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Rent a Center Inc De (RCII)

Participants
Daniel O'Rourke Senior Vice President-Finance and Real Estate
Mitch Fadel Chief Executive Officer
Maureen Short Chief Financial Officer
Vincent Caintic Stephens
Bobby Griffin Raymond James
Anthony Chukumba Loop Capital Markets
Kyle Joseph Jefferies
Brad Thomas KeyBanc Capital Markets
Tim Vierengel Northcoast Research
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, Thursday, August 6, 2020.

Your speakers today are Mr. Mitch Fadel, Chief Executive Officer of Rent-A-Center; Maureen Short, Chief Financial Officer; and Daniel O'Rourke, Senior Vice President of Finance and Real Estate. to conference like to now would turn over the Mr. I O'Rourke. ahead, sir. go Please

Daniel O'Rourke

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

our release related All earnings link And for was after second operational available outlines the market results and webcast of materials, the including investor.rentacenter.com. Our on quarter financial our live close at distributed to it XXXX. yesterday. are a website

This or could are cause the in forward-looking reconciliation references measures. include financial some over yesterday results factors As statements. any forward-looking of to measures. statements can to second many undertakes earnings I'd also the provided revise in factors this turn a will These now to refer a like measures SEC Please well as materially on most found call that which statements, our differ call release, no filings. call call actual for of are to financial update issued financial be website expectations. from quarter Rent-A-Center subject reminder, to to to GAAP on obligation as which company's our the the to earnings this comparable our non-GAAP release Mitch. discussed described are our non-GAAP on publicly any

Mitch Fadel

and Daniel, morning, you, good for you Thank everyone. joining us. Thank

on providing website at to will the the found voiceover can a be our We webcast investor.rentacenter.com. be presentation shown that on

performance marshaled quarter, of in challenges changes So starting our navigate extensive second on made expectations. we're pandemic. Slide and to the X, the our was with resources significantly pleased which very above We the

positioned to the our off and proud access of investments products to now future. and The this difficult more for customers our customers I team be I even remained essential coworkers not speed, top has and paid providing are of period. strong our priority. could really agility, execution our Our safe safety believe customers we for And during better support

increased of back line believe the feel half two May Rent-A-Center continue Approximately Lease XXXX. locations company X% year. X% margin year experienced by years. consecutive increasing resiliency to the growth related strength to and to growth our recurring in temporarily we adjusted acceleration Revenue the the similar versus achieved That's original of and by assets then positive Preferred sales we about retail capture be orders the and to versus business performance positive comps the The XX.X%, June, in of we're we omnichannel in of shelter-in-place prior volume XX% almost the and the exceed same-store per strong a closures model and invoice the despite And we business to to our over in last increased were share customers, affecting closed QX XX% each well and enabled pandemic. expectations, top Lease approximately growth is adjusted The a great due the model. and and store our extensive EBITDA thirds earnings business drive revenue in as partners. expect pandemic. core our accelerated share. of to growing Preferred estimates positioned to to our same-store of in EBITDA quarter. last achieved We this quarter quarter this our was tenth highest for of serve the and Consolidated testament versus sales. the quarter the critical role All by X% throughout month revenue second the year quarter

validation performance our is Our a investment in that of channel.

and us strong in the our while turning the coronavirus. evolve Now the done we've enabled starting to year from offsetting work to Slide grow business to X, headwinds position the

EBITDA adjusted of range expect here free today, for sit EPS guidance. and increasing non-GAAP while to our diluted end XXXX the we within pre-COVID we cash revenue, As our guidance flow

in businesses that's doing portfolio well stimulus. both balances end are And I'm teams the needs. growth all for of positioned overall year day additional contingent our in for our extremely really to and proud every it's to a they're government not XXXX, meet expected on Our remarkable feat. customers'

While the we're model to of hard the both is economic digital e-com, to making grow investments our payment improved the earnings. virtual lease-to-own resiliency ability and predict, options and sales path our in have and

today to optimized will shape our and business and experience current the for things for we're for is model environment, Rent-A-Center years come. customers retail improve Our the partners economic the doing to

truly excited future. about As the we're you probably can imagine,

start let's line Slide had resilient which X, a business, the So shutdown. starting with the top Rent-A-Center on throughout performance

As share of recessions, we're months. outsized comps X.X% reduced increased credit an options for tighter in customers, that. think for all taking positive we past sales with Same-store and

home Our Demand detail, strong. an as has furniture yet and revenue early technology to activity higher improve payouts, incredible seeing. is e-commerce. the in what customer are will organization. as teams XX% in the operate to some continuing reach in remained have essential increased well the impact our for modest business done XX% margins, on trending business revenue. strongest in job drove Investments appliances. Stimulus Maureen an encouraged leveraging driving we're products had that Rent-A-Center also Overall, performance by we're of E-commerce total very quarter with across to and benefits

to skip/stolen growth in than of expect profit E-commerce on to XXXX the range we is generating business pointing we our Our the by for E-commerce XXXX. that impact It's Rent-A-Center out worth also sales to pandemic. anticipated having the within of be customers minimal for Rent-A-Center losses, which robust end we and prior customers, the expect over brick-and-mortar more for account are XX%

And on value model of the now we don't accounts. intend past or continue experience. revenue. to again, know by a COVID, that's are which, of times. the unemployment higher customers a in using invest material rates from As on improving today, has the Collections lease-to-own expect that approximately environment have during to benefiting based skip/stolen we steepen believe difficult our the digital curve what long-term options, are XXXX, improving strategic X% to to underscores early-stage investments. for is of customer reminder, recession the demand business also losses economic we this our payment We due number potential priorities and impact An our increasing

Moving on here pleased with well. our on we're X, Lease Slide performance Preferred to as

I use and invoice our business, in Store The volume strength customers spend work in invest of As call versus investment last center. year. more their time in mentioned, was and positively our up digital household the payment from for XX% we're demand example, systems benefited centralized Lease solutions. goods. majority the for Preferred now to seeing digital home. Collections payment accommodate quarter in patterns customers at shift adapt impacted reopenings as seeing and the significant is and Furniture, leveraging homes

increased for retailers partnering we additional our interest Lease. product seeing sales Our be believe team a with related model. to verticals natural could And jewelry in Preferred and fit tires, is fitness

product of numerous additional about the addition the also year. adding of of In we're an by the prospect verticals, excited end national account

with As across the landscape. credit Rent-A-Center tightened competitive stores, has the

as by Our store market was to higher experienced back mix and this staffed which the locations the drive to do and affected approval quarter. experienced and increase Adjusted closures the of our year. as up, stimulus us having of in are rates significant by We yield the EBITDA virtual the half in revenue virtual credit partner allow customers, shift and expect the we March should We share. we quality late middle government a normalize and payoffs well higher as of through programs. driven early we're

as as brings. relationships June Hogg, the Executive Vice and technology, quarter, Lease Preferred key Preferred appointment leader of a he of in we added financial J track has perspectives innovator excited in about new the record During financial with and new we're Lease. and J leadership the proven to President and services a

achieve struck profit ChargeAfter, those which laid for we've the and We're provide Lease Preferred confident business. partnership customers. lease-to-own a we also for with long-term We and revenue out integrating brick-and-mortar is targets to the E-commerce platform into can

As revenue you'll XXXX. billion $X.X goal includes by achieve that Preferred recall, annual our Lease in to

to we're strategic cash quarter move generated net revenue and in debt EBITDA performance our liquidity on forward positioned flow with plans. the Our and zero robust and strong well

top use the and Preferred Lease. are our digital way to stay. strong both work investments Rent-A-Center in advance to to priority Lease capabilities segment balance the alongside live our here Our The changes sheet and Preferred is customers to to grow our

Our leadership changes and managing The retail remain our from made serve strategically about we a on one holistically parts way think to customers for the focus business XXXX customers. organization our partners. of will and to view strategy, the cohesive support that increase strength in value comes lease-to-own leverages all best operating optimal that

from business. in practices cash segments operating primary effectively, the Rent-A-Center strong X a Our Lease share the to and compete flow business supports growth more Preferred best

partner and and We best-in-class have technology and growth. to digital sheet balance compliance a support strong

to We cash also to return intend to shareholders. continue

M&A to has strategy. evaluate dedication and Our time. and a might well. also of X%, thank to your to yield share as continue repurchases to the for evaluate advance retail customers I'd that We'll serve franchisees our like challenging coworkers, dividend during partners our approximately we'll continue

be the turn to in would results discuss to strong with possible more of each it not over without Our And I'll you. detail. that, financials second Maureen quarter

Maureen Short

Thanks, Mitch.

as the of second total less a strong Non-GAAP quarter EBITDA basis positive the performance of X, reserve over guidance the Digging increased EBITDA portfolio basis for remains lease up were the and mainly QX. versus for versus the to quarter, took and the points no of higher that important and incremental It's impacting X.X%, year. activity last last by versus in payment same-store year. XX $XXX of year ended ended business Gross flat of X we and programs with see business, field. compared second exceeded customer reductions quarter our capital payoffs basis two-year than retention. starting net since to was Slide demand and stimulus the to of performance, year. higher significantly Rent-A-center in was quarter favorable to Adjusted by the in month last be X.X% increased deeper increased strong quarter solid as million, points compared XX.X% revenue into the than COVID-XX, with XX.X%, government lease each EPS better flow Customer on XX%. the both tight exceptional cash for X% year. to working margin X.X% with Rent-A-center payouts increased to execution year. sales can sales strong and to same-store obtain demand Skip/stolen were down zero products. driven XX.X% versus related year the early rose with quarter in customer management segment lower versus operating you up last payment advantage without as debt. note ownership As XX The each comps business last grew expenses Slide primarily prior on diluted little last in resulted our margin adjustment Adjusted the year guidance last in losses the customers in strong, significantly activity was due XX portfolio Rent-A-center the points given

expect slightly versus business approximately the still year, for For skip/stolen last year e-commerce. growth full the up X% in to we be revenue, to Rent-A-center of losses due

quarter expense rent initiatives, including As COVID-XX. the Mitch into came of we to a an the That furloughs plan and mitigate impact of with included abatement. mentioned, aggressive range

the As from to of the business offset on within the line a pandemic were quarter. we result, in the impact able the all Rent-A-Center bottom

directives due Turning to quarter same Lease XX% quarter last ended was mentioned, XX% temporarily being majority and to staff X.X% the in portfolio locations the year, last the despite Mitch up quarter the period invoice versus Lease the during over Preferred of the closed second the our up shelter-in-place volume up pandemic. the year. Preferred revenue Preferred Lease, from as was

its ownership of the Preferred from in benefits higher and quarter, a rates percent first than Rent-A-Center outlined payments business. stream, we higher recurring the Lease has As revenue digital

were centralized should considered We of Preferred losses essential versus the which year. since XX.X% not an changes like increase our Rent-A-Center costs. labor Skip/stolen business were reduce stores. to were fully our many to closed by also being last ongoing made of leveraging due pandemic partners X.X% by affected a Lease of losses efficiencies our revenue skip/stolen our number center, call retail

reflect reserves not booking half any of current estimates loss to our driven COVID-XX. million skip/stolen year. reflect back typical best the We increased we COVID-related adjustments losses in further our reserve $X.X that of by In quarter do the XXXX in expectations, the our reserves expect for addition by to levels second

second the losses, last these been model. the losses COVID-related Excluding quarter, for mix XX.X% by have driven would shift the approximately skip/stolen of the revenue business year, from up towards of partially virtual

business. the to skip/stolen margin than adjustments $X.X the losses the had Lease incremental business adding up adjustment the XX% payouts driven impact overall expected to During in reserves lower business in the is rental EBITDA of and Preferred partners. lower year COVID-related the by increase a XX% skip/stolen back higher Adjusted higher we Lease early reserves for of With from transactions, and of EBITDA million be new was than a scale reserve an related Early and higher mainly margins expected Lease between the the our due losses EBITDA gross lower to a payouts our our last on business. resiliency quarter, loss margin and less government virtual Preferred than half retail of no the margin business mix as our Preferred to XXXX, Rent-A-Center are segment, revenue programs, to which virtual demonstrates have margin stimulus a COVID-XX business. gross X% the adjusted for by in

the beyond balance, net QX our flow available quarter pay to on end debt X in outstanding debt. cash to in cash used X brings $XXX us $XXX revolver P&L. was million a total down Operating the We Looking to to million. which and

Now we a originally to expectations retail in and guidance to what gave the have These Slide government similar additional said, overall programs. today as we're we environment stimulus X, Mitch no tracking consolidated turning to assume February.

$XXX XXXX Our to reiterated and adjusted $X.XXX EBITDA and between $XXX increased on flow, diluted to cash February. $X.XX. between XXXX from consolidated revenue $XX our be and We've billion free of a million $X.XX expected now also million, original guidance million between million guidance $XXX billion, $XXX between for non-GAAP our basis, up and guidance million EPS provided in $X.XXX includes,

build give help you are and color portfolios about our beyond not While to we position the will over, some just providing ranges XXXX. in specific rest to do went growth of guidance think us I to want how the I on XXXX

expected prior to year, to demand Adjusted by expected the the and year. up the adjusted pandemic. XXXX, to be end is XXXX versus In XX% we of approximately is to Rent-A-Center For expected expected the expected XX% of across be Preferred volume for The EBITDA XX% the to trends XX% the versus EBITDA approximately XXXX. margin the versus quarter and up approximately benefit quality portfolio And back Lease end in of each XXXX. is expect to the year at to last from favorable revenue full level credit year continue our revenue year expected balance half XXXX business, of with grow is invoice Lease over is expected to we is XX% year-over-year. to continue XX% the The back be portfolio our half to to up tightening competitive portfolio the environment. Preferred

efficiency. centralized benefit expect labor changes expenses, improve business into that we help and structural Preferred the to from savings operating partially the leveraging will Lease by our Regarding continue center QX, will call

and $XXX total million. in approximately on Now as quarter, XX, the end of Slide liquidity had cash the million we second of $XXX of approximately

of a year growth anticipating in in Preferred the and the to investment in half Rent-A-Center due are working Lease. back the capital business demand We

to We now have flow uncertainties the in due were cash invest the years XXXX will we are coming be opportunistically. improvements in pandemic, benefit expecting business, we've and made the from made the ample the suspended capital but to across we around organization. in Share temporarily repurchases as strong

of authorization. million remaining $XX.X leaving year, this million $XX.X purchased have We share repurchase

resiliency very still of amount a we the performance uncertainty business, related to pleased While with pandemic. of and tremendous is are our the the there

also to will to proactive perseverance ability their about have like our continue past growth. navigate needed, As I'm months, to coworkers to our drive successfully to pandemic. demonstrated over profitable the take serving management few for measures, thank team and I'd the continue our commitment we customers. optimistic the through as to

the always, by Thank our As time. now Relations detailed I'll Investor over later income questions. your posted website, statements call segment turn filing and to are anticipate you today. for we for XX-Q the

Operator

Stephens. from comes Caintic Vincent Your first question Instructions] from [Operator

Vincent Caintic

Great with Lease. morning. good Thanks, Preferred Starting quarter. off

here. just So two questions

July maybe for like if So wondering strong Even just then that. separate of far. could being jump, you and first just sales Also XX.X%, for – so the benefit the give thank you and up COVID-related year-over-year invoice if volume And could there. volume with And impact. for between the talk on about maybe the outlook impact out experienced then and same-store growth, maybe write-offs, XX% versus non-COVID acquisition the of you've very wondering August, the an breakup you non-COVID-related the invoice what by Merchants Preferred. growth the from

Mitch Fadel

Sure, Vincent. the was one X%. Well take about was because I'll and the of organic the first. The both Preferred, volume invoice organic Merchants last XX%

with the to being organic close good the of with side mostly part So of still two quite not the right, maybe pretty stores good but X%. it on quarter, – the quarter, a organic out of the in stores the up about closed thirds quarter, the that was did that's the the model, half of are closed over staff growth, part, because organic half

that. and accelerated So obviously very after strong then

the the address this let – anomaly. the as are collection half onetime We of the And address positive. a ways. very COVID couple in I'll COVID do the losses, current metrics a – normalizing different The We the really really back On see losses besides the year. of me or see we first. it

comments past. after summer. In we for the business, at And to of center side, those collections COVID. the XX% impacted did they business collections out the Preferred us, the our Merchants only stores that virtual last one call or only bought of context either. release, point staff locations our things business the in virtual to One and closed, on impacted all The doing we the Rent-A-Center weren't were were you losses closed, staff being in the of with by in happened those not close our were in actually prepared press noticed our our locations in

While We little the took in to that leaving over. forward, the mentioned. and obviously, the And to Atlanta and are the quarter. but overnight contact converting savings in using labor The convert that the was drove to collections losses now – so center, for it time now, gone switched a news but not losses. center, center that call by collections us, good great local high going basically, in collections only we're is metrics of over, the do are affected which the bit Maureen that contact the is the forward going the

anomaly local back obviously in really But because the talked keeping losses we're to some We're because So cost EBITDA confident to half center about being normalized of XX% localized the talked estimated the us Maureen our back had margin to – collections. year. the which collections half includes being back will the we the done collections onetime savings that it, be really, are numbers good in July. go be from – the it, are the metrics going metrics we'll the call collections. staff we've not about labor we've completed in that And now now center there's normalized. call the at year, losses of for We – now

our many it. today and the an from it we're converting call long to occurred in anomaly that We're the for leaving positive in going run seeing because years is very – reduces in costs operating on good localized center. into weird is very way, forked metrics So ongoing Vincent, collections to got come – we there, basis, the a

the long – one. $X run, it's but that's in this actually going just things weird another today, world a of you in on lot savings event So if obviously,

Maureen Short

virtual change the just would with of mix, I would versus staff. add it Preferred, the Merchants the the changed comparison better be acquisition And the that sequential because

around at losses. first so the at to XX% we quarter, mentioned, the we year, And were the And of beginning XX%. expected it around be we as in

than So sequentially year-over-year. I would compare it more

the quarter. lot We lease XX% within taking we also ended to of QX. adjustment And expect a up in reserve didn't preferred take in XX% first skip/stolen the any and to QX be numbers reserve that I quarter. know changes first companies

Vincent Caintic

I Okay. that. very that's And Perfect. helpful color. appreciate

forward nice on that. look very So

of be you about a in of technological stores comment a who made terms of market might you M&A. kind maybe Mitch, thoughts combination? maybe question, just add-ons? I'm coming there be are curious – second what there. players of Just on to or might And thinking it wondering other weaker your sort it is Is what The or

Mitch Fadel

added as guess I my there Yes. be But going comment forward some balance would sheet. already more could said. you only really than brick-and-mortar we're there color are certainly would on I with strategy would lease the And probably our is be – wouldn't side than specifically or side. any more think the opportunities our have we say guess to talking on the accelerate preferred I'd

Vincent Caintic

very That’s helpful. much. very Thanks

Mitch Fadel

Thanks Vincent.

Maureen Short

Vincent. Thanks

Operator

Bobby Your Griffin James. next question from from comes Raymond

Bobby Griffin

my Good staying safe Thank for you taking healthy. all hope morning everybody. questions. you I and are

four, Maureen ask to Is our around just might of some maybe assumed end the the if understand And First, real to us just I in back quickly you about model? how us we four stimulus? on getting that guidance. guidance can impact up half want the for numbers round do help

Maureen Short

Sure.

assume additional those And quarter, it guidance that not It level From more what second demand customer a retention, higher So we of in payouts. better metrics. drive we normalized mainly drove did higher assumed we payments. customer through saw the the provided, with we did stimulus.

stimulus, seems if we that the we provided. higher which taking discussions do place we we on if be towards should additional see the ranges see guidance were of likely the based pretty far. to end But that, So so

Bobby Griffin

national Okay. Lease. Very account a for there potential helpful. And of Mitch, the mentioned remarks, landing in you your Preferred

to Just organization to investments the curious a for scale would Or round on SG&A ramp up as ready of cost we the that? need and that account up? you play. does or builds there if the come the have side of be that of that would Is kind

Mitch Fadel

for we're virtual is to we're obviously be growing which than It'd the staff. up easier scale the I primarily think it. in anyhow, ready space

ready be from it expense it But And $X foreign a somewhere the then for to it. us we're add, From infrastructure standpoint, doesn't along so it. either. standpoint, we're an ready mean wouldn't million a mean you I'd I And line. material for have don't

biggest national quite the names on the don't have of for we some While while country, in the we've accounts a overall had furniture side.

Bob's about think pretty Rooms To the you Ashley, If chain. Furniture, City Value national, Go

So we've Those primarily national got are staffs. some accounts.

those a from So than more up virtual. are geared come what already would

Although as staff our high stores, differentiators, the could a us. during could or right, meaning higher periods and account of national volume, we virtual volume certain of higher of demographically maybe volume Higher some subprime for volume volume. more staff one stores, just some their stores, that's fit time

up So it we're national to to used virtual. having for staff accounts versus just of doing most

Bobby Griffin

from and And kind tickets just are Preferred then your accounts the your move the going going Okay. higher the ticket combination more organic seeing is up at lastly with of Lease. me, of you inside a world. on what's just When you're you portion So in gaining customers? it look growth? penetration customers, better are you're of on also seeing Or

Mitch Fadel

The bottom tightening decisioning. more we're more from and we with But certainly, well quality just coming asking a latter, penetration them higher tighten in the a partner customer with strong of credit, the retail in, also about losses. up can our credit, of was end getting demand tightening on Vincent means standpoint. as just coming which furniture

up decision engine the So us it is on coming end top on in the the bottom more anyhow. end to of allows because tighten

combination So it's really us. great for a

Bobby Griffin

questions. great my Best I helpful. really answering appreciate quarter. luck for a That’s of Okay.

Mitch Fadel

Thanks Bobby.

Maureen Short

you. Thank

Operator

Your Anthony from Chukumba Capital Loop from next question comes Markets.

Anthony Chukumba

taking questions. the strong for Thanks my on quarter. Congrats

wanted just I Merchants question. Preferred. in in clarify first increased something my terms – to wanted the of skip/stolens to just I So

done centralized just these to saying, call make switching partner Because stores you're like but sure I retail what partner I being to and wanted you're skip/stolens were collections sounded higher, the understood closed in were all the were the collections it retail center. So stores, to now the this.

long-term going a that's centralizing to to just I benefit be correctly. sure want because you're that make so understood And those. I

Mitch Fadel

we when we're virtually Yes, that retail closed we're far the technology change where I were locations, virtual. retail and contact those took and there people to ability a as about working stores stores, collecting didn't center staff as standpoint. big collecting We systems, they anything so to is the the while. out weren't talking when us didn't talking the our change the it collections. very a from from remember, that next next the then But take – closed and staff closing a partner because we're partner to staff in furloughed from we collections the was then of forth. mean a day start are day different And have about

little side. causing took blip see us Preferred obviously, or we a it while Lease – So in side the the Rent-A-Center virtual any that did not blip, the

So versus the because staff went while we sale. in the center. again, for to of the blip a we resiliency see collections over away did lease contact converted But a our until got

the a better we that But long-term now actually So blip. run that by caused as metrics, just found that metrics running good has the today, we can out of benefit. contact center, and

Anthony Chukumba

when I It's the going store going the not in to But we're we're do the to back to way stores wanted centralizes are having forward. confirm. just now reopened, the people And just it. right? the Got collections,

Mitch Fadel

didn't... savings. in sales. into People went to the stores still the back handle people Less we But the labor staff to stores went that's back

Anthony Chukumba

doing that's – about specifically. asking not collections, they're I'm collections, But what

Mitch Fadel

Correct. Correct.

Anthony Chukumba

clarify so Okay, guys. the work up wanted I Thanks good to okay. that. just Keep much.

Mitch Fadel

Anthony. Thanks

Operator

Your next question from Kyle from comes Joseph Jefferies.

Kyle Joseph

guys morning. Thanks happened good XXXX. Lease. much quarter able want so on to Hey were very taking I good you on for the guidance, echo reinstate and Preferred impressive very others, to start congratulations that's everything in questions despite and I of far sentiment my definitely a

billion business see the kind the EBITDA provided I next – back as of growth we on of color to how the long-term margins a get your the sense just the want you appreciate just years, foresee as in about outlook half few margin the talked margins there. You for EBITDA But revs trending? trending EBITDA how towards revenue you of over I over year. ramps time. $X.X you

Maureen Short

margins back to business, over to expect to the XX%, the scale those of we approximately in we half time. expect year. virtual the EBITDA increase Yes, as as XX% up Kyle, then we mentioned, margins we XX% of And

the investment been in the As infrastructure. and the revenue, the there's we increase technology

we So scale the that within significant expect expansion continue. business, to we margin pretty business as up

Kyle Joseph

a for business, in a can not then and but And then Got there. about the the – it, products other well, year COVID approaching Lease, the since really, very on pipeline And from pipeline integrated give given one retailers rent-to-own than we're helpful. us demand it's less conversion talk but the you've given changes for pipeline disruption? Preferred you the guys any virtual sense been

Mitch Fadel

is And Sure, strong. Kyle. Yes, good morning. pipeline

those those who imagine would – don't a on it's people or as in them. approved. tougher for their get there. tighten gains there's demand you who store even category, with tightening, do are that credit As But in above to Depending have category looking the things option lease-to-own

better for I'd So reasons, before say pandemic levels. today pipeline both at our national is local, those and the regional than

really differentiator the if like they industry does already even said fact that we unbanked in we to out even it's we're I the exciting. because the our there the already So highest can the one you when because We retailers have have a only don't consider they have that business in lease-to-own if have lease-to-own for one, customer. they opportunities rate – add that looking volume that And that with one a do. have option – approval we or the fact

have to have with don't approved. to You account us a bank get

pipeline. strong very So

Kyle Joseph

the the in But of April? can it – to a it that I us the did remain quarter? wind you in towards it, throughout quarter? Was of end did of quarter? heaviest me, cadence Rent-A-Center from Preferred kind the terms activity, early the the And one of buyout both down in business applies the the sense elevated a give of And last Or and Got appreciate probably it in just one then that. bit Lease.

Mitch Fadel

I mean a it basis, the in heavier right. you at – it probably was it started of April I look was know don't month, if in middle the on Yes, month-by-month stimulus the because

The about remember April first think – end. stimulus think April the I the about deposit irony ahead date. business for us, in day good with the XX. But at portfolio probably somewhere The the the think of but first round the same-store that the into stronger at yes, coming is the about sales. you quarter than tax April that being year least – be to news end ends big XX. beginning quarter, But Rent-A-Center of of I the on the want and X% say you segment tax of at day, the stimulus, XX – – quarter if impact you they stimulus should the if portfolio. The to used why X% was the then before, ahead the of range the X% in the or about were But what

when think gain this impact the So if down. actually first the the up. have about And portfolio – stimulus from normally case, more quarter with when in we the returns, goes portfolio – – EPOs went tax in you except year-over-year

it portfolio from more standpoint EPO. offset demand standpoint, the certainly plus from the So extra a from than it portfolio offset a the revenue

as great then Lease combination. the Maureen side, XX% on it's ended well. a that Preferred portfolio So year-over-year And up as mentioned,

but was revenue, But the anyhow portfolio going at didn't extra offset bigger year-over-year our at So because payout brought in it but the the that forward. hurt the obviously, in the recurring payouts here, demand – end. particular revenue

Kyle Joseph

Understood. for questions. I my appreciate that. very much answering Thanks

Mitch Fadel

Thanks Kyle.

Maureen Short

Thanks Kyle.

Operator

[Operator Capital from from Instructions] Brad Markets. Thomas comes KeyBanc Your question next

Brad Thomas

Maureen. A Mitch. morning if of morning you Good good I for questions could. couple Hi,

to the – First, ask just I thinking about wanted about guidance.

the the of range? important think you do of low some important the what versus we end half range end of as more the year weigh the high you the second As perhaps is here, the consider factors most behind of

Mitch Fadel

a program basic more with and lease-to-own important our is the the and standpoint, standpoint, for on executing always transaction growth demand from standpoint sales think side Lease retail partners. more I Well, Preferred collection

guidance. takes it so what I know course, stimulus mentioned our depends but the takes, it honestly, the lower I what shape into figured in stimulus mean to additional additional that I know. of And think end it would honestly. probably us I guidance take stimulus, of no Maureen – the there's don't quite to don't closer higher end, us

saw in execute. downside in because because contact range on in what could at they normally, think we imagine, that locations there switch think if scenario, when staff another don't the anybody that. well, look the certainly people of the I to shut all happened Lease because upside to even to that middle say, we didn't don't it's that to shutdown, question there's quarter the look the we Certainly, – you're happens in country losses Preferred I team the can you when made with the were down be kind where well happen, we've As second – we guidance, – would another center. somewhere. did a And the I is stimulus. that I at when worst-case that again. get give even and before. have so you expects mean time, there's executing losses the if And But But see asked saw already in we The

kind of that from we have a standpoint blip loss same So I describing was earlier. that wouldn't

honestly, is we uncertainty I reason, a us don't a range don't in still because everything. the Brad, that out There's there. a get question. would there's It's quite best But anything if upside stimulus know those answer lot the So the know of downside. though, obviously, to way think to for there's I

Brad Thomas

And That's interest was Thanks. to from them great and could to term helpful topic industry to I come your store businesses. synergies of how a one the appreciate versus longer you right deciding potential direct hoping it. competitors the split the of split owning off. maybe I about is you both color. talk then perhaps businesses now in that think its

Mitch Fadel

Brad. Yes, thanks

early right? significant growth retail phases in value. add business, long-term we we're virtual expected our the know, you in And to As the partner of

that's company So at in to this of compared as you're we're that. that splitting the phase referring to point, growth earlier

that could the the flow our in for could of ample road, our works changes see a them business that's together. down our bigger a we're and – company road, our will of cash down of is have part for it capital benefiting Certainly, how it like other we'll high the larger be inform I curve, the mean, past But road? right us be. and part sure for Now when growth all initiatives But the I said, that when see over And the decision growth business, how an down of Preferred valuation from that the makes too. brick-and-mortar, keeping and time, maybe now, by it well, – we're becomes Lease that option Rent-A-Center. we

it's road. it's certainly company. it say wouldn't the other do we the Well that see for never not certainly So it – We'll us, possibility the but how works a we'll that. right could time for down

Brad Thomas

so Thank Mitch. That’s helpful. you really much

Mitch Fadel

Thanks Brad.

Operator

from from Vierengel Your Research. Tim Northcoast comes next question

Tim Vierengel

my that taking a like you retailers, next lot seeing of are was the things. commentary of appliances really It chain to if to that could – be been have from and and some guys if expected furniture, guys some there sounds on all. and year. everything seeing thank how for six morning those heard disruptions, months Good both at you you questions. not and a you're comment side any supply demand news good We've other and or wondering the I might over anything handling continue on you're manufacturers disruptions

Mitch Fadel

it us. issue. better bit. little see gotten I Tim. had It's a as six-year for to Thanks, one-year don't certainly We've a

didn't or idle that held-for-rent know I'd much too rent it's there or on that to the It's $XX now year-over-year. words certainly million million, not just in front are me, them levels, like supply the about release $XXX other are year-over-year, sheet the million give to XX% in inventory me think numbers rental. in is of or down to But levels our Maureen, the already. numbers. I which down to, – balance catastrophic numbers inventory $XXX how that because stores, in point our have don't I is the held-for-rent the to I thing Tim, the you pay is much balance attention people And in see getting the press held-for-rent sheet the what the you better one you'll

XX%, back means inventory. hurting get But to days, our the XX% We business. our XX% – it's want it mean that over And and supply we a of about we six there. to less got a talk a doesn't from happening enough the retailer buffer for have to suppliers. XX So next we you're up. I months And chain not people year see

the in XX% not it's that already XX% hurting it's business. had it's down back it So where up. we it little up. a it's back but We back the last climbed in We're the seeing of XX% couple stores, wish to climb down bit. like starting weeks, And or

see we it and was forward. a this minor blip issue think I as going pretty So don't an for us,

Tim Vierengel

All right, thank you.

Mitch Fadel

Tim. Thanks

Operator

it Fadel back Mitch final our concludes that to now over And turn for comments. call. I will

Mitch Fadel

those these forward joined special coworkers appreciate delivering to strong strong tremendous and results us partners, safely, for without We We that together we out for you, a our joining And it Thank franchise such a serving Michael, you, job of all And you. thank have these look we and you. us call your thank continuing of you all you. to you. your on of everyone, morning. support, this appreciate mostly, Thank customers want to support. our retail I be our our who results putting again, there thank doing And today. and on for couldn't partners thanks thanks done and this

Operator

Thank today's this for conference you Ladies gentlemen, participating. call. concludes and

You may now disconnect.