Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 21, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 1-39681 | |
Entity Registrant Name | THE AARON'S COMPANY, INC. | |
Entity Incorporation, State or Country Code | GA | |
Entity Tax Identification Number | 85-2483376 | |
Entity Address, Address Line One | 400 Galleria Parkway SE | |
Entity Address, Address Line Two | Suite 300 | |
Entity Address, City or Town | Atlanta | |
Entity Address, State or Province | GA | |
Entity Address, Postal Zip Code | 30339-3182 | |
City Area Code | 678 | |
Local Phone Number | 402-3000 | |
Title of 12(b) Security | Common Stock, $0.50 Par Value | |
Trading Symbol | AAN | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 30,908,711 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001821393 | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
ASSETS: | ||
Cash and Cash Equivalents | $ 44,267 | $ 27,716 |
Accounts Receivable (net of allowances of $5,908 at March 31, 2023 and $8,895 at December 31, 2022) | 30,286 | 38,191 |
Lease Merchandise (net of accumulated depreciation and allowances of $423,541 at March 31, 2023 and $431,092 at December 31, 2022) | 666,472 | 693,795 |
Merchandise Inventories, Net | 86,336 | 95,964 |
Property, Plant and Equipment, Net | 263,878 | 267,457 |
Operating Lease Right-of-Use Assets | 458,421 | 459,950 |
Goodwill | 55,750 | 54,710 |
Other Intangibles, Net | 115,863 | 118,528 |
Income Tax Receivable | 3,809 | 5,716 |
Prepaid Expenses and Other Assets | 101,018 | 96,436 |
Total Assets | 1,826,100 | 1,858,463 |
LIABILITIES & SHAREHOLDERS’ EQUITY: | ||
Accounts Payable and Accrued Expenses | 242,399 | 264,043 |
Deferred Tax Liabilities | 87,519 | 87,008 |
Customer Deposits and Advance Payments | 74,828 | 73,196 |
Operating Lease Liabilities | 495,338 | 496,401 |
Debt | 222,113 | 242,413 |
Total Liabilities | 1,122,197 | 1,163,061 |
Commitments and Contingencies (Note 6) | ||
SHAREHOLDERS' EQUITY: | ||
Common Stock, Par Value $0.50 Per Share: Authorized: 112,500,000 Shares at March 31, 2023 and December 31, 2022; Shares Issued: 36,596,057 at March 31, 2023 and 36,100,011 at December 31, 2022 | 18,298 | 18,050 |
Additional Paid-in Capital | 741,054 | 738,428 |
Retained Earnings | 87,905 | 79,073 |
Accumulated Other Comprehensive Loss | (2,062) | (1,396) |
Stockholders' equity before treasury stock | 845,195 | 834,155 |
Less: Treasury Shares at Cost | ||
5,687,346 Shares at March 31, 2023 and 5,480,353 at December 31, 2022 | (141,292) | (138,753) |
Total Shareholders’ Equity | 703,903 | 695,402 |
Total Liabilities & Shareholders’ Equity | $ 1,826,100 | $ 1,858,463 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 5,908 | $ 8,895 |
Lease Merchandise, accumulated depreciation and allowances | $ 423,541 | $ 431,092 |
Common stock, par value (in dollars per share) | $ 0.50 | $ 0.50 |
Common stock, shares authorized (in shares) | 112,500,000 | 112,500,000 |
Common stock, shares issued (in shares) | 36,596,057 | 36,100,011 |
Treasury shares (in shares) | 5,687,346 | 5,480,353 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Earnings (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
REVENUES: | ||
Revenues | $ 554,361 | $ 456,082 |
COSTS OF REVENUES: | ||
Total cost of revenue | 258,667 | 171,135 |
GROSS PROFIT | 295,694 | 284,947 |
OPERATING EXPENSES: | ||
Personnel Costs | 131,445 | 121,110 |
Other Operating Expenses, Net | 124,145 | 104,359 |
Provision for Lease Merchandise Write-Offs | 20,160 | 21,957 |
Restructuring Expenses, Net | 5,289 | 3,335 |
Separation Costs | 129 | 540 |
Acquisition-Related Costs | 1,848 | 3,464 |
Operating expenses, total | 283,016 | 254,765 |
OPERATING PROFIT | 12,678 | 30,182 |
Interest Expense | (4,358) | (350) |
Other Non-Operating Income (Expense), Net | 572 | (927) |
EARNINGS BEFORE INCOME TAXES | 8,892 | 28,905 |
INCOME TAX (BENEFIT) EXPENSE | (3,906) | 7,373 |
NET EARNINGS | $ 12,798 | $ 21,532 |
(LOSS) EARNINGS PER SHARE (in dollars per share) | $ 0.42 | $ 0.69 |
(LOSS) EARNINGS PER SHARE ASSUMING DILUTION (in dollars per share) | $ 0.41 | $ 0.68 |
Lease Revenues and Fees | ||
REVENUES: | ||
Revenues | $ 373,795 | $ 409,318 |
COSTS OF REVENUES: | ||
Costs of goods and services sold | 125,141 | 136,665 |
Retail Sales | ||
REVENUES: | ||
Revenues | 150,546 | 12,607 |
COSTS OF REVENUES: | ||
Costs of goods and services sold | 113,529 | 9,114 |
Non-Retail Sales | ||
REVENUES: | ||
Revenues | 23,935 | 27,827 |
COSTS OF REVENUES: | ||
Costs of goods and services sold | 19,997 | 25,356 |
Franchise Royalties and Other Revenues | ||
REVENUES: | ||
Revenues | $ 6,085 | $ 6,330 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements Of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | ||
Statement of Comprehensive Income [Abstract] | |||
Net Earnings | $ 12,798 | $ 21,532 | |
Other Comprehensive (Loss) Income: | |||
Unrealized (Loss) Gain on Derivative Instruments, net of Tax | [1] | (990) | 154 |
Foreign Currency Translation Adjustment, net of Tax | [1] | 324 | 238 |
Total Other Comprehensive (Loss) Income | (666) | 392 | |
Comprehensive Income | $ 12,132 | $ 21,924 | |
[1]As of March 31, 2023, the Unrealized Loss on Derivative Instruments and the Foreign Currency Translation Adjustment are presented net of tax of $0.3 million and $0.3 million, respectively and the tax components of the prior year amounts are insignificant. |
Condensed Consolidated Statem_3
Condensed Consolidated Statements Of Comprehensive (Loss) Income (Unaudited) (Parenthetical) $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Statement of Comprehensive Income [Abstract] | |
Unrealized (Loss) Gain on Derivative Instruments, Tax | $ 0.3 |
Foreign Currency Translation Adjustment, Tax | $ 0.3 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
OPERATING ACTIVITIES: | ||
Net Earnings | $ 12,798 | $ 21,532 |
Adjustments to Reconcile Net Earnings to Cash Provided by Operating Activities: | ||
Depreciation of Lease Merchandise | 123,291 | 134,713 |
Other Depreciation and Amortization | 22,570 | 18,149 |
Provision for Lease Merchandise Write-Offs | 20,160 | 21,957 |
Accounts Receivable Provision | 6,908 | 6,753 |
Stock-Based Compensation | 2,922 | 3,611 |
Deferred Income Taxes | (5,985) | 6,241 |
Impairment of Assets | 914 | 1,585 |
Non-Cash Lease Expense | 30,042 | 23,971 |
Other Changes, Net | (900) | (4,576) |
Changes in Operating Assets and Liabilities: | ||
Lease Merchandise | (116,820) | (153,711) |
Merchandise Inventories | 9,801 | 0 |
Accounts Receivable | 1,016 | (4,190) |
Prepaid Expenses and Other Assets | 1,346 | (11,610) |
Income Tax Receivable | 1,907 | 876 |
Operating Lease Right-of-Use Assets and Liabilities | (30,350) | (27,009) |
Accounts Payable and Accrued Expenses | (18,470) | 846 |
Customer Deposits and Advance Payments | (190) | (10,086) |
Cash Provided by Operating Activities | 60,960 | 29,052 |
INVESTING ACTIVITIES: | ||
Purchases of Property, Plant, and Equipment | (20,209) | (25,103) |
Proceeds from Dispositions of Property, Plant, and Equipment | 2,149 | 8,136 |
Proceeds from Other Investing-Related Activities | 0 | 190 |
Cash Used in Investing Activities | (18,060) | (17,063) |
FINANCING ACTIVITIES: | ||
Repayments on Swing Line Loans, Net | (19,250) | 0 |
Proceeds from Revolver and Term Loan | 31,094 | 0 |
Repayments on Revolver and Term Loan | (32,187) | (10,000) |
Dividends Paid | (3,442) | (3,110) |
Acquisition of Treasury Stock | 0 | (4,722) |
Issuance of Stock Under Stock Option Plans | 0 | 52 |
Shares Withheld for Tax Payments | (2,539) | (3,541) |
Cash Used in Financing Activities | (26,324) | (21,321) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (25) | 18 |
Increase (Decrease) in Cash and Cash Equivalents | 16,551 | (9,314) |
Cash and Cash Equivalents at Beginning of Period | 27,716 | 22,832 |
Cash and Cash Equivalents at End of Period | 44,267 | 13,518 |
Other Businesses and Customer Agreements | ||
INVESTING ACTIVITIES: | ||
Acquisition of Businesses and Customer Agreements, Net of Cash Acquired | $ 0 | $ (286) |
Basis and Summary of Significan
Basis and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis and Summary of Significant Accounting Policies | BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Inflationary and other economic pressures, general macroeconomic conditions, rising interest rates, and the novel coronavirus ("COVID-19") pandemic have led to significant market disruption. For a discussion of trends that we believe have affected our business as a result of these items, see Part I, Item 2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations", including the "COVID-19 Pandemic," "Highlights," "Consolidated Results of Operations" and "Liquidity and Capital Resources", below, and Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission on March 1, 2023 (the "2022 Annual Report"). Description of Business The Aaron's Company, Inc. (the "Company") is a leading, technology-enabled, omni-channel provider of lease-to-own ("LTO") and retail purchase solutions of furniture, electronics, appliances, and other home goods across its brands: Aaron's, BrandsMart U.S.A., BrandsMart Leasing, and Woodhaven Furniture Industries ("Woodhaven"). Unless the context otherwise requires or we specifically indicate otherwise, references to "we," "us," "our," and the "Company," refer to The Aaron's Company, Inc., which holds, directly or indirectly, the Pre-Spin Aaron’s Business (as described in the 2022 Annual Report) and all other subsidiaries of the Company, which are wholly owned, as well as other lines of business described above. As of March 31, 2023, the Company's operating and reportable segments are the Aaron's Business and BrandsMart, each as described below. Effective as of April 1, 2022 and in connection with the acquisition of BrandsMart U.S.A., the Company changed its composition of reportable segments to align the reportable segments with the current organizational structure and the operating results that the chief operating decision maker regularly reviews to analyze performance and allocate resources, which includes separate segments for the Aaron's Business and BrandsMart, along with an Unallocated Corporate category for remaining unallocated costs. The Company has retroactively adjusted, for all periods presented, its segment disclosures to align with the current composition of reportable segments. The Aaron's Business segment is comprised of (i) Aaron's branded Company-operated and franchise-operated stores; (ii) aarons.com e-commerce platform ("aarons.com"); (iii) Woodhaven; and (iv) BrandsMart Leasing (collectively, the "Aaron’s Business"). The operations of BrandsMart U.S.A. (excluding BrandsMart Leasing) comprise the BrandsMart segment (collectively, "BrandsMart"). BrandsMart U.S.A. Acquisition On April 1, 2022, the Company completed the previously announced transaction to acquire a 100% ownership of Interbond Corporation of America, doing business as BrandsMart U.S.A. The Company paid total consideration of approximately $230 million in cash under the terms of the agreement and additional amounts for working capital adjustments and transaction related fees. Refer to Note 2 to these condensed consolidated financial statements for additional information regarding the BrandsMart U.S.A. acquisition. Management believes that the BrandsMart U.S.A. acquisition will strengthen the Company's ability to deliver on its mission of enhancing people’s lives by providing easy access to high quality furniture, appliances, electronics, and other home goods through affordable lease-to-own and retail purchase options. Management also believes that value creation opportunities include leveraging the Company's lease-to-own expertise to provide BrandsMart U.S.A.'s customers enhanced payment options and offering a wider selection of products to millions of Aaron's customers, as well as generating procurement savings and other cost synergies. Aaron's Business Segment Since its founding in 1955, Aaron's has been committed to serving the overlooked and underserved customer with a dedication to inclusion and improving the communities in which it operates. Through a portfolio of 1,261 stores and its aarons.com e-commerce platform, Aaron's, together with its franchisees, provide consumers with LTO and retail purchase solutions for the products they need and want, with a focus on providing its customers with unparalleled customer service, high approval rates, lease plan flexibility, and an attractive value proposition, including competitive monthly payments and total cost of ownership, as compared to other LTO providers. Woodhaven manufactures and supplies a significant portion of the upholstered furniture leased and sold in Company-operated and franchised Aaron's stores. Launched in 2022, BrandsMart Leasing offers LTO purchase solutions to customers of BrandsMart U.S.A. BrandsMart Segment Founded in 1977, BrandsMart U.S.A. is one of the leading appliance and consumer electronics retailers in the southeast United States and one of the largest appliance retailers in the country with ten stores in Florida and Georgia and a growing e-commerce presence on brandsmartusa.com. The operations of BrandsMart U.S.A. (other than BrandsMart Leasing) comprise the BrandsMart segment. The following table presents store count by ownership type: Stores as of March 31 (Unaudited) 2023 2022 Company-operated Aaron's Stores 1 1,030 1,070 GenNext (included in Company-Operated) 222 135 Franchisee-operated Aaron's Stores 231 236 BrandsMart U.S.A. Stores 2 10 — Systemwide Stores 1,271 1,306 Company-operated Aaron's Store Types as of March 31, 2023 (Unaudited) GenNext Legacy Total Store 196 750 946 Hub 25 17 42 Showroom 1 41 42 Total 222 808 1,030 1 The typical layout for a Company-operated Aaron's store is a combination of showroom, customer service and warehouse space, averaging approximately 11,000 square feet. Certain Company-operated Aaron's stores consist solely of a showroom. 2 BrandsMart U.S.A. stores average approximately 100,000 square feet and have been included in this table subsequent to the acquisition date of April 1, 2022. Basis of Presentation The financial statements as of and for the three months ended March 31, 2023 and comparable prior year period are condensed consolidated financial statements of the Company and its subsidiaries, each of which is wholly-owned, and is based on the financial position and results of operations of the Company. Intercompany balances and transactions between consolidated entities have been eliminated. These condensed consolidated financial statements reflect the historical results of operations, financial position and cash flows of the Company in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The preparation of the Company's condensed consolidated financial statements in conformity with U.S. GAAP for interim financial information requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. The extent to which inflationary and other economic pressures and any ongoing effects of the COVID-19 pandemic will impact the Company's business will depend on future developments. These developments are uncertain and cannot be precisely predicted at this time. In many cases, management's estimates and assumptions are dependent on estimates of such future developments and may change in the future. The accompanying unaudited condensed consolidated financial statements do not include all information required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in the 2022 Annual Report. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of operating results that may be achieved for any other interim period or for the full year. Reclassifications The following reclassifications have been made to the prior periods to conform to the current period presentation. For all previously reported periods prior to April 1, 2022, the Company presented all revenues derived from lease agreements and the related fees, as well as the retail sale of both new and returned lease merchandise from our Company-operated Aaron's stores and fees from our Aaron's Club program within one line in the condensed consolidated statements of earnings, presented as lease and retail revenues. Effective April 1, 2022, the Company revised its presentation to separately present revenues derived from lease agreements at our Company-operated Aaron's stores and e-commerce platform and fees from our Aaron's Club program as lease revenues and fees in the condensed consolidated statements of earnings, with the sale of both new and returned lease merchandise from our Company-operated Aaron's stores being classified as retail sales. This revised presentation does not have an impact on total revenues presented in prior periods. Similarly, for all previously reported periods prior to April 1, 2022, the Company presented the depreciation expense associated with lease merchandise as well as the depreciated costs of merchandise sold within one line in the condensed consolidated statements of earnings, presented as the cost of lease and retail revenues. Effective April 1, 2022, the Company revised its presentation to separately present the depreciation expense associated with lease merchandise in the condensed consolidated statements of earnings, with the costs associated with merchandise sold through our Company-operated Aaron's stores presented as retail cost of sales. This revised presentation does not have an impact on total costs of revenues presented in prior periods. Accounting Policies and Estimates See Note 1 to the consolidated and combined financial statements in the 2022 Annual Report for an expanded discussion of accounting policies and estimates. Earnings Per Share Earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. The computation of earnings per share assuming dilution includes the dilutive effect of stock options, restricted stock units ("RSUs"), restricted stock awards ("RSAs"), performance share units ("PSUs") and other awards issuable under the Company's employee stock purchase plan ("ESPP") (collectively, "share-based awards") as determined under the treasury stock method, unless the inclusion of such awards would have been anti-dilutive. The following table shows the calculation of weighted-average shares outstanding assuming dilution: Three Months Ended (Shares In Thousands) 2023 2022 Weighted Average Shares Outstanding 30,793 31,062 Dilutive Effect of Share-Based Awards 446 698 Weighted Average Shares Outstanding Assuming Dilution 31,239 31,760 Approximately 1.2 million and 0.5 million weighted-average share based awards were excluded from the computation of earnings per share assuming dilution during the three months ended March 31, 2023 and March 31, 2022, respectively, as the awards would have been anti-dilutive for the periods presented. Revenue Recognition The Company provides lease and retail merchandise, consisting of appliances, electronics, furniture, and other home goods to its customers for lease under certain terms agreed to by the customer and through retail sales. The Company's Aaron's stores, aaron's.com e-commerce platform, and BrandsMart Leasing components of the Aaron's Business segment offer leases with flexible ownership plans that can be generally renewed weekly, bi-weekly, semi-monthly, or monthly up to 12, 18 or 24 months. The Aaron's Business segment also earns revenue from the sale of merchandise to customers and Aaron's franchisees, and earns ongoing revenue from Aaron's franchisees in the form of royalties and through advertising efforts that benefit the franchisees. The Company's BrandsMart U.S.A. stores and related brandsmartusa.com e-commerce platform offer the sale of merchandise directly to its customers via retail sales. See Note 5 to these condensed consolidated financial statements for further information regarding the Company's revenue recognition policies and disclosures. Advertising The Company expenses advertising costs as incurred. Advertising production costs are initially recognized as a prepaid advertising asset and are expensed when an advertisement appears for the first time. Total advertising costs were $13.0 million and $10.7 million during the three months ended March 31, 2023 and 2022, respectively, and are classified within other operating expenses, net in the condensed consolidated statements of earnings. These advertising costs are presented net of cooperative advertising considerations received from vendors, which represents reimbursement of specific, identifiable and incremental costs incurred in selling those vendors’ products. The amount of cooperative advertising consideration recorded as a reduction of such advertising costs was $7.5 million and $7.0 million during the three months ended March 31, 2023 and 2022, respectively. The prepaid advertising asset was $4.8 million and $4.6 million at March 31, 2023 and December 31, 2022, respectively, and is reported within prepaid expenses and other assets on the condensed consolidated balance sheets. Accounts Receivable Accounts receivable consist primarily of receivables due from customers on lease agreements, corporate receivables incurred during the normal course of business (primarily for vendor consideration and third-party warranty providers), and franchisee obligations. Accounts receivable, net of allowances, consist of the following: (In Thousands) March 31, 2023 December 31, 2022 Customers $ 6,370 $ 9,721 Corporate 16,377 20,597 Franchisee 7,539 7,873 $ 30,286 $ 38,191 The Company maintains an accounts receivable allowance for the Aaron's Business customer lease agreements, under which its policy is to record a provision for returns and uncollectible contractually due renewal payments based on historical payments experience, which is recognized as a reduction of lease revenues and fees within the condensed consolidated statements of earnings. Other qualitative factors are considered in estimating the allowance, such as current and forecasted business trends. The Company writes off customer lease receivables, excluding customer lease receivables for its BrandsMart Leasing operations, that are 60 days or more past due on pre-determined dates twice monthly. The Company writes off customer lease receivables for its BrandsMart Leasing operations that are 90 days or more past due on pre-determined dates twice monthly. The Company also maintains an allowance for outstanding franchisee accounts receivable. The Company's policy is to estimate future losses related to certain franchisees that are deemed to have a higher risk of non-payment and record an allowance for these estimated losses. The estimated allowance on franchisee accounts receivable includes consideration of the financial position of each franchisee and qualitative consideration of potential losses associated with uncertainties impacting the franchisee's ability to satisfy their obligations. Uncertainties include inflationary and other economic pressures in the current macroeconomic environment and the normalization of business trends associated with the COVID-19 pandemic. Accordingly, actual accounts receivable write-offs could differ from the allowance. The provision for uncollectible franchisee accounts receivable is recorded as bad debt expense in other operating expenses, net within the condensed consolidated statements of earnings. The allowance related to remaining corporate receivables is not significant at March 31, 2023. The following table shows the components of the accounts receivable allowance: Three Months Ended (In Thousands) 2023 2022 Beginning Balance $ 8,895 $ 7,163 Accounts Written Off, net of Recoveries (9,895) (8,665) Accounts Receivable Provision 6,908 6,753 Ending Balance $ 5,908 $ 5,251 The following table shows the components of the accounts receivable provision, which includes amounts recognized for bad debt expense and the provision for returns and uncollected payments: Three Months Ended (In Thousands) 2023 2022 Bad Debt Expense (Reversal) $ 26 $ (175) Provision for Returns and Uncollectible Renewal Payments 6,882 6,928 Accounts Receivable Provision $ 6,908 $ 6,753 Lease Merchandise The Company’s lease merchandise is recorded at the lower of depreciated cost, including overhead costs from our distribution centers, or net realizable value. The cost of merchandise manufactured by our Woodhaven operations is recorded at cost and includes overhead from production facilities, shipping costs and warehousing costs. The Company begins depreciating lease merchandise at the earlier of 12 months and one day from its purchase of the merchandise or when the merchandise is leased to customers. Lease merchandise fully depreciates over the lease agreement period when on lease, generally 12 to 24 months, and generally 36 months when not on lease. Depreciation is accelerated upon early payout. The following is a summary of lease merchandise, net of accumulated depreciation and allowances: (In Thousands) March 31, 2023 December 31, 2022 Merchandise on Lease, net of Accumulated Depreciation and Allowances $ 424,301 $ 446,923 Merchandise Not on Lease, net of Accumulated Depreciation and Allowances 1 242,171 246,872 Lease Merchandise, net of Accumulated Depreciation and Allowances $ 666,472 $ 693,795 1 Includes Woodhaven raw materials, finished goods and work-in-process inventory that has been classified within lease merchandise in the condensed consolidated balance sheets of $10.6 million and $12.9 million as of March 31, 2023 and December 31, 2022, respectively. The Aaron's store-based operations' policies require weekly merchandise counts at its store-based operations, which include write-offs for unsalable, damaged, or missing merchandise inventories. Monthly cycle counting procedures are performed at both the Aaron's distribution centers and Woodhaven manufacturing facilities. Physical inventories are also taken at the manufacturing facilities annually. The Company also monitors merchandise levels and mix by division, store, and distribution center, as well as the average age of merchandise on hand. If obsolete merchandise cannot be returned to vendors, its carrying amount is adjusted to its net realizable value or written off. Generally, all merchandise not on lease is available for lease or sale. On a monthly basis, all damaged, lost or unsalable merchandise identified is written off and is included as a component of the provision for lease merchandise write-offs in the accompanying condensed consolidated statements of earnings. The Company records a provision for write-offs using the allowance method, which is included within lease merchandise, net within the condensed consolidated balance sheets. The allowance method for lease merchandise write-offs estimates the merchandise losses incurred but not yet identified by management as of the end of the accounting period based primarily on historical write-off experience. Other qualitative factors are considered in estimating the allowance, such as seasonality and the impacts of uncertainty surrounding inflationary and other economic pressures in the current macroeconomic environment and the normalization of business trends associated with the COVID-19 pandemic on our customers. Therefore, actual lease merchandise write-offs could differ from the allowance. The provision for write-offs is included in provision for lease merchandise write-offs in the accompanying condensed consolidated statements of earnings. The Company writes off lease merchandise on lease agreements, excluding lease agreements for its BrandsMart Leasing operations, that are 60 days or more past due on pre-determined dates twice monthly. The Company writes off lease merchandise on lease agreements for its BrandsMart Leasing operations that are 90 days or more past due on pre-determined dates twice monthly. The following table shows the components of the allowance for lease merchandise write-offs: Three Months Ended (In Thousands) 2023 2022 Beginning Balance $ 13,894 $ 12,339 Merchandise Written off, net of Recoveries (20,674) (22,183) Provision for Write-offs 20,160 21,957 Ending Balance $ 13,380 $ 12,113 Merchandise Inventories The Company’s merchandise inventories are stated at the lower of weighted average cost or net realizable value and consist entirely of merchandise held for sale by the BrandsMart segment. In-bound freight-related costs from vendors, net of allowances and vendor rebates, are included as part of the net cost of merchandise inventories. Costs associated with storing and transporting merchandise inventories to our retail stores are expensed as incurred and included within retail cost of sales in the condensed consolidated statements of earnings. The Company periodically evaluates aged and distressed inventory and establishes an inventory markdown which represents the excess of the carrying value over the amount the Company expects to realize from the ultimate sale of the inventory. Markdowns establish a new cost basis for the inventory and are recorded within retail cost of sales within the condensed consolidated statement of earnings. The write-offs of merchandise inventories associated with the Company's cycle and physical inventory count processes are also included within retail cost of sales in the condensed consolidated statement of earnings. The Company records an inventory reserve for the anticipated loss associated with selling inventories below cost. This reserve is based on management’s current knowledge with respect to inventory levels, sales trends, and historical experience selling or disposing of aged or obsolete inventory. The following is a summary of merchandise inventories, net of allowances: (In Thousands) March 31, 2023 December 31, 2022 Merchandise Inventories, gross $ 87,241 $ 96,945 Reserve for Merchandise Inventories (905) (981) Merchandise Inventories, net $ 86,336 $ 95,964 The following table shows the components of the reserve for merchandise inventories: Three Months Ended (In Thousands) March 31, 2023 Beginning Balance $ 981 Merchandise Written off — Provision for Write-offs (76) Ending Balance $ 905 Retail and Non-Retail Cost of Sales Included in retail cost of sales, as well as non-retail cost of sales, is the net book value of merchandise sold via retail and non-retail sales, primarily using specific identification. Prepaid Expenses and Other Assets Prepaid expenses and other assets consist of the following: (In Thousands) March 31, 2023 December 31, 2022 Prepaid Expenses $ 20,357 $ 20,218 Insurance Related Assets 21,848 25,103 Company-Owned Life Insurance 13,999 13,443 Assets Held for Sale 896 1,857 Deferred Tax Assets 23,433 16,277 Other Assets 1 20,485 19,538 $ 101,018 $ 96,436 1 Amounts as of March 31, 2023 and December 31, 2022 included restricted cash of $1.6 million held as collateral for BrandsMart U.S.A.'s workers' compensation and general liability insurance policies. Sale-Leaseback Transactions During the three months ended March 31, 2022, the Company entered into a sale and leaseback transaction related to three Company-owned Aaron's store properties. The Company received net proceeds of $5.7 million, which were presented within proceeds from dispositions of property, plant and equipment in the condensed consolidated statements of cash flows and recorded a gain of $3.8 million related to the sale and leaseback transaction, which was classified within other operating expenses, net in the condensed consolidated statements of earnings and was presented within other charges, net in the condensed consolidated statements of cash flows. Interest Rate Swap In March 2023, the Company entered into an interest rate swap agreement for an aggregate notional amount of $100.0 million with an effective date of April 28, 2023 and a termination date of March 31, 2027. The purpose of this hedge is to limit the Company's exposure of its variable interest rate debt by effectively converting it to fixed interest rate debt. Under the terms of the agreement, the Company will receive a floating interest rate based on 1-month Chicago Mercantile Exchange ("CME") Term Secured Overnight Financing Rate ("SOFR") and pay a fixed interest rate of 3.87% on the notional amount. The Company has accounted for the interest rate swap as a derivative instrument in accordance with ASC 815, Derivatives and Hedging ("ASC 815"), and the interest rate swap was designated as a cash flow hedge at inception. As of March 31, 2023, the facts and circumstances of the hedged relationship remain consistent with the initial effectiveness assessment in that the hedged instrument remains an effective accounting hedge. The fair value of the hedge as of March 31, 2023 was a liability of $1.3 million, which has been recorded within accounts payable and accrued expenses and as a component of accumulated other comprehensive loss in the Company's condensed consolidated balance sheets. See Note 3 to these condensed consolidated financial statements for further information regarding the fair value determination of the Company's interest rate swap agreement. The amounts from accumulated other comprehensive loss will begin to impact earnings once the swap becomes effective in the second quarter of 2023. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following: (In Thousands) March 31, 2023 December 31, 2022 Accounts Payable $ 96,096 $ 106,966 Estimated Claims Liability Costs 59,201 58,549 Accrued Salaries and Benefits 27,470 33,932 Accrued Real Estate and Sales Taxes 21,379 24,030 Other Accrued Expenses and Liabilities 38,253 40,566 $ 242,399 $ 264,043 Estimated Claims Liability Costs Estimated claims liability costs are accrued primarily for workers compensation and vehicle liability, as well as general liability and group health insurance benefits provided to team members. These liabilities are recorded within estimated claims liability costs within accounts payable and accrued expenses in the condensed consolidated balance sheets. Estimates for these claims liabilities are made based on actual reported but unpaid claims and actuarial analysis of the projected claims run off for both reported and incurred but not reported claims. This analysis is based upon an assessment of the likely outcome or historical experience and considers a variety of factors, including the actuarial loss forecasts, company-specific development factors, general industry loss development factors and third-party claim administrator loss estimates of individual claims. The Company makes periodic prepayments to its insurance carriers to cover the projected claims run off for both reported and incurred but not reported claims, considering its retention or stop loss limits. In addition, we have prefunding balances on deposit and other insurance receivables with the insurance carriers which are recorded within prepaid expenses and other assets in our condensed consolidated balance sheets. Goodwill Goodwill represents the excess of the purchase price paid over the fair value of the identifiable net tangible and intangible assets acquired in connection with business acquisitions. All acquisition-related goodwill balances are allocated amongst the Company's reporting units based on the nature of the acquired operations that originally created the goodwill. During the fourth quarter of 2022, in connection with its annual impairment testing, management evaluated the various components of the operating segments further described above and in Note 8 to these condensed consolidated financial statements and identified three reporting units, Aaron's Business, BrandsMart, and BrandsMart Leasing, each as described below. The Aaron's Business reporting unit is comprised of (i) Aaron's branded Company-operated and franchise operated stores; (ii) aarons.com e-commerce platform ("aarons.com"); and (iii) Woodhaven (collectively, the "Aaron’s Business reporting unit"). The Aaron's Business reporting unit is a component of the Aaron's Business operating segment. The operations of BrandsMart Leasing comprise the BrandsMart Leasing reporting unit (collectively, the "BrandsMart Leasing reporting unit"), and is a component of the Aaron's Business operating segment. Management considered the aggregation of the BrandsMart Leasing reporting unit and Aaron's Business reporting unit as a single reporting unit and determined that these components were economically dissimilar and also reviewed separately by the segment managers of the Aaron's Business operating segment, and therefore should not be aggregated. The operations of BrandsMart, comprise the BrandsMart reporting unit (collectively, the "BrandsMart reporting unit") and is also the sole component of the BrandsMart operating segment. The acquisition of BrandsMart U.S.A. in the second quarter of 2022 resulted in the recognition of approximately $55.8 million of goodwill, inclusive of measurement period adjustments further described in Note 2 to these condensed consolidated financial statements. Of this amount, $26.5 million was assigned to the BrandsMart Leasing reporting unit. The following table provides information related to the carrying amount of goodwill by operating segment. (In Thousands) Aaron's Business BrandsMart BrandsMart Leasing Total Balance at December 31, 2022 $ — $ 28,193 $ 26,517 $ 54,710 Acquisitions — — — — Currency Translation Adjustments — — — — Acquisition Accounting Adjustments — 1,040 — 1,040 Impairment Loss — — — — Balance at March 31, 2023 $ — $ 29,233 $ 26,517 $ 55,750 The Company’s goodwill is not amortized but is subject to an impairment test at the reporting unit level annually as of October 1 and more frequently if events or circumstances indicate that an interim impairment may have occurred. An interim goodwill impairment test is required if the Company believes it is more likely than not that the carrying amount of its reporting unit exceeds the reporting unit's fair value. The Company determined that there were no events that occurred or circumstances that changed during the three months ended March 31, 2023 that would more likely than not reduce the fair value of its reporting units below their carrying amount. The Company may be required to recognize material impairments to the BrandsMart or BrandsMart Leasing goodwill balances in the future if: (i) the Company fails to successfully execute on one or more elements of the BrandsMart strategic plan; (ii) actual results are unfavorable to the Company's estimates and assumptions used to calculate fair value; (iii) the BrandsMart or BrandsMart Leasing carrying values increase without an associated increase in the fair value; and/or (iv) BrandsMart or BrandsMart Leasing is materially impacted by further deterioration of macroeconomic conditions, including inflation and other economic pressures, including rising interest rates. Acquisition-Related Costs Acquisition-related costs of $1.8 million and $3.5 million were incurred during the three months ended March 31, 2023 and 2022, respectively, and primarily represent internal control readiness third-party consulting, banking and legal expenses and retention bonuses associated with the acquisition of BrandsMart U.S.A completed April 1, 2022. Related Party Transactions with the Sellers of BrandsMart U.S.A. Effective as of the BrandsMart U.S.A. acquisition date, the Company entered into lease agreements for six store locations retained by the sellers of BrandsMart U.S.A., including Michael Perlman, who was employed by the Company for a short period following the acquisition. While Mr. Perlman is no longer employed by the Company as of December 31, 2022, the Company intends to continue its treatment of the lease agreements as potential related party transactions under the Company’s Related Party Policy until December 2023. The agreements include initial terms of ten years, with options to renew each location for up to 20 years thereafter. The Company recorded these leases within operating lease right-of-use assets and operating lease liabilities in the Company's condensed consolidated balance sheets. The six operating leases have aggregate annual rental |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | ACQUISITIONS BrandsMart U.S.A. Acquisition On April 1, 2022, the Company completed the previously announced acquisition of all of the issued and outstanding shares of capital stock of BrandsMart U.S.A. Founded in 1977, BrandsMart U.S.A. is one of the leading appliance and consumer electronics retailers in the southeastern United States and one of the largest appliance retailers in the country, with ten stores in Florida and Georgia and a growing e-commerce presence on brandsmartusa.com. The Company paid total consideration of approximately $230 million in cash under the terms of the agreement and additional amounts for working capital adjustments and transaction related fees. Consideration transferred also included the off-market value associated with certain operating leases entered into in conjunction with the transaction, which is further described in the table below. Management believes that the BrandsMart U.S.A. acquisition will strengthen the Company's ability to deliver on its mission of enhancing people’s lives by providing easy access to high quality furniture, appliances, electronics, and other home goods through affordable lease-to-own and retail purchase options. Management also believes that value creation opportunities include leveraging the Company's lease-to-own expertise to provide BrandsMart U.S.A.'s customers enhanced payment options and offering a wider selection of products to millions of Aaron's customers, as well as generating procurement savings and other cost synergies. The BrandsMart U.S.A. acquisition has been accounted for as a business combination, and the BrandsMart results of operations are included in the Company's results of operations from the April 1, 2022 acquisition date. BrandsMart contributed revenues of $144.2 million during the three months ended March 31, 2023. Acquisition Accounting The consideration transferred and the estimated fair values of the assets acquired and liabilities assumed in the BrandsMart U.S.A. acquisition as of the April 1, 2022 acquisition date as well as measurement period adjustments recorded since the fiscal quarter ended June 30, 2022, are as follows: (In Thousands) Preliminary Amounts Recognized as of Acquisition Date 1 2023 Measurement Period Adjustments 2 Amounts Recognized as of Acquisition Date Cash Consideration to BrandsMart U.S.A. $ 230,000 $ — $ 230,000 Acquired Cash 15,952 — 15,952 Estimated Excess Working Capital, net of Cash 35,599 — 35,599 Non-Cash Off-Market Lease Agreement 3 6,823 — 6,823 Aggregate Consideration Transferred 288,374 — 288,374 Total Purchase Consideration, Net of Cash Acquired 272,422 — 272,422 Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed Accounts Receivable 4,310 — 4,310 Merchandise Inventories 124,064 173 124,237 Property, Plant and Equipment 22,053 (1,361) 20,692 Operating Lease Right-of-Use Assets 160,210 — 160,210 Other Intangibles 4 122,950 — 122,950 Prepaid Expenses and Other Assets 5 9,049 (80) 8,969 Total Identifiable Assets Acquired 442,636 (1,268) 441,368 Accounts Payable and Accrued Expenses 25,340 (2,050) 23,290 Customer Deposits and Advance Payments 25,332 1,822 27,154 Operating Lease Liabilities 158,712 — 158,712 Debt 15,540 — 15,540 Total Liabilities Assumed 224,924 (228) 224,696 Net Assets Acquired 217,712 (1,040) 216,672 Goodwill 6 54,710 1,040 55,750 Total Estimated Fair Value of Net Assets Acquired $ 272,422 $ — $ 272,422 1 As previously reported in the notes to the consolidated and combined financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. 2 The measurement period adjustments recorded in 2023 primarily relate to opening balance sheet adjustments to certain asset and liability balances further illustrated in the table above. 3 Effective as of the acquisition date, the Company entered into lease agreements for six store locations retained by the sellers of BrandsMart U.S.A. The agreement includes initial terms of ten years, with options to renew each location for up to 20 years thereafter. The annual rent is considered to be above market. The value of the off-market element of the lease agreements has been included in consideration transferred and as a reduction to the operating lease right-of-use-asset. 4 Identifiable intangible assets are further disaggregated in the table set forth below. 5 Includes restricted cash of $2.5 million at the acquisition date that was held as collateral for BrandsMart U.S.A.'s workers' compensation and general liability insurance policies. 6 The purchase price exceeded the fair value of the net assets acquired, which resulted in the recognition of goodwill, all of which is expected to be deductible for tax purposes. Goodwill is comprised of synergies created from the expected future benefits to the Company, including those related to the expansion of BrandsMart stores into new markets, expanded product assortment, procurement synergies, the projected growth of the BrandsMart Leasing business, and certain other intangible assets that do not qualify for separate recognition, such as an assembled workforce. See Note 1 to these condensed consolidated financial statements for further discussion of the identification of the Company's reporting units and the allocation of goodwill and Note 8 for the discussion of operating segments associated with the BrandsMart U.S.A. acquisition. The estimated values of intangible assets attributable to the BrandsMart U.S.A. acquisition are comprised of the following: Fair Value Weighted Average Life Trade Names $ 108,000 20.0 Non-Compete Agreements 250 3.0 Customer List 14,700 4.0 Total Acquired Intangible Assets $ 122,950 During the three months ended March 31, 2023, the Company incurred $1.8 million of transaction costs in connection with the acquisition of BrandsMart U.S.A. These costs were included within "Acquisition-Related Costs" in the condensed consolidated statements of earnings. Acquisition-Related Costs that will affect the Company's income statement throughout the remainder of 2023 are not expected to be material. Pro Forma Financial Information The following table presents unaudited consolidated pro forma information as if the acquisition of BrandsMart U.S.A. had occurred on January 1, 2021, compared to actual, historical results. (Unaudited) Three Months Ended March 31, 2022 (In Thousands) As Reported Pro Forma Combined Results Revenues $ 456,082 $ 641,227 Earnings Before Income Taxes 28,905 31,487 Net Earnings 21,532 23,489 The unaudited pro forma combined financial information does not reflect the costs of any integration activities or dis-synergies, or benefits that may result from future costs savings due to revenue synergies, procurement savings or operational efficiencies expected to result from the BrandsMart U.S.A. acquisition. Accordingly, the unaudited pro forma financial information above is not intended to represent or be indicative of the consolidated results of operations of the Company that would have been reported had the BrandsMart U.S.A. acquisition been completed as of the dates presented, and should not be construed as representative of the future consolidated results of operations or financial condition of the combined entity. The unaudited pro forma combined financial information for the three months ended March 31, 2022 includes adjustments to, among other things, record depreciation expense, amortization expense and income taxes based upon the fair value allocation of the purchase price to BrandsMart U.S.A.'s tangible and intangible assets acquired and liabilities assumed as though the acquisition had occurred on January 1, 2021. Interest expense on the additional debt incurred by the Company to fund the acquisition and personnel costs incurred related to the acquisition are also included in the unaudited pro forma combined information as if the BrandsMart U.S.A. acquisition had occurred on January 1, 2021 for the pro forma three months ended March 31, 2022. |
Fair Value Measurement
Fair Value Measurement | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | FAIR VALUE MEASUREMENT Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table summarizes financial liabilities measured at fair value on a recurring basis: (In Thousands) March 31, 2023 December 31, 2022 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Deferred Compensation Liability $ — $ (9,187) $ — $ — $ (8,621) $ — Interest Rate Swap Liability $ — $ (1,278) $ — $ — $ — $ — The Company maintains The Aaron's Company, Inc. Deferred Compensation Plan, which is an unfunded, nonqualified deferred compensation plan for a select group of management, highly compensated employees and non-employee directors. The liability represents benefits accrued for plan participants and is valued at the quoted market prices of the participants’ investment elections, which consist of equity and debt "mirror" funds. As such, the Company has classified the deferred compensation liability as a Level 2 liability, which is recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets. In March 2023, the Company entered into an interest rate swap agreement for an aggregate notional amount of $100.0 million with an effective date of April 28, 2023 and a termination date of March 31, 2027. The purpose of this hedge is to limit the Company's exposure of its variable interest rate debt by effectively converting it to fixed interest rate debt. Under the terms of the agreement, the Company will receive a floating interest rate based on 1-month CME Term SOFR and pay a fixed interest rate of 3.87% on the notional amount. The Company has accounted for the interest rate swap as a derivative instrument in accordance with ASC 815, and the interest rate swap was designated as a cash flow hedge at inception. As of March 31, 2023, the facts and circumstances of the hedged relationship remain consistent with the initial effectiveness assessment in that the hedged instrument remains an effective accounting hedge. The fair value of the interest rate swap agreement is derived by using widely accepted valuation techniques and reflects the contractual terms of the interest rate swap including the period to maturity and uses observable market-based inputs, including interest rate curves. The fair value associated with the interest rate swap is recorded within prepaid expenses and other assets (when the resulting fair value is an asset) or accounts payable and accrued expenses (when the resulting fair value is a liability) within the Company's condensed consolidated balance sheets. Non-Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The following table summarizes non-financial assets measured at fair value on a nonrecurring basis: (In Thousands) March 31, 2023 December 31, 2022 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets Held for Sale $ — $ 896 $ — $ — $ 1,857 $ — Assets classified as held for sale are recorded at the lower of carrying value or fair value less estimated costs to sell, and any adjustment is recorded in other operating expenses, net or restructuring expenses, net (if the asset is a part of the Company's restructuring programs as described in Note 7 to these condensed consolidated financial statements) in the condensed consolidated statements of earnings. The highest and best use of the primary components of assets held for sale are as real estate land parcels for development or real estate properties for use or lease; however, the Company has chosen not to develop or use these properties, and plans to sell the properties to third parties as quickly as practicable. |
Indebtedness
Indebtedness | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Indebtedness | INDEBTEDNESS The following is a summary of the Company's debt, net of unamortized debt issuance costs as applicable: (In Thousands) March 31, 2023 December 31, 2022 Revolving Facility $ 50,000 $ 69,250 Term Loan, Due in Installments through April 2027 1 172,113 173,163 Total Debt 222,113 242,413 Less: Current Maturities 4,375 23,450 Long-Term Debt $ 217,738 $ 218,963 1 Includes unamortized debt issuance costs of $0.7 million and $0.7 million as of March 31, 2023 and December 31, 2022. The Company has included $2.7 million and $2.9 million of debt issuance costs as of March 31, 2023 and December 31, 2022, respectively, related to the new and previous revolving credit facility, within prepaid expenses and other assets in the condensed consolidated balance sheets. Revolving Credit Facility and Term Loan To finance the BrandsMart U.S.A. acquisition, on April 1, 2022 the Company entered into a new unsecured credit facility (the "Credit Facility") which replaced its previous $250 million unsecured credit facility dated as of November 9, 2020 (as amended, the "Previous Credit Facility"). The Previous Credit Facility is further described in Note 8 to the consolidated and combined financial statements of the 2022 Annual Report. The Credit Facility provides for a $175 million term loan (the "Term Loan") and a $375 million revolving credit facility (the "Revolving Facility"), which includes (i) a $35 million sublimit for the issuance of letters of credit on customary terms, and (ii) a $35 million sublimit for swing line loans on customary terms. The Company pays a commitment fee on unused balances related to the revolving facility, which ranges from 0.20% to 0.30% as determined by the Company's ratio of total net debt to EBITDA (as defined by the agreement). On April 1, 2022, the Company borrowed $175 million under the Term Loan and $117 million under the Revolving Facility to finance the purchase price for the BrandsMart U.S.A. acquisition and other customary acquisition and financing-related closing costs and adjustments. The Company expects that future additional borrowings under the Revolving Facility will be used to provide for working capital and capital expenditures, to finance future permitted acquisitions and for other general corporate purposes. As of March 31, 2023, $172.8 million and $50.0 million remained outstanding under the Term Loan and Revolving Facility, respectively, compared to $173.9 million and $69.3 million outstanding at December 31, 2022. Borrowings under the Revolving Facility and the Term Loan bear interest at a rate per annum equal to, at the option of the Company, (i) the forward-looking term rate based on SOFR plus an applicable margin ranging between 1.50% and 2.25%, based on the Company's Total Net Debt to EBITDA Ratio, or (ii) the base rate (as defined in the Credit Facility) plus an applicable margin, which is 1.00% lower than the applicable margin for SOFR loans. The loans and commitments under the Revolving Facility mature or terminate on April 1, 2027. The Term Loan amortizes in quarterly installments, commencing on December 31, 2022, in an aggregate annual amount equal to (i) 2.50% of the original principal amount of the Term Loan during the first and second years after the closing date, (ii) 5.00% of the original principal amount of the Term Loan during the third, fourth and fifth years after the closing date, with the remaining principal balance of the Term Loan to be due and payable in full on April 1, 2027. Franchise Loan Facility Amendment On April 1, 2022, the Company also entered into a new $12.5 million unsecured franchise loan facility (the "Franchise Loan Facility"), which replaced its previous $15.0 million amended and restated unsecured franchise loan facility dated as of November 10, 2021. The Franchise Loan Facility operates as a guarantee by the Company of certain debt obligations of certain Aaron's franchisees (the "Borrower") under a franchise loan program. In the event these franchisees are unable to meet their debt service payments or otherwise experience an event of default, the Company would be unconditionally liable for the outstanding balance of the franchisees’ debt obligations under the Franchise Loan Facility, which would be due in full within 90 days of such event of default. Borrowings under the Franchise Loan Facility bear interest at a rate per annum equal to SOFR plus an applicable margin ranging between 1.50% and 2.25%, based on the Company's Total Net Debt to EBITDA Ratio (as defined in the Franchise Loan Facility). The Franchise Loan Facility is available for a period of 364 days commencing on April 1, 2022, and permits the Borrower to request extensions for additional 364-day periods. On February 10, 2023, the Company amended its Franchise Loan Facility to extend the maturity date from March 31, 2023 to March 30, 2024. Subsequently on February 23, 2023, the Company amended its Franchise Loan Facility to reduce the total commitment amount from $12.5 million to $10.0 million. Financial Covenants The Credit Facility and the Franchise Loan Facility contain customary financial covenants including (a) a maximum Total Net Debt to EBITDA Ratio of 2.75 to 1.00 and (b) a minimum Fixed Charge Coverage Ratio of 1.75 to 1.00. If the Company fails to comply with these covenants, the Company will be in default under these agreements, and all borrowings outstanding could become due immediately. Under the Credit Facility and Franchise Loan Facility, the Company may pay cash dividends in any year so long as, after giving pro forma effect to the dividend payment, the Company maintains compliance with its financial covenants and no event of default has occurred or would result from the payment. The Company is in compliance with all of these covenants at March 31, 2023. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | REVENUE RECOGNITION The following table disaggregates revenue by source: Three Months Ended March 31, (In Thousands) 2023 2022 Lease Revenues and Fees $ 373,795 $ 409,318 Retail Sales 150,546 12,607 Non-Retail Sales 23,935 27,827 Franchise Royalties and Fees 5,898 6,118 Other 187 212 Total 1 $ 554,361 $ 456,082 1 Includes revenues from Canadian operations of $4.4 million and $4.9 million during the three months ended March 31, 2023 and 2022, respectively, which are primarily lease revenues and fees. Lease Revenues and Fees The Aaron's Business segment, which includes BrandsMart Leasing, provides lease merchandise, consisting of furniture, appliances, electronics, computers, and other home goods to their customers for lease under certain terms agreed to by the customer. The Aaron's Business segment offers leases with flexible ownership plans that can be generally renewed weekly, bi-weekly, semi-monthly, or monthly up to 12, 18 or 24 months and does not require deposits upon inception of customer agreements. The customer has the right to acquire ownership either through an early purchase option or through payment of all required lease payments through the end of the ownership plan. Aaron's also offers customers the option to obtain a membership in the Aaron’s Club program. The benefits to customers of the Aaron's Club program are separated into three general categories: (a) lease protection benefits; (b) health & wellness discounts; and (c) dining, shopping and consumer savings. Lease agreements offered by the Aaron's Business segment including the Aaron's Club program memberships and BrandsMart Leasing, are cancellable at any time by either party without penalty, and as such, these offerings are renewable period to period arrangements. Lease revenues related to the leasing of merchandise and Aaron's Club membership fees are recognized as revenue in the month they are earned. Payments received prior to the month earned are recorded as deferred lease revenue, and this amount is included in customer deposits and advance payments in the accompanying condensed consolidated balance sheets. Lease payments due but not received prior to month end are recorded as accounts receivable in the accompanying condensed consolidated balance sheets. Lease revenues are recorded net of a provision for returns and uncollectible renewal payments. All of Aaron's customer lease agreements, including BrandsMart Leasing, are considered operating leases. The Company maintains ownership of the lease merchandise until all payment obligations are satisfied under lease agreements. Initial direct costs related to customer agreements are expensed as incurred and have been classified as other operating expenses, net in the condensed consolidated statements of earnings. The statement of earnings effects of expensing the initial direct costs as incurred are not materially different from amortizing initial direct costs over the lease ownership plan. Substantially all lease revenues and fees were within the scope of ASC 842, Leases , during the three months ended March 31, 2023 and 2022. Included in lease revenues and fees above, the Company had $6.3 million and $7.0 million of other revenue during the three months ended March 31, 2023 and 2022, respectively, within the scope of ASC 606, Revenue from Contracts with Customers, which is included in lease revenues and fees above . Lease revenues and fees are recorded within lease revenues and fees in the accompanying condensed consolidated statements of earnings. Retail Sales All retail sales revenue is within the scope of ASC 606, Revenue from Contracts with Customers, during the three months ended March 31, 2023 and 2022. Aaron's Business Revenues from the retail sale of lease merchandise to individual consumers are recognized at the point of sale and are recorded within retail sales in the accompanying condensed consolidated statements of earnings. Generally, the transfer of control occurs near or at the point of sale for retail sales. Aaron's Business retail sales are not subject to a returns policy. All retail sales revenue is within the scope of ASC 606, Revenue from Contracts with Customers , during the three months ended March 31, 2023 and 2022. BrandsMart Revenues from the retail sale of merchandise inventories are recorded within retail sales in the accompanying condensed consolidated statement of earnings and are recognized at a point in time that the Company has satisfied its performance obligation and transferred control of the product to the respective customer. Revenues associated with retail sales transactions for which control has not transferred are deferred and are recorded within customer deposits and advance payments within the accompanying consolidated balance sheets. Retail sales at the BrandsMart segment, both in store and online, are subject to the segment's 30-day return policy. Accordingly, an allowance, based on historical returns experience, for sales returns is recorded as a component of retail sales in the period in which the related sales are recorded as well as an asset for the returned merchandise. The return asset and allowance for sales returns as of March 31, 2023 was $2.2 million and $2.9 million, respectively, compared to $3.0 million and $4.0 million as of December 31, 2022, respectively. The return asset and allowance for sales returns was recorded within prepaid and other assets and accounts payable and accrued expenses within the accompanying consolidated balance sheets, respectively. Additional protection plans can be purchased by BrandsMart U.S.A. customers that provides extended warranty coverage on their product purchases, with payment being due for this protection at the point of sale. A third-party underwriter assumes the risk associated with the coverage and is primarily responsible for fulfillment. The Company is an agent to the contract and records the fixed commissions. These fixed commissions on the warranty coverages are included within retail sales in the accompanying condensed consolidated statements of earnings on a net basis. Non-Retail Sales Revenues for the non-retail sale of merchandise to Aaron's franchisees are recognized when control transfers to the franchisee, which is upon delivery of the merchandise and are recorded within non-retail sales in the accompanying condensed consolidated statements of earnings. All non-retail sales revenue is within the scope of ASC 606, Revenue from Contracts with Customers, during the three months ended March 31, 2023 and 2022. Franchise Royalties and Fees We have existing agreements with our current Aaron's franchisees to govern the operations of franchised stores. Our standard agreement is for a term of ten years, with one ten-year renewal option. Franchisees are obligated to remit to us royalty payments of 6% of the weekly cash revenue payments received, which is recognized as the fees become due. The Company guarantees certain debt obligations of some of the franchisees and receives guarantee fees based on the outstanding debt obligations of such franchisees. Refer to Note 6 to these condensed consolidated financial statements for additional discussion of the franchise-related guarantee obligation. The Company also charges fees for advertising efforts that benefit the franchisees, which are recognized at the time the advertising takes place. Substantially all franchise royalties and fee revenue is within the scope of ASC 606, Revenue from Contracts with Customers . Of the franchise royalties and fees, $4.8 million and $4.9 million during the three months ended March 31, 2023 and 2022, respectively, is related to franchise royalty income that is recognized as the fees become due. The remaining revenue is primarily related to advertising fees charged to franchisees. Franchise royalties and fees are recorded within franchise royalties and other revenues in the accompanying condensed consolidated statements of earnings. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENT AND CONTINGENCIES Guarantees The Company has guaranteed certain debt obligations of some of its Aaron's franchisees under a franchise loan program (the "Franchise Loan Facility") as described in further detail in Note 4 to these condensed consolidated financial statements. The Company has recourse rights to franchisee assets securing the debt obligations, which consist primarily of lease merchandise and fixed assets. Since the inception of the franchise loan program in 1994, the Company's losses associated with the program have been insignificant. However, such losses could be significant in a future period due to potential adverse trends in the liquidity and/or financial performance of Aaron's franchisees resulting in an event of default or impending defaults by franchisees. The Company entered into a new Franchise Loan Facility agreement on April 1, 2022, which reduced the total commitment under the Franchise Loan Facility from $15.0 million to $12.5 million and extended the commitment termination date to March 31, 2023. On February 10, 2023, the Company amended its Franchise Loan Facility to extend the maturity date from March 31, 2023 to March 30, 2024. Subsequently on February 23, 2023, the Company amended its Franchise Loan Facility to reduce the total commitment amount from $12.5 million to $10.0 million. At March 31, 2023, the maximum amount that the Company would be obligated to repay in the event franchisees defaulted was $4.3 million. The Company is subject to financial covenants under the Franchise Loan Facility as detailed in Note 4 to these condensed consolidated financial statements. At March 31, 2023, the Company was in compliance with all covenants under the Franchise Loan Facility agreement. The Company records a liability related to estimated future losses from repaying the franchisees' outstanding debt obligations upon any possible future events of default. This liability is included in accounts payable and accrued expenses in the condensed consolidated balance sheets and was $1.0 million and $1.3 million at March 31, 2023 and December 31, 2022, respectively. The balances at March 31, 2023 and December 31, 2022 included qualitative consideration of potential losses associated with uncertainties impacting the operations and liquidity of our franchisees. Uncertainties include inflationary and other economic pressures in the current macroeconomic environment and the normalization of business trends associated with the COVID-19 pandemic. Legal Proceedings From time to time, the Company is party to various legal and regulatory proceedings arising in the ordinary course of business, certain of which have been described below. The Company establishes an accrued liability for legal and regulatory proceedings when it determines that a loss is both probable and the amount of the loss can be reasonably estimated. The Company continually monitors its litigation and regulatory exposure and reviews the adequacy of its legal and regulatory reserves on a quarterly basis. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters due to the inherent uncertainty in litigation, regulatory and similar adversarial proceedings, and substantial losses from these proceedings or the costs of defending them could have a material adverse impact upon the Company’s business, financial position, and results of operations. The Company had accrued $0.9 million and $2.7 million at March 31, 2023 and December 31, 2022, respectively, for pending legal and regulatory matters for which it believes losses are probable and is management’s best estimate of its exposure to loss. The Company records these liabilities in accounts payable and accrued expenses in the condensed consolidated balance sheets. The Company estimates that the aggregate range of reasonably possible loss in excess of accrued liabilities for such probable loss contingencies is between zero and $0.5 million. At March 31, 2023, the Company estimated that the aggregate range of loss for all material pending legal and regulatory proceedings for which a loss is reasonably possible, but less likely than probable (i.e., excluding the contingencies described in the preceding paragraph), is between zero and $0.5 million. Those matters for which a reasonable estimate is not possible are not included within estimated ranges and, therefore, the estimated ranges do not represent the Company's maximum loss exposure. The Company's estimates for legal and regulatory accruals, aggregate probable loss amounts and reasonably possible loss amounts, are all subject to the uncertainties and variables described above. Other Contingencies Management regularly assesses the Company's insurance deductibles, monitors litigation and regulatory exposure with the Company's attorneys, and evaluates its loss experience. The Company also enters into various contracts in the normal course of business that may subject it to risk of financial loss if counterparties fail to perform their contractual obligations. |
Restructuring
Restructuring | 3 Months Ended |
Mar. 31, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | RESTRUCTURING As management continues to execute on its long-term strategic plan, additional benefits and charges are expected to result from our restructuring programs. The extent of any future charges related to our restructuring programs are not currently estimable and depend on various factors including the timing and scope of future cost optimization initiatives. Operational Efficiency and Optimization Restructuring Program During the third quarter of 2022, the Company initiated an operational efficiency and optimization restructuring program intended to strengthen operational efficiencies and reduce the Company’s overall costs. Management believes that this restructuring program will help the Company sharpen its operational focus, optimize its cost profile, allocate capital resources towards long-term strategic objectives, and generate incremental value for shareholders through investments in technological capabilities, and fulfillment center logistics competencies. Since initiation, the program has resulted in the closure or consolidation of 28 Company-operated Aaron's stores. This program also includes the hub and showroom model to optimize labor and other operating expenses in markets, store labor realignments, rationalization of the Company's supply chain, the centralization and restructuring of store support center, operations, and multi-unit store oversight functions, as well as other real estate and third party spend costs reductions. Total net restructuring expenses under the Operational Efficiency and Optimization Restructuring Program related to the initiatives described above were $2.9 million during the three months ended March 31, 2023. Such expenses were recorded within the Unallocated Corporate category for segment reporting and were comprised mainly of severance charges primarily related to the Company's January 2023 headcount reduction of its store support center and Aaron's Business store oversight functions, continuing variable occupancy costs incurred related to closed stores, operating lease right-of-use asset impairment charges and fixed asset impairment charges. Real Estate Repositioning and Optimization Restructuring Program During the first quarter of 2020, the Company initiated a real estate repositioning and optimization restructuring program. This program includes a strategic plan to remodel, reposition, and consolidate our Company-operated Aaron's store footprint over the next three Total net restructuring expenses under the real estate repositioning and optimization restructuring program of $2.4 million were recorded for the three months ended March 31, 2023. Restructuring expenses were recorded within the Unallocated Corporate category of segment reporting and were comprised mainly of continuing variable occupancy costs incurred related to closed stores and operating lease right-of-use asset and fixed asset impairment charges related to the vacancy or planned vacancy of stores identified for closure. Since inception of the real estate repositioning and optimization program, the Company has incurred charges of $64.0 million under the plan. These cumulative charges are primarily comprised of operating lease right-of-use asset and fixed impairment charges, losses recognized related to contractual lease obligations, and severance related to reductions in store support center and field support staff headcount. The following table summarizes restructuring charges for the three months ended March 31, 2023 and 2022, respectively, under the Company's restructuring programs: Three Months Ended March 31, (In Thousands) 2023 2022 Right-of-Use Asset Impairment $ 774 $ 1,178 Operating Lease Charges 1,908 1,442 Fixed Asset Impairment 121 245 Severance 2,202 418 Other Expenses 1 284 52 Total Restructuring Expenses, Net $ 5,289 $ 3,335 1 Includes professional advisory fees and net gains related to the sale of store properties and related assets. The following table summarizes the activity for the three months ended March 31, 2023 and the corresponding accrual balance as of March 31, 2023 for the restructuring programs: (In Thousands) Severance Operating Lease Charges 1 Professional Advisory Fees Balance at January 1, 2023 $ 695 $ 2,200 $ 1,032 Restructuring Charges (Reversals) 2,202 — (135) Payments (2,206) (2,200) (592) Balance at March 31, 2023 $ 691 $ — $ 305 1 Represents expenses related to a real estate-related settlement which remained payable at December 31, 2022 and was subsequently paid during the first quarter of 2023. |
Segments
Segments | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Segments | SEGMENTS Segment Reporting For all periods prior to April 1, 2022, the Company only had one operating and reportable segment. Effective as of April 1, 2022 and in connection with the acquisition of BrandsMart U.S.A., the Company updated its reportable segments to align the reportable segments with the current organizational structure and the operating results that the chief operating decision maker regularly reviews to analyze performance and allocate resources, which includes two operating and reportable segments: Aaron's Business and BrandsMart, along with an Unallocated Corporate category for remaining unallocated costs. The Company has retroactively adjusted, for all periods presented, its segment disclosures to align with the current composition of reportable segments. The Aaron's Business segment includes the operations of the Pre-Spin Aaron's business (as described in the 2022 Annual Report), which continued after the separation to provide consumers with LTO and retail purchase solutions through the Company's Aaron's stores in the United States and Canada and the aarons.com e-commerce platform. This operating segment also supports franchisees of its Aaron's stores. In addition, the Aaron's Business segment includes the operations of BrandsMart Leasing, which offers a lease-to-own solution to customers of BrandsMart U.S.A., and Woodhaven, which manufactures and supplies a significant portion of the upholstered furniture leased and sold in Company-operated and franchised Aaron's stores. The BrandsMart segment includes the operations of BrandsMart U.S.A. (other than BrandsMart Leasing), which is one of the leading appliance and consumer electronics retailers in the southeastern United States and one of the largest appliance retailers in the country with ten stores in Florida and Georgia and a growing e-commerce presence on brandsmartusa.com. The results of BrandsMart have been included in the Company's consolidated results from the April 1, 2022 acquisition date. Measurement of Segment Profit or Loss and Segment Assets The Company evaluates segment performance based primarily on revenues and earnings (loss) from operations before unallocated corporate costs, which are evaluated on a consolidated basis and not allocated to the Company's business segments. Intersegment sales between BrandsMart and the Aaron's Business pertaining to BrandsMart Leasing, are recognized at retail prices. Since the intersegment profit affects cost of goods sold, depreciation and lease merchandise valuation, they are adjusted when intersegment profit is eliminated in consolidation. The Company determines earnings (loss) before income taxes for all reportable segments in accordance with U.S. GAAP. Unallocated Corporate costs are presented separately and generally include unallocated costs associated with the following: equity-based compensation, interest income and expense, information security, executive compensation, legal and compliance, corporate governance, accounting and finance, human resources and other corporate functions. The Unallocated Corporate category also includes acquisition-related costs, restructuring charges and separation costs for which the individual operating segments are not being evaluated. The Company does not evaluate performance or allocate resources based on segment asset data, and therefore total segment assets are not presented. Three Months Ended March 31, 2023 (In Thousands) Aaron's Business BrandsMart Elimination of Intersegment Revenues Total Lease Revenues and Fees $ 373,795 $ — $ — $ 373,795 Retail Sales 8,318 144,158 (1,930) 150,546 Non-Retail Sales 23,935 — — 23,935 Franchise Royalties and Fees 5,898 — — 5,898 Other 187 — — 187 Total Revenues $ 412,133 $ 144,158 $ (1,930) $ 554,361 Three Months Ended March 31, 2023 (In Thousands) Aaron's Business 1 BrandsMart Unallocated Corporate 2 Elimination Total Gross Profit $ 260,706 $ 35,135 $ — $ (147) $ 295,694 Earnings (Loss) Before Income Taxes 35,859 (888) (25,971) (108) 8,892 Depreciation and Amortization 3 18,703 3,644 223 — 22,570 Capital Expenditures 18,029 916 1,264 — 20,209 1 The earnings before income taxes for the Aaron's Business during the three months ended March 31, 2023 includes a $3.8 million receipt from the settlement of a class action lawsuit related to alleged anti-competitive conduct by several manufacturers of cathode ray tubes. 2 The loss before income taxes for the Unallocated Corporate category during the three months ended March 31, 2023 was impacted by restructuring charges of $5.3 million, BrandsMart U.S.A. acquisition-related costs of $1.8 million and separation-related costs of $0.1 million. 3 Excludes depreciation of lease merchandise, which is not included in the chief operating decision maker's measure of depreciation and amortization. Three Months Ended March 31, 2022 (In Thousands) Aaron's Business BrandsMart Elimination of Intersegment Revenues Total Lease Revenues and Fees $ 409,318 $ — $ — $ 409,318 Retail Sales 12,607 — — 12,607 Non-Retail Sales 27,827 — — 27,827 Franchise Royalties and Fees 6,118 — — 6,118 Other 212 — — 212 Total $ 456,082 $ — $ — $ 456,082 Three Months Ended March 31, 2022 (In Thousands) Aaron's Business BrandsMart Unallocated Corporate 1 Elimination Total Gross Profit $ 284,947 $ — $ — $ — $ 284,947 Earnings (Loss) Before Income Taxes 52,161 — (23,256) — 28,905 Depreciation and Amortization 2 17,752 — 397 — 18,149 Capital Expenditures 23,260 — 1,843 — 25,103 1 The loss before income taxes for the Unallocated Corporate category during the three months ended March 31, 2022 was impacted by BrandsMart U.S.A. acquisition-related costs of $3.5 million, restructuring charges of $3.3 million and separation-related costs of $0.5 million. 2 Excludes depreciation of lease merchandise, which is not included in the chief operating decision maker's measure of depreciation and amortization. |
Basis and Summary of Signific_2
Basis and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business The Aaron's Company, Inc. (the "Company") is a leading, technology-enabled, omni-channel provider of lease-to-own ("LTO") and retail purchase solutions of furniture, electronics, appliances, and other home goods across its brands: Aaron's, BrandsMart U.S.A., BrandsMart Leasing, and Woodhaven Furniture Industries ("Woodhaven"). Unless the context otherwise requires or we specifically indicate otherwise, references to "we," "us," "our," and the "Company," refer to The Aaron's Company, Inc., which holds, directly or indirectly, the Pre-Spin Aaron’s Business (as described in the 2022 Annual Report) and all other subsidiaries of the Company, which are wholly owned, as well as other lines of business described above. As of March 31, 2023, the Company's operating and reportable segments are the Aaron's Business and BrandsMart, each as described below. Effective as of April 1, 2022 and in connection with the acquisition of BrandsMart U.S.A., the Company changed its composition of reportable segments to align the reportable segments with the current organizational structure and the operating results that the chief operating decision maker regularly reviews to analyze performance and allocate resources, which includes separate segments for the Aaron's Business and BrandsMart, along with an Unallocated Corporate category for remaining unallocated costs. The Company has retroactively adjusted, for all periods presented, its segment disclosures to align with the current composition of reportable segments. The Aaron's Business segment is comprised of (i) Aaron's branded Company-operated and franchise-operated stores; (ii) aarons.com e-commerce platform ("aarons.com"); (iii) Woodhaven; and (iv) BrandsMart Leasing (collectively, the "Aaron’s Business"). |
Basis of Presentation | Basis of Presentation The financial statements as of and for the three months ended March 31, 2023 and comparable prior year period are condensed consolidated financial statements of the Company and its subsidiaries, each of which is wholly-owned, and is based on the financial position and results of operations of the Company. Intercompany balances and transactions between consolidated entities have been eliminated. These condensed consolidated financial statements reflect the historical results of operations, financial position and cash flows of the Company in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The preparation of the Company's condensed consolidated financial statements in conformity with U.S. GAAP for interim financial information requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. The extent to which inflationary and other economic pressures and any ongoing effects of the COVID-19 pandemic will impact the Company's business will depend on future developments. These developments are uncertain and cannot be precisely predicted at this time. In many cases, management's estimates and assumptions are dependent on estimates of such future developments and may change in the future. |
Reclassifications | Reclassifications The following reclassifications have been made to the prior periods to conform to the current period presentation. For all previously reported periods prior to April 1, 2022, the Company presented all revenues derived from lease agreements and the related fees, as well as the retail sale of both new and returned lease merchandise from our Company-operated Aaron's stores and fees from our Aaron's Club program within one line in the condensed consolidated statements of earnings, presented as lease and retail revenues. Effective April 1, 2022, the Company revised its presentation to separately present revenues derived from lease agreements at our Company-operated Aaron's stores and e-commerce platform and fees from our Aaron's Club program as lease revenues and fees in the condensed consolidated statements of earnings, with the sale of both new and returned lease merchandise from our Company-operated Aaron's stores being classified as retail sales. This revised presentation does not have an impact on total revenues presented in prior periods. Similarly, for all previously reported periods prior to April 1, 2022, the Company presented the depreciation expense associated with lease merchandise as well as the depreciated costs of merchandise sold within one line in the condensed consolidated statements of earnings, presented as the cost of lease and retail revenues. Effective April 1, 2022, the Company revised its presentation to separately present the depreciation expense associated with lease merchandise in the condensed consolidated statements of earnings, with the costs associated with merchandise sold through our Company-operated Aaron's stores presented as retail cost of sales. This revised presentation does not have an impact on total costs of revenues presented in prior periods. |
Accounting Policies and Estimates | Accounting Policies and EstimatesSee Note 1 to the consolidated and combined financial statements in the 2022 Annual Report for an expanded discussion of accounting policies and estimates. |
Earnings Per Share | Earnings Per ShareEarnings per share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. The computation of earnings per share assuming dilution includes the dilutive effect of stock options, restricted stock units ("RSUs"), restricted stock awards ("RSAs"), performance share units ("PSUs") and other awards issuable under the Company's employee stock purchase plan ("ESPP") (collectively, "share-based awards") as determined under the treasury stock method, unless the inclusion of such awards would have been anti-dilutive. |
Revenue Recognition | Revenue Recognition The Company provides lease and retail merchandise, consisting of appliances, electronics, furniture, and other home goods to its customers for lease under certain terms agreed to by the customer and through retail sales. The Company's Aaron's stores, aaron's.com e-commerce platform, and BrandsMart Leasing components of the Aaron's Business segment offer leases with flexible ownership plans that can be generally renewed weekly, bi-weekly, semi-monthly, or monthly up to 12, 18 or 24 months. The Aaron's Business segment also earns revenue from the sale of merchandise to customers and Aaron's franchisees, and earns ongoing revenue from Aaron's franchisees in the form of royalties and through advertising efforts that benefit the franchisees. The Company's BrandsMart U.S.A. stores and related brandsmartusa.com e-commerce platform offer the sale of merchandise directly to its customers via retail sales. |
Advertising | AdvertisingThe Company expenses advertising costs as incurred. Advertising production costs are initially recognized as a prepaid advertising asset and are expensed when an advertisement appears for the first time. Total advertising costs were $13.0 million and $10.7 million during the three months ended March 31, 2023 and 2022, respectively, and are classified within other operating expenses, net in the condensed consolidated statements of earnings. These advertising costs are presented net of cooperative advertising considerations received from vendors, which represents reimbursement of specific, identifiable and incremental costs incurred in selling those vendors’ products. |
Accounts Receivable | Accounts Receivable Accounts receivable consist primarily of receivables due from customers on lease agreements, corporate receivables incurred during the normal course of business (primarily for vendor consideration and third-party warranty providers), and franchisee obligations. The Company also maintains an allowance for outstanding franchisee accounts receivable. The Company's policy is to estimate future losses related to certain franchisees that are deemed to have a higher risk of non-payment and record an allowance for these estimated losses. The estimated allowance on franchisee accounts receivable includes consideration of the financial position of each franchisee and qualitative consideration of potential losses associated with uncertainties impacting the franchisee's ability to satisfy their obligations. Uncertainties include inflationary and other economic pressures in the current macroeconomic environment and the normalization of business trends associated with the COVID-19 pandemic. Accordingly, actual accounts receivable write-offs could differ from the allowance. The provision for uncollectible franchisee accounts receivable is recorded as bad debt expense in other operating expenses, net within the condensed consolidated statements of earnings. The allowance related to remaining corporate receivables is not significant at March 31, 2023. |
Lease Merchandise | Lease Merchandise The Company’s lease merchandise is recorded at the lower of depreciated cost, including overhead costs from our distribution centers, or net realizable value. The cost of merchandise manufactured by our Woodhaven operations is recorded at cost and includes overhead from production facilities, shipping costs and warehousing costs. The Company begins depreciating lease merchandise at the earlier of 12 months and one day from its purchase of the merchandise or when the merchandise is leased to customers. Lease merchandise fully depreciates over the lease agreement period when on lease, generally 12 to 24 months, and generally 36 months when not on lease. Depreciation is accelerated upon early payout. |
Merchandise Inventories | Merchandise Inventories The Company’s merchandise inventories are stated at the lower of weighted average cost or net realizable value and consist entirely of merchandise held for sale by the BrandsMart segment. In-bound freight-related costs from vendors, net of allowances and vendor rebates, are included as part of the net cost of merchandise inventories. Costs associated with storing and transporting merchandise inventories to our retail stores are expensed as incurred and included within retail cost of sales in the condensed consolidated statements of earnings. The Company periodically evaluates aged and distressed inventory and establishes an inventory markdown which represents the excess of the carrying value over the amount the Company expects to realize from the ultimate sale of the inventory. Markdowns establish a new cost basis for the inventory and are recorded within retail cost of sales within the condensed consolidated statement of earnings. The write-offs of merchandise inventories associated with the Company's cycle and physical inventory count processes are also included within retail cost of sales in the condensed consolidated statement of earnings. The Company records an inventory reserve for the anticipated loss associated with selling inventories below cost. This reserve is based on management’s current knowledge with respect to inventory levels, sales trends, and historical experience selling or disposing of aged or obsolete inventory. The following is a summary of merchandise inventories, net of allowances: |
Retail and Non-Retail Cost of Sales | Retail and Non-Retail Cost of SalesIncluded in retail cost of sales, as well as non-retail cost of sales, is the net book value of merchandise sold via retail and non-retail sales, primarily using specific identification. |
Interest Rate Swap | Interest Rate Swap In March 2023, the Company entered into an interest rate swap agreement for an aggregate notional amount of $100.0 million with an effective date of April 28, 2023 and a termination date of March 31, 2027. The purpose of this hedge is to limit the Company's exposure of its variable interest rate debt by effectively converting it to fixed interest rate debt. Under the terms of the agreement, the Company will receive a floating interest rate based on 1-month Chicago Mercantile Exchange ("CME") Term Secured Overnight Financing Rate ("SOFR") and pay a fixed interest rate of 3.87% on the notional amount. The Company has accounted for the interest rate swap as a derivative instrument in accordance with ASC 815, Derivatives and Hedging |
Estimated Claims Liability Costs | Estimated Claims Liability Costs Estimated claims liability costs are accrued primarily for workers compensation and vehicle liability, as well as general liability and group health insurance benefits provided to team members. These liabilities are recorded within estimated claims liability costs within accounts payable and accrued expenses in the condensed consolidated balance sheets. Estimates for these claims liabilities are made based on actual reported but unpaid claims and actuarial analysis of the projected claims run off for both reported and incurred but not reported claims. This analysis is based upon an assessment of the likely outcome or historical experience and considers a variety of factors, including the actuarial loss forecasts, company-specific development factors, general industry loss development factors and third-party claim administrator loss estimates of individual claims. The Company makes periodic prepayments to its insurance carriers to cover the projected claims run off for both reported and incurred but not reported claims, considering its retention or stop loss limits. In addition, we have prefunding balances on deposit and other insurance receivables with the insurance carriers which are recorded within prepaid expenses and other assets in our condensed consolidated balance sheets. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price paid over the fair value of the identifiable net tangible and intangible assets acquired in connection with business acquisitions. All acquisition-related goodwill balances are allocated amongst the Company's reporting units based on the nature of the acquired operations that originally created the goodwill. During the fourth quarter of 2022, in connection with its annual impairment testing, management evaluated the various components of the operating segments further described above and in Note 8 to these condensed consolidated financial statements and identified three reporting units, Aaron's Business, BrandsMart, and BrandsMart Leasing, each as described below. The Aaron's Business reporting unit is comprised of (i) Aaron's branded Company-operated and franchise operated stores; (ii) aarons.com e-commerce platform ("aarons.com"); and (iii) Woodhaven (collectively, the "Aaron’s Business reporting unit"). The Aaron's Business reporting unit is a component of the Aaron's Business operating segment. The operations of BrandsMart Leasing comprise the BrandsMart Leasing reporting unit (collectively, the "BrandsMart Leasing reporting unit"), and is a component of the Aaron's Business operating segment. Management considered the aggregation of the BrandsMart Leasing reporting unit and Aaron's Business reporting unit as a single reporting unit and determined that these components were economically dissimilar and also reviewed separately by the segment managers of the Aaron's Business operating segment, and therefore should not be aggregated. The operations of BrandsMart, comprise the BrandsMart reporting unit (collectively, the "BrandsMart reporting unit") and is also the sole component of the BrandsMart operating segment. The acquisition of BrandsMart U.S.A. in the second quarter of 2022 resulted in the recognition of approximately $55.8 million of goodwill, inclusive of measurement period adjustments further described in Note 2 to these condensed consolidated financial statements. Of this amount, $26.5 million was assigned to the BrandsMart Leasing reporting unit. The following table provides information related to the carrying amount of goodwill by operating segment. (In Thousands) Aaron's Business BrandsMart BrandsMart Leasing Total Balance at December 31, 2022 $ — $ 28,193 $ 26,517 $ 54,710 Acquisitions — — — — Currency Translation Adjustments — — — — Acquisition Accounting Adjustments — 1,040 — 1,040 Impairment Loss — — — — Balance at March 31, 2023 $ — $ 29,233 $ 26,517 $ 55,750 The Company’s goodwill is not amortized but is subject to an impairment test at the reporting unit level annually as of October 1 and more frequently if events or circumstances indicate that an interim impairment may have occurred. An interim goodwill impairment test is required if the Company believes it is more likely than not that the carrying amount of its reporting unit exceeds the reporting unit's fair value. The Company determined that there were no events that occurred or circumstances that changed during the three months ended March 31, 2023 that would more likely than not reduce the fair value of its reporting units below their carrying amount. |
Acquisition-Related Costs | Acquisition-Related CostsAcquisition-related costs of $1.8 million and $3.5 million were incurred during the three months ended March 31, 2023 and 2022, respectively, and primarily represent internal control readiness third-party consulting, banking and legal expenses and retention bonuses associated with the acquisition of BrandsMart U.S.A completed April 1, 2022. |
Fair Value Measurement | Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets. Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3—Valuations based on unobservable inputs reflecting the Company's own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. The fair values of the Company's current financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their carrying values due to their short-term nature. The Company's outstanding debt borrowings as of March 31, 2023 and December 31, 2022 were subject to a variable interest rate. Therefore, the fair value of these borrowings also approximates its carrying value. These assets and liabilities are measured within Level 2 of the fair value hierarchy. The Company also measures certain non-financial assets at fair value on a nonrecurring basis, such as goodwill, intangible assets, operating lease right-of-use assets, property, plant, and equipment and assets held for sale, in connection with periodic evaluations for potential impairment. The Company measures a liability related to its non-qualified deferred compensation plan, which represents benefits accrued for participants that are part of the plan and is valued at the quoted market prices of the participants' investment election, at fair value on a recurring basis. On April 1, 2022, the Company completed the previously announced acquisition of all of the issued and outstanding shares of capital stock of BrandsMart U.S.A. For the fair value measurements performed related to the net assets acquired, including acquired intangible assets, the Company utilized multiple Level 3 inputs and assumptions, such as estimates about costs of capital, future projected performance and cash flows. See Note 2 to these condensed consolidated financial statements for further details regarding the acquired assets. In March 2023, the Company entered into an interest rate swap agreement. The interest rate swap agreement is measured within Level 2 of the fair value hierarchy, and the fair value is derived by using widely accepted valuation techniques and reflects the contractual terms of the interest rate swap including the period to maturity and uses observable market-based inputs, including interest rate curves. The fair value associated with the interest rate swap is recorded within prepaid expenses and other assets (when the resulting fair value is an asset) or accounts payable and accrued expenses (when the resulting fair value is a liability) within the Company's condensed consolidated balance sheets. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements There were no new accounting standards that had a material impact on the Company’s condensed consolidated financial statements during the three months ended March 31, 2023, and there were no other new accounting standards or pronouncements that were issued but not yet effective as of March 31, 2023 that the Company expects to have a material impact on its condensed consolidated financial statements. |
Basis and Summary of Signific_3
Basis and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule Of Company Operated Store Activity | The following table presents store count by ownership type: Stores as of March 31 (Unaudited) 2023 2022 Company-operated Aaron's Stores 1 1,030 1,070 GenNext (included in Company-Operated) 222 135 Franchisee-operated Aaron's Stores 231 236 BrandsMart U.S.A. Stores 2 10 — Systemwide Stores 1,271 1,306 Company-operated Aaron's Store Types as of March 31, 2023 (Unaudited) GenNext Legacy Total Store 196 750 946 Hub 25 17 42 Showroom 1 41 42 Total 222 808 1,030 1 The typical layout for a Company-operated Aaron's store is a combination of showroom, customer service and warehouse space, averaging approximately 11,000 square feet. Certain Company-operated Aaron's stores consist solely of a showroom. |
Calculation of Dilutive Stock Awards | The following table shows the calculation of weighted-average shares outstanding assuming dilution: Three Months Ended (Shares In Thousands) 2023 2022 Weighted Average Shares Outstanding 30,793 31,062 Dilutive Effect of Share-Based Awards 446 698 Weighted Average Shares Outstanding Assuming Dilution 31,239 31,760 |
Accounts Receivable Net of Allowances | Accounts receivable, net of allowances, consist of the following: (In Thousands) March 31, 2023 December 31, 2022 Customers $ 6,370 $ 9,721 Corporate 16,377 20,597 Franchisee 7,539 7,873 $ 30,286 $ 38,191 |
Allowance for Doubtful Accounts | The following table shows the components of the accounts receivable allowance: Three Months Ended (In Thousands) 2023 2022 Beginning Balance $ 8,895 $ 7,163 Accounts Written Off, net of Recoveries (9,895) (8,665) Accounts Receivable Provision 6,908 6,753 Ending Balance $ 5,908 $ 5,251 The following table shows the components of the accounts receivable provision, which includes amounts recognized for bad debt expense and the provision for returns and uncollected payments: Three Months Ended (In Thousands) 2023 2022 Bad Debt Expense (Reversal) $ 26 $ (175) Provision for Returns and Uncollectible Renewal Payments 6,882 6,928 Accounts Receivable Provision $ 6,908 $ 6,753 |
Schedule of Lease Merchandise | The following is a summary of lease merchandise, net of accumulated depreciation and allowances: (In Thousands) March 31, 2023 December 31, 2022 Merchandise on Lease, net of Accumulated Depreciation and Allowances $ 424,301 $ 446,923 Merchandise Not on Lease, net of Accumulated Depreciation and Allowances 1 242,171 246,872 Lease Merchandise, net of Accumulated Depreciation and Allowances $ 666,472 $ 693,795 1 Includes Woodhaven raw materials, finished goods and work-in-process inventory that has been classified within lease merchandise in the condensed consolidated balance sheets of $10.6 million and $12.9 million as of March 31, 2023 and December 31, 2022, respectively. |
Allowance for Lease Merchandise | The following table shows the components of the allowance for lease merchandise write-offs: Three Months Ended (In Thousands) 2023 2022 Beginning Balance $ 13,894 $ 12,339 Merchandise Written off, net of Recoveries (20,674) (22,183) Provision for Write-offs 20,160 21,957 Ending Balance $ 13,380 $ 12,113 |
Schedule of Merchandise Inventories | (In Thousands) March 31, 2023 December 31, 2022 Merchandise Inventories, gross $ 87,241 $ 96,945 Reserve for Merchandise Inventories (905) (981) Merchandise Inventories, net $ 86,336 $ 95,964 The following table shows the components of the reserve for merchandise inventories: Three Months Ended (In Thousands) March 31, 2023 Beginning Balance $ 981 Merchandise Written off — Provision for Write-offs (76) Ending Balance $ 905 |
Schedule of Prepaid Expenses and Other Assets | Prepaid expenses and other assets consist of the following: (In Thousands) March 31, 2023 December 31, 2022 Prepaid Expenses $ 20,357 $ 20,218 Insurance Related Assets 21,848 25,103 Company-Owned Life Insurance 13,999 13,443 Assets Held for Sale 896 1,857 Deferred Tax Assets 23,433 16,277 Other Assets 1 20,485 19,538 $ 101,018 $ 96,436 1 Amounts as of March 31, 2023 and December 31, 2022 included restricted cash of $1.6 million held as collateral for BrandsMart U.S.A.'s workers' compensation and general liability insurance policies. |
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following: (In Thousands) March 31, 2023 December 31, 2022 Accounts Payable $ 96,096 $ 106,966 Estimated Claims Liability Costs 59,201 58,549 Accrued Salaries and Benefits 27,470 33,932 Accrued Real Estate and Sales Taxes 21,379 24,030 Other Accrued Expenses and Liabilities 38,253 40,566 $ 242,399 $ 264,043 |
Schedule of Goodwill | The following table provides information related to the carrying amount of goodwill by operating segment. (In Thousands) Aaron's Business BrandsMart BrandsMart Leasing Total Balance at December 31, 2022 $ — $ 28,193 $ 26,517 $ 54,710 Acquisitions — — — — Currency Translation Adjustments — — — — Acquisition Accounting Adjustments — 1,040 — 1,040 Impairment Loss — — — — Balance at March 31, 2023 $ — $ 29,233 $ 26,517 $ 55,750 |
Schedule of Stockholders Equity | Changes in stockholders' equity for the three months ended March 31, 2023 and 2022 are as follows: Treasury Stock Common Stock Additional Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity (In Thousands, Except Per Share) Shares Amount Shares Amount Balance, December 31, 2022 (5,480) $ (138,753) 36,100 $ 18,050 $ 738,428 $ 79,073 $ (1,396) $ 695,402 Cash Dividends, $0.125 per share — — — — — (3,966) — (3,966) Stock-Based Compensation — — — — 2,874 — — 2,874 Issuance of Shares under Equity Plans (207) (2,539) 496 248 (248) — — (2,539) Net Earnings — — — — — 12,798 — 12,798 Unrealized (Loss) on Derivative Instruments, net of Tax — — — — — — (990) (990) Foreign Currency Translation Adjustment, net of tax — — — — — — 324 324 Balance, March 31, 2023 (5,687) $ (141,292) 36,596 $ 18,298 $ 741,054 $ 87,905 $ (2,062) $ 703,903 Treasury Stock Common Stock Additional Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity (In Thousands, Except Per Share) Shares Amount Shares Amount Balance, December 31, 2021 (4,580) $ (121,804) 35,559 $ 17,779 $ 724,384 $ 98,546 $ (739) $ 718,166 Cash Dividends, $0.11 per share — — — — — (3,584) — (3,584) Stock-Based Compensation — — — — 3,611 — — 3,611 Issuance of Shares Under Equity Plans (163) (3,541) 410 205 (153) — — (3,489) Acquisition of Treasury Stock (262) (5,720) — — — — — (5,720) Net Earnings — — — — — 21,532 — 21,532 Unrealized Gain on Fuel Hedge Derivative Instrument — — — — — — 154 154 Foreign Currency Translation Adjustment — — — — — — 238 238 Balance, March 31, 2022 (5,005) $ (131,065) 35,969 $ 17,984 $ 727,842 $ 116,494 $ (347) $ 730,908 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The consideration transferred and the estimated fair values of the assets acquired and liabilities assumed in the BrandsMart U.S.A. acquisition as of the April 1, 2022 acquisition date as well as measurement period adjustments recorded since the fiscal quarter ended June 30, 2022, are as follows: (In Thousands) Preliminary Amounts Recognized as of Acquisition Date 1 2023 Measurement Period Adjustments 2 Amounts Recognized as of Acquisition Date Cash Consideration to BrandsMart U.S.A. $ 230,000 $ — $ 230,000 Acquired Cash 15,952 — 15,952 Estimated Excess Working Capital, net of Cash 35,599 — 35,599 Non-Cash Off-Market Lease Agreement 3 6,823 — 6,823 Aggregate Consideration Transferred 288,374 — 288,374 Total Purchase Consideration, Net of Cash Acquired 272,422 — 272,422 Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed Accounts Receivable 4,310 — 4,310 Merchandise Inventories 124,064 173 124,237 Property, Plant and Equipment 22,053 (1,361) 20,692 Operating Lease Right-of-Use Assets 160,210 — 160,210 Other Intangibles 4 122,950 — 122,950 Prepaid Expenses and Other Assets 5 9,049 (80) 8,969 Total Identifiable Assets Acquired 442,636 (1,268) 441,368 Accounts Payable and Accrued Expenses 25,340 (2,050) 23,290 Customer Deposits and Advance Payments 25,332 1,822 27,154 Operating Lease Liabilities 158,712 — 158,712 Debt 15,540 — 15,540 Total Liabilities Assumed 224,924 (228) 224,696 Net Assets Acquired 217,712 (1,040) 216,672 Goodwill 6 54,710 1,040 55,750 Total Estimated Fair Value of Net Assets Acquired $ 272,422 $ — $ 272,422 1 As previously reported in the notes to the consolidated and combined financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. 2 The measurement period adjustments recorded in 2023 primarily relate to opening balance sheet adjustments to certain asset and liability balances further illustrated in the table above. 3 Effective as of the acquisition date, the Company entered into lease agreements for six store locations retained by the sellers of BrandsMart U.S.A. The agreement includes initial terms of ten years, with options to renew each location for up to 20 years thereafter. The annual rent is considered to be above market. The value of the off-market element of the lease agreements has been included in consideration transferred and as a reduction to the operating lease right-of-use-asset. 4 Identifiable intangible assets are further disaggregated in the table set forth below. 5 Includes restricted cash of $2.5 million at the acquisition date that was held as collateral for BrandsMart U.S.A.'s workers' compensation and general liability insurance policies. |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | The estimated values of intangible assets attributable to the BrandsMart U.S.A. acquisition are comprised of the following: Fair Value Weighted Average Life Trade Names $ 108,000 20.0 Non-Compete Agreements 250 3.0 Customer List 14,700 4.0 Total Acquired Intangible Assets $ 122,950 |
Business Acquisition, Pro Forma Information | The following table presents unaudited consolidated pro forma information as if the acquisition of BrandsMart U.S.A. had occurred on January 1, 2021, compared to actual, historical results. (Unaudited) Three Months Ended March 31, 2022 (In Thousands) As Reported Pro Forma Combined Results Revenues $ 456,082 $ 641,227 Earnings Before Income Taxes 28,905 31,487 Net Earnings 21,532 23,489 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table summarizes financial liabilities measured at fair value on a recurring basis: (In Thousands) March 31, 2023 December 31, 2022 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Deferred Compensation Liability $ — $ (9,187) $ — $ — $ (8,621) $ — Interest Rate Swap Liability $ — $ (1,278) $ — $ — $ — $ — |
Assets Measured at Fair Value on Nonrecurring Basis | The following table summarizes non-financial assets measured at fair value on a nonrecurring basis: (In Thousands) March 31, 2023 December 31, 2022 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Assets Held for Sale $ — $ 896 $ — $ — $ 1,857 $ — |
Indebtedness (Tables)
Indebtedness (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Summary of Company's Credit Facilities | The following is a summary of the Company's debt, net of unamortized debt issuance costs as applicable: (In Thousands) March 31, 2023 December 31, 2022 Revolving Facility $ 50,000 $ 69,250 Term Loan, Due in Installments through April 2027 1 172,113 173,163 Total Debt 222,113 242,413 Less: Current Maturities 4,375 23,450 Long-Term Debt $ 217,738 $ 218,963 1 Includes unamortized debt issuance costs of $0.7 million and $0.7 million as of March 31, 2023 and December 31, 2022. The Company has included $2.7 million and $2.9 million of debt issuance costs as of March 31, 2023 and December 31, 2022, respectively, related to the new and previous revolving credit facility, within prepaid expenses and other assets in the condensed consolidated balance sheets. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table disaggregates revenue by source: Three Months Ended March 31, (In Thousands) 2023 2022 Lease Revenues and Fees $ 373,795 $ 409,318 Retail Sales 150,546 12,607 Non-Retail Sales 23,935 27,827 Franchise Royalties and Fees 5,898 6,118 Other 187 212 Total 1 $ 554,361 $ 456,082 |
Restructuring (Tables)
Restructuring (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | The following table summarizes restructuring charges for the three months ended March 31, 2023 and 2022, respectively, under the Company's restructuring programs: Three Months Ended March 31, (In Thousands) 2023 2022 Right-of-Use Asset Impairment $ 774 $ 1,178 Operating Lease Charges 1,908 1,442 Fixed Asset Impairment 121 245 Severance 2,202 418 Other Expenses 1 284 52 Total Restructuring Expenses, Net $ 5,289 $ 3,335 1 Includes professional advisory fees and net gains related to the sale of store properties and related assets. |
Schedule of Restructuring Reserve | The following table summarizes the activity for the three months ended March 31, 2023 and the corresponding accrual balance as of March 31, 2023 for the restructuring programs: (In Thousands) Severance Operating Lease Charges 1 Professional Advisory Fees Balance at January 1, 2023 $ 695 $ 2,200 $ 1,032 Restructuring Charges (Reversals) 2,202 — (135) Payments (2,206) (2,200) (592) Balance at March 31, 2023 $ 691 $ — $ 305 1 Represents expenses related to a real estate-related settlement which remained payable at December 31, 2022 and was subsequently paid during the first quarter of 2023. |
Segments (Tables)
Segments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Information on Segments and Reconciliation to Earnings Before Income Taxes from Continuing Operations | The Company does not evaluate performance or allocate resources based on segment asset data, and therefore total segment assets are not presented. Three Months Ended March 31, 2023 (In Thousands) Aaron's Business BrandsMart Elimination of Intersegment Revenues Total Lease Revenues and Fees $ 373,795 $ — $ — $ 373,795 Retail Sales 8,318 144,158 (1,930) 150,546 Non-Retail Sales 23,935 — — 23,935 Franchise Royalties and Fees 5,898 — — 5,898 Other 187 — — 187 Total Revenues $ 412,133 $ 144,158 $ (1,930) $ 554,361 Three Months Ended March 31, 2023 (In Thousands) Aaron's Business 1 BrandsMart Unallocated Corporate 2 Elimination Total Gross Profit $ 260,706 $ 35,135 $ — $ (147) $ 295,694 Earnings (Loss) Before Income Taxes 35,859 (888) (25,971) (108) 8,892 Depreciation and Amortization 3 18,703 3,644 223 — 22,570 Capital Expenditures 18,029 916 1,264 — 20,209 1 The earnings before income taxes for the Aaron's Business during the three months ended March 31, 2023 includes a $3.8 million receipt from the settlement of a class action lawsuit related to alleged anti-competitive conduct by several manufacturers of cathode ray tubes. 2 The loss before income taxes for the Unallocated Corporate category during the three months ended March 31, 2023 was impacted by restructuring charges of $5.3 million, BrandsMart U.S.A. acquisition-related costs of $1.8 million and separation-related costs of $0.1 million. 3 Excludes depreciation of lease merchandise, which is not included in the chief operating decision maker's measure of depreciation and amortization. Three Months Ended March 31, 2022 (In Thousands) Aaron's Business BrandsMart Elimination of Intersegment Revenues Total Lease Revenues and Fees $ 409,318 $ — $ — $ 409,318 Retail Sales 12,607 — — 12,607 Non-Retail Sales 27,827 — — 27,827 Franchise Royalties and Fees 6,118 — — 6,118 Other 212 — — 212 Total $ 456,082 $ — $ — $ 456,082 Three Months Ended March 31, 2022 (In Thousands) Aaron's Business BrandsMart Unallocated Corporate 1 Elimination Total Gross Profit $ 284,947 $ — $ — $ — $ 284,947 Earnings (Loss) Before Income Taxes 52,161 — (23,256) — 28,905 Depreciation and Amortization 2 17,752 — 397 — 18,149 Capital Expenditures 23,260 — 1,843 — 25,103 1 The loss before income taxes for the Unallocated Corporate category during the three months ended March 31, 2022 was impacted by BrandsMart U.S.A. acquisition-related costs of $3.5 million, restructuring charges of $3.3 million and separation-related costs of $0.5 million. 2 Excludes depreciation of lease merchandise, which is not included in the chief operating decision maker's measure of depreciation and amortization. |
Basis and Summary of Signific_4
Basis and Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | Mar. 31, 2023 USD ($) store | Apr. 01, 2022 USD ($) store | Mar. 31, 2022 store |
Significant Accounting Policies [Line Items] | |||
Common stock conversion ratio | 0.5 | ||
Approximate number of stores | 1,261 | ||
Number of retail stores | 1,271 | 1,306 | |
Interest Rate Swap | |||
Significant Accounting Policies [Line Items] | |||
Notional amount | $ | $ 100,000 | ||
BrandsMart | |||
Significant Accounting Policies [Line Items] | |||
Percentage of interests acquired | 100% | ||
Cash Consideration to BrandsMart U.S.A. | $ | $ 230,000 | $ 230,000 | |
Number of retail stores | 10 |
Basis and Summary of Signific_5
Basis and Summary of Significant Accounting Policies - Store Count by Ownership Type (Details) ft² in Thousands | Mar. 31, 2023 ft² store | Mar. 31, 2022 store |
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 1,271 | 1,306 |
Company-operated Aaron's Stores | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 1,030 | 1,070 |
Area of real estate property | ft² | 11 | |
Company-operated Aaron's Stores | GenNext | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 222 | 135 |
Company-operated Aaron's Stores | Legacy | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 808 | |
Company-operated Aaron's Stores | Store | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 946 | |
Company-operated Aaron's Stores | Store | GenNext | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 196 | |
Company-operated Aaron's Stores | Store | Legacy | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 750 | |
Company-operated Aaron's Stores | Hub | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 42 | |
Company-operated Aaron's Stores | Hub | GenNext | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 25 | |
Company-operated Aaron's Stores | Hub | Legacy | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 17 | |
Company-operated Aaron's Stores | Showroom | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 42 | |
Company-operated Aaron's Stores | Showroom | GenNext | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 1 | |
Company-operated Aaron's Stores | Showroom | Legacy | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 41 | |
Franchisee-operated Aaron's Stores | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 231 | 236 |
BrandsMart Stores | ||
Significant Accounting Policies [Line Items] | ||
Number of retail stores | 10 | 0 |
Area of real estate property | ft² | 100 |
Basis and Summary of Signific_6
Basis and Summary of Significant Accounting Policies - (Loss) Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accounting Policies [Abstract] | ||
Weighted Average Shares Outstanding (in shares) | 30,793 | 31,062 |
Dilutive Effect of Share-Based Awards (in shares) | 446 | 698 |
Weighted Average Shares Outstanding Assuming Dilution (in shares) | 31,239 | 31,760 |
Business and Summary of Signifi
Business and Summary of Significant Accounting Policies - (Loss) Earnings Per Share Narrative (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share [Abstract] | ||
Anti-dilutive securities excluded from the computation of earnings per share assuming dilution (in shares) | 1.2 | 0.5 |
Basis and Summary of Signific_7
Basis and Summary of Significant Accounting Policies - Revenue Recognition (Details) - Sales And Lease Ownership | Mar. 31, 2023 |
Agreement One | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Lease agreement period | 12 months |
Agreement Two | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Lease agreement period | 18 months |
Agreement Three | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Lease agreement period | 24 months |
Basis and Summary of Signific_8
Basis and Summary of Significant Accounting Policies - Advertising Expense (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | |||
Advertising costs | $ 13 | $ 10.7 | |
Amount of cooperative advertising consideration netted against advertising expense | 7.5 | $ 7 | |
Prepaid advertising asset | $ 4.8 | $ 4.6 |
Basis and Summary of Signific_9
Basis and Summary of Significant Accounting Policies - Accounts Receivable Net of Allowances (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net of allowances | $ 30,286 | $ 38,191 |
Threshold period past due for write-off of lease receivable | 60 days | |
Customers | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net of allowances | $ 6,370 | 9,721 |
Customer Lease Receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Threshold period past due for write-off of lease receivable | 90 days | |
Corporate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net of allowances | $ 16,377 | 20,597 |
Franchisee | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net of allowances | $ 7,539 | $ 7,873 |
Basis and Summary of Signifi_10
Basis and Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning Balance | $ 8,895 | $ 7,163 |
Accounts Written Off, net of Recoveries | (9,895) | (8,665) |
Accounts Receivable Provision | 6,908 | 6,753 |
Ending Balance | $ 5,908 | $ 5,251 |
Basis and Summary of Signifi_11
Basis and Summary of Significant Accounting Policies - Components of the Accounts Receivable Provision (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accounting Policies [Abstract] | ||
Bad Debt Expense (Reversal) | $ 26 | $ (175) |
Provision for Returns and Uncollectible Renewal Payments | 6,882 | 6,928 |
Accounts Receivable Provision | $ 6,908 | $ 6,753 |
Basis and Summary of Signifi_12
Basis and Summary of Significant Accounting Policies - Lease Merchandise (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Significant Accounting Policies [Line Items] | ||
Lease merchandise, net of accumulated depreciation and allowances | $ 666,472 | $ 693,795 |
Manufacturing | Operating Segments | ||
Significant Accounting Policies [Line Items] | ||
Inventory, including raw materials and work-in-process | 10,600 | 12,900 |
Merchandise on Lease, net of Accumulated Depreciation and Allowances | ||
Significant Accounting Policies [Line Items] | ||
Lease merchandise, net of accumulated depreciation and allowances | $ 424,301 | 446,923 |
Merchandise on Lease, net of Accumulated Depreciation and Allowances | Minimum | ||
Significant Accounting Policies [Line Items] | ||
Lease merchandise useful life | 12 months | |
Merchandise on Lease, net of Accumulated Depreciation and Allowances | Maximum | ||
Significant Accounting Policies [Line Items] | ||
Lease merchandise useful life | 24 months | |
Merchandise Not on Lease, net of Accumulated Depreciation and Allowances | ||
Significant Accounting Policies [Line Items] | ||
Lease merchandise useful life | 36 months | |
Lease merchandise, net of accumulated depreciation and allowances | $ 242,171 | $ 246,872 |
Basis and Summary of Signifi_13
Basis and Summary of Significant Accounting Policies - Allowance for Lease Merchandise Write-offs (Details) - Lease Merchandise - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Components of the allowance of leases merchandise write-offs: | ||
Beginning Balance | $ 13,894 | $ 12,339 |
Merchandise Written off, net of Recoveries | (20,674) | (22,183) |
Provision for Write-offs | 20,160 | 21,957 |
Ending Balance | $ 13,380 | $ 12,113 |
Basis and Summary of Signifi_14
Basis and Summary of Significant Accounting Policies - Retail Related Inventory, Merchandise (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Accounting Policies [Abstract] | ||
Merchandise Inventories, gross | $ 87,241 | $ 96,945 |
Reserve for Merchandise Inventories | (905) | (981) |
Merchandise Inventories, Net | $ 86,336 | $ 95,964 |
Basis and Summary of Signifi_15
Basis and Summary of Significant Accounting Policies - Retail Related Inventory, Components of the Reserve for Merchandise Inventories (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Retail Related Inventory, Merchandise [Roll Forward] | |
Beginning Balance | $ 981 |
Merchandise Written off | 0 |
Provision for Write-offs | (76) |
Ending Balance | $ 905 |
Business and Summary of Signi_2
Business and Summary of Significant Accounting Policies - Prepaid Expenses and Other Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Apr. 01, 2022 |
Restructuring Cost and Reserve [Line Items] | |||
Prepaid Expenses | $ 20,357 | $ 20,218 | |
Insurance Related Assets | 21,848 | 25,103 | |
Company-Owned Life Insurance | 13,999 | 13,443 | |
Assets Held for Sale | 896 | 1,857 | |
Deferred Tax Assets | 23,433 | 16,277 | |
Other Assets | 20,485 | 19,538 | |
Prepaid expenses and other assets | 101,018 | 96,436 | |
BrandsMart | |||
Restructuring Cost and Reserve [Line Items] | |||
Restricted cash | $ 1,600 | $ 1,600 | $ 2,500 |
Basis and Summary of Signifi_16
Basis and Summary of Significant Accounting Policies - Sale-Leaseback Transactions (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 USD ($) store | Mar. 31, 2022 store | |
Lessee, Lease, Description [Line Items] | ||
Number of retail stores | 1,271 | 1,306 |
Sale and leaseback transactions | ||
Lessee, Lease, Description [Line Items] | ||
Sales leaseback transaction, sale price | $ | $ 5.7 | |
Sale and leaseback transactions | Other operating expense | ||
Lessee, Lease, Description [Line Items] | ||
Gain related to the sale and leaseback transaction | $ | $ 3.8 | |
BrandsMart | ||
Lessee, Lease, Description [Line Items] | ||
Number of retail stores | 6 | |
BrandsMart | Sale and leaseback transactions | ||
Lessee, Lease, Description [Line Items] | ||
Number of retail stores | 3 |
Basis and Summary of Signifi_17
Basis and Summary of Significant Accounting Policies - Interest Rate Swap (Details) $ in Millions | Mar. 31, 2023 USD ($) |
Debt Instrument [Line Items] | |
Derivative fixed interest rate | 3.87% |
Interest Rate Swap | |
Debt Instrument [Line Items] | |
Notional amount | $ 100 |
Derivative fixed interest rate | 3.87% |
Interest Rate Swap | Designated as Hedging Instrument | |
Debt Instrument [Line Items] | |
Derivative liability | $ 1.3 |
Basis and Summary of Signifi_18
Basis and Summary of Significant Accounting Policies - Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Accounting Policies [Abstract] | ||
Accounts Payable | $ 96,096 | $ 106,966 |
Estimated Claims Liability Costs | 59,201 | 58,549 |
Accrued Salaries and Benefits | 27,470 | 33,932 |
Accrued Real Estate and Sales Taxes | 21,379 | 24,030 |
Other Accrued Expenses and Liabilities | 38,253 | 40,566 |
Accounts Payable and Accrued Liabilities | $ 242,399 | $ 264,043 |
Basis and Summary of Signifi_19
Basis and Summary of Significant Accounting Policies - Goodwill Narrative (Details) $ in Thousands | 3 Months Ended | |||
Dec. 31, 2022 USD ($) reportingUnit | Mar. 31, 2023 USD ($) | Jun. 30, 2022 USD ($) | Apr. 01, 2022 USD ($) | |
Goodwill [Line Items] | ||||
Number of reporting units | reportingUnit | 3 | |||
Goodwill | $ 54,710 | $ 55,750 | ||
BrandsMart | ||||
Goodwill [Line Items] | ||||
Goodwill | 55,750 | $ 55,800 | $ 54,710 | |
BrandsMart | BrandsMart Leasing | ||||
Goodwill [Line Items] | ||||
Goodwill | $ 26,517 | $ 26,517 | $ 26,500 |
Basis and Summary of Signifi_20
Basis and Summary of Significant Accounting Policies - Schedule Of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | $ 54,710 |
Acquisitions | 0 |
Currency Translation Adjustments | 0 |
Acquisition Accounting Adjustments | 1,040 |
Impairment Loss | 0 |
Goodwill, Ending Balance | 55,750 |
Aaron's Business | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 0 |
Acquisitions | 0 |
Currency Translation Adjustments | 0 |
Acquisition Accounting Adjustments | 0 |
Impairment Loss | 0 |
Goodwill, Ending Balance | 0 |
BrandsMart | |
Goodwill [Roll Forward] | |
Acquisition Accounting Adjustments | 1,040 |
Goodwill, Ending Balance | 55,750 |
BrandsMart | Reporting Units, Excluding Leasing | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 28,193 |
Acquisitions | 0 |
Currency Translation Adjustments | 0 |
Acquisition Accounting Adjustments | 1,040 |
Impairment Loss | 0 |
Goodwill, Ending Balance | 29,233 |
BrandsMart | BrandsMart Leasing | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 26,517 |
Acquisitions | 0 |
Currency Translation Adjustments | 0 |
Acquisition Accounting Adjustments | 0 |
Impairment Loss | 0 |
Goodwill, Ending Balance | $ 26,517 |
Basis and Summary of Signifi_21
Basis and Summary of Significant Accounting Policies - Acquisition Related Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Business Combination, Separately Recognized Transactions [Line Items] | ||
Acquisition-related costs | $ 1,848 | $ 3,464 |
BrandsMart | ||
Business Combination, Separately Recognized Transactions [Line Items] | ||
Acquisition-related costs | $ 1,800 | $ 3,500 |
Basis and Summary of Signifi_22
Basis and Summary of Significant Accounting Policies - Related Party Transactions (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 USD ($) store | Mar. 31, 2022 store | |
Related Party Transaction [Line Items] | ||
Number of retail stores | 1,271 | 1,306 |
BrandsMart | ||
Related Party Transaction [Line Items] | ||
Number of retail stores | 6 | |
Initial operating lease term | 10 years | |
Renewal term | 20 years | |
Number of operating leases | 6 | |
Annual rental payments operating lease | $ | $ 10 | |
BrandsMart | Related to Real Estate Activities, Including Rental Payments, Maintenance and Taxes | ||
Related Party Transaction [Line Items] | ||
Related party transaction, expenses from transactions with related party | $ | $ 3.2 |
Basis and Summary of Signifi_23
Basis and Summary of Significant Accounting Policies - Statements of Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Treasury Stock Beginning Balance (in shares) | (5,480,353) | ||
Beginning Balance | $ 695,402 | $ 718,166 | |
Cash Dividends | (3,966) | (3,584) | |
Stock-Based Compensation | 2,874 | 3,611 | |
Issuance of Shares under Equity Plans | (2,539) | (3,489) | |
Acquisition of Treasury Stock | (5,720) | ||
Net Earnings | 12,798 | 21,532 | |
Unrealized (Loss) Gain on Fuel Hedge Derivative Instrument, net of Tax | [1] | (990) | 154 |
Foreign Currency Translation Adjustment, net of Tax | [1] | $ 324 | 238 |
Treasury Stock Ending Balance (in shares) | (5,687,346) | ||
Ending Balance | $ 703,903 | $ 730,908 | |
Treasury Stock | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Treasury Stock Beginning Balance (in shares) | (5,480,000) | (4,580,000) | |
Beginning Balance | $ (138,753) | $ (121,804) | |
Issuance of Shares under Equity Plans (in shares) | (207,000) | (163,000) | |
Issuance of Shares under Equity Plans | $ (2,539) | $ (3,541) | |
Acquisition of Treasury Stock (in shares) | (262,000) | ||
Acquisition of Treasury Stock | $ (5,720) | ||
Treasury Stock Ending Balance (in shares) | (5,687,000) | (5,005,000) | |
Ending Balance | $ (141,292) | $ (131,065) | |
Common Stock | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning Balance | $ 18,050 | $ 17,779 | |
Beginning Balance (in shares) | 36,100,000 | 35,559,000 | |
Issuance of Shares under Equity Plans (in shares) | 496,000 | 410,000 | |
Issuance of Shares under Equity Plans | $ 248 | $ 205 | |
Ending Balance | $ 18,298 | $ 17,984 | |
Ending Balance (in shares) | 36,596,000 | 35,969,000 | |
Additional Paid-in Capital | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning Balance | $ 738,428 | $ 724,384 | |
Stock-Based Compensation | 2,874 | 3,611 | |
Issuance of Shares under Equity Plans | (248) | (153) | |
Ending Balance | 741,054 | 727,842 | |
Retained Earnings | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning Balance | 79,073 | 98,546 | |
Cash Dividends | (3,966) | (3,584) | |
Net Earnings | 12,798 | 21,532 | |
Ending Balance | $ 87,905 | $ 116,494 | |
Dividends, per share (in dollars per share) | $ 0.125 | $ 0.11 | |
Accumulated Other Comprehensive Loss | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Beginning Balance | $ (1,396) | $ (739) | |
Unrealized (Loss) Gain on Fuel Hedge Derivative Instrument, net of Tax | (990) | 154 | |
Foreign Currency Translation Adjustment, net of Tax | 324 | 238 | |
Ending Balance | $ (2,062) | $ (347) | |
[1]As of March 31, 2023, the Unrealized Loss on Derivative Instruments and the Foreign Currency Translation Adjustment are presented net of tax of $0.3 million and $0.3 million, respectively and the tax components of the prior year amounts are insignificant. |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 USD ($) store | Apr. 01, 2022 USD ($) store | Mar. 31, 2023 USD ($) store | Mar. 31, 2022 USD ($) store | |
Business Acquisition [Line Items] | ||||
Number of retail stores | store | 1,271 | 1,271 | 1,306 | |
Acquisition-related costs | $ 1,848 | $ 3,464 | ||
BrandsMart | ||||
Business Acquisition [Line Items] | ||||
Number of retail stores | store | 10 | |||
Cash consideration to BrandsMart U.S.A. | $ 230,000 | $ 230,000 | ||
Revenue contributed by acquiree | 144,200 | |||
Acquisition-related costs | $ 1,800 | $ 3,500 |
Acquisitions - BrandsMart Acqui
Acquisitions - BrandsMart Acquisition (Details) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2023 USD ($) | Apr. 01, 2022 USD ($) store | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Jun. 30, 2022 USD ($) | |
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed | |||||
Goodwill | $ 55,750 | $ 55,750 | $ 54,710 | ||
Acquisition Accounting Adjustments | 1,040 | ||||
BrandsMart | |||||
Business Acquisition [Line Items] | |||||
Cash Consideration to BrandsMart U.S.A. | 230,000 | $ 230,000 | |||
Measurement Period adjustments, cash consideration | 0 | ||||
Acquired Cash | 15,952 | 15,952 | 15,952 | ||
Measurement Period adjustments, acquired cash | 0 | ||||
Estimated Excess Working Capital, net of Cash | 35,599 | 35,599 | 35,599 | ||
Measurement Period adjustments, estimated excess working capital, net of Cash | 0 | ||||
Non-Cash Off-Market Lease Agreement | 6,823 | 6,823 | 6,823 | ||
Measurement period adjustments non-cash off-market lease agreement | 0 | ||||
Aggregate Consideration Transferred | 288,374 | 288,374 | |||
Measurement Period adjustments, consideration transferred | 0 | ||||
Measurement Period adjustments, total purchase consideration, net of cash acquired | 0 | ||||
Estimated Fair Value of Identifiable Assets Acquired and Liabilities Assumed | |||||
Accounts Receivable | 4,310 | 4,310 | 4,310 | ||
Measurement Period adjustments, accounts receivable | 0 | ||||
Merchandise Inventories | 124,237 | 124,064 | 124,237 | ||
Measurement period adjustments, merchandise inventories | 173 | ||||
Property, Plant and Equipment | 20,692 | 22,053 | 20,692 | ||
Measurement Period adjustments, property, plant and equipment | (1,361) | ||||
Operating Lease Right-of-Use Assets | 160,210 | 160,210 | 160,210 | ||
Measurement Period adjustments, operating lease right-of-use assets | 0 | ||||
Other Intangibles | 122,950 | 122,950 | 122,950 | ||
Measurement Period adjustments, intangibles | 0 | ||||
Prepaid Expenses and Other Assets | 8,969 | 9,049 | 8,969 | ||
Measurement Period adjustments, prepaid expenses and other assets | (80) | ||||
Total Identifiable Assets Acquired | 441,368 | 442,636 | 441,368 | ||
Measurement Period adjustments, total identifiable assets acquired | (1,268) | ||||
Accounts Payable and Accrued Expenses | 23,290 | 25,340 | 23,290 | ||
Measurement Period adjustments, accounts payable and accrued expenses | (2,050) | ||||
Customer Deposits and Advance Payments | 27,154 | 25,332 | 27,154 | ||
Measurement Period adjustments, customer deposits and advance payments | 1,822 | ||||
Operating Lease Liabilities | 158,712 | 158,712 | 158,712 | ||
Measurement Period adjustments, operating lease liabilities | 0 | ||||
Debt | 15,540 | 15,540 | 15,540 | ||
Measurement Period adjustments, debt | 0 | ||||
Total Liabilities Assumed | 224,696 | 224,924 | 224,696 | ||
Measurement Period adjustments, total liabilities assumed | (228) | ||||
Net Assets Acquired | 216,672 | 217,712 | 216,672 | ||
Measurement Period adjustments, net assets acquired | (1,040) | ||||
Goodwill | 55,750 | 54,710 | 55,750 | $ 55,800 | |
Acquisition Accounting Adjustments | 1,040 | ||||
Total Estimated Fair Value of Net Assets Acquired | 272,422 | $ 272,422 | 272,422 | ||
Measurement Period adjustments, total estimated fair value of net assets acquired | 0 | ||||
Number of store locations | store | 6 | ||||
Initial operating lease term | 10 years | ||||
Renewal term | 20 years | ||||
Restricted cash | $ 1,600 | $ 2,500 | $ 1,600 | $ 1,600 |
Acquisitions - Intangible Asset
Acquisitions - Intangible Assets Acquired (Details) - BrandsMart $ in Thousands | Apr. 01, 2022 USD ($) |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, fair value | $ 122,950 |
Trade Names | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, fair value | $ 108,000 |
Weighted Average Life (in years) | 20 years |
Non-Compete Agreements | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, fair value | $ 250 |
Weighted Average Life (in years) | 3 years |
Customer List | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible assets, fair value | $ 14,700 |
Weighted Average Life (in years) | 4 years |
Acquisitions - Pro Forma Financ
Acquisitions - Pro Forma Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Revenues, As Reported | $ 554,361 | $ 456,082 |
Earnings Before Income Taxes, As Reported | 8,892 | 28,905 |
Net Earnings | $ 12,798 | 21,532 |
BrandsMart | ||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||
Revenues, As Reported | 456,082 | |
Revenues, Pro Forma Combined Results | 641,227 | |
Earnings Before Income Taxes, As Reported | 28,905 | |
Earnings Before Income Taxes, Pro Forma Combined Results | 31,487 | |
Net Earnings | 21,532 | |
Net Earnings, Pro Forma Combined Results | $ 23,489 |
Fair Value Measurement - Summar
Fair Value Measurement - Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Recurring Basis - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred Compensation Liability | $ 0 | $ 0 |
Level 1 | Interest Rate Swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest Rate Swap Liability | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred Compensation Liability | (9,187) | (8,621) |
Level 2 | Interest Rate Swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest Rate Swap Liability | (1,278) | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Deferred Compensation Liability | 0 | 0 |
Level 3 | Interest Rate Swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest Rate Swap Liability | $ 0 | $ 0 |
Fair Value Measurement - Narrat
Fair Value Measurement - Narrative (Details) $ in Millions | Mar. 31, 2023 USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative fixed interest rate | 3.87% |
Interest Rate Swap | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Notional amount | $ 100 |
Derivative fixed interest rate | 3.87% |
Fair Value Measurement - Assets
Fair Value Measurement - Assets Measured At Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets Held for Sale | $ 896 | $ 1,857 |
Level 1 | Fair Value, Nonrecurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets Held for Sale | 0 | 0 |
Level 2 | Fair Value, Nonrecurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets Held for Sale | 896 | 1,857 |
Level 3 | Fair Value, Nonrecurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets Held for Sale | $ 0 | $ 0 |
Indebtedness - Summary of Compa
Indebtedness - Summary of Company's Credit Facilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Less: Current Maturities | $ 4,375 | $ 23,450 |
Long-Term Debt | 217,738 | 218,963 |
Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt | 222,113 | 242,413 |
Revolving Facility | Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt | 50,000 | 69,250 |
Revolving Facility | Credit Facility | Fixed-Rate Long-Term Debt | ||
Debt Instrument [Line Items] | ||
Unamortized debt issuance costs deferred | 700 | 700 |
Revolving Facility | Credit Facility | Prepaid Expenses and Other Assets | ||
Debt Instrument [Line Items] | ||
Unamortized debt issuance costs deferred | 2,700 | 2,900 |
Term Loan | Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt | $ 172,113 | $ 173,163 |
Indebtedness - Narrative (Detai
Indebtedness - Narrative (Details) - USD ($) | 24 Months Ended | 36 Months Ended | |||||||
Apr. 01, 2022 | Dec. 31, 2024 | Dec. 31, 2027 | Mar. 31, 2023 | Feb. 23, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Nov. 10, 2021 | Nov. 09, 2020 | |
Term Loan | Forecast | |||||||||
Debt Instrument [Line Items] | |||||||||
Percentage of original principal amount amortized | 2.50% | 5% | |||||||
Swingline Loans on Customary Terms | Progressive Subsidiary | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 35,000,000 | ||||||||
Franchise Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Event of default, loan due In full, term | 90 days | ||||||||
Debt term | 364 days | ||||||||
Debt instrument, extension period | 364 days | ||||||||
Debt instrument, covenant, maximum EBITDA ratio | 2.75 | ||||||||
Debt instrument, covenant, minimum fixed charge coverage ratio | 1.75 | ||||||||
Letter of Credit | Progressive Subsidiary | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 35,000,000 | ||||||||
Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-Term debt | $ 222,113,000 | $ 242,413,000 | |||||||
Basis spread, base rate below SOFR | 1% | ||||||||
Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 1.50% | ||||||||
Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 2.25% | ||||||||
Credit Facility | Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-Term debt | 172,800,000 | 173,900,000 | |||||||
Credit Facility | Franchise Loan Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 1.50% | ||||||||
Credit Facility | Franchise Loan Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, basis spread on variable rate | 2.25% | ||||||||
Credit Facility | Revolving Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-Term debt | $ 50,000,000 | $ 69,250,000 | |||||||
Credit Facility | Revolving Facility | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit, unused capacity, commitment fee percentage | 0.20% | ||||||||
Credit Facility | Revolving Facility | Maximum | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit, unused capacity, commitment fee percentage | 0.30% | ||||||||
Credit Facility | Revolving Facility | Previous Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 250,000,000 | ||||||||
Credit Facility | Revolving Facility | Term Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 175,000,000 | ||||||||
Credit Facility | Revolving Facility | Revolving Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | 375,000,000 | ||||||||
Credit Facility | Revolving Facility | BrandsMart U.S.A. Revolving Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | 117,000,000 | ||||||||
Credit Facility | Revolving Facility | Franchise Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Franchise loan facility | $ 12,500,000 | $ 10,000,000 | $ 15,000,000 | ||||||
Credit Facility | Revolving Facility | Previous Franchise Loan Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Franchise loan facility | $ 15,000,000 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 554,361 | $ 456,082 |
Lease Revenues and Fees | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 373,795 | 409,318 |
Lease Revenues and Fees | Canada | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 4,400 | 4,900 |
Retail Sales | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 150,546 | 12,607 |
Non-Retail Sales | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 23,935 | 27,827 |
Franchise Royalties and Fees | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 5,898 | 6,118 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 187 | $ 212 |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 USD ($) renewalOption | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Disaggregation of Revenue [Line Items] | |||
Revenues | $ 554,361 | $ 456,082 | |
Return asset | 2,200 | $ 3,000 | |
Allowance for sales returns | $ 2,900 | $ 4,000 | |
Franchise operations agreement, initial term | 10 years | ||
Franchise operations agreement, number of renewal options | renewalOption | 1 | ||
Franchise operations agreement, renewal term | 10 years | ||
Leases | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | $ 6,300 | 7,000 | |
Franchise Royalties and Fees | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 5,898 | 6,118 | |
Franchise Royalties and Fees | Transferred over Time | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | $ 4,800 | $ 4,900 | |
Sales and Lease Ownership and HomeSmart | |||
Disaggregation of Revenue [Line Items] | |||
Royalty payment rate | 6% | ||
Agreement One | Sales And Lease Ownership | |||
Disaggregation of Revenue [Line Items] | |||
Lease agreement period | 12 months | ||
Agreement Two | Sales And Lease Ownership | |||
Disaggregation of Revenue [Line Items] | |||
Lease agreement period | 18 months | ||
Agreement Three | Sales And Lease Ownership | |||
Disaggregation of Revenue [Line Items] | |||
Lease agreement period | 24 months |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Mar. 31, 2023 | Feb. 23, 2023 | Dec. 31, 2022 | Apr. 01, 2022 | Mar. 31, 2022 |
Other Commitments [Line Items] | |||||
Portion that company might be obligated to repay in the event franchisees defaulted | $ 4,300,000 | ||||
Fair value of franchisee-related borrowings | 1,000,000 | $ 1,300,000 | |||
Loss contingency accrual | 900,000 | $ 2,700,000 | |||
Minimum | |||||
Other Commitments [Line Items] | |||||
Range of possible loss not accrued | 0 | ||||
Estimate of possible loss | 0 | ||||
Maximum | |||||
Other Commitments [Line Items] | |||||
Range of possible loss not accrued | 500,000 | ||||
Estimate of possible loss | $ 500,000 | ||||
Revolving Facility | Franchise Loan Facility | Credit Facility | |||||
Other Commitments [Line Items] | |||||
Franchise loan facility | $ 10,000,000 | $ 12,500,000 | $ 15,000,000 |
Restructuring - Narrative (Deta
Restructuring - Narrative (Details) $ in Thousands | 3 Months Ended | 39 Months Ended | ||
Mar. 31, 2023 USD ($) store | Mar. 31, 2022 USD ($) | Mar. 31, 2020 | Mar. 31, 2023 USD ($) store | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expenses net | $ 5,289 | $ 3,335 | ||
2022 Restructuring Program | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of store closures | store | 28 | |||
Restructuring expenses net | $ 2,900 | |||
Real Estate Repositioning and Optimization Restructuring Program | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Number of store closures | store | 222 | |||
Restructuring expenses net | $ 2,400 | |||
Expected number of store closures, consolidation, or relocation over remainder of year | store | 34 | |||
Incurred charges | $ 64,000 | $ 64,000 | ||
Real Estate Repositioning and Optimization Restructuring Program | Minimum | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Strategic plan, term | 3 years | |||
Real Estate Repositioning and Optimization Restructuring Program | Maximum | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Strategic plan, term | 4 years |
Restructuring - Summary of Rest
Restructuring - Summary of Restructuring Charges by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 5,289 | $ 3,335 |
Right-of-Use Asset Impairment | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 774 | 1,178 |
Operating Lease Charges | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 1,908 | 1,442 |
Fixed Asset Impairment | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 121 | 245 |
Severance | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 2,202 | 418 |
Other Expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 284 | $ 52 |
Restructuring - Summary of Accr
Restructuring - Summary of Accruals of Restructuring Programs (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Severance | |
Restructuring Reserve [Roll Forward] | |
Balance at January 1, 2023 | $ 695 |
Restructuring Charges (Reversals) | 2,202 |
Payments | (2,206) |
Balance at March 31, 2023 | 691 |
Operating Lease Charges | |
Restructuring Reserve [Roll Forward] | |
Balance at January 1, 2023 | 2,200 |
Restructuring Charges (Reversals) | 0 |
Payments | (2,200) |
Balance at March 31, 2023 | 0 |
Professional Advisory Fees | |
Restructuring Reserve [Roll Forward] | |
Balance at January 1, 2023 | 1,032 |
Restructuring Charges (Reversals) | (135) |
Payments | (592) |
Balance at March 31, 2023 | $ 305 |
Segments - Narrative (Details)
Segments - Narrative (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 segment store | Mar. 31, 2023 store segment | |
Business Acquisition [Line Items] | ||
Number of retail stores | store | 1,306 | 1,271 |
BrandsMart | ||
Business Acquisition [Line Items] | ||
Number of operating segments | segment | 1 | 2 |
Number of reportable segments | segment | 1 | 2 |
Number of retail stores | store | 10 |
Segments Segments - Revenue by
Segments Segments - Revenue by source and segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 554,361 | $ 456,082 |
Gross Profit | 295,694 | 284,947 |
Earnings (Loss) Before Income Taxes | 8,892 | 28,905 |
Depreciation and Amortization | 22,570 | 18,149 |
Capital Expenditures | 20,209 | 25,103 |
Receipt from settlement of class action lawsuit | 3,800 | |
Restructuring charges | 5,289 | 3,335 |
Acquisition-related costs | 1,848 | 3,464 |
Separation Costs | 129 | 540 |
Elimination of Intersegment Revenues | ||
Segment Reporting Information [Line Items] | ||
Revenues | (1,930) | 0 |
Gross Profit | (147) | 0 |
Earnings (Loss) Before Income Taxes | (108) | 0 |
Depreciation and Amortization | 0 | 0 |
Capital Expenditures | 0 | 0 |
Unallocated Corporate | ||
Segment Reporting Information [Line Items] | ||
Gross Profit | 0 | 0 |
Earnings (Loss) Before Income Taxes | (25,971) | (23,256) |
Depreciation and Amortization | 223 | 397 |
Capital Expenditures | 1,264 | 1,843 |
Aaron's Business | ||
Segment Reporting Information [Line Items] | ||
Separation Costs | 100 | |
Aaron's Business | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Revenues | 412,133 | 456,082 |
Gross Profit | 260,706 | 284,947 |
Earnings (Loss) Before Income Taxes | 35,859 | 52,161 |
Depreciation and Amortization | 18,703 | 17,752 |
Capital Expenditures | 18,029 | 23,260 |
BrandsMart | ||
Segment Reporting Information [Line Items] | ||
Restructuring charges | 3,300 | |
Separation Costs | 500 | |
BrandsMart | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Revenues | 144,158 | 0 |
Gross Profit | 35,135 | 0 |
Earnings (Loss) Before Income Taxes | (888) | 0 |
Depreciation and Amortization | 3,644 | 0 |
Capital Expenditures | 916 | 0 |
BrandsMart | ||
Segment Reporting Information [Line Items] | ||
Revenues | 456,082 | |
Earnings (Loss) Before Income Taxes | 28,905 | |
Acquisition-related costs | 1,800 | 3,500 |
Lease Revenues and Fees | ||
Segment Reporting Information [Line Items] | ||
Revenues | 373,795 | 409,318 |
Lease Revenues and Fees | Elimination of Intersegment Revenues | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0 | 0 |
Lease Revenues and Fees | Aaron's Business | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Revenues | 373,795 | 409,318 |
Lease Revenues and Fees | BrandsMart | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0 | 0 |
Retail Sales | ||
Segment Reporting Information [Line Items] | ||
Revenues | 150,546 | 12,607 |
Retail Sales | Elimination of Intersegment Revenues | ||
Segment Reporting Information [Line Items] | ||
Revenues | (1,930) | 0 |
Retail Sales | Aaron's Business | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Revenues | 8,318 | 12,607 |
Retail Sales | BrandsMart | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Revenues | 144,158 | 0 |
Non-Retail Sales | ||
Segment Reporting Information [Line Items] | ||
Revenues | 23,935 | 27,827 |
Non-Retail Sales | Elimination of Intersegment Revenues | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0 | 0 |
Non-Retail Sales | Aaron's Business | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Revenues | 23,935 | 27,827 |
Non-Retail Sales | BrandsMart | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0 | 0 |
Franchise Royalties and Fees | ||
Segment Reporting Information [Line Items] | ||
Revenues | 5,898 | 6,118 |
Franchise Royalties and Fees | Elimination of Intersegment Revenues | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0 | 0 |
Franchise Royalties and Fees | Aaron's Business | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Revenues | 5,898 | 6,118 |
Franchise Royalties and Fees | BrandsMart | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0 | 0 |
Other | ||
Segment Reporting Information [Line Items] | ||
Revenues | 187 | 212 |
Other | Elimination of Intersegment Revenues | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0 | 0 |
Other | Aaron's Business | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Revenues | 187 | 212 |
Other | BrandsMart | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 0 | $ 0 |