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Rent a Center Inc De (RCII)

Participants
Mitch Fadel Chief Executive Officer
Daniel O'Rourke Senior Vice President-Finance and Real Estate
Jason Hogg Executive Vice President-Acima
Anthony Blasquez Executive Vice President
Maureen Short Chief Financial Officer
Anthony Chukumba Loop Capital
Brad Thomas KeyBanc Capital Markets
Vincent Caintic Stephens
Bobby Griffin Raymond James
Kyle Joseph Jefferies
Tim Vierengel Northcoast Research
John Rowan Janney
Call transcript
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Operator

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

As a reminder, this conference is being recorded, Thursday, May 6, 2021.

Your speakers today are Mr. Mitch Fadel, Chief Executive Officer of Rent-A-Center; Maureen Short, Chief Financial Officer; Jason Hogg, Executive Vice President of Acima; Anthony Blasquez, Executive Vice President of Rent-A-Center Business; and Daniel O'Rourke, Senior Vice President of Finance and Real Estate. to call 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 first 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

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

Mitch Fadel

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

driven We new website history Acima investor.rentacenter.com. teams is across and and the portfolio we continue grow the we're quarter. for on our were are by portfolio. right webcast our the first sales, at be the scale turn the quarter improving the to to on on an businesses. shown with a pleased volume to presentation on The presence, economy, Same-store will the digital tied increase business functionality voiceover as our optimizing schedule. providing strong and momentum integration The demand the We be that can most performance in found invoice in delivered successful

the XX.X% a our Acima drove we combines the basis, and On quarter. with acquired previous preferred lease in which acquired Acima Acima business the strategy sales retail in stand-alone merchandise February, had our more exciting, volume strong The Our adjusted first segment, segment to business of invoice about quarter. and margins around opportunity. truly feel capture we EBITDA great the path is partner in the of

move XX.X%, we also digital by profitable business in Acima, accelerate margin e-commerce business. we've to important a driven proposition, growth. XX% put to quarter and trend. business with The in pro and growth. forma forma driving revenue partner up the business nice two-year positive it's approximately generated XXX supported basis had line increase efficiency Rent-A-Center consecutive XXth Acima with and our by As into revenues by improvements and a investments And year-over-year up lift is acquisition top pro broad-based basis, first and the stack of volume XX% the ahead quarter to results a revenue the sales. testament is Rent-A-Center continue same-store Acima XX%, were Adjusted over a value a XX.X% approximately the motion. increase retail Demand was making That's EBITDA was driven with comparable, outstanding up that. great invoice Total Rent-A-Center the quarter in progress our gains. The points, on a XX%

a strategy innings, long early E-commerce digital we for in growth. and Our to the continues are mobile each. and drive runway there's think

so long-term expertise, retail is immediately high-value announced just transformed for and bringing engine LTO broad many we verticals. with and of that create extremely is as and with us. leading a have supports our our is targets high-performing more EPS platform. for the the compelling decision tilts X, Now component to operating powerful year our Slide better access financial a ability we're We'll have we've revenue across perspective, can't From to with and target as the runway. the credit-constrained fintech and reach seeing for earnings. and consumers. business we're to retail in Acima to team report increase higher-growth, discussed, Acima products discuss conservative more we given traction some superior virtual growth of We're our platforms Mastercard digital non-GAAP more business with XX% majority has accretion to XXXX, strategy for to and to progress back-end revenues making. partner higher-profit two one may without a enhancing progresses. our infrastructure. with first to agreement much consolidated evidence our turning accounts for The on compete we're track I and now believe digital improving with business. addressing The the recently It's Acima cash be doing national things an extensive record a underwriting quarter data best-in-class a attractive our

size points faster We're where us touch allows lease capabilities it's that and paying to shop customer Business, We out and retail to stores partners product customers verticals accelerating to question scale for and it's generation Rent-A-Center and that in it to they guidance multiple environment reflect that updated a flexibility as want XXXX, more the expect the re-openings numerously both underpin and work the driving adding in And and grow new return great by multiple a our profitability. while billion good a customers confidence our should half. we it little both favorably our at Acima offered in we're online. mid-teens in in captures catalog's The equates to quarter news goal costs. adjusted is Acima a which it stimulus omnichannel improve in any meet that to serve performance, lease-to-own. performance represents digital acquisition believe And to strong a very second shape in we consolidated in the for And is story. our profitability quality. want $X and for very performance the strong EBITDA and supports incorporates margin. improve the more see and off doing with that and ended combine There's Our and of sustainable in younger and that growth consolidated normalized and growth And attractive portfolios still benefit who and should periods. play sector, enviable growth revenues customer in to improvements XXXX future our and efficient in impact

to over assets look together like to I a to Before we best-in-class franchisees forward and customers. further. We've coworkers, retail the our our dedication the support with call partners, lease-to-own, to and working grow I'd to thank their our Jason, suppliers serving put for of to you Jason? set business our turn

Jason Hogg

Thanks, Mitch.

sales Slide X, doubling had last to an quarter versus excellent business partner Turning with year. the retail

on have our prior points by As growth versus partners. volume. business many The and despite first were retail Skip/stolen mid-February. in supported you're our we expectations, improving of is invoice X.X%, performed by losses in Acima strong in included revenue inventory closing the achieved the from merchandise aware, QX The quarter constraints our that sales well financials basis likely gains transaction in the improvement year. impacted after were continued XXX

to be to we expect to the Acima transition engine. Acima skip/stolen decrease the decision expect losses X% as segment total we XXXX, XX%, and we between the for For which

February approximately for were Acima in the Adjusted XX.X%, EBITDA We XX% margins LTO the full continue for year. to and to expect we margins be skip/stolen Acima's X.X%. acquired were business EBITDA losses

approach as making Turning to move of successful optimize the Additionally, deliberate which the while scale consolidated Acima Immediately forward Slide our to to control of to We're We're and regional approach staff updates while span organizational we've acquisition, businesses. operating to the accelerating organization growth. Acima national we organic following some sales our improve We're growth the of a our segment for on with business designed integrate the were to X, account leadership overhead shows progress. our significant our three-pronged our leveraging Acima. to on the a maintain we strategy strategy. able organizations close progress reducing the virtual organizational restructure with existing revenue

regional gaining such, efficiency force, sales of the new while overhead have maintaining As merchant completed growth strong we our in partners. integration

combined robust negotiations placed have We and we are national XXX team that we targets have talent companies utilizing formalize national retailers. simultaneously our over with And emphasis within numerous in active the of to pursuing. account equal pipeline are amplified our on

a Finally, the companies. cohesive one we've invested brick-and-mortar approach. e-commerce come complement quickly further fit How the as seamless to two together these between in have organizations to a team a testament excellent cultural productivity dedicated maintain team and is

for We're well to to entirety provided all be the have that staffing also just quarter staff our servicing which operations locations actions operations, and centralized drive this Acima in synergies, virtual in we made we shutting move million as platform given year. on end in center converted activities $XX much We've efficiency. Consequently, and potential we no business its all we on of the XXXX. the later into track midyear the I of the converted notice locations the $XX be capturing targeted collection virtual better by the for decision Atlanta in that to with collections and to to Utah. million than We described, Acima's will by in will are third down have servicing ramp all $XX way million

mid-teens margin. annual basis believe XX% EBITDA on grow will an We continue revenues to Acima XX% a to with adjusted

there's for qualify application since thousands don't merchants. need able integration. couldn't at card previously of where any store, To pay base physical approximately of check a point-of-sale at initiate X, firms tens mobile lease traditional and at in larger to first-open think just are significantly and access have the loop native customer Acima at improve million multiyear with of with their to other and segment, a Customers just and like differences for pay power and quality to to turning the card ubiquity will unlock at We of buy drive market $XX X.X broad we become of segments. of the utilize Mitch buy-now-pay-later addressable and pay Now their lease a select the financing eligible first partnerships a new partnership origination, This to consumers to locations have and shopping first no been LTO goods into segment create payment items physical to when Mastercard with fully that, locked as provides industry existing It's customers their that billion to Mastercard debt stored-value the that a This ways life. to shopping should retailers lease a of Strategic the then merchants, $XX put for concepts BNPL key sell the traditionally the access be level to array Mastercard implemented, along of that is now total retail customers shop to alternatives and and traditional integration out payments credit-constrained as card long-term brand Acima has of name cardholder. lease Mastercard opportunity category agreement. digital This Acima lease-to-own consumers of one will proprietary supplement doesn't required. to a this as Slide a without between acceptance count with later goods utilizing our is out access billion credit, they LTO shop consumer foremost, obligation. debit customers model to new leverage LTO that mentioned widely Three defined can cash in durable adopted. new more merchants, models LTO technology. context,

for traditionally customer and large nearly the an X,XXX one underserved us segment locations item to to address to of of return ability enables unique consumers. this Our Rent-A-Center

of merchant the just addressing XXX% next perspective, shuffles set retailer don't for same qualify to that for needs consumers effort the BNPL revenue solution improve the while basket LTO Second, an incremental provides one solutions. of likely a to consumers conversion, the BNPL financing from from in almost by

locations merchant lease-to-own consumers while their have capacity merchants. the number exponentially companies, the same enable have to utilize our Lastly, Consumers at will of will as partnerships BNPL origination more we platform the largest brick-and-mortar or Acima marketplace Mastercard, between the browser for ability goods utilize the lease Acima need. extension pay to fluidly they the the mobile initiating continue app, Acima with move leases to Acima

our expenses. consolidation utilization platforms, than utility payment which solutions, platform of repeat believe greater with will result greater As BNPL we provides and in card traditional

market in utilization to As and and we're leveraging as mobile our $XX proprietary underserved. pay currently newly focused browser decision such This technologies, Mastercard us the we learning-based billion machine extension, our addressable forward, app, is engine. origination look fully on $XX marketplace of unleash low-friction that with to our will lease billion combination enable acquired

of averaging tests direct-to-consumer to successful mentioned, We anticipate which as mobile several with we compares merchant completed platform. already our companies. costs the acquisition leading of origination continually the to customers strategy has an originating $XX, group through and marketing quantitative as Our fintech favorably customer variety scale technologies direct-to-consumer a costs e-commerce existing acquisition declining augmentation

addition, to gives that to pursue a billions the estimate support our The all of growth market tens personally accelerate to access that overall account and and like of In a us I'd enable our millions advantage while paradigm-shifting allows dollars, an we and to our would achieve by time. is customers us technology expectations. strategies bringing technology fruition potentially these integrated repeat further national within tens of through team revenue profit in us proprietary efforts. to of commend having to them experience integration technologies frictionless approach for our record thank strategy reducing these in growth the technologies

quarter, products in products. our that and the be Acima the of second video a beta demonstrates the During shows releasing action power we'll overview family

to turn discuss Rent-A-Center it I'll Now over the to Anthony business.

Anthony Blasquez

Jay. Thanks,

It's look XXth the XX%, row positive we our of comp driven X, As by revenues sales. XX.X%. quarter ever our strongest a Rent-A-Center a total Slide in quarter terrific same-store up with of at had Business

performance, higher portfolio was believe quarter demand XX% environment up in that the macro year. of of payment for at increased a big with To digital expectations am end in penetration last history. growth on sequential revenue. XXXX, the March of to achieved to these a current executing experienced in portfolio of continue payout to the first and Acima high as the to Similar came The the I was in We tax stimulus. the top want And recognize of is XX% net the for ahead point a experience. portfolio we grew part we helped out that That finer XX% our a new result time first the QX the as for put line XX% we I results well. it, significantly XXXX, level skip/stolen representing agreements our underscore activity EBITDA increase an team but E-commerce coupled as with almost year, led achieve us over be that initiatives of losses top portfolio, expense well. and XX% early with X.X% retention now a customer proud to with season the due EBITDA to we an focus we margin benefit the seeing, business, almost of level role, stronger outpaced played While adjusted Digital line improving well. the such The the last future compared how quarter are the our and in periods. will performance, consistent mixed adjusted of of to versus XX%. low in of

the categories. portfolio traction. will tire and the the inventory categories. with forward levels with a the believe quarter momentum than about quarter year. in X, category measures and really addition digital other as is categories, helped Notably, performance launched last for approach ended strategies of Turning one we've of improvements, we to These proactive new by say, we're area The benefited inventory our of gaining we are first certain the we category X% new excited customer the the is offset implement along end We Slide to product nationally, alternative product tires, ways to from true going product in our will One value-add the keep going. the year. And inventory strategies. we sourcing it's experienced constraints higher

communities, reducing approval also give process transactions. We modernizing manage include speed in a mobility decisioning customer with in experience, increasing experience, in presence our and to an physical further in can customers there's tools to improves operate with increase our that markets our stores opportunity the to with open experience, by our year has lease our so technology-focused in grow also the their Centralized new stores efficiency e-commerce strong improve experience helped more and Within We've reduce continue and we The which faster key customers we ultimately customer to our enhance seamless enhancements with control online customer a more and Along customer to this few customer checkout. our customer interactions, reach test and in a efficiently losses. new a more more invested co-workers more order and smaller customers, advancements experience a plan serve to seamless will believe to more given grow demand. enable interactions. revenue. online footprint technology locations the friction a

on guidance outlook briefly while the Turning business Maureen Rent-A-Center touch on expand I'll XX, to for a the Slide moment, in will XXXX.

and QX the year. year adjusted in return the and EBITDA revenue think back same-store XX% be increased single-digit the sales our we've our to mid-to-high guidance. performance With which assume comps We to half normalized does favorable more a now will portfolio, XX%, for the of

also the We EBITDA skip/stolen losses we have believe above X% range can margin for we'll XXXX, adjusted an in XX%. and sustain

macro we've environment, business Maureen. us to transformational worked but positioned the going. from discussed, call implement I've As several the have now keep also momentum I'll to benefited to to the have turn that over the changes hard

Maureen Short

year. gross of is was versus year. lower the a at On revenue cost. a Anthony. revenues in last virtual. negatively basis, a coming growth and last year, strong in non-GAAP a asset-light previous of the lower times basis, stimulus. The and basis operational Acima increase drove was revenue, were margin was driven Acima On nearly period which year, offsetting versus XX.X%. point driven related more to onetime intangible margin $XXX doubled forma revenue, better to Acima of a $X.XX XXX-basis virtual and XX.X%. acquisition customer were improvement adjusted expense mix model, improvements last payment partially was and EBITDA We million, was EBITDA costs, the impacted stock Adjusted given percent last same margin billion, was and by over quarter higher forma aided operating shift improvement performance the versus of by million debt $XX year-over-year, total growth earnings of lower compensation XX.X% benefiting last QX by performance acquisition mid-February. Thanks, the The early to related the Pro offset was due losses same GAAP payouts, EBITDA expenses of pre-tax versus the acquisition $XXX interest in higher XX% QX up on a our subject gross $X.XX from than of $XXX by to period $X.XXX QX in EPS government pro to the two by demand activity Adjusted year. Organic and assets Acima year. consolidated higher Diluted growth cash strong balance amortization Free consideration transaction flow vesting a million, ended integration of equity with Acima. million billion. cash $X.XX And the

the QX, at right to are leverage Given end and as we QX. times in performance target times are of ahead activity date a well of two higher we under two the be basis pro forma payout our strong at early on

Liquidity quarter, down million $XX of an down the revolver our paid additional $XXX in QX During ABL million. was April. $XXX on and we paid the end at million

weighted the in Our a quarter. was but share result XX.X increased a count the acquisition, on average shares to million first of diluted $XX.X basis Acima million as

was per During the same approximately X% than last which higher during share, cash the a of year $X.XX quarter, dividend period. we paid

outlook increasing guidance the our first to guidance. for we Based results year, in the are on our XX. XXXX of our on quarter rest improved XXXX the and Turning Slide

$X.XX the key for normalized stimulus, metrics Rent-A-Center $XXX million. portfolio an to with be an stronger-than-expected expected year. of Our and and $X.XX Consolidated per in due to and government in to share and between the to guidance adjusted $X.XX. the be is revenues XXXX, We QX consolidated half improving improved are the no EBITDA higher chain expected by back and increase primarily $XXX supply additional business. billion levels global billion expect return now earnings the revenue in more outlook, to Non-GAAP balance between be that assumes million $X.X between diluted driven rental

are as an also million cash performance free outlook We higher of $XXX to over to The versus rest last generate in QX million, of of which expect flow as year. million for increases quarter. the strong primarily driven issued $XXX the guidance the increase by is well $XXX

segment million segment margins generate of year our to segment is XX.X% were yield, impacted Gross we expected activity. to Acima to EBITDA reduce million Adjusted rest normalized are to segment as due projections, for and we adjusted to our $X.XX billion Turning higher revenues. revenues throughout QX $XXX to and billion. the more expected, Margins synergies, offset of XX.X% to of in with $X.XX payout increase EBITDA adjusted $XXX expect margins the of which levels. the of Acima to of to returning costs expected margins sequentially impact metrics the our duplicative grow implement EBITDA are

the achieve segment Rent-A-Center business billion to expect revenues We billion. to $X.XX $X.XX of

mid- As XX.X% EBITDA to to million moderate of revenues. will to segment in expenses same-store Anthony labor sales losses return of in the digits and back XX.X% year-over-year year. half normalized to increase mentioned, $XXX $XXX resulting Operating levels, as of adjusted or to to single million we high the expect

rest of the for results of cadence the year. the Regarding

approximately XX% QX up EPS is up and expected year-over-year increase by each XX% We approximately XX% the year-over-year to half. non-GAAP expect back revenue to quarter, in to diluted XX% and in be

lease-to-own Turning technology growing including to and strategic e-commerce to Slide virtual XX, via new our innovation. the investing capital business, be continue channel grow allocation to the priorities partnerships

continue generation. provide confident and net strong to advantage Secondly, the capital returns adjusted billion XXXX company to returning by mid-teens lease-to-own our of long-term share repurchases total X.X for business, in strong is shareholders positioned our may margin. our longer-term We're also we liquidity. of our excited shareholder XXXX EBITDA adjusted plan flow while for our and And market the attractive dividends and virtual in business finally, with debt well take opportunistically. paydown in through $X growth we to plan to addressable goal leverage cash both With of continue a preserving times, consolidated target to robust form EBITDA and of consolidated revenues and the Rent-A-Center growth the prospects earnings about for free large profitable highly reducing

segment your I'll statements income detailed for turn and Thank always, call today. you posted for website, tomorrow. time to your As are questions. by now be XX-Q the the will our over filed

Operator

[Operator from Instructions] Your first line Anthony question of Chukumba the comes Loop Capital. from

line Your open. is

Anthony Chukumba

to Good morning. taking information strong detailed lot. and And start Congrats really I my lot on guess year. for A of is that the second your question. in a the comments, good thanks in half appreciate my the on question press release your so guidance.

I'm assuming additional really July, lot no kick them. until thinking obviously really I you of customer, be stimulus, tax beneficial wondering, in to are if credit? of how a You're which But have start is could fiscal your your Because child with just about I to second the half, and sense. that that core which makes think, the guess doesn't would

are that how factoring into So you guidance? your

Mitch Fadel

joining thanks this factored And Good morning. We in. morning Mitch. Anthony, is this that for have us don't

So, if would is a benefit, that numbers. our be to upside that

of in don't of in you, impact be. kind it's because that. forecast And be really didn't really positive what we it's haven't factor anything anything, going going in positive. with if is I We our But we factored the to agree – to know

Anthony Chukumba

And mean, I mean, of comp, out how started on of December. focus said, it mean, I But a stimulus, ever, strong half was Very I it. XX%. you business, doing you out And out. as parse Like been strongest as quite know impressive. pretty this you probably coming coming checks. comp just accelerated your you – the much for those that did of of stack I I But that that in is in meaningfully we'll is on Rent-A-Center the They very three basis. comp? maybe quarters was tough even there checks mean, right? time. two-year think sort other I Got that fiscal the that have was March. some the to guys comps about know started

Anthony Blasquez

Hey good morning Anthony, this Anthony. is

on and the for thanks parse kind Yes, be So, question. is it. to out of specific it hard

So, we the believe driven of by sales. it a was merchandise stimulus, maybe namely that third

by shown go question bigger our the We the at we think to I'd But have some can more us what the is see this And XX%. what this guidance we're the with that that increase believe revised our we're quarter that fourth obviously continue we're important this We in driven the look happened outperform up going And year. believe throughout really we're quarter up focused I taking that forward portfolio played in role. first quarter, is quarter. exited what's to XX%. you of and guidance, market is exit rest we XX%, still a is, sequentially you to up exiting on if that say of stimulus share. a

or We XX% performance. are happening extremely excited – improvement comps in e-comm as well with what's in e-comm, in XX%

that think to So, that's on basis, really us. I exciting what's go-forward a

Anthony Chukumba

good taking for my much questions up work keep so Thanks and the guys.

Anthony Blasquez

Anthony. you, Thank

Mitch Fadel

Thanks, Anthony.

Operator

comes the Brad question of Markets. Capital next line from Your KeyBanc from Thomas

is Your line open.

Brad Thomas

good Two if Hi, a questions, here. great quarter on everybody. morning, And congrats I could.

the and all the broader and and little rates. to you Acima portfolio. your Mitch, decisioning of bit losses early this could Jason, about increase across first your expertise Acima's also The of approval some insights level leverage a and tool your Hoping, potentially confidence ability that learnings talk could around and reduce

Jason Hogg

Yes.

be that When of it's this have team one be acquire sort good more of couldn't more news things untrue. So discount is factor. some couldn't when morning, and engine, pleased. and got we company, And in always working of is you where for The we a with sort us the mental began Jay. those good decision you Brad, the

direct that the will have of threefold. impact it So, sort is

at better the already reducing and we are radically reducing is fraud, is fraud first assessing benefits which engine The – of. seeing out

second which that much assignment, with is through a does increase a regard the to enables effect, better of line the combinatory approvals engine us, yield. and job kind the and The to

improvement And to preferred lease as continue end see platform, the with so, and of onto complete begin of as result. contribution material portfolio we've migrated and in that EBITDA the a will margin our yield kind we'll at be QX, migrate, which largely to

Brad Thomas

mean, could by And just your regarding I follow-up guidance. the a ask I at all I $X.XX through Great. if – a $X.XX to guidance. you flowing about about beat think level, high

Just as Thanks. think for Or of might we you year. about talk offsets just balance more takes? any and be the creeping may think Can think as would puts there for just the about we year? the year, be conservatism the of any of that Are up? balance I the this is enthusiasm there reason

Maureen Short

we think Yes. keep as the Good our think losses than morning, about as back half versus versus the The trends. in different with internal will more variance targets. the variance Brad. back be And we There about going guidance. through additional the and are is the mind labor have some costs we and toward year, puts normalized that that Street flowing takes of slightly But

opens margins. Some the of and forward, muted million segment we'll the improve more synergies back Acima with half as both customer toward to EBITDA of our And gross margins $XX that become expect of the behavior, in up. of going will country the back the the actually we year the then margins implementation have

guidance. those So into the assumptions the are worked

Mitch Fadel

Mitch. is this Brad, And Yes.

we're the I the know say can sure think we're do. to do you operated we years; like we way based to we make on we've what last – few going

we and into kitchen to pointed the like how single Acima things to latter making put You the much year. standpoint normalized digits in tax just scenario mid Anthony rest child growth our like everything rent said, business the Obviously, pretty can into either. and year. half commitments sales But try call worth the takes that and trend being so credit that sink in the best-case the of or not great I mean, forth. high throw takes still same-store And year, is conservative in from much out, for take our that late the we it's every a in a even We're as didn't everything center the forecast fulfill of still business. Anthony the there, sure we

for So in potential them. we out with there's upside yes, come time the I think every numbers,

Brad Thomas

all That’s Thank very helpful. much. you so

Mitch Fadel

Brad. Thanks,

Operator

Stephens. of from line Vincent Your next comes question from Caintic the

line Your is open.

Vincent Caintic

for seasonality echo That's much I good helpful. my outlook. all details in let really questions taking very Thanks good Hey, the and results. morning. And the the appreciate me

Acima the First, on business.

So, and about that's pretty pipeline, you a with working talked accounts, and interesting. exciting national different bit XXX

the they of are the of sort have through of – this you just the pace? are for they looking for general you're kind what going current environment. you're Or wondering are kind As in of things and where are sort pipeline, slowed looking retailers what

Jason Hogg

Well, And is question. good for the morning, Vincent. thanks This Jay.

had mentioned revenue few the the we a segment. as is to retailers One, NPL option that streams, incremental look things. for and continue earlier, So, I LTO augmentative the so provide toward,

a low-friction so them from to which consumers. physical ways as gives perspective. a integrate, as perspective looking brick-and-mortar from and And new that digital in also They're well implement for access to both

want platform Acima the they obviously, drive so is the to third able be to customer. continuing to that that So gives relationship with activate the us And utilization, then capability. an repeat ongoing

such, solutions enable browser so, and on putting the with still in and extension our in view and very All been that. mobile ecosystem that those them all, fronts. demand to we're And place strong testing we've that

Vincent Caintic

Thank strong I so And Great. result switching this basically really And the was Rent-A-Center looks quarter. competitive the then Okay. to Business, wondering environment you. how like.

your e-comm when putting and maybe that benefit, like about pops? a nice perspective? much XX% the – thinking how think mom things affecting think But of peers about good share I share you how wondering, kind and And a even industry, differentiator So, when you growth, of of a how had I'm a is result. broad you much your taking of from that about other are traded publicly maybe market rent-to-own brick-and-mortar as chuck other from the guys, that kind

Mitch Fadel

Yes. Vincent. Mitch. is Good questions, This

ours quarter, a companies I Not same-store maintained as results. our that first competition there's well still good at of zero, differential you're in industry. look other got get a the our number now. – between bumps our good there. you're in done that whether got XX%, think another lot differential public results Obviously, mean And right. are somebody we and years similar I and of XX%, for we we we've that quarter, you're in quarter, else our competition, sales is one

a So, it, part mentioned. team of you right? a a differentiator, with been job. team Anthony his great Probably the we're E-comm with really are the is more And performing. big it as way has think is I for is as – not and the a so doing a little or public much and it public regional much into other e-com. we've a because mom-and-pop more differentiator us as like happy differentiator with other got company things the company businesses against more investment

So, a the advantage us regional I against think for competitive is it players. smaller

to chains, only every of much of and be chains, And tailwind going in it be to chains. not see it that a will continue think I smaller regional to XX-store as more e-commerce. day continues more more we invest and X-store through – you're – XX-store So

as to numerous that. don't it our is So, only The supply chain, to e-comm and have money them. better. supply and we others continue advantages chain we I one in things think the have differentiators, in invest of you get Certainly, like will – the the

So – the we've about happy – stimulus, but business boy, just because customer mean, customer I talked way the I performing. with the we Vincent. be can incredible this is not The is before, demand it's

as just the stimulus lease-to-own. continues it's LTO, competition, for grow but more tailwinds a more And say, to too. helping I pay mainstream, the I not drive Rent-A-Center, virtual of the buy should there's just not – awareness, later that's to now believe Acima As with that's things And become one as tailwind. business

longer-term I tailwind becomes lease-to-own a more think that's much as mainstream.

Vincent Caintic

helpful. very Thanks much. It’s okay. very That’s

Mitch Fadel

Vincent. Thanks,

Operator

line James. Griffin the of question Raymond Your Bobby from comes next from

Your open. line is

Bobby Griffin

and XXXX Good for Thank the to and taking a my questions start you initial morning, of congrats integration on everybody. Acima. great

Mitch Fadel

Thanks, Bobby. Thank you.

Bobby Griffin

different is and also there's the going long-term things. during Mitch, business, I pulling but costs core this want But obviously, guys a initiatives, have and question, growth things a circle on that kind lot this like been of more and to of really you on different with period. interesting a first, done lot e-commerce stimulus back out,

look you of any color EBITDA business the longer-term basis, on clearly, some support. the it government benefited a now core is? e-commerce is given Or that return changed I mix before? at margin some or the in EBITDA idea high when business? well. the to kind normalized business and the you you the with doing out back about point, think it really business as the to And a But context margin has Is from XX% has So of just around maybe what guess I'm was need teens it, asking so maybe much

Mitch Fadel

believe stores e-com year markets to the the XX-plus Yes. mentioned growth. for Anthony walk-in and an technology the our that act it footprints that about and for Bobby. a some you a shouldn't Yes. few when as even this and a open Good to question, fulfillment business definitely think it's e-com is basis going technology orders. center in smaller center we're ongoing come showroom for on much as below and traffic I payments

a is see business. "fintech couple think lot are such And a of have So, as there Acima It out when the business as play" of brick-and-mortar. there's transformation our the company fintech I out to centers that a – into fulfillment Rent-A-Center we happens in well. people thousand turning just a there

more try show potential technology, footage that more and forth. go So the cost. the product more we – think of as and to of reduce going into to our we some so technology to using square have and I We're even

forward. all you So, XX%-plus together, moving I think put when it's business a definitely it

Bobby Griffin

to helpful. very the Acima to bridge the That's year. of for in get EBITDA. guess, And dig I for XX% looking just maybe a on to the then to Kind Okay. is me the secondly little bit

in Acima I is on as But the else you the one across driver. that out decisioning remarks fully portfolio segment of think, the anything your Jason, kind yield mentioned rolled get you to help and That the then would I to X-ish XX%. secondly, to guess, from XX%? would above in quarter a here kind bridge – percent XQ get to the of that imply

there there? Or of us think the back anything in about So, around big drivers the some is help to half? that

Maureen Short

This I'll take that Maureen. is Yes. question.

So, we're quarter, that's we've really $XX EBITDA synergies sequentially gross each the and the margins of assuming driven that integration XXXX. that and by and margins both improved outlined million for

far and decision perspective, a also the are improved moving synergies versus SaaS as the to bottom-line have gross from yields concerned, loss as well of Acima superior the more detection lower improvements loss what engine today on lower decision streamlining engine rates, including benefits and business. the that's as the fraud rates margin from as based capturing our So over we

of virtual engine converted to Some the will as moved will be Acima locations to and they those decision well. be

EBITDA of some the So the those throughout are margins the year. drivers improved of

Mitch Fadel

itself out, the virtual standalone one Yes, did point of quarter it what And XX.X%. was factor that. out, reasons thought I business is as think important Acima probably, things I'd we the the add those we in you that's to pointed out by all first to

good, And make of loss obviously down, bring margins gives obvious. even performance for target, right? that the on outperform So stimulus But then options or early can extra purchase kind the the maybe customer those is you – to us up not though you the line, it's so tends it from outperform that.

some number. to out couple we pretty the has pointed it, shoot a XX.X% takes puts of That's So, good a it's why times but and in for.

thing say about to you get integrated. overall we X% is remind the is XX% first go go other year fully the that and And target, once the lowest. think our everybody, and and the I'd the quarter – that from first as the we're XX.X% quarter, usually when the So, through for obviously, year, margin,

but helped this our the out where – Now at when of look guidance some change on you obviously stimulus quarter. segment the there, annual didn't that Acima. missed we estimates, And estimates the

performed margin So some disappointed with the estimates, – obviously, maybe it of weren't the analysts. it with too we our our was way compared X% internally to modeled that how against by

stimulus. from when the to is answer extra payout going – from the we for really to step this important of is because But we get case, XX.X% number pressure being internally think surprisingly number, people analysts some We little you think change track. some a right about still think year quarter season, always without and and having differently we're you first – short think the on low up a Even year when where standpoint, had guidance, our though tax about the to because target average, X% guidance. under XX%, that a obviously, I that So, our how annual of in XXXX. into full a forecast was

Bobby Griffin

in to quarter Absolutely. and of I remainder and best details the appreciate second the luck of you XXXX. the

Mitch Fadel

Thanks, Bobby. Great.

Operator

Joseph from next line Your the Jefferies. from comes Kyle question of

Your line is open.

Kyle Joseph

Hey, start morning, very few follow-up a strong questions year. me. I congratulations the on for echo A good to

mix you you the of give give And how did In brick-and-mortar? see balance the longer-term you terms guys outlook kind e-com of of versus of Acima, there? can a

Mitch Fadel

Yes, it's did you're whether – there's we contracts number. forth. and it, how to depends don't a it's we But It lot upside but about talking that creeping at range. it, volume think of say in XX% that we before, look We it toward range. I you so think that talked about XX% versus

on we're Rent-A-Center mentioned, there. the of XX% XX% business. innings we're almost with And the early a we as growth, in the side, So,

at the the XX% and a in side, standpoint. both from upside On we're Acima businesses almost lot of an the e-com

Kyle Joseph

over the the Rent-A-Center And but how e-com, of now Got it. this you on how evolving side then see business, and the for time. is of touched store earlier, Thanks. count a given business on sense you give much us

about stores talked some the in think some potential for for I prepared markets in you of consolidation your remarks, and others? new store adding

Anthony Blasquez

is this Anthony, Kyle, yes. Hey,

is And in commented a to more of the the Mitch But looking we a of was way out unbanked think it as we customers. the not there's more as with the exit So, at customers, to And But a a We mentioned mentioned pretty both progress remarks, and leases opportunistic is there's count. remain communities business opportunity serve, we store technology-focused, and space last embedded net do we payment be with about a lot the for to year our communities is for new We really strong center some is a at prepared leases. a that think recognizing the minute year, that's opportunity, of cash-paying to plan footprint plenty net the we white fact the and in And it least neutral that see us think serve. continue the quarter going to the this I least fulfillment test exciting, renegotiate our I I through ago, I opportunity And customers. the to pipeline look our at neutral. and allows equally, strategy locations might from to where revenue expect. that remain we're there. so just smaller from forth. to that same time, lower underbanked we something was, still perspective, in

ability to So, remain really communities intriguing. in the and serve is those customers those

So, And at plan. is, good net our stores. of the go-forward answer neutral, that's short least pipeline opportunities for

Mitch Fadel

the XX%, and square has we this by in little use long-term find the a significant, view, we're yes, excited from way about opportunity. long-term have. doesn't obviously, that the today? we – And what's Wall If at as impact play, pretty if on expire, And we a the mentioned, right we changed be rough year, of years, to business it's least leases And there, long-term if the can think technology XX% somewhere forth it what Anthony roughly five locations, rent footage few we – reduction compared look Street square can at average of the XX%, against it can a there's could these least which darn revenue what's can the we if hit smaller out, bit long-term in there. quite the is so just percentage pretty at always XX%, trying XX that room our X,XXX years where of there's of can X,XXX a and the with differently. footage a program that view, But from a – technology stores corporate-owned exploring business, the –

Kyle Joseph

Got [ph] was and phenomenal. Anthony, tire it. Thanks, Mitch you're pun

thank So, you…

Anthony Blasquez

No problem.

Mitch Fadel

around here, of tired Kyle. so of here. many it around heard We're kind times it We've

Kyle Joseph

one want make the you year? last the And a did me, sure you to give of Maureen, then what I share count? from diluted then perspective, be just kind modeling average for the for weighted expect to count ending And

Maureen Short

Yes.

be XX a occurred a the in same first that million We a XX go-forward the on count that should that it's that It forward, But I expect than it basis to gave be in going and on was weighted basis. around lower around average April, number that quarter. that little around number million.

Kyle Joseph

much my questions. Got answering it. Thanks very for

Maureen Short

you. Thank

Mitch Fadel

Tom. Thanks,

Operator

line question from the next Your Tim Research. Northcoast of from Vierengel comes

open. is line Your

Tim Vierengel

thank one and questions. I'm more a on else you pick going my time. Everyone good one, Anthony asked morning, Good seemed to for so taking to

your some at goods better larger, a it chain, like guys competitors and be your your inherent maybe than about bit feel a you rent-to-own in about of seems than kind if the of I price you. your maybe to was supply in some Thank of commentary, chain more least guys sourcing the competitors? or you there's that seem durable on business supply wondering maybe little Regarding points product the business. industry of little make categories brick-and-mortar upbeat higher-priced the side bit anything

Anthony Blasquez

Yes. I it. appreciate question. good And Tim. Thanks,

positioned So, feel from an well. we're we inventory perspective, like

We some things. have done

same And look of XXX it's component. if we you is, to lease, versus We've we ahead the took and local And And that of even things to strategy at for around to order were California. done go the order inventory supply in in products, some about we're those our up to right sourcing we it realize one get regional period well. promotional locations, year. strength up fewer held that's X% was and that Our considering position – an inventory last now. about have important refranchised the at ways us the really locations proactive that that look our as almost the beef measures in

– regional promotional customers that and we're also and we that's at like to it that's okay sourcing. I rerent once who get forget feel we merchandise for and in purchases, because return to right ahead good able we somebody back, they like local do where deal. tend have So, while. to the don't a in business said, some a we're we're about that the – good to And product And go looking now,

with the our just things the chain and the And their we proud success, we're continue subsequent and back supply for year, on. support quarters, get merchants through and the that we go things, suppliers our coupled part the as better. those very to working of So the expect they're of that will

to meet now. So, right we good We've got inventory the demand. feel enough

Mitch Fadel

count the mean, about great all you going to match limit Tim, points. compared because you those those to lot out are even I our would to forth. not or Go, is that have living inherent of that like of something a one that going traditional retail other add on furniture I have. might to Rooms frames SKU Wayfair to groups do – got we're talking get returns, add big lower store was because is of different one that, not that where like And you can have returns and I'd you Anthony kind business, you're X,XXX to fabrics a pick or to what To you like to so a

rental are the retail. returns due And a a know, we're there limited SKUs as store you primarily. box to So, obviously, small in

So, they're rooms. show not large

the environment, the helps that is in of really SKUs, inherent kind there. So, piece limited this that of I always think, really, and an model is

preferred returns few it only Anthony has a supply business. from So, get the helps that from lease legacy about, but I get our a we think returns And we business, standpoint. not chain the then talked

And road, soon we'll monetizing of as we'll Acima down – the returns well. the be some

it. – we coming well, back really of from to that helps variety we product not So, get got chain there as mention the supply the

Tim Vierengel

guys. good color. for I appreciate really That’s it me. That’s Thanks. all really

Mitch Fadel

Tim. Thanks

Anthony Blasquez

Tim. Thanks

Operator

comes from question of next Rowan Janney. Your line the John from

open. is line Your

John Rowan

Good morning, everyone.

Mitch Fadel

Hi John.

Maureen Short

Good morning.

John Rowan

implied going I expense you forward? to make raise the that kind the of timing debt. me stays of cost Can capital happens with was if interest trying deal Acima walk to and what through, the sure just of that isn't stable, the impacting

Maureen Short

Sure.

cash rate first our that's revolving generate paying will far liquidity a credit. revolver rate So, as down to more since – we as as is of line we be lowest flow, preserve the ABL goes. interest we the have That

in today. versus interest going a change be what there'll So, minimal we're rate seeing forward

John Rowan

Okay.

come some should expense interest rate you're is that same. roughly the interest as off paying down So, of But the debt?

Maureen Short

Yes, it will.

As we it time. will – decrease will dollars down debt, the pay over

Mitch Fadel

the the quarter, in the from because right? the down we first of middle not Maybe first quarter, quarter closed

John Rowan

the That's of at, closed what trying I'm right? You in middle get quarter. to the

of one only you trying when just the statement. interest because partial actually just lower at the look which out to if period, up goes quarter you're a I'm figure had debt expense cost end makes next period looking So,

Maureen Short

that's right. Yes,

saw the first So, quarter $XX was of half that only million the we the in approximately quarter's – worth. about

be will around going each reduce that over down pay if $XX time debt. quarter we it So, will forward, and million

Mitch Fadel

to would got Yes. million we to times It won't that leverage we we're $XX the – from two because about the XX that talking down XX take months. already double paid

strong. to the The first quarter was times. two still We're already down

the won't it but million. about It double, ballpark. So, to quite that's goes $XX

John Rowan

you talked down. And Okay. housekeeping talking of EPS second what about year-over-year half. in believe Maureen, get I just written a couple then about you I didn't growth. repeat Can you versus – XQ quite were questions. you it said? two guidance

Maureen Short

Yes.

the is half. And for diluted basis up we quarter back because expected last back to the of in XX% year. approximately And So, XX% more on EPS to part to of be XX% the year, returning half then normalized a to second is metrics non-GAAP the the expect up levels of versus year-over-year. that be

Mitch Fadel

Yes. Partially then last that. comparing And obviously, year. we're to

on obviously to XX%, pandemic latter in and the then what closures year, the going to last which XX% is with where pretty lot were with forth. half still a reserves the to going knowing year's do quarter, not strong with XX% quarter taking year skip/stolen, second those second in the last So up was and to has so the of second quarter the end

well. a lot has what with happened it to as So, last do year

John Rowan

mentioned Do it me. press stores. didn't question you last the X,XXX release. Mitch, have for the And company-owned see number? in Okay. you just actual around I

Mitch Fadel

head. XXX X,XXX franchise. That's top my and the it's what is pretty what's think U.S. off good it, and in of XXX I Mexico in in then,

John Rowan

pretty sounds to It accurate me.

All right. Okay. Thank you.

Mitch Fadel

Thanks, John.

Maureen Short

John. Thanks

John Rowan

Thanks.

Operator

from Anthony Loop the of line Chukumba Your comes from next Capital. question

Your line open. is

Anthony Chukumba

I'll it keep brief.

public mentioned competitors And of was one benefit has now your just buy later I got times I a later. to from with couple a now large provider, So, a pay wondering that. because a and certainly of they partnership be buy soon you pay guess

are the and if now you provide you. So, similar buy not, credit partnering I if you partnerships. conversations to if pay consider would having a about lease-to-own was later the just any Thank And wondering with stack?

Jason Hogg

the Anthony. Yes, for is Thanks Jay. This question.

partnership, obviously So, them a but actually, to buckets. into few I specific going put – few comment a I'm on not any

that We the always bucket have are actively waterfall pursuing. we

that integrated discussions because, strategy. to We Specific continue in again, is are are on a incremental as discussions are additive with pay buy it now your and number, later, well we already expand in to there to and to we those in players. once

segment consumer Our very is complementary.

that, access of effort with third enable had Mastercard we have in order segment actually more to to so the strategy integration is get as other then in no mentioned to our the ways much to to well. And merchants. absolutely partnership, is we consumer with as with in begin which And we the little tie that part name can merchants brand

a very are resolve that essentially coordinated So, three-pronged out. we

Anthony Chukumba

That’s helpful. Thank you.

Jason Hogg

Great. Thanks, Anthony.

Mitch Fadel

Thank you.

Operator

concludes to call closing back Fadel for comments. Mitch Q&A I the That turn Session. our now

Mitch Fadel

it's We Jason, appreciate you, and time. and very story. for and We're here. a going together multiple, with everyone, rates compelling at thank our two you, your us pretty Thank look excited put margins current think morning. got we joining pretty our about point. growth And we this We're what those on EBITDA future. fantastic excited this our got at you We've about

appreciate quarter listening time forward reporting you. look next it we to your So, again to to and

have great out everyone. there. So Thanks, day a

Operator

everybody That you concludes joining. today’s for conference call. Thank

disconnect. now may You