Texas. The complaint alleges that the defendants breached their fiduciary duties owed to Rent-A-Center and otherwise mismanaged the affairs of the company as it concerns (i) public statements made related to the rollout of our point-of-sale system; (ii) compensation paid to Guy Constant and Robert Davis surrounding their resignations; and (iii) change-of-control language in certain debt agreements, which the suit alleges impacts shareholders’ willingness to vote for a slate of directors nominated by Engaged Capital Flagship Master Fund, LP. (“Engaged Capital”). The complaint claims damages in unspecified amounts, disgorgement of benefits from alleged breaches of duty by the individual defendants; an order declaring that certain language in the debt agreements is unenforceable; an order enjoining the lender defendants from enforcing certain provisions in the debt agreements; an order directing the Company’s board to approve Engaged Capital’s slate of directors; an order directing the Company to make unspecified changes to corporate governance and internal procedures; and costs, fees, and expenses.
In response to the motion to dismiss filed by the defendants on April 25, 2017, the plaintiff amended his complaint on May 9, 2017 and on May 19, 2017. The amended complaint alleges breach of fiduciary duty, unjust enrichment and waste of corporate assets related to alleged acts for the purposes of entrenching board members, including the approval of change-of-control language in certain debt agreements, the implementation of the point-of-sale system, and the severance compensation paid to Guy Constant and Robert Davis.
On July 10, 2017, the plaintiff’s claims against JPMorgan Chase Bank, N.A. and The Bank of New York Mellon Trust Company, N.A. were dismissed.
On October 12, 2017, the court issued an order requiring plaintiffs to re-plead the claims related to our point-of-sale system, and denying the motion to dismiss with respect to the waste and entrenchment claims.
We believe that these claims are without merit and intend to vigorously defend ourselves. However, we cannot assure you that the defendants will be found to have no liability in this matter.
Blair v. Rent-A-Center, Inc. This matter is a state-wide class action complaint originally filed on March 13, 2017 in the Federal District Court for the Northern District of California. The complaint alleges various claims, including that our cash sales and total rent to own prices exceed the pricing permitted under the Karnette Rental-Purchase Act. In addition, the plaintiffs allege that we fail to give customers a fully executed rental agreement and that all such rental agreements that were issued to customers unsigned are void under the law. The plaintiffs are seeking statutory damages under the Karnette Rental-Purchase Act which range from $100 - $1,000 per violation, injunctive relief, and attorney’s fees. We believe that these claims are without merit and intend to vigorously defend ourselves. However, we cannot assure you that we will be found to have no liability in this matter.


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Item 1A. Risk Factors
Except as set forth in Item 1A of Part II, "Risk Factors," in our Form 10-Q for the quarter ended September 30, 2017, thereThere have been no material changes to the risk factors disclosed in Item 1A of Part 1, "Risk Factors," in“Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2016.2023.
Item 2. Unregistered Sales of Equity Securities, and Use of Proceeds, and Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.

Certain of our officers have made, or may make, elections to participate in, or are participating in, the Company's stock investment option and dividend reinvestment available through the Company's 401(k) plan. In addition, certain of our officers and directors may from time to time make elections to have shares withheld to cover withholding taxes owed in connection with long-term incentive plan awards or to pay the exercise price of options or make standing elections to reinvest dividends received on our shares or long-term incentive plan awards held by them, which may be intended to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act, or may constitute “non-Rule 10b5–1 trading arrangements” as defined in Item 408(c) of Regulation S-K.


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Item 6.Exhibits.
Exhibit No.Description
Exhibit No.Description
Articles of Incorporation and Bylaws
3.1
Certificate of Incorporation of Rent-A-Center, Inc.,the registrant, as amended (Incorporated(incorporated herein by reference to Exhibit 3.1 to the registrant's Current Report on Form 8-K dated as of December 31, 2002.)
3.2
3.3
3.4
Certificate of Amendment to the Certificate of Incorporation of the registrant, dated February 21, 2023 (incorporated herein by reference to Exhibit 3.1 to the registrant's Current Report on Form 8-K dated as of February 23, 2023.)
3.5
3.6
Certificate of Designations of Series D Preferred Stock of Rent-A-Center, Inc. (Incorporatedthe registrant (incorporated herein by reference to Exhibit 3.1 to the registrant's Current Report on Form 8-K dated as of March 29,31, 2017.)
Instruments Defining the Rights of Security Holders, Including Indentures
4.1
4.2
Form of Certificate evidencing Common Stock (Incorporated(incorporated herein by reference to Exhibit 4.14.6 to the registrant's Current ReportRegistration Statement on Form 10-QS-8 dated as of March 31, 2017.June 7, 2023.)
4.24.3
Indenture, dated as of November 2, 2010,February 17, 2021, by and among Rent-A-Center, Inc., as Issuer, the Guarantors named therein, as Guarantors,between Radiant Funding SPV, LLC and TheTruist Bank of New York Mellon Trust Company, N.A., as Trustee (Incorporated(incorporated herein by reference to Exhibit 4.1 to the registrant's Current Report on Form 8-K dated as of November 2, 2010.February 17, 2021.)
4.3Management Contracts and Compensatory Plans or Arrangements
10.1*
4.410.2
10.1†
Amended and Restated Rent-A-Center, Inc. Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003.)
10.2
Guarantee and Collateral Agreement, dated March 19, 2014, by and among Rent-A-Center, Inc., its subsidiaries named as guarantors therein and JPMorgan Chase Bank, N.A. as Administrative Agent (Incorporated herein by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K dated March 19, 2014.)
10.3
Franchisee FinancingLetter Agreement, dated April 30, 2002, but effective as of June 28, 2002, by and3, 2024, between Texas Capital Bank, National Association, ColorTyme,Upbound Group, Inc. and Rent-A-Center, Inc. (Incorporated herein by reference to Exhibit 10.14 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002.)
10.4
Supplemental Letter Agreement to Franchisee Financing Agreement, dated May 26, 2003, by and between Texas Capital Bank, National Association, ColorTyme, Inc. and Rent-A-Center, Inc. (Incorporated herein by reference to Exhibit 10.23 to the registrant's Registration Statement on Form S-4 filed July 11, 2003.)


10.5
First Amendment to Franchisee Financing Agreement, dated August 30, 2005, by and among Texas Capital Bank, National Association, ColorTyme, Inc. and Rent-A-Center East, Inc. (Incorporated herein by reference to Exhibit 10.7 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.)
10.6
Franchise Financing Agreement, dated as of August 2, 2010, between ColorTyme Finance, Inc. and Citibank, N.A. (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of August 2, 2010.)
10.7
Unconditional Guaranty of Rent-A-Center, Inc., dated as of August 2, 2010, executed by Rent-A-Center, Inc. in favor of Citibank, N.A. (Incorporated herein by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K dated as of August 2, 2010.)
10.8
Unconditional Guaranty of Rent-A-Center, Inc., dated as of August 2, 2010, executed by ColorTyme Finance, Inc. in favor of Citibank, N.A. (Incorporated herein by reference to Exhibit 10.3 to the registrant's Current Report on Form 8-K dated as of August 2, 2010.)
10.9†
Form of Stock Option Agreement issuable to Directors pursuant to the Amended and Restated Rent-A-Center, Inc. Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.20 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2004.)


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10.10†
Form of Stock Option Agreement issuable to management pursuant to the Amended and Restated Rent-A-Center, Inc. Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.21 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2004.)
10.11†
Summary of Director Compensation (Incorporated herein by reference to Exhibit 10.11 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2016.)
10.12†
Form of Stock Compensation Agreement issuable to management pursuant to the Amended and Restated Rent-A-Center, Inc. Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.15 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2005.)
10.13†
Form of Long-Term Incentive Cash Award issuable to management pursuant to the Amended and Restated Rent-A-Center, Inc. Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.16 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2005.)
10.14†
Form of Loyalty and Confidentiality Agreement entered into with management (Incorporated herein by reference to Exhibit 10.14 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2016.)
10.15†
Rent-A-Center, Inc. 2006 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.17 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.)
10.16†
Form of Stock Option Agreement issuable to management pursuant to the Rent-A-Center, Inc. 2006 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.18 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.)
10.17†
Form of Stock Compensation Agreement issuable to management pursuant to the Rent-A-Center, Inc. 2006 Equity Incentive Plan (Incorporated herein by reference to Exhibit 10.19 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2006.)
10.18†
Form of Long-Term Incentive Cash Award issuable to management pursuant to the Rent-A-Center, Inc. 2006 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.20 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2006.)
10.19†
Rent-A-Center, Inc. 2006 Equity Incentive Plan and Amendment (Incorporated herein by reference to Exhibit 4.5 to the registrant's Registration Statement on Form S-8 filed with the SEC on January 4, 2007.)
10.20†
Form of Stock Option Agreement issuable to management pursuant to the Rent-A-Center, Inc. 2006 Equity Incentive Plan (Incorporated herein by reference to Exhibit 10.22 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2006.)
10.21†
Form of Stock Compensation Agreement issuable to management pursuant to the Rent-A-Center, Inc. 2006 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.23 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2006.)
10.22†
Form of Stock Option Agreement issuable to Directors pursuant to the Rent-A-Center, Inc. 2006 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.24 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2006.)
10.23†
Form of Deferred Stock Unit Award Agreement issuable to Directors pursuant to the Rent-A-Center, Inc. 2006 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.23 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2010.)
10.24†
Form of Executive Transition Agreement entered into with management (Incorporated herein by reference to Exhibit 10.24 to the registrant's Annual Report on Form 10-K for the year ended August 31, 2016.)
10.25†
Rent-A-Center, Inc. 2016 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.36 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.)
10.26†
Rent-A-Center, Inc. Non-Qualified Deferred Compensation Plan (Incorporated herein by reference to Exhibit 10.28 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.)
10.27†
Rent-A-Center, Inc. 401-K Plan (Incorporated herein by reference to Exhibit 10.30 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2008.)
10.28
Credit Agreement, dated as of March 19, 2014, among Rent-A-Center, Inc., the several lenders from time to time parties thereto, Bank of America, N.A., BBVA Compass Bank, Wells Fargo Bank, N.A. and Suntrust Bank, as syndication agents, and JPMorgan Chase Bank, N.A., as administrative agent (Incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated as of March 19, 2014.)


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RENT-A-CENTER, INC. AND SUBSIDIARIES


10.29†
Rent-A-Center East, Inc. Retirement Savings Plan for Puerto Rico Employees (Incorporated herein by reference to Exhibit 99.1 to the registrant's Registration Statement on Form S-8 filed January 28, 2011.)
10.30
First Amendment to Franchisee Financing Agreement between ColorTyme Finance, Inc. and Citibank, N.A., dated as of July 25, 2012 (Incorporated herein by reference to Exhibit 10.32 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.)
10.31
Master Confirmation Agreement, dated as of May 2, 2013, between Rent-A-Center, Inc. and Goldman Sachs & Co. (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of May 2, 2013.)
10.32
Second Amendment to Franchisee Financing Agreement between ColorTyme Finance, Inc. and Citibank, N.A., dated as of August 30, 2013 (Incorporated herein by reference to Exhibit 10.34 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.)
10.33
Third Amendment to Franchisee Financing Agreement between ColorTyme Finance, Inc. and Citibank, N.A., dated as of May 1, 2014 (Incorporated herein by reference to Exhibit 10.33 to the registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.)
10.34
Waiver and Fourth Amendment to Franchisee Financing Agreement between ColorTyme Finance, Inc. and Citibank, N.A., dated as of September 1, 2014 (Incorporated herein by reference to Exhibit 10.34 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.)
10.35
First Amendment to the Credit Agreement, dated February 1, 2016, between the Company, JPMorgan Chase Bank, N.A., as administrative agent, the other agents party thereto and the lenders party thereto (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of February 1, 2016.)
10.36†
Form of Stock Option Agreement issuable to management pursuant to the Rent-A-Center, Inc. 2016 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.37 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.)
10.37†
Form of Stock Compensation Agreement (RSU) issuable to management pursuant to the Rent-A-Center, Inc. 2016 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.38 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.)
10.38†
Form of Stock Compensation Agreement (PSU) issuable to management pursuant to the Rent-A-Center, Inc. 2016 Long-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.39 to the registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016.)
10.39
Second Amendment to the Credit Agreement, dated effective as of September 30, 2016, between the Company, JPMorgan Chase Bank, N.A., as administrative agent, the other agents party thereto and the lenders party thereto (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of October 4, 2016.)
10.40†
Interim CEO Employment Agreement, dated as of January 9, 2017, between MarkMitchell E. Speese and Rent-A-Center, Inc. (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of January 9, 2017.)
10.41†
Separation Agreement and Release of Claims, dated as of January 9, 2017, between Robert D. Davis and Rent-A-Center, Inc. (Incorporated herein by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K dated as of January 9, 2017.)
10.42†
Amendment No. 1 to Interim CEO Employment Agreement, dated April 10, 2017, between Mark E. Speese and Rent-A-Center, Inc. (IncorporatedFadel (incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of April 9, 2017.5, 2024.)
10.43Other Exhibits and Certifications
31.1*
Third Amendment and Waiver to the Credit Agreement, dated effective as of May 1, 2017, between the Company, JPMorgan Chase Bank, N.A., as administrative agent, the other agents party thereto and the lenders party thereto (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of May 1, 2017.)
10.44
Fourth Amendment to the Credit Agreement (including Amended and Restated Guarantee and Collateral Agreement), dated as of June 6, 2017, between the Company, JPMorgan Chase Bank, N.A., as administrative agent, the other agents party thereto and the lenders party thereto (Incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated as of June 6, 2017.)
18.1
Preferability letter regarding change in accounting principle (Incorporated herein by reference to Exhibit 18.1 to the registrant's Quarterly Report on the Form 10-Q for the quarter ended September 30, 2014).


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RENT-A-CENTER, INC. AND SUBSIDIARIES


21.1
Subsidiaries of Rent-A-Center, Inc. (Incorporated herein by reference to Exhibit 21.1 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2016.)
31.1*
Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 implementing Section 302 of the Sarbanes-Oxley Act of 2002 by Mark E. SpeeseMitchell Fadel
31.2*
Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 implementing Section 302 of the Sarbanes-Oxley Act of 2002 by Maureen B. ShortFahmi Karam
32.1*
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Mark E. SpeeseMitchell Fadel
32.2*
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Maureen B. ShortFahmi Karam
101.INS*XBRL Instance Document - The instance document does not appear in the interactive data files because its XBRL tags are embedded within the inline XBRL document
101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document
104*Cover page Interactive Data File (embedded within the inline XBRL document contained in Exhibit 101)
*Filed herewith.
†Management contract or compensatory plan or arrangement
*Filed herewith



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RENT-A-CENTER, INC. AND SUBSIDIARIES



SIGNATURE
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
UPBOUND GROUP, INC.
RENT-A-CENTER, INC.
By:
/S/ MAUREEN B. SHORT      FAHMI W. KARAM
Maureen B. ShortFahmi W. Karam
InterimEVP, Chief Financial Officer
Date: November 1, 2017May 2, 2024







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