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Rent a Center Inc De (RCII)

Participants
Daniel O'Rourke Rent-A-Center, Inc.
Mark E. Speese Rent-A-Center, Inc.
Joel M. Mussat Rent-A-Center, Inc.
Maureen B. Short Rent-A-Center, Inc.
Bradley B. Thomas KeyBanc Capital Markets, Inc.
Kyle Joseph Jefferies LLC
John Allen Baugh Stifel, Nicolaus & Co., Inc.
John Rowan Janney Montgomery Scott LLC
Laura Champine Roe Equity Research LLC
Anthony Chukumba Loop Capital Markets LLC
Call transcript
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Operator

Good morning, and thank you for holding. Welcome to Rent-A-Center's Third Quarter Earnings Conference Call.

As a reminder, this conference is being recorded, Tuesday, October 31, 2017.

Your speakers today are Mr. Mark Speese, Chief Executive Officer of Rent-A-Center; Maureen Short, Interim Chief Financial Officer; Joel Mussat, Chief Operating Officer; and Daniel O'Rourke, Vice President of Finance, Investor Relations, and Treasury. to conference like to now would turn over the Mr. I O'Rourke. ahead, sir. go Please

Daniel O'Rourke

Thank thank everyone, us. morning, you, Good Amy. and you joining for

Our investor.rentacenter.com. results after our distributed materials are of earnings yesterday, our related release outlined website on which at XXXX. market All operational the for close financial available third quarter and was

expectations. release publicly could now forward-looking These are update subject our to As the or a factors the statements undertakes the are revise materially which of I'd Rent-A-Center results yesterday to provided on differ any factors to like to statements, that forward-looking described cause obligation statement. reminder, some this actual to call are in as no over many our issued filings. call in as well from turn company's SEC Mark. earnings

Mark E. Speese

our everyone, that Well, we Today, and discuss joining you, Good thank continuing Daniel. we're thank to plan. the you for quarter us. and on our strategic results progress third will morning, make

Of Rico. meals discuss as Houston XX,XXX we shipping than in course detail. to Maureen that results our activity, greater operating furniture bottles those all results doing from by as during the well in for affected. We're and need packaged remain impacted more water our of Puerto impact to of hurricanes, Joel our those will and the and thoughts financial and donating the to with care quarter, can in unprecedented hurricane were

results seeing our being let line still that by Core, strategic lower our the do, is they an plan. of our we're are third impacted portfolio. as progress the with progress Before provide executing the in we quarter expectations the overview on are results our me making and In

and of reach our position made enhancements a store full-time as our average than hours turnover have average frontline in provide improved. the plan stability maintain Process to And growth. result in our monthly volume to put significantly promotional our reduce proposition our into workforce X.X% believe of co-worker are up and these metrics and significant overall with There changes, a By lower points new further, moving by are the visibility growth levels, workforce XXXX. delinquency the fourth will up We company business our still to opportunity are hours. a co-workers been inventory XXX still the Stabilizing ownership is inventory, year-over-year helped and to idle continue continue sequentially. for the same-store customers. historical the in are with in Positive the drive The driven and drive portfolio in into Acceptance feedback the more including rates quarter established have sales leading have and same-store monthly to continue efforts Overall of improvements for invest upgrading obtain better value products prior entering and In a on have ticket higher progress. year-over-year returned empowered momentum in to talent scorecards ticket, been up tenured the foundation have is the to of an holiday agreement less drive key Stores remains Core rates basis the the offerings. Core, co-worker future through within Pay have and modified the and we delinquency to upgrade more product idle year line the positive percentage and the focus the our and being to and sequentially, stores levels would products. our improve collection as sales turnover our optimizing ranges our replace part-time have September, was from co-worker. have season. well. been less older, The who and well now co-workers to lower Now to enhancements company operational performance.

Within testing shorter be the is are service higher multiple for affordable lease-to-own future still been Acceptance models Now, opportunities a model Acceptance slightly while non-peak enhance company. while are other profitability business in Now drive partners, Now. offer Enhancements lower better retail The with profitable options levels and locations Now times retail be growth. third-party exclusively a almost we of to and virtual. retail ticket and growth. returned unstaffed that drives improve more unstaffed coming or points associates. Now value and with months product that being the able product Acceptance number profitability. product to a partner varying Now, businesses. our to strategic purchase will costs and profitable and the a of of times us optimizing look to Acceptance ownership Core. significant higher made transition and we there has flow, relationship capital, steps repositioning and system-wide forward also for service use during coupled our retention less the are options as cash less consolidation for with significant monthly quick deliver transfers our model to the promising. key returned result Less continues return total the are making to monthly our application I during believe for in peak company and rate for A is advantage the proposition control business experience Acceptance user months of few with business to partner The hybrid of value more more the relationships early changes proposition gathering, ownership to consumers past and towards there higher partners will model are that staffed the made taken Turning and Acceptance terms, early, been a to assortment and results improved the information proposition and increased product increased improved for to unnecessary strongly have phases through will position the for value average retail customers, and and the ROI. benefit in retail being business screens both The over Core our to likely of improved elimination to to We've benefits progress easier also made the the believe

of Acceptance to and New build and proprietary ownership provide for Acceptance scale pipeline to opportunity more policies our by continuing to will using reduce determine approval lower data assessment space were in company The amounts operations verification to enhanced access strategies. attributes. unstaffed risk added optimize white effectively aggregation speed a Now to portion data We're be addressable at of implementing market. increase decision The a to Now processes business capabilities cost and a out to market, also and engine approval analytics continues utilizing risk. elements the Rent-A-Center's to enable faster process driven substantially our and rates vast strong. the a with to also scoring risk and reduce losses application, models, the continues data greater

management to to improve and algorithms mitigation analytics expected and Our to rates, risk well delinquencies starting profitability. to customize as company The drive date to determine also the optimize made to changes tactics, return use loss is team lower analytics providing are as results, account continuously the the and risk co-workers to tools analytics for increase post-sale our centralized management the in and customer store decision-making ownership are invest products to future. leverage plans rates teams. return by capabilities and continue and company The and collection reduce that in,

build expand investments strategic pillar of points. is our course the to our out and In experience. customer technology continue distribution plan Of to online channels we leveraging store, improve the another and integration Core,

the leading in the and omni-channel dozens not this an stock the online additional their customer to that U.S. catalog selection to specific we we which where allows of customer aisle to program, partnership items with can from for customers This experience. program our is personal a extended capability furniture experience Ashley all Included an do an categories. choose order choice rolled typically stores. enhanced During order third special shopping from enable larger SKUs out a quarter, store our allows SKUs largest Furniture, products our and of special enhance much we our staff across supplier, brand of to provides order a larger in

in finally confirmed as And mobile last A that of the capital of sizable opportunity announced is the integral we franchising part addition, future XXXX. grow the investment. the and franchising been Rent-A-Center. quarter exist we've work currently last improve region firm. and the evaluating has tested the full we're business the in ability play we're company, and timing and position to with early quarter, app franchising of can a being mentioned level also an consulting In in expand a in Their to third-party with expecting working

nature made committed expected wish performance are to take decided ourselves the have As and one finally, results her acknowledge opportunity with said share. am have implemented to And the of Angela item that for before to year, time very the call her the new the holding business. management to to of the personal I improvements our the CIO, pleased beginning would turn the for stockholder the best performance, generating accept the we take team portfolio of Joel as changes discuss and has our business. a We this believe we over in progress it will of I position stabilize service contributions Yochem, I trajectory we've at improve value. future. I drive year-end. board that and operational that The and want and Rent-A-Center. and I accountable to our to the to to thank for Angela given

end successor that, ensure I And efforts staying she Joel our me search underway. this As ask on operational past to an and their to be to I commitment provide will and a thank quarter. for want update. XX,XXX with of continued December co-workers seamless the now for you her transition, the do through is let said,

Joel M. Mussat

call about first be The focus the morning isn't and performance. in us. the the typically line operating the count fourth Thanks, since lower the start on drops their in the opportunities material continue of the performs and Mark, rent, tax will in joining quarter our company plans on Historically, back businesses I'm months, merchandise the Core to agreement Core for excited business with that increase everyone, of ownership five our in their the very of third quarter, about and to refunds use at for performance. a and agreement terms I'll on business. results lie I've the bottom obtain until to us. customers line count for now customer there improve thanks, been My this and top ahead quarter.

quarter, increase third impacts line addition, bottom the which In typically in delinquencies performance.

was third company quarter. the mentioned, As hurricanes three the in impacted by

customers and their back Hurricane yet Now about Irma XXX co-workers Our affected, of or stores at families. now XXX of stores stores our hearts and Maria. of all Rico Harvey, out least U.S. Puerto about four All open, the by many but are go the our Core impacted were not still but closed to those including and of our or operational. Overall, fully Acceptance are locations

continuing trend those evaluating We that average And care Puerto our territory, for our Core of move on and a island while in have be produce XX need. stores million Now slightly I Acceptance in month in stores store overall to stores our below $X in footprint the located forward, note we XX about store Rico as profitability. revenue. Core that will the we'll take

of are we was our this Excluding our the the hurricanes, with impact projection. planned. three as pleased Core our And results internal business, line for with quarter business as of turnaround of continues in the performance the

in of helped growing of the To by last months, they least points demonstrates very two our in both in as teams August our has sales operating GAAP not the in historically for improvements in and September our portfolio at of due has percent numbers time by agreements by of part also our operational illustrate improved charge-offs significance last driven execution lower has able teams. challenges, rates are XXX the focus the now portfolio free of year-over-year this well against XXX on year, also and we merchandise improve fueled proud points typically done sequentially, margin in were ticket, support grow improvements ownership inventory basis year-over-year driven displayed Even In is We our almost business. our those by pricing a portfolio the rentals, and stores a by to on seasonality which year-over-year decrease of since to running management. higher which The and we QX. hurricane labor some the months, our X%. ahead very and XX new reductions and see is in as the store in of strategy, consecutively, strong of the new and by our strong amounts basis improved Core these helped discipline and our comp flat effect, our our closed in our years. delinquencies has with has in quality have sales Same-store

we out a are their delivering customer experience. recently As have to we our training using great mystery personnel rolled program, we last use as a store quarter, for mentioned a and improve to shopper tool point-of-purchase success which

program. our are some our this in and to lead strengthening and their so sales portion confident conversion improvements results rates. September frontline for in are impact our already and growing We the seen these far, of August We're of customers. pleased co-workers with have attribute We value skills our delivering and portfolio sales follow-up success

have first give we the to experience customer our launched which also opportunities. begun voice of customer better us already ever has visibility Additionally, initiative, to

We we ability are nurture count collections to In the quarter, agreement enhanced combined our high-single-digit very improvement the better last of quarter, offsetting fourth the per higher a better Core agreement ticket best stronger same-store lower to and the In expect sales. and customers agreements. than driving of assortment, a need gain quality same-store have store driving to the Throughout take agreements. year, from be in proposition better reduced insights average experience. higher we we of churn care year, excited and positive our to of the expect store the in year-over-year value and business, fourth the customer performance the consistently rate rate customer in we the sales portfolio growth have

highest our are Now every brands. and Over U.S. in the momentum our results. business. the the progress and have with above, into and some alignment We store keep confidence terms that most great the the manager did and important deliver Core meetings on to see and this both our the will part Mark and our managers organization energy the going, was sales to traveled It the energy, across the past six passion Acceptance of performing for across held build I weeks, on we teams, our ensure multi-unit of we help as expected confident of and growing quarter they and and

about points For comp the Acceptance same-store sequentially XXX year. mainly closures delivered location, Please of Now, this improved due sales points hhgregg total the and Conn's third year-over-year. XXX that basis basis business note a our our and to store base is earlier of

of We the Conn's stores by to opening about quarter due Revenue operating losses, is skip/stolen portfolio, higher. this us which the has which than the locations continued to quality of as year-over-year on XX income due our We rates is collect expected higher these to new in rates about to of closures, year-to-date. in were of Most challenging in gets down which stores accounts. increase growth quarter, and as portion to the loss are loss would new current driven hhgregg due the be to our the XXX expected. due knew agreements our

from are routing to recent our up to to in a are are software have starting our also plan well in management on we new However, number customers, will be We're pricing improvements account we down engine a which an process, fronts. existing initial collection customer first and believe putting we improvements, Mark decision stores. our plan cater a higher steps location apparent several as the experienced mentioned a collection quality place fundamentally rates discipline of tool hhgregg how them payment shift subset of results in verification feature, agreements our received while working results, our our shore clear, partners to model, with agreements. who a of our portfolio as maintaining payments AutoPay our the default keeping adding the base, we're a delinquency the our have implementing exiting of building to have strategies, capabilities. higher in healthy with which through drive Marketing around To collection pleased locations and rate RTO under delinquencies examples not improve approval portfolio. transferred Conn's also

the Additionally, is training opportunity who grow our well lower to we're efforts. co-workers, store are focused our the of the portfolio as still by typically rates of on our businesses improving as impacted the seasonality being quarter the during frontline collection while fourth earnings both periods. portfolio, turnover a largest high spearhead Overall,

point and expected improve which of stores, bottom our is our XXX the to business. hold continue initiatives quarter we managed from expect be as the the profits country. third here in The for to and , trajectory Mexico, fully we In and to are improve self-funding operate take

have made as proper over year-over-year, best X% our strides assortment idle good, reduced management over stores units focus have ticket inventory by we year-over-year, our as pricing allocation on and and us U.S. We've better allocation XX%. our helped of in-store as long-term This degree install have by aisles We some in the inventory our in in to also good we by well store our capital raise as and on done believe, we the reduced both ratios DCs XX%. our the over we management, overall has can

to the during Mexico We strong continue thanks income. that, like for quarter, dedication by thank special hurricanes. push a XX,XXX a affected for those our quality the the portfolio operating well as business, for to and efforts With as focus on co-workers a with for third our I'd

the turn I'll to Maureen, discuss Maureen? to performance over Now, financial the of company.

Maureen B. Short

everyone. morning, Good Joel. Thanks,

measure and Adjusted prior plan. will sequential against of same we the $XX.X compared noted, the revenues excluding the for or the Acceptance second items excluding performance special to revenue. to million million, by special points around was hurricane results of items business million year the reduced $XXX versus from third XX% estimates period impact diluted by and quarter. the approximately million quarter. our in was quarter was for the X.X% present XX% XXXX, EPS or financial second revenue non-GAAP Core $X.XX the XXXX, $X through from as effects down the EBITDA share otherwise the the around the was versus and $X our walk XXX and or I'll million unless The $X Now of improvement That Consolidated Now, Net the year. quarter basis down per quarter total third loss margin EBITDA strategic prior company $X.XX. were of that in

As assets merchandise and Joel drag Harvey near-term idle in mentioned, a has coverage Charges related and had primarily $X.X expect rent we some reaching recorded the to from Puerto to merchandise before fixed impacted in and and merchandise, million fixed on asset for and there Irma. U.S. on a insurance is company hurricane XXX Hurricanes were self-insured the the almost be business and recovery. Rico for in full damage, business for The interruption. locations of QX

We needed charges potential for booking anticipate Hurricane those the and Maria, are on currently estimating working QX. in

targeted merchandise The rent XXX from the to of impact X.X% revenues X% sales our primarily sales basis business Core in reduction to XXX shows Turning same-store down store Gross due than QX sequentially year-over-year is points positive recent and by right-size decline year Same-store our make basis average versus changes pricing profit same-store XXX by and of the improved significant that up points, agreements. still XX.X%, the and total by proposition Core assortment. U.S. which monthly margin X.X% the sequentially segment, we continuing on the increase lower driven in inventory value last portfolio driven are for were the in expectation. rate results count actions to points, year was improved QX U.S. basis by last the the on in in ground and the change hurricanes. to sales in

the demand cost and – QX. count. sequentially in rental store average million labor also to lower Skip/stolen compared driven gross levels X.X% as per $XX.X for was year. the quarter driven expectation the Core rental quality improved by is million margins was EBITDA portfolio. fee year-over-year points higher more up XXX in and were And made towards due unit and by down preparing remain were basis was of by for prior at lower in year; store in last continue improve the the down given store year-over-year in versus company margin rent XX U.S. the however, the was an losses quarter that count. expecting million to losses sequentially EBITDA basis lower to the by Store EBITDA fourth driven increase gap and $XX.X Other lower better the losses Core are was expenses the to from the quarter. best our points. margin held will is merchandise sequentially QX, improvements shift product. down $X.X X.X% last in in expense the year We

impact turning Now revenues due the hurricanes, from locations X.X%, decreased by offset and Total recent closures Now same-store Acceptance of of higher and Conn's the the to primarily sales X.X%. by to the hhgregg business.

for store million the in With approximately changes, mentioned, Acceptance be $XXX of margin million from was Now focused customers. Gross to the to the approximately the to profit the and ownership encourage merchandise negotiating on basis hurricanes, expected for year year. select revenue in or and returned points recent our fourth lieu full is amount last of XXX down $XXX picking Now quarter product impact lower XX.X%, Joel, sales up optimization driven gross Acceptance buyout reduce product a by by in effort due

the QX driven elevated prior be be by and higher increased from depreciation investments this quarter. technology quarter to million expenses operating $XX.X expect changes project was to year, going quarter. expenses Corporate expected ownership Now related strategic for Acceptance expenses the are in our Corporate versus legal $X.X rates. EBITDA compared are expense well. flat higher current initiatives, million forward to primarily next to expenses. XX.X%, proposition and were for Acceptance higher We expected in result value activity Now Skip/stolen losses as until continue to

turning the sheet. balance to Now,

we As million had quarter, the end cash and equivalents. third of of cash $XX.X in the

million, Our total on with debt million was the drawn $XX balance $XXX.X revolver.

times, For coverage given necessary fixed leaving fixed Total the $XXX coverage the the liquidity the taking revolver, quarter we million. $XXX approximately over $XXX Mark, million Year-to-date, of call open your the line additional have X.X into before for charge million on turn back was approximately from let quarter, With generated available the of rate. charge was we cash end account of to million me operations. the $XX capacity the that, the at company's questions.

Mark E. Speese

Thank you, Maureen and Joel.

the want Before Q&A, additional over call discuss made the we I turn to that I announcements to two briefly yesterday.

this has and the a decision Please reached. not a any can note complete I improve of will on we will not while team, process the There comprehensive executing in course results speak focused the Directors action. process no business, discuss Rent-A-Center's process has maximizing particular any the to we a I on unless that remain approved First, full disclose definitive a announced to review, available a know, or company, the that and financial management and range to underway. we of of Board when on been result initiated has of I agreement focus until across developments board transaction, board's shareholder the regarding or that with say established assurance to on do the to board on plan the has explore no behalf its a value. intend review this alternatives that process and strategic specific timeline is be alternative

dividend. Second, regarding the

as our the afternoon clear, the board quarter as cash from third operations Maureen suspended announced for cash also $XXX.X of quarter million equivalents. period and company has be million ended strong $XX our that the yesterday ended dividend. cash mentioned, the and of the with remains and just nine-month third cash position We cash quarterly To generated

And limit the to I topic. would you turning like quarter before like this you So, the cooperation. you we that I call to would call purpose the discuss is that, your now questions and consideration to of results. for Thank call questions. that ask advance your third remind to in the Q&A, open with for to that

Operator

question-and-answer At this be session. our time, will we conducting

the Your with your line of first question from is KeyBanc Capital Brad, open. line Thomas Markets. Brad comes

Bradley B. Thomas

about fourth morning, Hi Mark sales. I in about quarter? bit and you. Core you're the ask in the rejoined the By help improvement us company, that more Mark, Good progress about maybe sales you of first could in math, the to improving a just just that that you'd in comp confidence making it Core in thank the like in you the understand could comps. get you're to get to seeing that same-store is in and in my pace since Core looks to overall quarter And if the you're particular, to a low-single-digit ANow. expecting you fourth positive business, math clearly you in wanted business you've XQ? what same-store need if the right, Maureen. order Could perhaps hit talk and little gives

Mark E. Speese

data couple Yeah, other to expand then me a some free points, Maureen let areas. you give feel of and in

or pricing are those. then rent, those portfolio have key or and One the couple that individual end performing it contracts on was is number of data the the At XX% collecting BOR of try contracts, third was you year-over-year. what you the drivers about you quarter, of give Brad. the a how value points, is the let And to less against than me of of

the Joel we By And gained time it and portfolio of it heard how August, comment the end difference. XX% the the portfolio, think in okay. in the July, of of XX% and difference the September. end was So, of you September, if first was August you size end years, way, of XX

think of the portfolio. you the gap of shrinking size is So, the when

go referenced. that other to Now, those two I points

back, see you X.X% collecting APU, are we portfolio? that actually a or delinquencies, the delivery monthly, of and in on losses key terms I use this of ago. that terms that's back to driver percent collecting the I year-over-year, to in you think delinquency performance mentioned and of our we're put the accounts, up metrics are historic, X.X% is the The we've free out, close compared historic pricing is, heard X.X% how Our now Maureen, in stated, certainly Core the weekly in pretty collected, other right? against year time, of And in Joel monthly you to and norms, our

So, when report zero, card we was to course, proposition, it a think zero you portfolio, of where you the today now something pricing it stated and collections the third appreciates value to akin in something belief the try collecting what hence, percent fourth move around okay? I've the right-size collections, to X%. this out is portfolio XX%, that overnight, again, I'll again, show against collections sure not And is have gap got up The size first and got number the improve inventory, is business, company year, our this happen And to we're the in challenges that through doesn't was the of the monthly X%. was XX% started X.X%, we you repeat and quarter and before and of I'm are year. last reaffirms everyone the pricing way, the to faced to we or we have this and is the of and up gap put

proposition. improvement on well we to in portfolio the believe, can the as size, value we as so, gap the pricing And continued narrow continue

because I say, norms side, now. we've expect any we collection on the it's fair at running historical think to more been don't our

continue to So going XX%, before we we're the can X% to narrow XX% that. X.X% was XX% that continue X.X%? We believe we month to and the and I which to we upward, question or referenced, month to before that is, move gap, believe the get can

add So, good any us is it that know I don't if or gives you want color Maureen, confidence. to hopefully... pretty more

Maureen B. Short

covers No, I that think it.

Bradley B. Thomas

That's helpful.

little I working over will healthier, improve with think the X%, down, having And portfolio gets from been what comps a is as the Core basically September that continue expectation to so, on? you're

Mark E. Speese

like April. has month Yes, every it since

Bradley B. Thomas

Great. Great. turning sort expense to And Mark, of the equation. the side of

there You think back where certain and business? the we in lean from costs, down a putting keep bring referenced to help to labor. perspective, think the be that that are maybe more put us too areas more structure of may have opportunities continue you you some cost business, need about flexibility where are in getting into and the to to just Can you stores timing

Mark E. Speese

guess lines a of two I good That's business. question. there's

Core, the if think the I cost So, the feel profit with generally gross I comfortable speaking think – structure there. line, we think the throughout that below about P&L you have I

decisions Maureen we to still going not the made top way deleverage do that have. part of tell profit out, And the grow improvements – you has in to old we're we in of from the line move some the costs do of early the line. some I to on how you year would can the Core, to in faster. continue cost it's we're that we we leveraging gross about the of spoken got think and impact Now, I it's terms the is, that – make taking inventory through that about some

an there's that on the older some was pricing I you've little whether up as of discounting improvement would time, or profit So, we've move continue But a over as it in gross depreciation the inventory. line, that. bit, to to go seen the moved we margin through opportunity that the that expect inventory, or pick-up through

payment, two And – loss the the there's I'll Now, recognize the really we so and is I'm rolls the on Joel a on going of percentage our is portfolio What a risk defaults taking but business, Clearly, is analytics, of business in there mentioned how Of they up can to levels years. about of course opportunity lines leading right? indicator, tell seen the payment we're the Core we that everyone are the haven't is you two in line. into we it further decision-making, and today talking I enhancements also. Acceptance the misses road. the like And steps first that that with business, this is Now the just perform some indicator portfolio in down important the a and show, which at may remind Acceptance the the what's the that's engine leading aggregate. first

it's level take to a all going Now, but the improve Now, be the I probably in the say There's still that to profit I to better the those of may some time, a the be or Acceptance again portfolio, the okay, performance believe solution But we're option. whether time, about some of we be stores over which contracts, that's unmanned, first payment that's that overall some going optimization able will the think the can do most strongly when unmanned done think delinquencies, we default. where optimization, it's how of recognized margins. enhance so in and

So, of that we opportunities of forward. kinds more expect also. have move we those see And you can as to

Bradley B. Thomas

to and last detail lot give strategic as nine of That's in going ago just what's if alternatives minds And to could decision or more. Mark. explore maybe of now on know terms six ask here. mind alternatives? the I to moment not your in review a from to changed, I I the board, anything, If the helpful, a these why of in if want one you're squeeze maybe could maybe months

Mark E. Speese

determined way in the to only interest the taking been and that in board, they best they board right always the the value. concluded focus I now the the to think company. time maximizing review has it, again, I or to actions could the the determined that, it's And obviously but committed Brad, on stockholders is I'm is initiate answer of not on a

more I review going we're with as advisors, they'll the outside comment full not of to and be assistance the a that so, able alternatives said, to any of beyond frankly. range And

Bradley B. Thomas

Mark, so much, you Thank luck. good and

Mark E. Speese

No. Thank your Appreciate you. questions.

Operator

from comes question next Your from Kyle Jefferies. Joseph

line Your open. is

Kyle Joseph

be you saw What post-hurricane. you thanks on whatnot. October have get in lot markets and demand in the disruptions because you or questions. Obviously, would FEMA anticipate seen know a my terms or and demand that just September of by I for mentioned hurricanes. recoveries would of and to impacted there in there of drag you quarter fourth I of a that sort store some morning, the markets the Good wanted when were color refunds, taking Maureen trends recoveries? hurricanes had in

Joel M. Mussat

Joel. put is think well. I can as in This And Yeah. (XX:XX) Maureen

areas. the have the them of percent and one stores, what revenue occurred Florida, terms we lens think some fully collected Florida, in progress surrounding there at in they're and They're the damage making I time. Texas set speed back short order, some entire you – some we the a Acceptance island like they period to time some you XX Puerto it stores not and can hurricane, versus we our back comes type at stores communications at Core We've back to because different Rico, I Now's, but in and challenged they'll obviously, experienced on weather and to normal The of standpoint the were look Puerto for especially got be it'll when up rates. lenses, getting them there online. said, come island, now. to Rico there run XX to from event. I When as back being get look two being look into take power different Puerto Rico. animal, In And the of grid, back Texas think a and the is once-in-a-lifetime for yet, stores fairly right think up running. in good back

should Just getting or us a I into us a day-to-day stores is for for say. occurrence connectivity's challenge

point at and when where we'll footprint to running. those and look we'll a get of say to that to are advantage back exactly our make up So, take do opportunity hard the know We stores base lease upon based what can a grasp long-term our whatnot current we to give as that like the footprint look and of the as on dates of well profitability expiration sure island. store should better

Kyle Joseph

about for And Now, you the the proposition Thanks. Acceptance helpful. That's transitioning to talked it. then, Got customer. value

can we In idea they of were us of portfolio in should give terms where duration? them terms where you of anticipate an the going and terms,

Mark E. Speese

a – total Core, we the term bit is little by the cost. like somewhat Yeah, driven

the have the range, a between is, there's was the you – or is still maybe you we expectation won't XX and we generally generally the being what – Acceptance So, months XX XX Now, speaking tell top right? can will don't whether we months, longer I can of And than where in But anything tested range months. also. it's and settle, that's more that not end

testing not you say that little now. price Again, the bit or it's margin ownership, being on drive when term, help I and it how that give anybody. more we'll obviously far less, of up more a may for but terms shorter right is XX it's faster, a everything good able initially, of we're – the collect months the people shorten idea in carried So, doing to out terms, money little

Kyle Joseph

of in you there, value And out both it. staff Got follow-up proposition us a for plan you and this staff would and sense the between give new long-term mix and terms can direct, rolling anticipate in one direct? the

Mark E. Speese

of said right? right any go the We've is potential thousands apply there, is across that answer not out I them. of And the would retail in it, manned The unmanned we listen, there and think to is, cases. of tens way those of are know yes. This all the partners all

partner excites else. somewhere give us to proposition in important, a And be don't optimal what and value And a for – to where to offer we a having Kyle. the we solution so, on having develop. again I that predict, is mix what a unmanned viable – hard is can continue to able that's the think position ourselves they little of putting in that's terms and I work is, what may not

case, the continuum, another because in in manned and/or they're fully that think to and case, forth. in flow, the weekends, to about you the and it the manned terms are – it unmanned all busy may me, where some a of when of all So be time, if in be it the we time, it's from on so traffic extreme, the opportunities may

able exciting is working and that's being So, that be I in towards. position think really for to is us, what we're what

Kyle Joseph

lot my Got it. a answering questions. Thanks helpful. for That's

Mark E. Speese

you. Thank You bet.

Operator

from Your Baugh next John comes from question Stifel.

line Your open. is

John Allen Baugh

is you I what with said, guess, for taking clear, Mark, your you're morning, this Good questions currently, defaults morning. my Thanks first ANow, be I'll at start payment levels Maureen. to high and that just just Joel, extremely Mark? seeing are

Mark E. Speese

never haven't all, seen couple that years, extremely we the were lows at the No. we say No. first that. Well, in opposite they any They're at of of No. No. high point. so

years, been which at performance of and kind in seen good first have visibility We new payment a stuff. is and we've contracts payments thing. that couple all the are last on the defaults in doing the levels And lowest that the all of we've

businesses So, we're doing, much better looking. all is the

John Allen Baugh

Okay.

Conn's And even progress and/or so, originating to accounts not within or other partners? or is hhgregg, are making that you solely primarily retail related obviously with recently

Mark E. Speese

how the then used and if in themselves, and the the – the again, It's engine algorithms score It's above. all the who are decision analytics, will. obviously, terms, that so we being are you partners risk

those So, things. a combination of all it's

John Allen Baugh

could the And Okay. the it or discuss kind of or dangerous staffed. Is between a GAAP unmanned? that of sounds as unmanned is that performance the good like and that you assumption correct as metrics not again what staffed

Joel M. Mussat

perform I the they it's differently, in would say it's model. not just that

it. that know solution an would and volumes if the dictate volumes a the solution we manned it, in, So, dictate in, if we unmanned put typically

to go So, an lower doesn't justify if a with we putting typically money lower, unmanned volumes are the in on and agreement labor that it support the location. in lower solution, where count spending

it's decision. driven depends really by in each a by upon is that feel location. we for location, location from it a model or justified what And really part So, that and perspective specific location

John Allen Baugh

revenue, was Okay. unmanned? which I guess driving at as delinquencies driving there I versus staffed at charge-offs wasn't or

Joel M. Mussat

higher more customer, Typically can not it's typically so there banked a a with just you put unmanned, again because a those location we or is of see typically, – location, location, staff better and more rates banked base. an handle quality customer default at in want manned in to in both a stick a locations versus will where you have there manned on banked Whereas we handle a what to unmanned. to of the you collections manned not site, and unstaffed under-banked Because strongly location. a a we customer want typically with customer no would

John Allen Baugh

So, your would or not? and virtual the or unmanned better than charge-offs delinquencies be

Joel M. Mussat

a would upon defaults to hard you mean, you're I think would banked typically rates. if that the loss It's with payment customer, and It location other. see would one Yes. depend better way or specifically. first you say better

Mark E. Speese

that that's little brush, think that in everyone are just could lender applies the us, AM, than same not Here is that's and to But any customer so but forth, financial paint AM. share, something and I at risk not to we I'm the online on And that this trying average. what I comment. those facts can walks apply a support there with X:XX higher see, a different John, at this XX:XX

the to different some underwriting to account on decision-making, working And anyone, things? you depending just of probably of that's you your have And – which and not kinds and adjust do going but you're when those the us. for unique you're so, about so again, that's the environment how science in where that's and in – coming underwriting they're rules from, used think

might you kinds it's those but or between that forth. see of – So so differences the channels tweaks different and

John Allen Baugh

get I assume comp or will, to like and believe now retail composition for revenue $XXX say year. And, some trying roughly right still the hhgregg from based, million I revenue stores – think, this that. and collecting lose, base and the Conn's I of but a something you'll the in will around next any the to of guide, that's comp ANow some if guide what accounts? from you we just you those in I'm terms third the of heard two Maureen the there is year said Is in only total much. revenues I'm revenue be what be I curious not XXXX, as as

Maureen B. Short

John, Yeah. Maureen. this is

So, a base comp just third overall the of the is base store Now. within Acceptance

until around this quarter hhgregg to new continue We in locations and continue agreement, slowly year. agreements will the we see on first because through Conn's of agreement the stop writing those didn't May

optimization Joel the Acceptance understanding have what about and talked that call. XXXX will or that more on on earnings Now we'll looks likely direction XXXX, the guidance the and the about impact they'll than quarter will impact We're XXXX continue in of they see in agreements, an in the did We we obviously the guidance were on those working of overall year. So, the provide fourth less for XXXX. be plan next store in like business provide but follow-up to

John Allen Baugh

where Okay. Is store count, currently? want further Mark, there you a of or reduce are be kind Core to plan you to

Mark E. Speese

revisit great of continue it the to beginning a we've end and will at lot evaluate we the I the at of the performance, year, the made said we of stores that year all Well, progress.

regular the You've about I hygiene that how mean, the of seen normal I there's if place. some filed, it, think is taken or will, kind you'll is of see part – you Q has when

it was saw done and quarter, you last this again So, quarter. it

think today, expecting here more That's on this I'm what regular you're now about white to to sit point, solution asking. regular, think around underperforming I – that's ways, approach it That's able a sheet, much to you expect now? out and As different and That's we're But that and much couple then and from a not can normal on mean strategy of more larger, on. It's do if may balance a large to not what and my franchising going at I also so, thought might rationalization, stores. hygiene how right? hygiene. any do we store – to be about see and a just you space, right comment

John Allen Baugh

you is be due situation last Good. therefore insurance around you'll difficult curious financially, then covered is until do the that. will can looking we net what wait? Puerto my in with or a better to And it at are Rico around what's decisions what those the whether question do Thanks we or I'm for just just have maybe Rico. frame there. to on taking Puerto It's wise, reason uncertainty obviously Is charge the for any of stores? what not QX

Maureen B. Short

and we we our was fairly customers and trying our wanted their situation. we have reason from on the that to get started within then hold to the information just and assets. what of the better the the And co-workers the process to Really was information. why a It inventory in waited fixed understanding late also is, get stores impact

of the quarter. information, charges expected will understand lot taking So, reviewing the what the gathered process we've in of be charges matter are do those and we and that what just currently It's and insurance determining the knot of next going But be us. a bring to forward. we'll we're a for tying

John Allen Baugh

Thank luck. Great. good you Okay. and

Mark E. Speese

John. you, Thank

Operator

Janney. John your next comes Rowan from is line question Your the line John, with of open.

John Rowan

everyone. morning Good

Mark E. Speese

morning, John. Good

Maureen B. Short

morning. Good

John Rowan

be I to just want clear.

and that charge have to to enough On you just fluid sure liquidity the move up when coverage of revolver, of out covenant solve $XX guys you how'd the room ratio? kind make borrowing want I worth liquidity charge the on the do million base fixed ratio? the if reduced you coverage fixed of

Maureen B. Short

or at way million capacity Yes. in $XXX so we we base is, capacity. the the revolver minimum John, of borrowing a on have the look

in of We letters credit. have about million $XXX

We not $XX hold to have our revolver on an ratio, of charge And we back requirement. currently. $XX meet because that the coverage did because million have million, we additional drawn fixed

So, that revolver, $XXX $XX at million the – capacity million on end million quarter. available in with leaves us plus $XXX we the of have cash the in

that leaves million in available with And us so, liquidity. $XXX

amount of our credit we charge is, pressure we some liquidity. with because that coverage comfortable for facility fixed reasons amended would the time. why was very one feel understood the of under be the that we So, Again, some

cash generation million flow. available pressure felt and than those rather was covenants strong in us, issue continue $XX like so, flow cash and drive And the business expect since we an for having the drive liquidity there, to to not we for strong

John Rowan

in for mentioned where guys then, Furniture, – And keep you in inventory system, but a the typically for you a or stock. about system won't RAC things new is access that have certain Okay. Is Ashley that something storage I new you don't company ordering new acceptance? to say that

Joel M. Mussat

our we're stores. SKUs a more forward. going our to for the for No. from where No. working across our would categories of we an Ashley create choose that dozen we Those merchandising aisle, are Furniture, for of all We use several extended also stores, more in company with standard customers added our and

suite merchandising So, and of Ashley. store between it's not current a as much just a well all as products larger base our products, but of now categories,

John Rowan

season to not SKUs, But open you're right? you retailing... have it's back not chance sure of absurd some sofa no that I on want just make that getting all

Joel M. Mussat

No. No.

John Rowan

it custom, got return? it and ordered someone ...because as you a

Joel M. Mussat

question. focus fit model. great got we've business A No. SKUs that No, that of we on, a select number SKUs very our

John Rowan

Maureen, I gave – guidance were think you corporate sure, going make on said think corporate I sequentially. you're to right? about then, expenses, should G&A, And be talking I some expenses Okay. flat you

Maureen B. Short

about the as talking We're depreciation. corporate which G&A well includes Yes. as segment, Yes.

John Rowan

very All much. right. you Thank

Maureen B. Short

Thanks, John.

Mark E. Speese

you. Thank

Operator

line line next comes Champine question Roe. is of from Laura with open. your Laura, the Your

Laura Champine

sounds that up the means to value bit just Can Again, has you're we partnerships? Good a I so don't Acceptance much will the like deal you dig said gross margin in you of into a margins have pressuring and what some heard gross until morning. explain pick that of product. to the that to making pressure it sort Maureen sort continue of more on Now. And with Could that proposition retail customers maybe the little do that your how with me changes. of situation changes

Mark E. Speese

– and keep otherwise, empowered total to for them, that and a would what rent. value extract of money returns, off, are how the much the out somewhere the if line I system of long the we've been are on and the And the that an they a in customer customer better of at how to knows it's had paid alluding again, under available to any way effort was she that. to the has what either they have unit paid depending so – time is managers pay to so how and do remaining if to cost they've negotiate. of they in get a purchase to mitigate agreement, empowered between they EPO course would then are would and if to the lack more if – continue of forth. they've comes forth life they've cycle there option the business, everyone Yeah, you paid, at guess an it, and we And district meaning where that the will, discount, early

effort again, you through basis is give we in been increase? of can't and work that don't of we've save don't a can that, that. quantify Laura, returns exactly, don't of know that expectation. an to know, I XXX And think some doing some the I our I Maureen, so I to the points

got much both made be profit the Core you we've inventory value the to. this to through And in knew it don't margin saw make the which the or proposition where loss in going and And talk changes, when the we is view was and it's worse, categories changes But like with I expense Now, we clear, I in the value the on about in moving line up any P&L. depreciation the differently. gross Core. previous want at of proposition, we this the some line, the least other that the

– other So, make proposition there we it in to other the as we time, drive the near-term changes, value improvements to but over would implement expect was the the total impact, a Core book.

Laura Champine

Got it.

the proposition, what on have So don't I a unclear you locations on value still in little do as much that you changing Core? in as you your control know because those I'm what sell means, partner

Mark E. Speese

Yeah.

the this an the So, this quarters, you several over the understand XxX same the me know I know it it Core, think and, me last talked you'll about there. to think example about benefit and as examples of I've of I use let think, I a recall think, way we've get because, about try pricing we lot people – value if proposition everyone. this, In which I Core it is the shared here, – way, for why of describe to and I formula. want the talking the

so, historically, is system life, start, you consideration so into Core, a methodology. talk get? ultimately, a all-in, That's products of so times about get on. And at the And of second early were left forth purchase at taking the many product you've and you do do can the And a heard when it X-turn. rented. But losses, something write-offs that me when would that's their up. end life, what where we X-turn pricing X.X-turn. it's options, the we how And not in then, you the leaves system, where It's do end

damaged that left of You or turn. in product it end like more time. right? was the something was it that a the rent me bit, little that at say only the But were got the two-way rented a less the we So, heard when average system, Core, times, for on getting day,

or it's same we're if X-turn, are we a X-turn the price it, front-end, So, in way. talking maybe when think of proposition about of that Regardless it it's a a leaves maybe what Now the on So, where around X.X-turn system, we Acceptance X.X-turn. a the getting? today, it's the and way value not

whatever And am my so, I am depreciation. it and it losses I'm where improving what back that kinds to the may show of ROI, I is leaves invested on, and about am up that's is on I are getting those better we're so system, things so the return a my the today, working gross profit additional line, the money and on. and forth Y, my getting talking we're and When to quicker the X on taking

Laura Champine

Got it. you. Thank

Mark E. Speese

Okay.

Operator

Anthony with the of Markets. from line Loop Anthony, comes Your your is next question Chukumba open. Capital line

Anthony Chukumba

and morning thanks my taking questions. for Good

Mark E. Speese

Anthony. Hi,

Anthony Chukumba

the had search. I question just CFO a on

has doing that offense was coming Thank that a and year I no board to you. some all? where you're up Maureen, now disagreements at that and close great but without of exceeded process wondering whether process, are or issues you CFO job, the the just You're a in a sort of

Mark E. Speese

expect job the moment she just time, much don't and initially, point, continues that's knows for, I light thankful wonderful announced, and so. think, up started done to suffice say everyone as do to just in has for And to last be started everything I'm me the place a doing mentioned your we it Maureen that wasn't that, either. at news the that of taken to point, to it I search Well, of and light in why I

I have So, probably and anything to I won't on got it anytime no say issue soon with for it, either.

Anthony Chukumba

Okay. That's helpful. Thank you.

Mark E. Speese

you. Thank

Operator

This turn remarks. concludes our closing question-and-answer Speese now session. for the call over will to Mark I back

Mark E. Speese

for Thank you, joining everyone us.

day. and are discussions. and always, great we always, interest Thanks for as and appreciate your Maureen available I As have follow-up any support. a And

Operator

This concludes call. conference today's

You may now disconnect.