Document and Company Informatio
Document and Company Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 24, 2023 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Entity Registrant Name | Upbound Group, Inc. | |
Document Transition Report | false | |
Entity File Number | 001-38047 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 45-0491516 | |
Entity Address, Address Line One | 5501 Headquarters Drive | |
Entity Address, City or Town | Plano | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75024 | |
City Area Code | 972 | |
Local Phone Number | 801-1100 | |
Title of 12(b) Security | Common stock, $.01 par value | |
Trading Symbol | UPBD | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 54,294,852 | |
Entity Central Index Key | 0000933036 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Store | ||||
Rentals and fees | $ 806,766 | $ 829,459 | $ 2,421,039 | $ 2,569,804 |
Merchandise sales | 127,564 | 147,616 | 415,256 | 541,265 |
Installment sales | 13,444 | 16,718 | 45,191 | 52,355 |
Other | 1,429 | 1,340 | 4,422 | 3,698 |
Total store revenues | 949,203 | 995,133 | 2,885,908 | 3,167,122 |
Franchise | ||||
Merchandise sales | 24,082 | 22,823 | 69,778 | 67,849 |
Royalty income and fees | 5,813 | 6,001 | 18,636 | 19,962 |
Total revenues | 979,098 | 1,023,957 | 2,974,322 | 3,254,933 |
Store | ||||
Cost of rentals and fees | 296,820 | 310,079 | 885,662 | 968,655 |
Cost of merchandise sold | 155,937 | 179,477 | 492,879 | 615,543 |
Cost of installment sales | 5,102 | 6,032 | 16,359 | 18,379 |
Total cost of store revenues | 457,859 | 495,588 | 1,394,900 | 1,602,577 |
Franchise cost of merchandise sold | 24,073 | 22,834 | 69,766 | 68,183 |
Total cost of revenues | 481,932 | 518,422 | 1,464,666 | 1,670,760 |
Gross profit | 497,166 | 505,535 | 1,509,656 | 1,584,173 |
Store expenses | ||||
Labor | 152,080 | 156,192 | 460,470 | 486,751 |
Other store expenses | 191,455 | 197,847 | 569,267 | 624,306 |
General and administrative expenses | 53,898 | 40,002 | 150,434 | 141,273 |
Depreciation and amortization | 12,624 | 12,798 | 38,102 | 40,208 |
Other charges | 29,057 | 61,619 | 184,413 | 185,435 |
Total operating expenses | 439,114 | 468,458 | 1,402,686 | 1,477,973 |
Operating profit | 58,052 | 37,077 | 106,970 | 106,200 |
Interest expense | 27,887 | 22,960 | 84,233 | 61,018 |
Interest income | (1,255) | (216) | (2,690) | (353) |
Earnings before income taxes | 31,420 | 14,333 | 25,427 | 45,535 |
Income tax expense | 27,057 | 20,111 | 19,352 | 35,825 |
Net earnings (loss) | $ 4,363 | $ (5,778) | $ 6,075 | $ 9,710 |
Basic earnings (loss) per common share | $ 0.08 | $ (0.10) | $ 0.11 | $ 0.18 |
Diluted earnings (loss) per common share | 0.08 | (0.10) | 0.11 | 0.16 |
Cash dividends declared per common share | $ 0.34 | $ 0.34 | $ 1.02 | $ 1.02 |
Condensed Consolidated Statem_2
Condensed Consolidated Statement of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings (loss) | $ 4,363 | $ (5,778) | $ 6,075 | $ 9,710 |
Foreign currency translation adjustments, net of tax of $(725) and $(163), $1,202 and $(14) for the three and nine months ended September 30, 2023 and 2022, respectively | (2,729) | (615) | 4,520 | (51) |
Total other comprehensive (loss) income | (2,729) | (615) | 4,520 | (51) |
Comprehensive income (loss) | $ 1,634 | $ (6,393) | $ 10,595 | $ 9,659 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Foreign currency translation tax adjustment | $ (725) | $ (163) | $ 1,202 | $ (14) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
ASSETS | ||
Cash and cash equivalents | $ 105,726 | $ 144,141 |
Receivables, net of allowance for doubtful accounts of $13,120 and $13,214 in 2023 and 2022, respectively | 104,772 | 111,865 |
Prepaid expenses and other assets | 55,671 | 46,070 |
Rental merchandise, net | ||
On rent | 968,965 | 989,869 |
Held for rent | 122,493 | 134,959 |
Merchandise held for installment sale | 5,537 | 6,988 |
Property assets, net of accumulated depreciation of $627,488 and $576,675 in 2023 and 2022, respectively | 277,216 | 295,371 |
Operating lease right-of-use assets | 295,879 | 302,311 |
Deferred tax asset | 84,164 | 82,886 |
Goodwill | 289,750 | 289,750 |
Other intangible assets, net | 315,902 | 359,409 |
Total assets | 2,626,075 | 2,763,619 |
LIABILITIES | ||
Accounts payable – trade | 132,379 | 155,449 |
Accrued liabilities | 299,597 | 320,624 |
Operating lease liabilities | 299,509 | 305,556 |
Deferred tax liability | 57,947 | 87,986 |
Senior debt, net | 799,973 | 930,902 |
Senior notes, net | 439,425 | 437,956 |
Total liabilities | 2,028,830 | 2,238,473 |
STOCKHOLDERS' EQUITY | ||
Common stock, $0.01 par value; 250,000,000 shares authorized; 125,354,405 and 125,028,169 shares issued in September 30, 2023 and December 31, 2022, respectively | 1,108 | 1,080 |
Additional paid-in capital | 1,443,667 | 1,298,094 |
Retained earnings | 1,026,309 | 1,077,189 |
Treasury stock at cost, 70,270,920 and 69,354,651 shares in September 30, 2023 and December 31, 2022 | (1,867,733) | (1,840,591) |
Accumulated other comprehensive loss | (6,106) | (10,626) |
Total Stockholders' Equity | 597,245 | 525,146 |
Total Liabilities and Stockholders' Equity | $ 2,626,075 | $ 2,763,619 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 13,120 | $ 13,214 |
Property assets, accumulated depreciation | $ 627,488 | $ 576,675 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, shares, issued (in shares) | 125,354,405 | 125,028,169 |
Treasury stock (in shares) | 70,270,920 | 69,354,651 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive (Loss) Income |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Common stock, shares, outstanding | 124,398 | |||||
Total stockholders' equity | $ 513,276 | $ 1,065 | $ 1,146,509 | $ 1,143,647 | $ (1,765,574) | $ (12,371) |
Net earnings (loss) | (4,237) | (4,237) | ||||
Total other comprehensive (loss) income | 661 | 661 | ||||
Exercise of stock options, shares | 22 | |||||
Exercise of stock options | 477 | $ 1 | 476 | |||
Vesting of restricted share units, net of shares withheld for employee taxes, shares | 424 | |||||
Vesting of restricted share units, net of shares withheld for employee taxes | 0 | $ 4 | (4) | |||
Tax effect of stock awards vested and options exercised | (8,466) | (8,466) | ||||
Stock-based compensation | 41,410 | 41,410 | ||||
Dividends declared | (20,063) | (20,063) | ||||
Net earnings (loss) | 9,710 | |||||
Total other comprehensive (loss) income | (51) | |||||
Common stock, shares, outstanding | 124,844 | |||||
Total stockholders' equity | 523,058 | $ 1,070 | 1,179,925 | 1,119,347 | (1,765,574) | (11,710) |
Net earnings (loss) | 19,725 | 19,725 | ||||
Total other comprehensive (loss) income | (97) | (97) | ||||
Exercise of stock options, shares | 52 | |||||
Exercise of stock options | 783 | 783 | ||||
Vesting of restricted share units, net of shares withheld for employee taxes, shares | 85 | |||||
Vesting of restricted share units, net of shares withheld for employee taxes | 0 | $ 1 | (1) | |||
Tax effect of stock awards vested and options exercised | (969) | (969) | ||||
Stock-based compensation | 36,438 | 36,438 | ||||
Dividends declared | (20,104) | (20,104) | ||||
Common stock, shares, outstanding | 124,981 | |||||
Total stockholders' equity | 558,834 | $ 1,071 | 1,216,176 | 1,118,968 | (1,765,574) | (11,807) |
Net earnings (loss) | (5,778) | (5,778) | ||||
Total other comprehensive (loss) income | (615) | (615) | ||||
Purchase of treasury stock | (29,797) | $ (13) | (29,784) | |||
Exercise of stock options, shares | 33 | |||||
Exercise of stock options | 461 | 461 | ||||
Vesting of restricted share units, net of shares withheld for employee taxes, shares | 5 | |||||
Vesting of restricted share units, net of shares withheld for employee taxes | 0 | $ 45 | (45) | |||
Tax effect of stock awards vested and options exercised | (42) | (42) | ||||
Stock-based compensation | 44,773 | 44,773 | ||||
Dividends declared | (19,673) | (19,673) | ||||
Common stock, shares, outstanding | 125,019 | |||||
Total stockholders' equity | 548,163 | $ 1,103 | 1,261,323 | 1,093,517 | (1,795,358) | (12,422) |
Common stock, shares, outstanding | 125,028 | |||||
Total stockholders' equity | 525,146 | $ 1,080 | 1,298,094 | 1,077,189 | (1,840,591) | (10,626) |
Net earnings (loss) | 47,330 | 47,330 | ||||
Total other comprehensive (loss) income | 3,104 | 3,104 | ||||
Exercise of stock options, shares | 55 | |||||
Exercise of stock options | 684 | $ 1 | 683 | |||
Vesting of restricted share units, net of shares withheld for employee taxes, shares | 204 | |||||
Vesting of restricted share units, net of shares withheld for employee taxes | 0 | $ 31 | (31) | |||
Tax effect of stock awards vested and options exercised | (2,535) | (2,535) | ||||
Stock-based compensation | 115,681 | 115,681 | ||||
Dividends declared | (19,068) | (19,068) | ||||
Net earnings (loss) | 6,075 | |||||
Total other comprehensive (loss) income | 4,520 | |||||
Common stock, shares, outstanding | 125,287 | |||||
Total stockholders' equity | 670,342 | $ 1,112 | 1,411,892 | 1,105,451 | (1,840,591) | (7,522) |
Net earnings (loss) | (45,618) | (45,618) | ||||
Total other comprehensive (loss) income | 4,145 | 4,145 | ||||
Exercise of stock options, shares | 19 | |||||
Exercise of stock options | 371 | 371 | ||||
Vesting of restricted share units, net of shares withheld for employee taxes, shares | 2 | |||||
Vesting of restricted share units, net of shares withheld for employee taxes | 0 | $ 1 | (1) | |||
Stock-based compensation | 15,425 | 15,425 | ||||
Dividends declared | (19,072) | (19,072) | ||||
Common stock, shares, outstanding | 125,308 | |||||
Total stockholders' equity | 625,593 | $ 1,113 | 1,427,687 | 1,040,761 | (1,840,591) | (3,377) |
Net earnings (loss) | 4,363 | 4,363 | ||||
Total other comprehensive (loss) income | (2,729) | (2,729) | ||||
Purchase of treasury stock | (27,151) | $ (9) | (27,142) | |||
Exercise of stock options, shares | 27 | |||||
Exercise of stock options | 463 | 463 | ||||
Vesting of restricted share units, net of shares withheld for employee taxes, shares | 19 | |||||
Vesting of restricted share units, net of shares withheld for employee taxes | 0 | $ 4 | (4) | |||
Tax effect of stock awards vested and options exercised | (97) | (97) | ||||
Stock-based compensation | 15,618 | 15,618 | ||||
Dividends declared | (18,815) | (18,815) | ||||
Common stock, shares, outstanding | 125,354 | |||||
Total stockholders' equity | $ 597,245 | $ 1,108 | $ 1,443,667 | $ 1,026,309 | $ (1,867,733) | $ (6,106) |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities | ||
Net earnings (loss) | $ 6,075 | $ 9,710 |
Adjustments to reconcile net earnings to net cash provided by operating activities | ||
Depreciation of rental merchandise | 859,001 | 937,728 |
Bad debt expense | 17,533 | 18,100 |
Stock-based compensation expense | 146,724 | 122,621 |
Depreciation of property assets | 53,894 | 51,384 |
Loss on sale or disposal of property assets | 413 | 5,979 |
Amortization of intangibles | 43,518 | 51,382 |
Amortization of financing fees | 4,770 | 4,798 |
Deferred income taxes | (32,488) | (21,025) |
Changes in operating assets and liabilities, net of acquired assets | ||
Rental merchandise | (824,151) | (704,191) |
Receivables | (10,441) | (4,951) |
Prepaid expenses and other assets | (9,600) | (7,808) |
Operating lease right-of-use assets and lease liabilities | 385 | (2,047) |
Accounts payable – trade | (23,070) | 4,085 |
Accrued liabilities | (12,621) | (53,682) |
Net cash provided by operating activities | 219,942 | 412,083 |
Cash flows from investing activities | ||
Purchase of property assets | (36,167) | (49,436) |
Proceeds from sale of property assets | 15 | 35 |
Acquisitions of businesses | (39) | (775) |
Net cash used in investing activities | (36,191) | (50,176) |
Cash flows from financing activities | ||
Share repurchases | (24,049) | (29,797) |
Exercise of stock options | 1,518 | 1,720 |
Shares withheld for payment of employee tax withholdings | (2,632) | (9,477) |
Proceeds from debt | 0 | 90,000 |
Repayments of debt | (134,229) | (296,563) |
Dividends paid | (64,366) | (60,410) |
Net cash used in financing activities | (223,758) | (304,527) |
Effect of exchange rate changes on cash | 1,592 | (86) |
Net (decrease) increase in cash and cash equivalents | (38,415) | 57,294 |
Cash and cash equivalents at beginning of period | 144,141 | 108,333 |
Cash and cash equivalents at end of period | $ 105,726 | $ 165,627 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2023 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Basis of Presentation The interim condensed consolidated financial statements of Upbound Group, Inc. included herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the SEC’s rules and regulations, although we believe the disclosures are adequate to make the information presented not misleading. We suggest these financial statements be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2022. In our opinion, the accompanying unaudited interim financial statements contain all adjustments, consisting only of those of a normal recurring nature, necessary to present fairly our results of operations and cash flows for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. Use of Estimates In preparing financial statements in conformity with U.S. generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent losses and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. In applying accounting principles, we must often make individual estimates and assumptions regarding expected outcomes or uncertainties. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. However, uncertainties, including those related to recent macroeconomic trends or other factors, may affect certain estimates and assumptions inherent in the financial reporting process, which may impact reported amounts of assets and liabilities in future periods and cause actual results to differ from those estimates. Principles of Consolidation and Nature of Operations The financial statements included herein include the accounts of Upbound Group, Inc. and its direct and indirect subsidiaries. All intercompany accounts and transactions have been eliminated. Unless the context indicates otherwise, references to “Upbound Group, Inc.” refer only to Upbound Group, Inc., the parent, and references to the “Company”, “we,” “us” and “our” refer to the consolidated business operations of Upbound Group and any or all of its direct and indirect subsidiaries. We report four operating segments: Rent-A-Center, Acima, Mexico, and Franchising. Our Rent-A-Center segment consists of company-owned lease-to-own stores in the United States and Puerto Rico that lease household durable goods to customers on a lease-to-own basis. We also offer merchandise on an installment sales basis in certain of our stores under the names “Get It Now” and “Home Choice.” Our Rent-A-Center segment operates through our company-owned stores and e-commerce platform through rentacenter.com. Our Acima segment, which operates in the United States and Puerto Rico, and includes the operations of Acima Holdings and certain locations previously operating under our Preferred Lease brand, generally offers the lease-to-own transaction to consumers who do not qualify for financing from the traditional retailer through staffed or unstaffed kiosks located within such retailer’s locations, or other virtual options. Virtual locations employ a virtual solution where customers, either directly or with the assistance of a representative of the third-party retailer, initiate the lease-to-own transaction online in the retailers’ locations using our virtual solutions. Our Mexico segment consists of our company-owned lease-to-own stores in Mexico that lease household durable goods to customers on a lease-to-own basis. Rent-A-Center Franchising International, Inc., an indirect wholly-owned subsidiary of Upbound Group, Inc., is a franchisor of lease-to-own stores. Our Franchising segment’s primary source of revenue is the sale of rental merchandise to its franchisees, who in turn offer the merchandise to the general public for rent or purchase under a lease-to-own transaction. The balance of our Franchising segment’s revenue is generated primarily from royalties based on franchisees’ monthly gross revenues. |
Revenues
Revenues | 9 Months Ended |
Sep. 30, 2023 | |
Revenues [Abstract] | |
Revenues | Revenues The following tables disaggregate our revenue for the periods ended September 30, 2023 and 2022: Three Months Ended September 30, 2023 Rent-A-Center Acima Mexico Franchising Consolidated (in thousands) Store Rentals and fees $ 413,051 $ 375,202 $ 18,513 $ — $ 806,766 Merchandise sales 26,819 99,857 888 — 127,564 Installment sales 13,444 — — — 13,444 Other 318 157 241 713 1,429 Total store revenues 453,632 475,216 19,642 713 949,203 Franchise Merchandise sales — — — 24,082 24,082 Royalty income and fees — — — 5,813 5,813 Total revenues $ 453,632 $ 475,216 $ 19,642 $ 30,608 $ 979,098 Nine Months Ended September 30, 2023 Rent-A-Center Acima Mexico Franchising Consolidated (in thousands) Store Rentals and fees $ 1,260,745 $ 1,107,943 $ 52,351 $ — $ 2,421,039 Merchandise sales 97,905 314,741 2,610 — 415,256 Installment sales 45,191 — — — 45,191 Other 990 737 565 2,130 4,422 Total store revenues 1,404,831 1,423,421 55,526 2,130 2,885,908 Franchise Merchandise sales — — — 69,778 69,778 Royalty income and fees — — — 18,636 18,636 Total revenues $ 1,404,831 $ 1,423,421 $ 55,526 $ 90,544 $ 2,974,322 Three Months Ended September 30, 2022 Rent-A-Center Acima Mexico Franchising Consolidated (In thousands) Store Rentals and fees $ 426,805 $ 387,488 $ 15,166 $ — $ 829,459 Merchandise sales 30,009 116,795 812 — 147,616 Installment sales 16,718 — — — 16,718 Other 223 165 63 889 1,340 Total store revenues 473,755 504,448 16,041 889 995,133 Franchise Merchandise sales — — — 22,823 22,823 Royalty income and fees — — — 6,001 6,001 Total revenues $ 473,755 $ 504,448 $ 16,041 $ 29,713 $ 1,023,957 Nine Months Ended September 30, 2022 Rent-A-Center Acima Mexico Franchising Consolidated (In thousands) Store Rentals and fees $ 1,305,871 $ 1,218,143 $ 45,790 $ — $ 2,569,804 Merchandise sales 123,255 415,465 2,545 — 541,265 Installment sales 52,355 — — — 52,355 Other 964 386 119 2,229 3,698 Total store revenues 1,482,445 1,633,994 48,454 2,229 3,167,122 Franchise Merchandise sales — — — 67,849 67,849 Royalty income and fees — — — 19,962 19,962 Total revenues $ 1,482,445 $ 1,633,994 $ 48,454 $ 90,040 $ 3,254,933 Lease Purchase Agreements Rent-A-Center, Acima, and Mexico Rentals and Fees. Rental merchandise is leased to customers pursuant to lease-to-own agreements, which provide for weekly, bi-weekly, semi-monthly or monthly terms with non-refundable lease payments. At the expiration of each lease term, customers may renew the lease-to-own agreement for the next lease term. Generally, the customer has the right to acquire title of the merchandise either through a purchase option or through payment of all required lease terms. Customers can terminate the lease-to-own agreement and return the product at the end of any lease term without penalty. Therefore, lease-to-own agreements are accounted for as operating leases. Lease payments received at our Rent-A-Center stores, certain Acima staffed locations formerly operating under the Preferred Lease brand, and Mexico stores must be prepaid in advance of the next lease term. Under the Acima Holdings business model, revenues may be earned prior to the lease payment due date, in which case revenue is accrued prior to receipt of the lease payment, net of estimated returns and uncollectible renewal payments. Under both models, rental revenue is recognized over the lease term. See Note 3 for additional information regarding accrued lease revenue. Cash received for rental payments, including fees, prior to the period in which it should be recognized, is deferred and recognized according to the lease term. At September 30, 2023 and December 31, 2022, we had $56.6 million and $54.9 million, respectively, in deferred revenue included in accrued liabilities related to our lease-to-own agreements. Revenue related to various payment, reinstatement or late fees is recognized when paid by the customer at the point service is provided. Rental merchandise in our Rent-A-Center stores, certain Acima staffed locations formerly operating under the Preferred Lease brand, and Mexico stores is depreciated using the income forecasting method and recognized in cost of rentals and fees in our Condensed Consolidated Statement of Operations over the lease term. Lease merchandise under Acima Holdings is depreciated over the lease term using a straight-line depreciation method. Under the income forecasting method, the consumption of lease merchandise occurs during periods of rental and depreciation directly coincides with the receipt of rental revenue over the lease-to-own contract period. Depreciation under the straight-line method is recognized each period over the term of the lease-to-own contract irrespective of receipt of revenue payments from the customer. We also offer additional product plans along with our lease-to-own agreements which provide customers with liability protection against significant damage or loss of a product, and club membership benefits, including various discount programs and product service and replacement benefits in the event merchandise is damaged or lost, and payment insurance in the event eligible customers become unemployed. Customers renew product plans in conjunction with their rental term renewals, and can cancel the plans at any time. Revenue for product plans is recognized over the term of the plan. Costs incurred related to product plans are primarily recognized in cost of sales. Revenue from contracts with customers Rent-A-Center, Acima, and Mexico Merchandise Sales. Merchandise sales include payments received for the exercise of the early purchase options offered through our lease-to-own agreements or merchandise sold through point-of-sale transactions. Revenue for merchandise sales is recognized when payment is received and ownership of the merchandise passes to the customer. The remaining net value of merchandise sold is recorded to cost of sales at the time of the transaction. Installment Sales. Revenue from the sale of merchandise in our retail installment stores is recognized when the installment note is signed and control of the merchandise has passed to the customer. The cost of merchandise sold through installment agreements is recognized in cost of sales at the time of the transaction. We offer extended service plans with our installment agreements which are administered by third parties and provide customers with product service maintenance beyond the term of the installment agreement. Payments received for extended service plans are deferred and recognized, net of related costs, when the installment payment plan is complete and the service plan goes into effect. Customers can cancel extended service plans at any time during the installment agreement period and receive a refund for payments previously made towards the plan. At September 30, 2023 and December 31, 2022, we had $1.2 million and $2.0 million, respectively, in deferred revenue included in accrued liabilities related to extended service plans. Other. Other revenue consists of revenue generated by other miscellaneous product plans offered to our rental and installment customers. Revenue for other product plans is recognized in accordance with the terms of the applicable plan agreement. Franchising Merchandise Sales. Revenue from the sale of rental merchandise is recognized upon shipment of the merchandise to the franchisee. Royalty Income and Fees. Franchise royalties, including franchisee contributions to corporate advertising funds, represent sales-based royalties calculated as a percentage of gross rental payments and sales. Royalty revenue is accrued and recognized as rental payments and merchandise sales occur. Franchise fees are initial fees charged to franchisees for new or converted franchise stores. Franchise fee revenue is recognized on a straight-line basis over the term of the franchise agreement. At September 30, 2023 and December 31, 2022, we had $3.1 million and $3.4 million, respectively, in deferred revenue included in accrued liabilities related to franchise fees. |
Receivables and Allowance for D
Receivables and Allowance for Doubtful Accounts | 9 Months Ended |
Sep. 30, 2023 | |
Receivables and Allowance for Doubtful Accounts [Abstract] | |
Receivables and Allowance for Doubtful Accounts | Receivables and Allowance for Doubtful Accounts Installment sales receivables consist primarily of receivables due from customers for the sale of merchandise in our retail installment stores. Installment sales receivables associated with the sale of merchandise at our Get It Now and Home Choice stores generally consist of the sales price of the merchandise purchased and any additional fees for services the customer has chosen, less the customer’s down payment. No interest is accrued and interest income is recognized each time a customer makes a payment, generally on a monthly basis. Interest paid on installment agreements for each of the nine months ended September 30, 2023 and 2022 wa s $8.7 million and $9.2 million, respectively. Trade and notes receivables consist of amounts due from our lease-to-own customers for lease renewal payments and past due uncollected lease payments, adjusted for the probability of collection based on our assessment of historical collection rates and length of time the receivable is past due; amounts owed from our franchisees for inventory purchases, earned royalties and other obligations; and other corporate related receivables. Credit is extended to franchisees based on an evaluation of each franchisee’s financial condition and collateral is generally not required. Trade receivables are generally due within 30 days. Receivables consist of the following: (in thousands) September 30, 2023 December 31, 2022 Installment sales receivables $ 62,236 $ 69,550 Trade and notes receivables (1) 55,656 55,529 Total receivables 117,892 125,079 Less allowance for doubtful accounts (2) (13,120) (13,214) Total receivables, net of allowance for doubtful accounts $ 104,772 $ 111,865 (1) Trade and notes receivables includes accrued revenue, adjusted for the probability of collection, related to our lease-to-own agreements of $29.9 million and $28.7 million at September 30, 2023 and December 31, 2022, respectively. (2) Lease receivables are accrued on a net basis, adjusted for the probability of collection based on our assessment of historical collection rates, as described above. Therefore, we do not maintain a separate allowance for doubtful accounts related to our lease receivables. We have established an allowance for doubtful accounts for our installment notes receivable. Our policy for determining the allowance is primarily based on historical loss experience, as well as the results of management’s review and analysis of the payment and collection of the installment notes receivable within the previous year. We believe our allowance is adequate to absorb all expected losses. Our policy is to charge off installment notes receivable that are 120 days or more past due. Charge- offs are applied as a reduction to the allowance for doubtful accounts and any recoveries of previously charged off balances are applied as an increase to the allowance for doubtful accounts. The allowance for our Franchising trade and notes receivables is determined by considering a number of factors, including the length of time receivables are past due, previous loss history, the franchisee’s current ability to pay its obligation, and the condition of the general economy and the industry as a whole. Trade receivables that are more than 90 days past due are either written-off or fully reserved in our allowance for doubtful accounts. Payments subsequently received on such receivables are credited to the allowance for doubtful accounts. The allowance for doubtful accounts related to Franchising trade and notes receivables was $1.1 million and $1.2 million at September 30, 2023 and December 31, 2022, respectively, and the allowance for doubtful accounts related to installment sales receivables was $12.0 million at both September 30, 2023 and December 31, 2022. Changes in our allowance for doubtful accounts are as follows: (in thousands) September 30, 2023 Beginning allowance for doubtful accounts $ 13,214 Bad debt expense (1) 17,533 Accounts written off, net of recoveries (17,627) Ending allowance for doubtful accounts $ 13,120 (1) Uncollectible installment payments, franchisee obligations, and other corporate receivables are recognized in other store operating expenses in our condensed consolidated financial statements. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Leases | Leases We lease space for all of our Rent-A-Center and Mexico stores under operating leases expiring at various times through 2034. In addition, we lease space for certain support facilities under operating leases expiring at various times through 2032. Most of our store leases are five year leases and contain renewal options for additional periods ranging from three years to five years at rental rates adjusted according to agreed upon formulas. We evaluate all leases to determine if it is likely that we will exercise future renewal options and in most cases we are not reasonably certain of exercise due to competing market rental rates and lack of significant penalty, or business disruption incurred by not exercising the renewal options. In certain situations involving the sale of a Rent-A-Center corporate store to a franchisee, we enter into a lease assignment agreement with the buyer, but we remain the primary obligor under the original lease for the remaining active term. These assignments are therefore classified as subleases and the original lease is included in our operating lease right-of-use assets and operating lease liabilities in our Condensed Consolidated Balance Sheets. We lease vehicles for all of our Rent-A-Center stores under operating leases with lease terms expiring twelve months after the start date of the lease. We classify these leases as short-term and have elected the short-term lease exemption for our vehicle leases, and have therefore excluded them from our operating lease right-of-use assets within our Condensed Consolidated Balance Sheets. We also lease vehicles for all of our Mexico stores which have terms expiring at various times through 2026 with rental rates adjusted periodically for inflation. Finally, we have a minimal number of equipment leases, primarily related to temporary storage containers and certain back-office technology hardware assets. In our calculation of operating lease right-of-use assets and operating lease liabilities we have elected not to separate the lease and non-lease components. Furthermore, operating lease right-of-use assets and operating lease liabilities are discounted using our incremental borrowing rate, since the implicit rate is not readily determinable. We do not currently have any financing leases. Operating lease costs are recorded on a straight-line basis within other store expenses in our Condensed Consolidated Statements of Operations. Total operating lease costs by expense type: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Operating lease cost included in Other store expenses (1)(2) $ 31,143 $ 31,100 $ 93,208 $ 93,365 Operating lease cost included in Other charges — 264 — 299 Sublease receipts (734) (1,642) (3,012) (5,700) Total operating lease charges $ 30,409 $ 29,722 $ 90,196 $ 87,964 (1) Includes short-term lease costs, which are not significant. (2) Excludes variable lease costs of $9.9 million and $29.0 million for the three and nine months ended September 30, 2023, respectively, compared to $9.4 million and $27.2 million for the three and nine months ended September 30, 2022, respectively. Supplemental cash flow information related to leases: Nine Months Ended September 30, (in thousands) 2023 2022 Cash paid for amounts included in measurement of operating lease liabilities $ 79,871 $ 77,780 Cash paid for short-term operating leases not included in operating lease liabilities 13,240 14,170 Right-of-use assets obtained in exchange for new operating lease liabilities 50,786 81,937 Weighted-average discount rate and weighted-average remaining lease term: September 30, 2023 December 31, 2022 Weighted-average discount rate (1) 7.6 % 7.0 % Weighted-average remaining lease term (in years) 4 4 (1) The January 1, 2019 incremental borrowing rate was used for leases in existence at the time of adoption of ASU 2016-02. Reconciliation of undiscounted operating lease liabilities to the present value operating lease liabilities at September 30, 2023: (in thousands) Operating Leases 2023 $ 29,524 2024 103,277 2025 85,151 2026 59,870 2027 38,556 Thereafter 33,499 Total undiscounted operating lease liabilities 349,877 Less: Interest (50,368) Total present value of operating lease liabilities $ 299,509 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Tax | Income Taxes The effective tax rate was 76.1% for the nine months ended September 30, 2023, compared to 78.7% for the corresponding period in 2022. The effective tax rates for the nine months ended September 30, 2023 and 2022 were impacted by the difference between recorded goodwill and goodwill recognized for tax purposes, primarily related to stock consideration issued to employee former owners of Acima Holdings subject to restricted stock agreements. Please reference Note 9 for additional information regarding the recognition of these restricted stock units in our condensed consolidated financial statements. For tax purposes, restricted stock units subject to restricted stock agreements issued to the former owners of Acima Holdings were recorded as goodwill and will be amortized over a period of 15 years. |
Senior Debt
Senior Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Senior Debt | Senior Debt On February 17, 2021, we entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and lenders party thereto, providing for a seven-year $875 million senior secured term loan facility (the “Term Loan Facility”) and an Asset Based Loan Credit Facility (the “ABL Credit Facility”) providing for a five-year asset-based revolving credit facility with commitments of $550 million and a letter of credit sublimit of $150 million. Commitments under the ABL Credit Facility may be increased, at our option and under certain conditions, by up to an additional $125 million in the aggregate. Proceeds from the Term Loan Facility were net of original issue discount of $4.4 million upon issuance from the lenders. In addition, in connection with the closing of the Term Loan Facility and the ABL Credit Facility, we incurred approximately $30.2 million in debt issuance costs, including bank financing fees and third party legal and other professional fees, of which $25.3 million was capitalized in accordance with ASC Topic 470, “Debt” and recorded as a reduction of our outstanding senior debt, net in our Condensed Consolidated Balance Sheets. On September 21, 2021 we entered into a First Amendment to the Term Loan Facility, effective as of September 21, 2021. The amendment effected a repricing of the applicable margin under the Term Loan Facility by reducing the LIBOR floor by 25 basis points from 0.75% to 0.50%, and the applicable margin, with respect to any initial term loans, by 75 basis points from 4.00% to 3.25%. In connection with the execution of the First Amendment, and in accordance with ASC Topic 470, “Debt”, we recorded approximately $5.4 million in write-offs of unamortized debt issuance costs and original issue discount previously capitalized upon the issuance of the Term Loan Facility on February 17, 2021. On August 10, 2022, we entered into a First Amendment to the ABL Credit Facility, effective as of August 10, 2022. The amendment effected the replacement of LIBOR with Term Secured Overnight Financing Rate (“Term SOFR”) as the benchmark rate of interest thereunder. On June 15, 2023, we entered into a Second Amendment to the Term Loan Facility, effective as of June 15, 2023. The amendment effected the replacement of LIBOR with Term SOFR as the benchmark rate of interest and also resulted in a repricing of the applicable margin by 26 basis points from 3.25% to 3.51% effective July 31, 2023. In connection with the First Amendment to the ABL Credit Facility and the Second Amendment to the Term Loan Facility described above, we have elected optional expedients available under ASC Topic 848, “Reference Rate Reform” which classify contract amendments for the transition of LIBOR as events that do not require accounting reassessments as a contract modification. As of September 30, 2023, the total remaining balance of unamortized debt issuance costs and original issue discount related to our senior debt reported in the Condensed Consolidated Balance Sheets were approximately $13.4 million and $2.1 million, respectively. Remaining unamortized debt issuance costs and original issue discount will be amortized to interest expense over the remaining term of the Term Loan Facility. The amount outstanding under the Term Loan Facility was $815.5 million at September 30, 2023. We had no outstanding borrowings under our ABL Credit Facility at September 30, 2023 and borrowing capacity of $485.6 million, net of issued letters of credit of approximately $64.4 million, primarily relating to insurance claims. Term Loan Credit Agreement The Term Loan Facility, which matures on February 17, 2028, amortizes in equal quarterly installments at a rate of 1.00% per annum of the original principal amount thereof, with the remaining balance due at final maturity. Subject in each case to certain restrictions and conditions, we may add up to $500 million of incremental term loan facilities to the Term Loan Facility or utilize incremental capacity under the Term Loan Facility at any time by issuing or incurring incremental equivalent term debt. Interest on borrowings under the Term Loan Facility is payable at a fluctuating rate of interest determined by reference to the Term SOFR rate plus an applicable margin of 3.51%, subject to a 0.50% Term SOFR floor. The total interest rate on the Term Loan Facility was 8.881% at September 30, 2023. Borrowings under the Term Loan Facility amortize in equal quarterly installments in an amount equal to 1.000% per annum of the original aggregate principal amount thereof, with the remaining balance due at final maturity. The Term Loan Facility is secured by a first-priority security interest in substantially all of our present and future tangible and intangible personal property, including our subsidiary guarantors, other than the ABL Priority Collateral (as defined below), and by a second-priority security interest in the ABL Priority Collateral, subject to certain exceptions. The obligations under the Term Loan Facility are guaranteed by us and our material wholly-owned domestic restricted subsidiaries that also guarantee the ABL Credit Facility. The Term Loan Facility contains covenants that are usual and customary for similar facilities and transactions and that, among other things, restrict our ability and our restricted subsidiaries to create certain liens and enter into certain sale and lease-back transactions; create, assume, incur or guarantee certain indebtedness; consolidate or merge with, or convey, transfer or lease all or substantially all of our and our restricted subsidiaries’ assets, to another person; pay dividends or make other distributions on, or repurchase or redeem, our capital stock or certain other debt; and make other restricted payments. The Term Loan Facility also includes mandatory prepayment requirements related to asset sales (subject to reinvestment), debt incurrence (other than permitted debt) and excess cash flow, subject to certain limitations described therein. These covenants are subject to a number of limitations and exceptions set forth in the governing documents of the Term Loan. In the event our Consolidated Secured Leverage Ratio (as such term is defined in the Term Loan Facility credit agreement) exceeds 1:1, we are required to prepay the loans under the Term Loan Facility by a percentage of annual excess cash flow, as more fully described in the Term Loan Facility credit agreement. We made mandatory excess cash flow prepayments of approximately $42.6 million, including $0.6 million in accrued interest, in March 2023, relating to results for the year ended December 31, 2022. The Term Loan provides for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving us and our significant subsidiaries. ABL Credit Agreement The ABL Credit Facility will mature on February 17, 2026. We may borrow only up to the lesser of the level of the then-current borrowing base and the aggregate amount of commitments under the ABL Credit Facility. The borrowing base is tied to the amount of eligible installment sales accounts, inventory and eligible rental contracts, reduced by certain reserves. The ABL Credit Facility bears interest at a fluctuating rate determined by reference to Term SOFR plus an applicable margin of 1.50% to 2.00%. The total interest rate on the ABL Credit Facility at September 30, 2023 was 7.52%. A commitment fee equal to 0.250% to 0.375% of the unused portion of the ABL Credit Facility fluctuates dependent upon average utilization for the prior month as defined by a pricing grid included in the governing documents of the ABL Credit Facility. The commitment fee at September 30, 2023 was 0.375%. We paid $0.8 million of commitment fees during the third quarter of 2023. Loans under the ABL Credit Facility may be borrowed, repaid and re-borrowed until February 17, 2026, at which time all amounts borrowed must be repaid. The obligations under the ABL Credit Facility are guaranteed by us and certain of our wholly owned domestic restricted subsidiaries, subject to certain exceptions. The obligations under the ABL Credit Facility and such guarantees are secured on a first-priority basis by all of our and our subsidiary guarantors’ accounts, inventory, deposit accounts, securities accounts, cash and cash equivalents, rental agreements, general intangibles (other than equity interests in our subsidiaries), chattel paper, instruments, documents, letter of credit rights, commercial tort claims related to the foregoing and other related assets and all proceeds thereof related to the foregoing, subject to permitted liens and certain exceptions (such assets, collectively, the “ABL Priority Collateral”) and a second-priority basis in substantially all other present and future tangible and intangible personal property of ours and the subsidiary guarantors, subject to certain exceptions. The ABL Credit Facility contains covenants that are usual and customary for similar facilities and transactions and that, among other things, restrict our ability and our restricted subsidiaries to create certain liens and enter into certain sale and lease-back transactions; create, assume, incur or guarantee certain indebtedness; consolidate or merge with, or convey, transfer or lease all or substantially all of our and our restricted subsidiaries’ assets, to another person; pay dividends or make other distributions on, or repurchase or redeem, our capital stock or certain other debt; and make other restricted payments. The ABL Credit Facility also requires the maintenance of a consolidated fixed charge coverage ratio of at least 1.10 to 1.00 at the end of each fiscal quarter only in the event either (i) certain specified events of default have occurred and are continuing or (ii) availability is less than or equal to the greater of $56.25 million and 15% of the line cap then in effect. These covenants are subject to a number of limitations and exceptions set forth in the governing documents of the ABL Credit Facility. The fixed charge coverage ratio as of September 30, 2023 was 1.19 to 1.00. The governing documents of the ABL Credit Facility provides for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements or conditions, and certain events of bankruptcy or insolvency involving us and our significant subsidiaries. As of September 30, 2023, we were in compliance with all requirements and conditions set forth in our ABL Credit Facility governing documents. The table below shows the scheduled maturity dates of our outstanding senior debt at September 30, 2023 for each of the years ending December 31: (in thousands) Term Loan Facility (1) 2023 $ — 2024 — 2025 — 2026 — 2027 — Thereafter 815,458 Total senior debt $ 815,458 (1) Annual installment requirements were reduced by the amount of the excess cash flow payment described above, in accordance with the terms of the credit agreement governing the Term Loan Facility. |
Senior Notes
Senior Notes | 9 Months Ended |
Sep. 30, 2023 | |
Subsidiary Guarantors - Senior Notes [Abstract] | |
Senior Notes | Senior Notes On February 17, 2021, we issued $450 million in senior unsecured notes due February 15, 2029, at par value, bearing interest at 6.375% (the “Notes”), the proceeds of which were used to fund a portion of the Aggregate Cash Consideration upon closing of the Acima Holdings acquisition. Interest on the Notes is payable in arrears on February 15 and August 15 of each year. In connection with the issuance of the Notes, we incurred approximately $15.7 million in debt issuance costs, including bank financing fees and third party legal and other professional fees, which were capitalized in accordance with ASC Topic 470, “Debt” and recorded as a reduction of our outstanding Notes in our Condensed Consolidated Balance Sheets. Debt issuance costs are amortized as interest expense over the term of the Notes. As of September 30, 2023, the total remaining balance of unamortized debt issuance costs related to our senior notes reported in the Condensed Consolidated Balance Sheets was approximately $10.6 million. We may redeem some or all of the Notes at any time on or after February 15, 2024 for cash at the redemption prices set forth in the indenture governing the Notes, plus accrued and unpaid interest to, but not including, the redemption date. Prior to February 15, 2024, we may redeem up to 40% of the aggregate principal amount of the Notes with the proceeds of certain equity offerings at a redemption price of 106.375% plus accrued and unpaid interest to, but not including, the redemption date. In addition, we may redeem some or all of the Notes prior to February 15, 2024, at a redemption price of 100% of the principal amount of the Notes plus accrued and unpaid interest to, but not including, the redemption date, plus a “make-whole” premium. If we experience specific kinds of change of control, we will be required to offer to purchase the Notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest. The Notes are our general unsecured senior obligations, and are effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, structurally subordinated to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries, equal in right of payment to all of our and our guarantor subsidiaries’ existing and future senior indebtedness and senior in right of payment to all of our future subordinated indebtedness, if any. The Notes are jointly and severally guaranteed on a senior unsecured basis by certain of our domestic subsidiaries that have outstanding indebtedness or guarantee other specified indebtedness, including the ABL Credit Facility and the Term Loan Facility. The indenture governing the Notes contains covenants that limit, among other things, our ability and the ability of some of our restricted subsidiaries to create liens, transfer or sell assets, incur indebtedness or issue certain preferred stock, pay dividends, redeem stock or make other distributions, make other restricted payments or investments, create restrictions on payment of dividends or other amounts to us by our restricted subsidiaries, merge or consolidate with other entities, engage in certain transactions with affiliates and designate our subsidiaries as unrestricted subsidiaries. These covenants are subject to a number of exceptions and qualifications. The covenants limiting restricted payments, restrictions on payment of dividends or other amounts to us by our restricted subsidiaries, the ability to incur indebtedness, asset dispositions and transactions with affiliates will be suspended if and while the Notes have investment grade ratings from any two of Standard & Poor’s Ratings Services, Moody’s Investors Service, Inc. and Fitch, Inc. The indenture governing the Notes also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, and interest on all the then outstanding Notes to be due and payable. |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value We follow a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values, in determining the fair value of our non-financial assets and non-financial liabilities, which consist primarily of goodwill. These tiers include: Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Our financial instruments include cash and cash equivalents, receivables, payables, borrowings against our ABL Credit Facility and Term Loan Facility, and outstanding Notes. The carrying amount of cash and cash equivalents, receivables and payables approximates fair value at September 30, 2023 and December 31, 2022, because of the short maturities of these instruments. In addition, the interest rates on our Term Loan Facility and ABL Credit Facility are variable and, therefore, we believe the carrying value of outstanding borrowings approximates their fair value. The fair value of our Notes is based on Level 1 inputs and was as follows at September 30, 2023: September 30, 2023 (in thousands) Carrying Value Fair Value Difference Senior notes $ 450,000 $ 401,040 $ (48,960) |
Other Charges
Other Charges | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Other Charges | Other Charges Acima Holdings Acquisition. On February 17, 2021, we completed the acquisition of Acima Holdings, a leading provider of virtual lease-to-own solutions. Included in the aggregate consideration issued to the former owners of Acima Holdings were 8,096,595 common shares, valued at $414.1 million, subject to 36-month vesting conditions under restricted stock agreements, which will be recognized over the vesting term as stock compensation expense, in accordance with ASC Topic 718, “Stock-based Compensation”. During the nine months ended September 30, 2023 and 2022, we recognized approximately $128.1 million and $111.5 million in stock compensation expense, respectively, related to these restricted stock agreements. See Note 11 for additional information. The fair value of assets acquired as part of the transaction included $520 million in intangible assets and $170 million in developed technology. During the nine months ended September 30, 2023 and 2022, we recognized approximately $42.8 million and $50.6 million in amortization expense, respectively, related to acquired intangible assets. We also recognized approximately $11.9 million in incremental depreciation expense related to acquired technology assets in both the nine months ended September 30, 2023 and 2022. During the nine months ended September 30, 2022, we recognized approximately $0.2 million in transaction costs associated with the closing of the transaction. Internally Developed Software Depreciation. During the third quarter of 2023, we completed initial development and began pilot testing a new internally developed point-of-sale system for our Rent-A-Center lease-to-own stores. We expect to fully deploy the new system across our lease-to-own store network during the first half of 2024, at which time our existing point-of-sale software will be retired. Therefore, in the third quarter of 2023, we accelerated the remaining useful lives of our existing point-of-sale software assets to align with the current deployment timeline of our new point-of-sale system, which resulted in the recognition of additional depreciation expense of $4.6 million for the three months ended September 30, 2023. Subsequent to September 30, 2023 we expect to recognize additional depreciation expense of $10.8 million over the remaining life of these assets. Activity with respect to Other charges for the nine months ended September 30, 2023 is summarized in the below table: (in thousands) Accrued Charges at December 31, 2022 Charges & Adjustments Payments & Adjustments Accrued Charges at September 30, 2023 Cash charges: Labor reduction costs (1) $ 2,202 $ — $ (2,202) $ — Total cash charges $ 2,202 — $ (2,202) $ — Non-cash charges: Acima Holdings restricted stock agreements (2) 128,128 Depreciation and amortization of acquired assets (3) 54,701 Accelerated software depreciation 4,609 Other (4) (3,025) Total other charges $ 184,413 (1) Represents charges incurred and payments related to employee severance. (2) Represents stock compensation expense related to common stock issued to Acima Holdings employees under restricted stock agreements as part of the acquisition proceeds subject to vesting restrictions, as described in Note 11. (3) Represents amortization of the total fair value of acquired intangible assets and incremental depreciation related to the fair value increase over net book value of acquired software assets in connection with the acquisition of Acima Holdings in 2021. (4) Primarily represents interest income on tax refunds for prior years received in 2023. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2023 | |
Segment Information [Abstract] | |
Segment Information | Segment Information The operating segments reported below are the segments for which separate financial information is available and for which segment results are evaluated by the chief operating decision makers. Our operating segments are organized based on factors including, but not limited to, type of business transactions, geographic location and store ownership. Within our operating segments, we offer merchandise for lease from certain basic product categories: furniture, including mattresses, tires, consumer electronics, appliances, tools, handbags, computers, smartphones, and accessories. Segment information as of and for the three and nine months ended September 30, 2023 and 2022 is as follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Revenues Rent-A-Center $ 453,632 $ 473,755 $ 1,404,831 $ 1,482,445 Acima 475,216 504,448 1,423,421 1,633,994 Mexico 19,642 16,041 55,526 48,454 Franchising 30,608 29,713 90,544 90,040 Total revenues $ 979,098 $ 1,023,957 $ 2,974,322 $ 3,254,933 Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Gross profit Rent-A-Center $ 317,233 $ 334,892 $ 975,210 $ 1,046,332 Acima 159,427 152,434 474,258 481,742 Mexico 13,971 11,330 39,410 34,242 Franchising 6,535 6,879 20,778 21,857 Total gross profit $ 497,166 $ 505,535 $ 1,509,656 $ 1,584,173 Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Operating profit Rent-A-Center $ 63,762 $ 71,999 $ 211,637 $ 271,283 Acima 58,124 48,885 175,103 94,318 Mexico 1,124 996 3,417 5,011 Franchising 3,541 5,077 13,280 15,170 Total segments 126,551 126,957 403,437 385,782 Corporate (1) (68,499) (89,880) (296,467) (279,582) Total operating profit $ 58,052 $ 37,077 $ 106,970 $ 106,200 (1) Includes stock compensation expense of $9.4 million and $128.1 million recognized for the three and nine months ended September 30, 2023 and $42.1 million and $111.5 million recognized for the three and nine months ended September 30, 2022, related to common stock issued to Acima Holdings employees under restricted stock agreements as part of the acquisition consideration subject to vesting restrictions as described in Note 11. Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Depreciation and amortization Rent-A-Center $ 4,421 $ 4,629 $ 13,964 $ 15,665 Acima (1) 420 439 1,263 1,496 Mexico 345 182 880 494 Franchising 36 35 110 110 Total segments 5,222 5,285 16,217 17,765 Corporate (2) 7,402 7,513 21,885 22,443 Total depreciation and amortization $ 12,624 $ 12,798 $ 38,102 $ 40,208 (1) Excludes amortization expense of approximately $14.3 million and $42.8 million for the three and nine months ended September 30, 2023, compared to $14.2 million and $50.6 million for the three and nine months ended September 30, 2022, recorded to Other charges in the Condensed Consolidated Statement of Operations, related to intangible assets acquired upon closing of the Acima Holdings acquisition. See Note 9 for additional information. (2) Excludes depreciation expense of approximately $8.6 million and $16.5 million for both the three and nine months ended September 30, 2023, compared to $3.9 million and $11.9 million for the three and nine months ended September 30, 2022, recorded to Other charges in the Condensed Consolidated Statement of Operations, related to software acquired upon closing of the Acima Holdings acquisition and accelerated software depreciation. See Note 9 for additional information. Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Capital expenditures Rent-A-Center $ 6,822 $ 10,714 $ 12,587 $ 30,917 Acima 121 16 203 205 Mexico 508 696 1,902 1,219 Franchising — 166 1 278 Total segments 7,451 11,592 14,693 32,619 Corporate 7,322 6,949 21,474 16,817 Total capital expenditures $ 14,773 $ 18,541 $ 36,167 $ 49,436 (in thousands) September 30, 2023 December 31, 2022 On rent rental merchandise, net Rent-A-Center $ 429,614 $ 465,095 Acima 517,302 503,795 Mexico 22,049 20,979 Total on rent rental merchandise, net $ 968,965 $ 989,869 (in thousands) September 30, 2023 December 31, 2022 Held for rent rental merchandise, net Rent-A-Center $ 111,311 $ 124,117 Acima 509 373 Mexico 10,673 10,469 Total held for rent rental merchandise, net $ 122,493 $ 134,959 (in thousands) September 30, 2023 December 31, 2022 Assets by segment Rent-A-Center $ 960,425 $ 1,067,875 Acima 1,172,466 1,198,879 Mexico 60,676 51,225 Franchising 19,192 18,194 Total segments 2,212,759 2,336,173 Corporate 413,316 427,446 Total assets $ 2,626,075 $ 2,763,619 |
Common Stock and Stock-Based Co
Common Stock and Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Stock-Based Compensation [Abstract] | |
Common Stock and Stock-Based Compensation | Common Stock and Stock-Based Compensation Stock Repurchase Program In early December 2021, our Board of Directors authorized a stock repurchase program for up to $500 million (the “December 2021 Program”), which superseded our previous stock repurchase program. Under the December 2021 Program, we may purchase shares of our common stock from time to time in the open market or privately negotiated transactions. We are not obligated to acquire any shares under the program, and the program may be suspended or discontinued at any time. During the nine months ended September 30, 2023 and 2022, we repurchased 916,269 and 1,218,313 shares of our common stock for an aggregate purchase price of approximately $27.1 million and $29.8 million, respectively. As of September 30, 2023, under the December 2021 Program approximately $258.0 million remains available for repurchases. Stock Based Compensation We recognized $6.2 million and $2.7 million in compensation expense related to stock awards issued under the Upbound Group, Inc. Amended 2021 Long-Term Incentive Plan (the “2021 Plan”) and 2016 Long-Term Incentive Plan (the “2016 Plan”) during the three months ended September 30, 2023 and 2022, and $18.6 million and $11.1 million during the nine months ended September 30, 2023 and 2022. During the nine months ended September 30, 2023, we granted 599,845 market-based performance units and 361,169 time-vesting units under the 2021 Plan. Performance-based restricted stock units are valued using a Monte Carlo simulation. Time-vesting restricted stock units are valued based on our closing stock price on the trading day immediately preceding the date of the grant, or as of the date of modification in the event an award is modified. The weighted-average grant date fair value of the market-based performance and time-vesting restricted stock units granted during the nine months ended September 30, 2023 was $32.30 and $26.34, respectively. In connection with the acquisition of Acima Holdings, LLC in 2021, we issued to the former owners of Acima Holdings 10,779,923 of common shares valued at $51.14 per share, as of the date of closing. Of this total, 2,683,328 common shares were included in the aggregate purchase price of the transaction for financial reporting purposes, while 8,096,595 common shares, valued at $414.1 million, issued under restricted stock agreements and subject to vesting conditions, are recognized as stock compensation expense over the vesting term in accordance with ASC Topic 718, “Stock-based Compensation” and recorded to Other charges in our unaudited Condensed Consolidated Statements of Operations. We recognized $9.4 million and $42.1 million in stock compensation expense related to these restricted stock agreements during the three months ended September 30, 2023 and 2022, and $128.1 million and $111.5 million during the nine months ended September 30, 2023 and 2022. Stock compensation expense recognized during the nine months ended September 30, 2023 for these restricted stock agreements included $78.4 million attributable to the acceleration of vesting provisions, primarily related to Aaron Allred's transition from Executive Vice President of Acima to an advisory role. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies From time to time, we, along with our subsidiaries, are party to various legal proceedings and governmental inquiries arising in the ordinary course of business. We reserve for loss contingencies that are both probable and reasonably estimable. We regularly monitor developments related to these legal proceedings, and review the adequacy of our legal reserves on a quarterly basis. We do not currently expect these losses to have a material impact on our consolidated financial statements if and when such losses are incurred. Nevertheless, we cannot predict the impact of future developments affecting our claims and lawsuits, and any resolution of a claim or lawsuit or reserve within a particular fiscal period may materially and adversely impact our results of operations for that period. In addition, claims and lawsuits against us may seek injunctive or other relief that requires changes to our business practices or operations and it is possible that any required changes may materially and adversely impact our business, financial condition, results of operations or reputation. Unclaimed Property. We are subject to unclaimed property audits by states in the ordinary course of business. The property subject to review in the audit process includes unclaimed wages, vendor payments and customer refunds. State escheat laws generally require entities to report and remit abandoned and unclaimed property to the state. Failure to timely report and remit the property can result in assessments that could include interest and penalties, in addition to the payment of the escheat liability itself. We routinely remit escheat payments to states and believe we are in compliance with applicable escheat laws. Acima Consumer Financial Protection Bureau investigation. Prior to the execution of the definitive agreement to acquire Acima, Acima received a Civil Investigative Demand dated October 1, 2020 (the “CID”) from the Consumer Financial Protection Bureau (the “CFPB”) requesting certain information, documents and data relating to Acima’s products, services and practices for the period from January 1, 2015 to the date on which responses to the CID are provided in full. The purpose of the CID was to determine whether Acima extends credit, offers leases, or otherwise offers or provides a consumer financial product or service and whether Acima complies with certain consumer financial protection laws. After the original CID, the CFPB issued subsequent CIDs requesting further information, documents and testimony. Acima has completed its responses to all CIDs and has been cooperating with the CFPB throughout their investigation. On May 16, 2023, in accordance with the CFPB’s Notice and Opportunity to Respond and Advise (“NORA”) process, the CFPB staff notified Acima that the staff may allege that Acima violated the Consumer Financial Protection Act of 2010; the Truth in Lending Act and its implementing regulation, Regulation Z; the Electronic Fund Transfer Act and its implementing regulation, Regulation E; and the Fair Credit Reporting Act and its implementing regulation, Regulation V. The CFPB staff further stated that the CFPB’s Office of Enforcement may recommend that the CFPB take legal action against Acima based on these potential allegations, and in connection therewith, the staff may seek remedies including restitution, disgorgement, damages, injunctive relief, and civil money penalties. On June 20, 2023, Acima submitted its response to the NORA notice, in which Acima asserted that the staff’s potential allegations lacked merit. As of the date of this report on Form 10-Q, we have not yet received the CFPB’s response to the NORA process and Acima’s submission. We are currently unable to predict the CFPB’s response to the NORA process or the ultimate timing or outcome of the CFPB investigation or any legal proceedings arising therefrom. On the terms and subject to the conditions set forth in the definitive agreement to acquire Acima, the former owners of Acima agreed to indemnify Upbound Group, Inc. for certain losses arising after the consummation of the transaction with respect to the CID. The indemnification obligations of the former owners of Acima with respect to the CID are limited to the remaining amount of an indemnity holdback which is now $45 million of a $50 million initial holdback for the CID and other matters, which was escrowed at the closing of the transaction, and will be Upbound Group, Inc.’s sole recourse against the former owners of Acima with respect to all of the indemnifiable claims under the definitive transaction agreement. In respect of the CID, other than with respect to any then-pending or unresolved claims for indemnification submitted by Upbound Group, Inc., remaining escrowed funds will be released on the earlier of February 17, 2024 and the date on which a final determination is entered providing for a resolution of the matters regarding the CID. In the event there is not a final determination resolving the CFPB matter by February 17, 2024, any amounts in excess of our estimated losses may be released from the escrow holdback to the former owners of Acima. On May 19, 2023, in light of the above-referenced NORA notice, Upbound Group, Inc. submitted an indemnification claim notice pursuant to the definitive merger agreement with Acima. There can be no assurance that such escrowed amount will be sufficient to address all covered losses or that the CFPB’s ongoing investigation or future exercise of its enforcement, regulatory, discretionary or other powers will not result in findings or alleged violations of consumer financial protection laws that could lead to enforcement actions, proceedings or litigation, whether by the CFPB, other state or federal agencies, or other parties, and the imposition of damages, fines, penalties, restitution, other monetary liabilities, sanctions, settlements or changes to Acima’s business practices or operations that could materially and adversely affect our business, financial condition, results of operations or reputation. Massachusetts Attorney General. The Massachusetts Attorney General (the “MAG”) issued a civil investigative demand in 2018 seeking information with respect to certain of our business practices, including regarding account management and certain other business practices in connection with our lease-to-own transactions. Since receiving such demand, we have cooperated with the MAG in connection with its investigation. In June 2021, the MAG provided us with proposed settlement terms including a monetary payment, injunctive provisions regarding certain business practices and compliance requirements. We are continuing to cooperate and discuss resolution of the inquiry with the MAG. We are currently unable to predict the ultimate timing or outcome of the MAG investigation. State Attorneys General Investigation. On November 1, 2021, Acima received a letter from the Nebraska Attorney General’s office stating that the Attorney General of Nebraska, along with a coalition of thirty-eight state Attorneys General, initiated a multi-state investigation into the business acts and practices of Acima and that a civil investigative demand(s) and/or subpoena(s) pursuant to respective state consumer protection laws will be forthcoming. Since receiving the letter, we have held multiple discussions with officials at the lead attorneys general offices and, based on those discussions, it is our understanding that the investigation is looking at business practices within the virtual lease-to-own industry and includes or will include multiple companies. In April 2022, we received a request for information and documents. Acima is cooperating with the investigation and is currently in the process of producing requested information. No specific allegations have been made against Acima pursuant to the investigation. We are currently unable to predict the eventual scope, timing or outcome of this matter. New York Attorney General. The New York Attorney General (the “NYAG”) issued a subpoena to our Acima subsidiary in January 2020 seeking information with respect to various business practices in connection with Acima’s lease-to-own transactions. Acima received additional subpoenas from the NYAG in August 2021 and July 2023. Since receiving the subpoenas, we have cooperated with the NYAG in connection with its investigation. In March 2023, the NYAG provided Acima with an initial proposed assurance of discontinuance alleging violations of certain consumer laws and seeking injunctive provisions regarding certain business practices, compliance requirements and unspecified payment amounts for restitution and civil penalties. We are continuing to cooperate and discuss resolution of this matter with the NYAG. We are currently unable to predict the ultimate timing or outcome of the NYAG investigation. |
Earnings (Loss) Per Common Shar
Earnings (Loss) Per Common Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Common Share | Earnings (Loss) Per Common Share Summarized basic and diluted earnings (loss) per common share were calculated as follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share data) 2023 2022 2023 2022 Numerator: Net earnings (loss) $ 4,363 $ (5,778) $ 6,075 $ 9,710 Denominator: Weighted-average shares outstanding 55,485 55,380 55,294 54,376 Effect of dilutive stock awards (1) (2) 1,367 — 1,373 5,422 Weighted-average dilutive shares 56,852 55,380 56,667 59,798 Basic earnings (loss) per common share $ 0.08 $ (0.10) $ 0.11 $ 0.18 Diluted earnings (loss) per common share (1) (2) $ 0.08 $ (0.10) $ 0.11 $ 0.16 Anti-dilutive securities excluded from diluted earnings (loss) per common share: Anti-dilutive restricted share units 43 465 43 81 Anti-dilutive performance share units — 941 740 197 Anti-dilutive stock options 129 865 200 279 (1) Weighted-average dilutive shares outstanding for the nine months ended September 30, 2023 and 2022, includes approximately 0.4 million and 3.7 million common shares, respectively, issued in connection with the acquisition of Acima Holdings and subject to vesting conditions under restricted stock agreements. (2) There was no dilutive effect to the loss per common share for the three months ended September 30, 2022 due to the net loss incurred for the period. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||||||
Net Income (Loss) | $ 4,363 | $ (45,618) | $ 47,330 | $ (5,778) | $ 19,725 | $ (4,237) | $ 6,075 | $ 9,710 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates In preparing financial statements in conformity with U.S. generally accepted accounting principles, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent losses and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. In applying accounting principles, we must often make individual estimates and assumptions regarding expected outcomes or uncertainties. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. However, uncertainties, including those related to recent macroeconomic trends or other factors, may affect certain estimates and assumptions inherent in the financial reporting process, which may impact reported amounts of assets and liabilities in future periods and cause actual results to differ from those estimates. |
Principles of Consolidation and Nature of Operations | Principles of Consolidation and Nature of Operations The financial statements included herein include the accounts of Upbound Group, Inc. and its direct and indirect subsidiaries. All intercompany accounts and transactions have been eliminated. Unless the context indicates otherwise, references to “Upbound Group, Inc.” refer only to Upbound Group, Inc., the parent, and references to the “Company”, “we,” “us” and “our” refer to the consolidated business operations of Upbound Group and any or all of its direct and indirect subsidiaries. We report four operating segments: Rent-A-Center, Acima, Mexico, and Franchising. Our Rent-A-Center segment consists of company-owned lease-to-own stores in the United States and Puerto Rico that lease household durable goods to customers on a lease-to-own basis. We also offer merchandise on an installment sales basis in certain of our stores under the names “Get It Now” and “Home Choice.” Our Rent-A-Center segment operates through our company-owned stores and e-commerce platform through rentacenter.com. Our Acima segment, which operates in the United States and Puerto Rico, and includes the operations of Acima Holdings and certain locations previously operating under our Preferred Lease brand, generally offers the lease-to-own transaction to consumers who do not qualify for financing from the traditional retailer through staffed or unstaffed kiosks located within such retailer’s locations, or other virtual options. Virtual locations employ a virtual solution where customers, either directly or with the assistance of a representative of the third-party retailer, initiate the lease-to-own transaction online in the retailers’ locations using our virtual solutions. Our Mexico segment consists of our company-owned lease-to-own stores in Mexico that lease household durable goods to customers on a lease-to-own basis. Rent-A-Center Franchising International, Inc., an indirect wholly-owned subsidiary of Upbound Group, Inc., is a franchisor of lease-to-own stores. Our Franchising segment’s primary source of revenue is the sale of rental merchandise to its franchisees, who in turn offer the merchandise to the general public for rent or purchase under a lease-to-own transaction. The balance of our Franchising segment’s revenue is generated primarily from royalties based on franchisees’ monthly gross revenues. |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenues [Abstract] | |
Disaggregation of Revenue | The following tables disaggregate our revenue for the periods ended September 30, 2023 and 2022: Three Months Ended September 30, 2023 Rent-A-Center Acima Mexico Franchising Consolidated (in thousands) Store Rentals and fees $ 413,051 $ 375,202 $ 18,513 $ — $ 806,766 Merchandise sales 26,819 99,857 888 — 127,564 Installment sales 13,444 — — — 13,444 Other 318 157 241 713 1,429 Total store revenues 453,632 475,216 19,642 713 949,203 Franchise Merchandise sales — — — 24,082 24,082 Royalty income and fees — — — 5,813 5,813 Total revenues $ 453,632 $ 475,216 $ 19,642 $ 30,608 $ 979,098 Nine Months Ended September 30, 2023 Rent-A-Center Acima Mexico Franchising Consolidated (in thousands) Store Rentals and fees $ 1,260,745 $ 1,107,943 $ 52,351 $ — $ 2,421,039 Merchandise sales 97,905 314,741 2,610 — 415,256 Installment sales 45,191 — — — 45,191 Other 990 737 565 2,130 4,422 Total store revenues 1,404,831 1,423,421 55,526 2,130 2,885,908 Franchise Merchandise sales — — — 69,778 69,778 Royalty income and fees — — — 18,636 18,636 Total revenues $ 1,404,831 $ 1,423,421 $ 55,526 $ 90,544 $ 2,974,322 Three Months Ended September 30, 2022 Rent-A-Center Acima Mexico Franchising Consolidated (In thousands) Store Rentals and fees $ 426,805 $ 387,488 $ 15,166 $ — $ 829,459 Merchandise sales 30,009 116,795 812 — 147,616 Installment sales 16,718 — — — 16,718 Other 223 165 63 889 1,340 Total store revenues 473,755 504,448 16,041 889 995,133 Franchise Merchandise sales — — — 22,823 22,823 Royalty income and fees — — — 6,001 6,001 Total revenues $ 473,755 $ 504,448 $ 16,041 $ 29,713 $ 1,023,957 Nine Months Ended September 30, 2022 Rent-A-Center Acima Mexico Franchising Consolidated (In thousands) Store Rentals and fees $ 1,305,871 $ 1,218,143 $ 45,790 $ — $ 2,569,804 Merchandise sales 123,255 415,465 2,545 — 541,265 Installment sales 52,355 — — — 52,355 Other 964 386 119 2,229 3,698 Total store revenues 1,482,445 1,633,994 48,454 2,229 3,167,122 Franchise Merchandise sales — — — 67,849 67,849 Royalty income and fees — — — 19,962 19,962 Total revenues $ 1,482,445 $ 1,633,994 $ 48,454 $ 90,040 $ 3,254,933 |
Receivables and Allowance for_2
Receivables and Allowance for Doubtful Accounts (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Receivables and Allowance for Doubtful Accounts [Abstract] | |
Receivables | Receivables consist of the following: (in thousands) September 30, 2023 December 31, 2022 Installment sales receivables $ 62,236 $ 69,550 Trade and notes receivables (1) 55,656 55,529 Total receivables 117,892 125,079 Less allowance for doubtful accounts (2) (13,120) (13,214) Total receivables, net of allowance for doubtful accounts $ 104,772 $ 111,865 (1) Trade and notes receivables includes accrued revenue, adjusted for the probability of collection, related to our lease-to-own agreements of $29.9 million and $28.7 million at September 30, 2023 and December 31, 2022, respectively. (2) Lease receivables are accrued on a net basis, adjusted for the probability of collection based on our assessment of historical collection rates, as described above. Therefore, we do not maintain a separate allowance for doubtful accounts related to our lease receivables. |
Changes in Allowance for Doubtful Accounts | Changes in our allowance for doubtful accounts are as follows: (in thousands) September 30, 2023 Beginning allowance for doubtful accounts $ 13,214 Bad debt expense (1) 17,533 Accounts written off, net of recoveries (17,627) Ending allowance for doubtful accounts $ 13,120 (1) Uncollectible installment payments, franchisee obligations, and other corporate receivables are recognized in other store operating expenses in our condensed consolidated financial statements. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Operating Lease Costs | Total operating lease costs by expense type: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Operating lease cost included in Other store expenses (1)(2) $ 31,143 $ 31,100 $ 93,208 $ 93,365 Operating lease cost included in Other charges — 264 — 299 Sublease receipts (734) (1,642) (3,012) (5,700) Total operating lease charges $ 30,409 $ 29,722 $ 90,196 $ 87,964 (1) Includes short-term lease costs, which are not significant. (2) Excludes variable lease costs of $9.9 million and $29.0 million for the three and nine months ended September 30, 2023, respectively, compared to $9.4 million and $27.2 million for the three and nine months ended September 30, 2022, respectively. Supplemental cash flow information related to leases: Nine Months Ended September 30, (in thousands) 2023 2022 Cash paid for amounts included in measurement of operating lease liabilities $ 79,871 $ 77,780 Cash paid for short-term operating leases not included in operating lease liabilities 13,240 14,170 Right-of-use assets obtained in exchange for new operating lease liabilities 50,786 81,937 Weighted-average discount rate and weighted-average remaining lease term: September 30, 2023 December 31, 2022 Weighted-average discount rate (1) 7.6 % 7.0 % Weighted-average remaining lease term (in years) 4 4 (1) The January 1, 2019 incremental borrowing rate was used for leases in existence at the time of adoption of ASU 2016-02. |
Operating Lease Liability Maturity | Reconciliation of undiscounted operating lease liabilities to the present value operating lease liabilities at September 30, 2023: (in thousands) Operating Leases 2023 $ 29,524 2024 103,277 2025 85,151 2026 59,870 2027 38,556 Thereafter 33,499 Total undiscounted operating lease liabilities 349,877 Less: Interest (50,368) Total present value of operating lease liabilities $ 299,509 |
Senior Debt (Tables)
Senior Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Maturities of Long-term Debt | The table below shows the scheduled maturity dates of our outstanding senior debt at September 30, 2023 for each of the years ending December 31: (in thousands) Term Loan Facility (1) 2023 $ — 2024 — 2025 — 2026 — 2027 — Thereafter 815,458 Total senior debt $ 815,458 (1) Annual installment requirements were reduced by the amount of the excess cash flow payment described above, in accordance with the terms of the credit agreement governing the Term Loan Facility. |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements Nonrecurring | The fair value of our Notes is based on Level 1 inputs and was as follows at September 30, 2023: September 30, 2023 (in thousands) Carrying Value Fair Value Difference Senior notes $ 450,000 $ 401,040 $ (48,960) |
Other Charges (Tables)
Other Charges (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Other Charges | Activity with respect to Other charges for the nine months ended September 30, 2023 is summarized in the below table: (in thousands) Accrued Charges at December 31, 2022 Charges & Adjustments Payments & Adjustments Accrued Charges at September 30, 2023 Cash charges: Labor reduction costs (1) $ 2,202 $ — $ (2,202) $ — Total cash charges $ 2,202 — $ (2,202) $ — Non-cash charges: Acima Holdings restricted stock agreements (2) 128,128 Depreciation and amortization of acquired assets (3) 54,701 Accelerated software depreciation 4,609 Other (4) (3,025) Total other charges $ 184,413 (1) Represents charges incurred and payments related to employee severance. (2) Represents stock compensation expense related to common stock issued to Acima Holdings employees under restricted stock agreements as part of the acquisition proceeds subject to vesting restrictions, as described in Note 11. (3) Represents amortization of the total fair value of acquired intangible assets and incremental depreciation related to the fair value increase over net book value of acquired software assets in connection with the acquisition of Acima Holdings in 2021. |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Information [Abstract] | |
Segment Information | Segment information as of and for the three and nine months ended September 30, 2023 and 2022 is as follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Revenues Rent-A-Center $ 453,632 $ 473,755 $ 1,404,831 $ 1,482,445 Acima 475,216 504,448 1,423,421 1,633,994 Mexico 19,642 16,041 55,526 48,454 Franchising 30,608 29,713 90,544 90,040 Total revenues $ 979,098 $ 1,023,957 $ 2,974,322 $ 3,254,933 Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Gross profit Rent-A-Center $ 317,233 $ 334,892 $ 975,210 $ 1,046,332 Acima 159,427 152,434 474,258 481,742 Mexico 13,971 11,330 39,410 34,242 Franchising 6,535 6,879 20,778 21,857 Total gross profit $ 497,166 $ 505,535 $ 1,509,656 $ 1,584,173 Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Operating profit Rent-A-Center $ 63,762 $ 71,999 $ 211,637 $ 271,283 Acima 58,124 48,885 175,103 94,318 Mexico 1,124 996 3,417 5,011 Franchising 3,541 5,077 13,280 15,170 Total segments 126,551 126,957 403,437 385,782 Corporate (1) (68,499) (89,880) (296,467) (279,582) Total operating profit $ 58,052 $ 37,077 $ 106,970 $ 106,200 (1) Includes stock compensation expense of $9.4 million and $128.1 million recognized for the three and nine months ended September 30, 2023 and $42.1 million and $111.5 million recognized for the three and nine months ended September 30, 2022, related to common stock issued to Acima Holdings employees under restricted stock agreements as part of the acquisition consideration subject to vesting restrictions as described in Note 11. Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Depreciation and amortization Rent-A-Center $ 4,421 $ 4,629 $ 13,964 $ 15,665 Acima (1) 420 439 1,263 1,496 Mexico 345 182 880 494 Franchising 36 35 110 110 Total segments 5,222 5,285 16,217 17,765 Corporate (2) 7,402 7,513 21,885 22,443 Total depreciation and amortization $ 12,624 $ 12,798 $ 38,102 $ 40,208 (1) Excludes amortization expense of approximately $14.3 million and $42.8 million for the three and nine months ended September 30, 2023, compared to $14.2 million and $50.6 million for the three and nine months ended September 30, 2022, recorded to Other charges in the Condensed Consolidated Statement of Operations, related to intangible assets acquired upon closing of the Acima Holdings acquisition. See Note 9 for additional information. (2) Excludes depreciation expense of approximately $8.6 million and $16.5 million for both the three and nine months ended September 30, 2023, compared to $3.9 million and $11.9 million for the three and nine months ended September 30, 2022, recorded to Other charges in the Condensed Consolidated Statement of Operations, related to software acquired upon closing of the Acima Holdings acquisition and accelerated software depreciation. See Note 9 for additional information. Three Months Ended September 30, Nine Months Ended September 30, (in thousands) 2023 2022 2023 2022 Capital expenditures Rent-A-Center $ 6,822 $ 10,714 $ 12,587 $ 30,917 Acima 121 16 203 205 Mexico 508 696 1,902 1,219 Franchising — 166 1 278 Total segments 7,451 11,592 14,693 32,619 Corporate 7,322 6,949 21,474 16,817 Total capital expenditures $ 14,773 $ 18,541 $ 36,167 $ 49,436 (in thousands) September 30, 2023 December 31, 2022 On rent rental merchandise, net Rent-A-Center $ 429,614 $ 465,095 Acima 517,302 503,795 Mexico 22,049 20,979 Total on rent rental merchandise, net $ 968,965 $ 989,869 (in thousands) September 30, 2023 December 31, 2022 Held for rent rental merchandise, net Rent-A-Center $ 111,311 $ 124,117 Acima 509 373 Mexico 10,673 10,469 Total held for rent rental merchandise, net $ 122,493 $ 134,959 (in thousands) September 30, 2023 December 31, 2022 Assets by segment Rent-A-Center $ 960,425 $ 1,067,875 Acima 1,172,466 1,198,879 Mexico 60,676 51,225 Franchising 19,192 18,194 Total segments 2,212,759 2,336,173 Corporate 413,316 427,446 Total assets $ 2,626,075 $ 2,763,619 |
Earnings (Loss) Per Common Sh_2
Earnings (Loss) Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | Summarized basic and diluted earnings (loss) per common share were calculated as follows: Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share data) 2023 2022 2023 2022 Numerator: Net earnings (loss) $ 4,363 $ (5,778) $ 6,075 $ 9,710 Denominator: Weighted-average shares outstanding 55,485 55,380 55,294 54,376 Effect of dilutive stock awards (1) (2) 1,367 — 1,373 5,422 Weighted-average dilutive shares 56,852 55,380 56,667 59,798 Basic earnings (loss) per common share $ 0.08 $ (0.10) $ 0.11 $ 0.18 Diluted earnings (loss) per common share (1) (2) $ 0.08 $ (0.10) $ 0.11 $ 0.16 Anti-dilutive securities excluded from diluted earnings (loss) per common share: Anti-dilutive restricted share units 43 465 43 81 Anti-dilutive performance share units — 941 740 197 Anti-dilutive stock options 129 865 200 279 (1) Weighted-average dilutive shares outstanding for the nine months ended September 30, 2023 and 2022, includes approximately 0.4 million and 3.7 million common shares, respectively, issued in connection with the acquisition of Acima Holdings and subject to vesting conditions under restricted stock agreements. (2) There was no dilutive effect to the loss per common share for the three months ended September 30, 2022 due to the net loss incurred for the period. |
Basis of Presentation - Narrati
Basis of Presentation - Narrative (Details) | 9 Months Ended |
Sep. 30, 2023 segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments | 4 |
Revenues (Details)
Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | |||||
Rentals and fees | $ 806,766 | $ 829,459 | $ 2,421,039 | $ 2,569,804 | |
Merchandise sales | 127,564 | 147,616 | 415,256 | 541,265 | |
Installment sales | 13,444 | 16,718 | 45,191 | 52,355 | |
Other | 1,429 | 1,340 | 4,422 | 3,698 | |
Total store revenues | 949,203 | 995,133 | 2,885,908 | 3,167,122 | |
Merchandise sales | 24,082 | 22,823 | 69,778 | 67,849 | |
Royalty income and fees | 5,813 | 6,001 | 18,636 | 19,962 | |
Total revenues | 979,098 | 1,023,957 | 2,974,322 | 3,254,933 | |
Rental purchase agreements [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Deferred revenue | 56,600 | 56,600 | $ 54,900 | ||
Other product plans [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Deferred revenue | 1,200 | 1,200 | 2,000 | ||
Franchise fees [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Deferred revenue | 3,100 | 3,100 | $ 3,400 | ||
Rent-A-Center Business | |||||
Disaggregation of Revenue [Line Items] | |||||
Rentals and fees | 413,051 | 426,805 | 1,260,745 | 1,305,871 | |
Merchandise sales | 26,819 | 30,009 | 97,905 | 123,255 | |
Installment sales | 13,444 | 16,718 | 45,191 | 52,355 | |
Other | 318 | 223 | 990 | 964 | |
Total store revenues | 453,632 | 473,755 | 1,404,831 | 1,482,445 | |
Merchandise sales | 0 | 0 | 0 | 0 | |
Royalty income and fees | 0 | 0 | 0 | 0 | |
Total revenues | 453,632 | 473,755 | 1,404,831 | 1,482,445 | |
Acima | |||||
Disaggregation of Revenue [Line Items] | |||||
Rentals and fees | 375,202 | 387,488 | 1,107,943 | 1,218,143 | |
Merchandise sales | 99,857 | 116,795 | 314,741 | 415,465 | |
Installment sales | 0 | 0 | 0 | 0 | |
Other | 157 | 165 | 737 | 386 | |
Total store revenues | 475,216 | 504,448 | 1,423,421 | 1,633,994 | |
Merchandise sales | 0 | 0 | 0 | 0 | |
Royalty income and fees | 0 | 0 | 0 | 0 | |
Total revenues | 475,216 | 504,448 | 1,423,421 | 1,633,994 | |
Mexico | |||||
Disaggregation of Revenue [Line Items] | |||||
Rentals and fees | 18,513 | 15,166 | 52,351 | 45,790 | |
Merchandise sales | 888 | 812 | 2,610 | 2,545 | |
Installment sales | 0 | 0 | 0 | 0 | |
Other | 241 | 63 | 565 | 119 | |
Total store revenues | 19,642 | 16,041 | 55,526 | 48,454 | |
Merchandise sales | 0 | 0 | 0 | 0 | |
Royalty income and fees | 0 | 0 | 0 | 0 | |
Total revenues | 19,642 | 16,041 | 55,526 | 48,454 | |
Franchising | |||||
Disaggregation of Revenue [Line Items] | |||||
Rentals and fees | 0 | 0 | 0 | 0 | |
Merchandise sales | 0 | 0 | 0 | 0 | |
Installment sales | 0 | 0 | 0 | 0 | |
Other | 713 | 889 | 2,130 | 2,229 | |
Total store revenues | 713 | 889 | 2,130 | 2,229 | |
Merchandise sales | 24,082 | 22,823 | 69,778 | 67,849 | |
Royalty income and fees | 5,813 | 6,001 | 18,636 | 19,962 | |
Total revenues | $ 30,608 | $ 29,713 | $ 90,544 | $ 90,040 |
Receivables and Allowance for_3
Receivables and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Receivables [Line Items] | |||
Interest paid on installment agreements | $ 8,700 | $ 9,200 | |
Gross receivables | 117,892 | $ 125,079 | |
Total receivables, net of allowance for doubtful accounts | 104,772 | 111,865 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Less allowance for doubtful accounts | (13,120) | (13,214) | |
Bad debt expense | 17,533 | ||
Accounts written off, net of recoveries | (17,627) | ||
Installment sales receivable [Member] | |||
Receivables [Line Items] | |||
Gross receivables | 62,236 | 69,550 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Less allowance for doubtful accounts | (12,000) | (12,000) | |
Trade and notes receivables [Member] | |||
Receivables [Line Items] | |||
Gross receivables | 55,656 | 55,529 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Less allowance for doubtful accounts | (1,100) | (1,200) | |
Notes Receivable | |||
Receivables [Line Items] | |||
Accrued Revenue | $ 29,900 | $ 28,700 |
Leases - Narrative (Details)
Leases - Narrative (Details) | Sep. 30, 2023 |
Lessee, Lease, Description [Line Items] | |
Term of contract | 5 years |
Minimum [Member] | |
Lessee, Lease, Description [Line Items] | |
Renewal term | 3 years |
Maximum [Member] | |
Lessee, Lease, Description [Line Items] | |
Renewal term | 5 years |
Leases - Lease by Type (Details
Leases - Lease by Type (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Lessee, Lease, Description [Line Items] | |||||
Operating lease charges | $ 30,409 | $ 29,722 | $ 90,196 | $ 87,964 | |
Sublease receipts | $ (734) | (1,642) | (3,012) | (5,700) | |
Cash paid for amounts included in measurement of operating lease liabilities | 79,871 | 77,780 | |||
Cash paid for short-term operating leases not included in operating lease liabilities | 13,240 | 14,170 | |||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 50,786 | 81,937 | |||
Weighted-average discount rate | 7.60% | 7.60% | 7% | ||
Weighted average remaining lease term (in years) | 4 years | 4 years | 4 years | ||
Variable lease cost | $ 9,900 | 9,400 | $ 29,000 | 27,200 | |
Other store expenses [Member] | |||||
Lessee, Lease, Description [Line Items] | |||||
Operating lease charges | 31,143 | 31,100 | 93,208 | 93,365 | |
Other charges [Member] | |||||
Lessee, Lease, Description [Line Items] | |||||
Operating lease charges | $ 0 | $ 264 | $ 0 | $ 299 |
Leases - Reconciliation (Detail
Leases - Reconciliation (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
2023 | $ 29,524 | |
2024 | 103,277 | |
2025 | 85,151 | |
2026 | 59,870 | |
2027 | 38,556 | |
Thereafter | 33,499 | |
Total undiscounted operating lease liabilities | 349,877 | |
Less: Interest | (50,368) | |
Operating lease liabilities | $ 299,509 | $ 305,556 |
Income Taxes (Details)
Income Taxes (Details) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 76.10% | 78.70% |
Goodwill amortization period | 15 years |
Senior Debt (Details)
Senior Debt (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Jul. 31, 2023 | Sep. 21, 2021 | Feb. 17, 2021 | Mar. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Debt Instrument [Line Items] | |||||||
Original issue discount | $ 4,400,000 | ||||||
Debt issuance costs | 30,200,000 | ||||||
Letters of credit, amount outstanding | $ 64,400,000 | $ 64,400,000 | |||||
Repayments of secured debt | $ 134,229,000 | $ 296,563,000 | |||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.375% | ||||||
Line of credit commitment fee | 800,000 | ||||||
Write-off of debt financing fees | $ 5,400,000 | ||||||
Debt Issuance Costs [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Unamortized Debt Issuance Expense | 13,400,000 | $ 13,400,000 | |||||
Original Issue Discount [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Unamortized Debt Issuance Expense | $ 2,100,000 | $ 2,100,000 | |||||
Term loan credit | |||||||
Debt Instrument [Line Items] | |||||||
Senior secured term loan facility | 875,000,000 | ||||||
Debt Instrument, Maturity Date | Feb. 17, 2028 | ||||||
Debt Instrument, Frequency of Periodic Payment | quarterly | ||||||
Debt Instrument, Periodic Payment, Percent | 1% | ||||||
Actual margin on variable rate | 8.881% | 8.881% | |||||
2023 | $ 0 | $ 0 | |||||
2024 | 0 | 0 | |||||
2025 | 0 | 0 | |||||
2026 | 0 | 0 | |||||
2027 | 0 | 0 | |||||
Thereafter | 815,458,000 | 815,458,000 | |||||
Senior debt, net | $ 815,458,000 | $ 815,458,000 | |||||
Term loan credit | London Interbank Offered Rate (LIBOR) | |||||||
Debt Instrument [Line Items] | |||||||
Decrease to basis spread on variable rate | 0.25% | ||||||
Term loan credit | Eurodollar | |||||||
Debt Instrument [Line Items] | |||||||
Decrease to basis spread on variable rate | 0.75% | ||||||
Term loan credit | Secured Overnight Financing Rate (SOFR) | |||||||
Debt Instrument [Line Items] | |||||||
Increase to basis spread on variable rate | 0.26% | ||||||
Basis margin on variable rate | 3.51% | ||||||
Term loan credit | Secured Overnight Financing Rate (SOFR) Floor | |||||||
Debt Instrument [Line Items] | |||||||
Basis margin on variable rate | 0.50% | ||||||
Term loan credit | Debt Issuance Costs [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Unamortized Debt Issuance Expense | $ 25,300,000 | ||||||
ABL credit facility | ABL credit facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Term | 5 years | ||||||
Maximum borrowing capacity | $ 125,000,000 | ||||||
Percent of line cap | 15% | ||||||
Line of Credit Facility, Covenant Compliance, Remaining Borrowing Capacity, Maximum | $ 56,250,000 | $ 56,250,000 | |||||
ABL credit facility | Letter of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 150,000,000 | ||||||
Term Loan Facility | Secured Debt | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Term | 7 years | ||||||
Interest rate, stated percentage | 1% | 1% | |||||
Consolidated secured leverage ratio | 100% | ||||||
Repayments of secured debt | $ 42,600,000 | ||||||
Accrued interest | $ 600,000 | ||||||
Incremental term loans available | $ 500,000,000 | ||||||
ABL credit facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Revolving credit facility commitments | $ 550,000,000 | ||||||
ABL Credit Facility amount available | $ 485,600,000 | $ 485,600,000 | |||||
Debt Instrument, Maturity Date | Feb. 17, 2026 | ||||||
Actual margin on variable rate | 7.52% | 7.52% | |||||
Required consolidated fixed charge coverage ratio, minimum | 1.10 | 1.10 | |||||
Actual fixed charge coverage ratio | 1.19 | 1.19 | |||||
Senior debt, net | $ 0 | $ 0 | |||||
Maximum [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.375% | ||||||
Maximum [Member] | Term loan credit | London Interbank Offered Rate (LIBOR) | |||||||
Debt Instrument [Line Items] | |||||||
Basis margin on variable rate | 0.75% | ||||||
Maximum [Member] | Term loan credit | Eurodollar | |||||||
Debt Instrument [Line Items] | |||||||
Basis margin on variable rate | 4% | ||||||
Maximum [Member] | ABL credit facility [Member] | Secured Overnight Financing Rate (SOFR) | |||||||
Debt Instrument [Line Items] | |||||||
Basis margin on variable rate | 2% | ||||||
Minimum [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.25% | ||||||
Minimum [Member] | Term loan credit | London Interbank Offered Rate (LIBOR) | |||||||
Debt Instrument [Line Items] | |||||||
Basis margin on variable rate | 0.50% | ||||||
Minimum [Member] | Term loan credit | Eurodollar | |||||||
Debt Instrument [Line Items] | |||||||
Basis margin on variable rate | 3.25% | ||||||
Minimum [Member] | Term loan credit | Secured Overnight Financing Rate (SOFR) | |||||||
Debt Instrument [Line Items] | |||||||
Basis margin on variable rate | 3.51% | 3.25% | |||||
Minimum [Member] | ABL credit facility [Member] | Secured Overnight Financing Rate (SOFR) | |||||||
Debt Instrument [Line Items] | |||||||
Basis margin on variable rate | 1.50% |
Senior Notes (Details)
Senior Notes (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Feb. 17, 2021 | |
The Notes | Senior Notes [Member] | ||
Senior Notes [Line Items] | ||
Additional percentage of principal amount redeemed | 100% | |
Percentage of principal amount purchased | 101% | |
Senior Notes [Member] | ||
Senior Notes [Line Items] | ||
Initial borrowing in senior notes | $ 450,000 | $ 450,000 |
Unamortized Debt Issuance Expense | $ 10,600 | $ 15,700 |
Debt Instrument, Redemption Price, Percentage | 106.375% | |
Interest rate, stated percentage | 6.375% | |
Senior note redemption price, percent | 40% |
Fair Value (Details)
Fair Value (Details) - Senior Notes [Member] - USD ($) $ in Thousands | Sep. 30, 2023 | Feb. 17, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Initial borrowing in senior notes | $ 450,000 | $ 450,000 |
Fair value | 401,040 | |
Difference | $ (48,960) |
Other Charges (Details)
Other Charges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Feb. 17, 2021 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2024 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Restructuring Cost and Reserve [Line Items] | |||||||
Depreciation of property assets | $ 53,894 | $ 51,384 | |||||
Charges & Adjustments | 0 | ||||||
Accrued Charges | $ 0 | 0 | $ 2,202 | ||||
Payments & Adjustments | (2,202) | ||||||
Stock-based compensation expense | 146,724 | 122,621 | |||||
Depreciation and amortization | 12,624 | $ 12,798 | 38,102 | 40,208 | |||
Other charges | 29,057 | 61,619 | 184,413 | 185,435 | |||
Non-Cash Charges [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Depreciation of property assets | 8,600 | 3,900 | 16,500 | 11,900 | |||
Stock-based compensation expense | 128,128 | ||||||
Other | (3,025) | ||||||
Software [Member] | Non-Cash Charges [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Depreciation and amortization | 4,600 | 4,609 | |||||
Software [Member] | Non-Cash Charges [Member] | Subsequent Event [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Depreciation and amortization | $ 10,800 | ||||||
Employee Severance [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Charges & Adjustments | 0 | ||||||
Accrued Charges | 0 | 0 | $ 2,202 | ||||
Payments & Adjustments | (2,202) | ||||||
Acima Holdings | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Stock consideration, shares | 10,779,923 | ||||||
Other intangible assets | $ 520,000 | ||||||
Depreciation of property assets | 11,900 | 11,900 | |||||
Amortization | 14,300 | 14,200 | 42,800 | 50,600 | |||
Stock-based compensation expense | $ 9,400 | $ 42,100 | 128,100 | $ 111,500 | |||
Acima Holdings | Non-Cash Charges [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Depreciation and amortization | $ 54,701 | ||||||
Acima Holdings | Restricted Stock Units [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Stock consideration, shares | 8,096,595 | 400,000 | 3,700,000 | ||||
Stock consideration, value | $ 414,100 | ||||||
Award vesting period | 36 months | ||||||
Acima Holdings | Software [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Property assets | $ 170,000 | ||||||
Acima Holdings | Transaction costs [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Charges & Adjustments | $ 200 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Segment Reporting Information [Line Items] | |||||
Total revenues | $ 979,098 | $ 1,023,957 | $ 2,974,322 | $ 3,254,933 | |
Gross profit | 497,166 | 505,535 | 1,509,656 | 1,584,173 | |
Operating (Ioss) profit | 58,052 | 37,077 | 106,970 | 106,200 | |
Depreciation and amortization | 12,624 | 12,798 | 38,102 | 40,208 | |
Capital expenditures | 14,773 | 18,541 | 36,167 | 49,436 | |
On rent | 968,965 | 968,965 | $ 989,869 | ||
Held for rent | 122,493 | 122,493 | 134,959 | ||
Assets | 2,626,075 | 2,626,075 | 2,763,619 | ||
Depreciation of property assets | 53,894 | 51,384 | |||
Stock-based compensation expense | 146,724 | 122,621 | |||
Non-Cash Charges [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Depreciation of property assets | 8,600 | 3,900 | 16,500 | 11,900 | |
Stock-based compensation expense | 128,128 | ||||
Acima Holdings | |||||
Segment Reporting Information [Line Items] | |||||
Amortization | 14,300 | 14,200 | 42,800 | 50,600 | |
Depreciation of property assets | 11,900 | 11,900 | |||
Stock-based compensation expense | 9,400 | 42,100 | 128,100 | 111,500 | |
Rent-A-Center Business | |||||
Segment Reporting Information [Line Items] | |||||
Total revenues | 453,632 | 473,755 | 1,404,831 | 1,482,445 | |
Gross profit | 317,233 | 334,892 | 975,210 | 1,046,332 | |
On rent | 429,614 | 429,614 | 465,095 | ||
Held for rent | 111,311 | 111,311 | 124,117 | ||
Acima | |||||
Segment Reporting Information [Line Items] | |||||
Total revenues | 475,216 | 504,448 | 1,423,421 | 1,633,994 | |
Gross profit | 159,427 | 152,434 | 474,258 | 481,742 | |
On rent | 517,302 | 517,302 | 503,795 | ||
Held for rent | 509 | 509 | 373 | ||
Mexico | |||||
Segment Reporting Information [Line Items] | |||||
Total revenues | 19,642 | 16,041 | 55,526 | 48,454 | |
Gross profit | 13,971 | 11,330 | 39,410 | 34,242 | |
On rent | 22,049 | 22,049 | 20,979 | ||
Held for rent | 10,673 | 10,673 | 10,469 | ||
Franchising | |||||
Segment Reporting Information [Line Items] | |||||
Total revenues | 30,608 | 29,713 | 90,544 | 90,040 | |
Gross profit | 6,535 | 6,879 | 20,778 | 21,857 | |
Operating segments | |||||
Segment Reporting Information [Line Items] | |||||
Operating (Ioss) profit | 126,551 | 126,957 | 403,437 | 385,782 | |
Depreciation and amortization | 5,222 | 5,285 | 16,217 | 17,765 | |
Capital expenditures | 7,451 | 11,592 | 14,693 | 32,619 | |
Assets | 2,212,759 | 2,212,759 | 2,336,173 | ||
Operating segments | Rent-A-Center Business | |||||
Segment Reporting Information [Line Items] | |||||
Operating (Ioss) profit | 63,762 | 71,999 | 211,637 | 271,283 | |
Depreciation and amortization | 4,421 | 4,629 | 13,964 | 15,665 | |
Capital expenditures | 6,822 | 10,714 | 12,587 | 30,917 | |
Assets | 960,425 | 960,425 | 1,067,875 | ||
Operating segments | Acima | |||||
Segment Reporting Information [Line Items] | |||||
Operating (Ioss) profit | 58,124 | 48,885 | 175,103 | 94,318 | |
Depreciation and amortization | 420 | 439 | 1,263 | 1,496 | |
Capital expenditures | 121 | 16 | 203 | 205 | |
Assets | 1,172,466 | 1,172,466 | 1,198,879 | ||
Operating segments | Mexico | |||||
Segment Reporting Information [Line Items] | |||||
Operating (Ioss) profit | 1,124 | 996 | 3,417 | 5,011 | |
Depreciation and amortization | 345 | 182 | 880 | 494 | |
Capital expenditures | 508 | 696 | 1,902 | 1,219 | |
Assets | 60,676 | 60,676 | 51,225 | ||
Operating segments | Franchising | |||||
Segment Reporting Information [Line Items] | |||||
Operating (Ioss) profit | 3,541 | 5,077 | 13,280 | 15,170 | |
Depreciation and amortization | 36 | 35 | 110 | 110 | |
Capital expenditures | 0 | 166 | 1 | 278 | |
Assets | 19,192 | 19,192 | 18,194 | ||
Corporate, non-segment | |||||
Segment Reporting Information [Line Items] | |||||
Operating (Ioss) profit | (68,499) | (89,880) | (296,467) | (279,582) | |
Depreciation and amortization | 7,402 | 7,513 | 21,885 | 22,443 | |
Capital expenditures | 7,322 | $ 6,949 | 21,474 | $ 16,817 | |
Assets | $ 413,316 | $ 413,316 | $ 427,446 |
Common Stock and Stock-Based _2
Common Stock and Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Feb. 17, 2021 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ 146,724 | $ 122,621 | |||
Performance-based restricted stock units granted (in shares) | 599,845 | ||||
Time-vesting restricted stock units granted (in shares) | 361,169 | ||||
Purchase of treasury stock | $ 27,151 | $ 29,797 | |||
Share Repurchase 500 Million | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock repurchase program, authorized amount | 500,000 | $ 500,000 | |||
Shares repurchased (in shares) | 916,269 | 1,218,313 | |||
Purchase of treasury stock | $ 27,100 | $ 29,800 | |||
Remaining Authorized Repurchase Amount | 258,000 | 258,000 | |||
Acima Holdings | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | 9,400 | 42,100 | 128,100 | $ 111,500 | |
Stock consideration, shares | 10,779,923 | ||||
Common stock price (in dollars per share) | $ 51.14 | ||||
Share-Based Payment Arrangement, Accelerated Cost | $ 78,400 | ||||
Acima Holdings | Share-based Payment Arrangement [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock consideration, shares | 2,683,328 | ||||
Acima Holdings | Restricted Stock Units [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock consideration, shares | 8,096,595 | 400,000 | 3,700,000 | ||
Stock consideration, value | $ 414,100 | ||||
2021 and 2016 Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ 6,200 | $ 2,700 | $ 18,600 | $ 11,100 | |
Restricted Stock Units [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Weighted average grant date fair value of restricted stock units granted (in dollars per share) | $ 26.34 | ||||
Performance-based restricted stock units [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Weighted average grant date fair value of restricted stock units granted (in dollars per share) | $ 32.30 |
Contingencies (Details)
Contingencies (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Oct. 01, 2020 |
Indemnification Agreement | ||
Loss Contingencies [Line Items] | ||
Escrowed indemnity amount | $ 45 | $ 50 |
Earnings (Loss) Per Common Sh_3
Earnings (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Feb. 17, 2021 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Common Share | |||||||||
Net earnings (loss) | $ 4,363 | $ (45,618) | $ 47,330 | $ (5,778) | $ 19,725 | $ (4,237) | $ 6,075 | $ 9,710 | |
Weighted-average shares outstanding | 55,485,000 | 55,380,000 | 55,294,000 | 54,376,000 | |||||
Effect of dilutive stock awards | 1,367,000 | 0 | 1,373,000 | 5,422,000 | |||||
Weighted-average dilutive shares | 56,852,000 | 55,380,000 | 56,667,000 | 59,798,000 | |||||
Basic earnings (loss) per common share | $ 0.08 | $ (0.10) | $ 0.11 | $ 0.18 | |||||
Diluted earnings (loss) per common share(1) (2) | $ 0.08 | $ (0.10) | $ 0.11 | $ 0.16 | |||||
Acima Holdings | |||||||||
Earnings Per Common Share | |||||||||
Stock consideration, shares | 10,779,923 | ||||||||
Restricted Stock Units [Member] | Acima Holdings | |||||||||
Earnings Per Common Share | |||||||||
Stock consideration, shares | 8,096,595 | 400,000 | 3,700,000 | ||||||
Retained Earnings | |||||||||
Earnings Per Common Share | |||||||||
Net earnings (loss) | $ 4,363 | $ (45,618) | $ 47,330 | $ (5,778) | $ 19,725 | $ (4,237) | |||
Performance-based restricted stock units [Member] | |||||||||
Earnings Per Common Share | |||||||||
Anti-dilutive securities | 0 | 941,000 | 740,000 | 197,000 | |||||
Stock options [Member] | |||||||||
Earnings Per Common Share | |||||||||
Anti-dilutive securities | 129,000 | 865,000 | 200,000 | 279,000 | |||||
Restricted share units [Member] | |||||||||
Earnings Per Common Share | |||||||||
Anti-dilutive securities | 43,000 | 465,000 | 43,000 | 81,000 |