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Rent a Center Inc De (RCII)

Participants
Daniel O'Rourke Rent-A-Center, Inc.
Mitchell E. Fadel Rent-A-Center, Inc.
Maureen B. Short Rent-A-Center, Inc.
Beryl Bugatch Raymond James & Associates, Inc.
Call transcript
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Operator

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

As a reminder, this conference is being recorded, Tuesday, July 31, 2018.

Your speakers today are Mr. Mitch Fadel, Chief Executive Officer of Rent-A-Center; Maureen Short, Interim Chief Financial 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. go Please

Daniel O'Rourke

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

release All investor.rentacenter.com. related market after are available operational for was Website which materials second earnings at our the XXXX. our results and closed of quarter on outlines financial Our yesterday distributed

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

Mitchell E. Fadel

proxy statement July and close SEC to now the approvals. regulatory And on transaction to with filings and were forward partnering good sizable over and we've XXth subject Rent-A-Center announced was everyone. to This for of full completed quarter $XX made which morning, XX, the significant to for Vintage transaction. improve performance. per results. by by realize of is Capital to premium on Thank expected The the stock that June On announcement. to reflects joining end the and stockholder our progress Vintage the premium the Daniel, the share, the you, the benefits a Thank company's us. price year, it merger prior receipt would preliminary the to materially second We acquired of be you represents look

sequentially second the portfolio the of with extremely to for for the and performance quarter positive sequentially Strong pricing sales well. bottom-line increasing customer sequentially our the Core can Acceptance sales businesses same-store segments segments imagine us you improvement The as and Core As have in operating performance sustainable All growth in over second quarter quarter. generated top-line in improved X.X% achieve first with improved changes we've value and all quarter a said in and both sixth the the The quarter. segment same-store the we within had the throughout press consecutive in I'm demand release, pleased as and – positive business quarter NOW the second the and helped revenue time continues both proposition and in retention. decade. by for

operations, last company in Regarding progress and our financial the approximately the near generated we make $XX the EBITDA our which profile and initiatives, are significantly strengthen profitability to expectations above the flow. cash from continue million to above adjusted bottom-line, in second term million saving and and drive significant execution quarter $XX significantly cash cost of flow approximately Through our in year.

back ran we distribution and rate expected quarter, to significant exited is Overall, During our annual reductions reverted the initiatives with levels and over to center product working savings distribution expected a million and be our $XX of realized to generate direct-to-store our $XXX network approximately run plan expected as original this continue significantly to cost million by supply costs. chain those year. our third-party idle This saving in ahead lowering reducing capital well.

implemented We either. initiatives material not business continue all the of track previously disruptions any the to in and seen we've

over and I and hard I'd I'll financials to day. turn through quarter. With the that their now would the mentioned been co-workers for not financial at made several for over our in like months, customers the she'll it coworkers Maureen to second of the all all for thank our turnaround strong without our work the great and do our contributions the for have you possible start announced update, results talented every go and last of focus our So, and that transaction

Maureen B. Short

Thanks, will detail to items. more I excluding and Mitch. I'll financial speak special the Good second everyone. information in our be results cover financial quarter morning,

last cost per the the same last our store improved quarter within positive share Same-store quarter consolidated basis was up During same the items taken segments. XXXX was year. of charges sequentially second million, margin and charges operating initiatives related quarter million, million driven primarily Adjusted across $XXX.X quarter the quarter X.X% excluding versus were by and special strategic per of over alternatives all the $X $X.XX to profit $X.XX. vehicle closures. share, in in and due board and The EBITDA year, primarily non-recurring the adjustments was insurance sales items driven Net quarter share charges were month last savings for consolidated per process were business each the diluted X.X%, $XX.X EBITDA $X.XX the in XXX down to special $XX.X X.X% sales. our approximately in the total or by million began were and points review October. revenues included Also totaling

XXX EBITDA products the quarter these the of diluted and $X.XX. the margin improvement to XX.X%, were lower was than this returned due Adjusted XXX share per year. QX. excluding Gross last and year value $X.X the first on a store in approximately decreased was driven total sequentially in last sale year, due closures by NOW down store in million, Acceptance $X.X down labor store Core to segment count same second of were in last increased over quarter point year, the items points value the profit intercompany approximately Skip/stolen versus or and enhancements. the our initiatives. capital proposition segment, last same X.X% due XXX points X.X%. versus million, of increase book and was and would basis to an the versus the the Core been last primarily and sales adjustment primarily Excluding sales have XX.X%, quarter revenue, million million X.X% $XX basis Core the decreased idle and primarily expense a improvement XXX basis vehicle flat positive basis Store same-store same held-for-rent of net was non-recurring sixth points year by in same the special other non-recurring revenues which quarter was and the versus working XX primarily and insurance million higher items, year on losses expenses and of partially consecutive Core merchandise quarter Rental profit versus points This quarter benefits. $XX.X sequential offset quarter $X sequentially. EBITDA margin which quarter inventory same-store is basis In same Core up was rent business

savings Acceptance by the points intercompany a better returned the primarily losses year, revenue, expenses XX.X%, XXX in was last of count, down closure by versus last adjustment quarter business, quarter second basis store million $XX.X second and XX% from NOW to centers. Adjusted and up and to was store basis versus down up $X.X initiatives. the quarter year other same the down the million the which and NOW points cost $XX and NOW Acceptance the decreased prior primarily XX.X%, better quarter in sales from same due book compared quarter Now in million XXX and was same and value Corporate was lower enhancements. HHGregg's turning $X.X were collection of NOW segment EBITDA closures last points on and was to last XXX sequentially. to for Gross driven XXX basis points were the decreased positive in X.X%. last revenues the of which the losses sequentially. expense margin by X.X% store partially basis same primarily lower was million EBITDA Acceptance year, Acceptance year year due than of basis products value NOW XXXX to quarter expenses proposition margin store Acceptance points Conn's the Skip/stolen year, due the total Store in XXX operating the realization offset the labor same

the of million to operating Corporate expected prior for compared compensation, Excluding decreased accruals year. $X impact higher approximately expenses incentive

company which charge $XXX under sheet, met credit for the by The at X.X We our $XX.X $XXX.X $XX the quarter available and the XXXX, cash ratio cash of committed capacity of reduced letters was at requirement first million, the on on liquidity the of our including million Total was million. quarter end from least balance of fixed X.XX, of our and credit. ended million was of the credit debt in now million the loans $XXX.X at sheet facility into during balance cash $XXX is the the second Since million million $XXX the Regarding approximately the the million eliminated full $XXX.X of quarter, taking quarter operations our account half on of $XXX includes approximately and outstanding hand end in total the QX Total revolver $XXX and debt which the facility outstanding in under coverage generated the quarter. million. senior reserve debt. this requirement with $XX.X remaining our over repaid million. were our notes million in only term end

the is Merger. providing to guidance longer company pending due Vintage the Lastly, no

questions may have. will we line for you the Now, open up any

Operator

Budd Raymond first Your question Please Bugatch comes with from James. ahead. go

Beryl Bugatch

since you might the shareholder not do guess for on What's providing on really any the better vote? when only is, proxy that? question guidance be the a congratulations we my you're results. outlook have (XX:XX) I update for issuing

Mitchell E. Fadel

Mitch. Well, Budd. This we filed is – good morning,

Beryl Bugatch

morning. Good

Mitchell E. Fadel

the We July filed SEC. with a preliminary proxy on as we said XX

then and that So, hearing a of getting definitive from SEC into the it's a proxy. matter back

and it's – So, the to this definitive it on on the at out preliminary from to comments turn waiting into send just preliminary just to based we're filed, shareholders. from SEC point their

Beryl Bugatch

to And transaction? need close what regulatory approvals other you do the

Mitchell E. Fadel

that's FTC I attorney and specifically, is – one. period one mean, But, the the government really I'm is that and well. the this in as government waiting I in filed, more on big approval And that Well, the deal. mean, we're not the been on

Beryl Bugatch

had of some a I Okay. filing is similar latest in received has last comparable your answered. And a you their me for from – the that information for be chief and request? FTC Have they one the guess request received your to disclosed questions question

Mitchell E. Fadel

we have No, not.

Beryl Bugatch

you. proxy Thank and Good you for much. very Thank tuned right. All stay luck, Okay. the we'll file.

Mitchell E. Fadel

all and for the all thanks coverage your and Budd, over you, your Thank support. years Okay.

Operator

are There at questions no time. this

Mitchell E. Fadel

it Well, Christy. on was didn't work to so. of quarter hard between us. you, didn't sale We But continue and a sometime – end questions by lot based a And for We being year, of and not continue the We'll forward just thank for us. good thank we'll we're everyone. your talk mean, you, expect thank with to we I closing the the announcement of closing. time a soon. and Vintage appreciate our quarter not. depends to to you working opportunities in or still Obviously in to again, Thank if improve and maximize you But you. morning front And see back we'll results. Look this on the surprised. reporting

Operator

call. conference today's Thank concludes for you joining. This

disconnect. now may You