CONN - Earnings call transcript Q1 2020

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Operator

Good morning and thank you for holding. Welcome to Conn's Inc. Conference Call to discuss Earnings for the Fiscal Quarter Ended April 30, 2019. My name is Sherry. I'll be your operator today.

participants in all listen-only presentation the will a be mode. During be speakers’ participate remarks, the invited you After session. will to question-and-answer in the

a Investor XX, call earnings As and can market conference recorded. via morning at this company's the ir.conns.com. accessed The company's opened is this release website was XXXX being May be distributed Relations before dated reminder

company's other adjusted During today's refer earnings income adjusted and earnings EBITDA, today diluted measures, that for to call, management release the financial will issued was adjusted measures of these the the reconciliation call performance the laws. discuss, Please measures. GAAP I per among in share. the made remind a non-GAAP are of to some of most statements within securities meaning comparable you forward-looking this must federal statements net

or risks represent future to actual which are necessarily results These the concerning today. company that which expectations assumptions, and from differ to certain materially present company's are such beliefs cautions statements subject uncertainties, based statements those The indicated events. cause forward-looking could on

Norm today Lee and the Wright, speakers company's CEO; Miller, COO. Your company's the are

like to now sir. over conference the Please go would I ahead, to Mr. call Miller. turn

Norm Miller

welcome quarter year strong years, best earnings call first share. to as first gross drove record a additional comments of call. in results. year-over-year year off start performance achieved Good Conn's XX% increase per segment quarter credit the financial XXXX XXXX Fiscal we will the morning, diluted and with I'll in prepared combined a is with quarter retail fiscal begin earnings then overview have remarks with to margin, five conference an Lee and our first complete on the

the in income quarter business by the retail disappointed significant demonstrates year-over-year are overall improvement of sales, model. we our first net power While

by a heading. to and encouraged significant As we on profitably we years many come, retail revenues, expand I'm direction opportunity to we the for growing have believe we focus are

in the our million repurchase company's announce to stock future, Directors shareholder that financial plan. value to of I'm our $XX confidence our position, generating commitment a strong Board pleased the Given and approved has

I Officer, am role this Lee Lastinger of morning's very President the joining Retail, on our Operating Chief and promoted enhancements new the Bchara promoted team. this release, with to Accounting announcement Officer Wright pleased also as to been has to To of Officer. leadership our been Conn's review press Nelson promoted Financial is Rodney has Chief new to has George Ryan Chief been morning's

and our promotion leadership significant CEO retention in to about demonstrates contributions they to our September of Credit four John continually Since build critical and Davis the made follow you and Lee, years members JD these recruiting, XXXX operation to talk three progress importance and me team I we heard capabilities. of enhance Collections. early new were the our platform and in Today's development as across need today. financial have of the areas place of the and that George is and joined roles critical Conn's played significant turnaround and President announcement leading have ago, leadership the made

of growth our from forward was as as as Rodney and served recently, $XX a U.S. leaders organization. comprised Vice of capitalize proven attract looks Conn's outside Rodney XX,XXX of Senior to us for important billion Stores President to region with is Most working for operation Rodney on Retail retail his in career also XX-year joining President Corporation. large over of us members Target, significant team XXX Target stores. will which It's and managing our help at managing a experience The opportunity. Southern the successful sales, after of team responsible

the value sustainable next leadership the proven, we team to assembled and motivated experienced positioned to shareholders, to take have well and create are company We for level. a

quarter first results So credit with our this detail, in look starting with business. our more introduction, let's at

quarter results First were excellent. credits

Our as spread our years, in result basis points XXX net five of quarter the highest credit of charge-off was spread and a the representing the XX.X%. net yield rate for first of XX.X%

performance maintaining credit not we appropriate improve, to and continues to we retail will focused standards, on are underwriting risk drive our increase As sales. credit

we addition, managing stores at underwriting our performance. credit In new proactively to are control

First has in we rates from payment our collection for better customer continue and the our and at a recovery default benefited underwriting, stable company portfolio economic Overall, stores environment healthy XX% the have enhancements than new made our to be core efforts. average. performance

the the year. delinquency the fiscal same was rate day representing from basis company in improvement experienced basis improvement rate result, from the day the fourth a XX-plus the delinquency point quarter. As XX in XX-plus The point last year-over-year period X.X%, a accelerated XX decline

Improving been in strategic a as for result our also higher on has cash recovery debt. loss focus charge-offs and net our lower reduced process bad recoveries rate allowance

period of XXXX, year of from in same collected we more first $X.X For fiscal XXXX. quarter recoveries, last year the all and increase year fiscal we the collected of XX% than an million

We are this have year. $XX a recovery built platform, we fiscal track recoveries collect to and exceeding million annual strong on

interest results million the that first approximately was with line quarter of points X,XXX credit only credit before operate credit basis loss and credit in expense can demonstrate with goal. of quarter breakeven the we spread. The taxes in business First breakeven $X.X a which our segment, net roughly includes

period increased first profitability prior the improved segment fiscal and XXXX. by versus of $XX.X quarter credit year million million over $XX.X year addition, the In

are stable place, going of in maintaining risk I'm our solid on business. platform to omni-channel a our We on focusing accelerates. our ability remain creating best-in-class business, retail retail focused manage and more a especially confident as growth With efforts forward, in credit we a credit

strategies our to the review let's pursuing segment drivers we and are So revenues. grow retail the of

primarily lower, to had quarter due efforts year. were Hurricane benefit the sales fiscal retail quarter rebuilding last of First Harvey the first in

pull in markets. year this of continue quarter with some Harvey the expect to forward the fiscal trend replacement of the second potential due We in cycle for residual this to half the year of to the impact back fiscal the

typically disruptive transition markets and sales utilized reducing and believe to retail We non-Harvey markets. in we tax applicants by source have a buying in of an sales and were approved Unfortunately, delay higher-than-anticipated Harvey online expected. than of was weaker rate, first refunds, who mix this due to primarily lower credit both e-commerce which power new our the platform discretionary across believe our impacted a many quarter

In or In business actively it application XXX,XXX for an of retail is We our volume year over monitor unique our credit in-house to as applications completed XXXX, credit fiscal important were application our all metric through XX% due offering. in faster our and quarter, last first a rate which the grew resulted applications online expected, originated same quarter approval year the impacted than website. sales. from XXX in mix the negatively fiscal point decline the of basis

that have apply our historically because approval lower applicants stores. to compared they Online risk credit higher within rates demonstrate customers

As a and applicants, result, sales. very not towards are we will credit increase cautious retail quarterly we risk drive online to

which quarter was interrupted late impacted online our load to online expected. conns.com, times than increased process. place experience platform, took retail sales and The first transition March. issues our platform initial online implementation application applications overall and refund caused page new lower tax These the affecting Also in the customer on delayed implementation

fiscal in over X% year increased May has of compared the of a decline volume quarter in XXXX. first month-to-date over to Application X%

long-term sales, seamless regardless implementation on While online first of end-to-end for we e-commerce a the been a With applications are financing create this the have quarter and customers, new by higher of trend that online had the strategy. the disappointed in to we creating desire was critical solution website effect an applicants our experience our of milestone needs.

secured online us excited core result can capabilities. entirely announce using our advanced with website, and now transact customer that enhanced infrastructure I'm offering and as proprietary a our IT our to in-house credit extremely underwriting of

nearly in e-commerce the company. is Conn's and the XXX-year business significant milestone has For credit XX the history been of years, of a launch our channel in our

team fit and to that analytics our the target year past maintain our Our point refining basis tolerance underwriting credit spent within spread. X,XXX sales our has these ensure strategies risk

With the customers. omni-channel in experience now our a already we have channel, grow while providing this applicants for opportunity majority an great sales of to online,

next fully XX-state delivery infrastructure, network. we and delivery In day addition, logistics our are across our existing capabilities as store locations already warehouse scalable offer last-mile

To highlight or through a card. with Synchrony card e-commerce credit and quality highest only less our last our fiscal sales $X year opportunity, the personal credit represented customers million magnitude of were than completed

For already approximately are the sales $X approximately marketing This of fully without May were and third alone, achieved month was in fiscal or online May sales. promoting one year's million. sales of e-commerce last this channel, total

on have margin retail higher year, making Over platform, execution. focus better the we include and merchandising are enhancing best retail our we strategy our which also our talked products, the both past improving and about investments in

customers. These a while success our first historically categories to riskier credit rolling during drive I'm quarter. we and pleased achieving new traffic fronts three progress strong and out margin demonstrates the with expectation, Last in all retail resonate was our that what gaming results gross category. made our the year's expansion in support efforts report

are of we our the We test home this in flooring in and category for which had launched using positive in our continued smart gaming includes our and experience our recently cellphones, overall upcoming strategy, expansion basis test test as expansion products.

and categories. and furniture transition focused year products within all on home remain This update categories gaming refreshing with colors. newness offerings includes our also PCs are assortment adding Chromebooks our additional collection, fiscal most executing across and our to we enhancing styles on-trend our assortment, We of mattress appliance of office XXXX, large-scale to our during and continuing

strategy, offerings, Our value-added our credit with supported which is our continues to product customers. affordable by resonate

basis also benefit Our is retail quarter above to last we which our gross fiscal first gross quarter a best an XX.X%. product continue year XX strategy believe points annual margin, to strategy. We retail increased better, first of the sustainable record as product of benefiting is from from margin XX%

improvements execution. we continue retail in make our merchandising to to addition In significant our enhancements,

For from example, for prior X.X% in first our up the X.X% was of lease-to-own the fiscal quarter, year sales quarter. penetration rate

core This efforts, our marketing have in a can our our brand, foundation starting and retail drive traffic solid and target marketing includes to both new HomePlus media you our efforts we and a now to promotions into and refreshing campaign, our on- off-line. see, both to As intensifying unique are website of expand stores. the new we and customer place, Conn's

As and Chief about customers. reach have Marketing as as we many with his our to and of the excited our expand we Officer grows, our opportunities the tenure team connect empower well are

new four and year Louisiana During opened stores, quarter including we XXXX, fiscal the Alabama. Texas, in of stores first

also another Texas We month. new this opened store in

our and us with revenues retail our be in provides performance store credit plan. which in expansion confidence to line continue New with increasing expectation,

growth our new With risk. fiscal credit closely we company's enhanced rate slower credit are years controlled as stores in to in the XXXX phase XXXX a to compared model place, ramping at

the to growth the comp base. contribute to stores will new which over expect stores sales amount to We enter of increase customers mature of same-store recurring time, these company average sales and our as

expect stores In now have the in and states, enhanced XX our customer new base. which existing layouts an and only stores states, will process. current our year, more XX we XX in store new long-term open to a expand experience efficient With to we featuring sales store and opportunity be between significant XXX in all

slower about sales While to than produce we retail future. the have opportunities are retail we in have started the out excited growth desired, consistent

demonstrate of results evolution positive our strength quarter the First of business our the and company. model

believe We X% retail XXXX opportunities our to retail fiscal beyond. the consistently in annual platform XX%, about continue model can I'm sales year and and we of support have credit and to excited growth total

me Lee. With this, the call turn over let to

Lee Wright

million a X.X% in XXXX, revenues first fiscal fiscal the decrease $XXX.X same for Consolidated the period million were Norm. quarter Thanks, $XXX.X last year from year. of

$X.XX year improved diluted or fiscal GAAP for to per quarter. million income year quarter compared share for diluted or the of fiscal $XX.X $X.XX share first $XX.X per to the prior million net XX.X% XXXX,

adjusting to diluted certain per $X.XX first On period income debt, share basis, charges the year. share compared extinguishment the diluted quarter for credits of year a from per same XXXX for loss non-GAAP for last fiscal fiscal of and and net was $X.XX

non-GAAP first press for that XX% Adjusted same EBITDA available quarter year. revenue compared the release to Reconciliations or results for was of total of was quarter GAAP fiscal $XX.X issued of $XX.X XX.X% first our last of fiscal period morning. on or to financial revenue million million are total this XXXX the year

quarter quarter point XX credit retail quarter margin of XXXX improvement First platform. result of better, We enabled in revenues lower our was retrospective warranty a quarter sales same achieved helped strong of record a by is basis fiscal best gross product due exchanges first which strategy, decrease XX%. last increase to continued also our on retail our the gross the of benefit An gross margin. year. year margin first $XXX.X were retail million, year-over-year in of fiscal commission The retail from X.X%

the trade are impact. we potential ongoing negotiations the tariffs, Regarding and monitoring and actively current

tariffs suppliers has the with year. been specter working since proactively outside production last China our team of merchandising to diversify Our arose

furniture. have in taken period. average impact continues increase We prolonged lessen progress tariffs made cost higher with The primary XX% progress items if so a actions already in doing our China the will will while on and in in for for focus prices substantial of the retail product or tariff already remaining result

Retail stores. same for prior for XXX XX.X%, to the fiscal new revenues SG&A the revenue $X.X in of approximately a due cost in as expense decline million expense was increased $XX.X of the primarily retail increase million, year, quarter to deleveraged while SG&A percentage basis points an and

ahead be associated costs months fiscal will compared opening expenses. open new We these seven to year we to We expenses remain locations. plan typically to control throughout prepare of open fiscal and stores approximately year as XX SG&A stores incurred to fiscal additional new We six on year. incurring stores last there strategies focused start with this to XX the

However, ability ERP future our new center to will state-of-the-art management Houston implementing make loan continue expanding opening and to our systems. ensure platform, includes base, investments distribution which successfully store a growth, our to we and manage

same primarily year increase increase of the charges from record year. The year fiscal year. yield other quarter versus from to period XXXX first an for last revenues same XXX of were up a credit of quarter basis XXXX, the and first points the fiscal fiscal XX.X% first $XX.X the segment for million fiscal Finance was last the a period of XX.X%, quarter due of

insurance During we recognize no retrospective and quarter, a to higher as the claims income insurance following began a result period income also Hurricane of retrospective of Harvey.

charge-offs the percent were increase as XX average fiscal net outstanding quarter period. over the year prior balance a a basis annualized of First XX.X%, point

for The fiscal year segment credit a primarily XXXX, a XX, a April debt year fiscal was first allowance fiscal performance. at which down bad Provision portfolio million from the of for interest same last $X was basis as year, debts in from $XX.X prior uncollectible decrease due the quarter the portfolio of to total the in XXXX, for period. XX was of million period points bad percent approximately strong the XX.X%

annualized last the in as the X.X% increased quarter As Norm are the average SG&A costs. quarter of to SG&A XXXX, compensation in year an first last recovery segment percentage increase a the expense basis year. for and mentioned, and investments increasing portfolio our XX.X% for continued fiscal customer the making quarter same of $X.X million an collected in recoveries, on we credit primarily of the balance compared was X.X%. the we in credit period increase versus same first reflects from The fiscal efforts expense X.X%

in of same which Interest declined reductions all-in our year expense quarter $XX.X and for of first million, the fiscal the for a cost XX.X% period as result was year-over-year last funds. deleveraging continued

balance was of expense same last fiscal first average year. portfolio period interest X.X% percentage X.X% for as the the compared quarter, a For annualized to

and B average re-entering percentage all the classes achieved expect one XX.X% the with was we debt notes during complete and note. current ABS Last period ABS notes our XX.X% same all-in XXXX C portfolio our include year. of the A all-in ABS which of as XXXX additional of X.XX%, cost transaction month, currently the to outstanding currently market A ABS for year. classes Average XXXX. funds since to have balance last fiscal a and in transaction XXXX compared B of an We the we was fiscal a funds closed of of cost lowest net new

a and to improvements make position. capital we reflects The the program repurchase with our decision sources. in balance million stock funding approve continue strong Board's Conn's diverse pleased very sheet $XX to I'm

and to expect through we addition, and existing anticipated result of our openings In same-store funds new portfolio fund our capital sales a as the growth internally growth in generated store sources.

couple housekeeping of call the opening to I want reveal up a items. Before for questions,

tax XX% effective annual the fiscal full XXXX our XX% to expect between be we First, year. rate for and

increase the as standard of an of this and Second, million. assets liabilities and retained lease-related assets quarter, was to earnings difference between in increase an liabilities $XXX in February X, of The accounting the an lease-related lease-related million recorded as new XXXX. we adopted resulting $XXX.X lease in adjustment

to XX-Q Operator, on the the up XXXX, please filed call overview, Please accounting XX, our information happy April will I for your questions. our later adoption ending period for the be this see additional new questions. take lease which With today Norm and of to open standard. are

Operator

Instructions] is [Operator first Markets. you. Thank Our from Capital with proceed. Thomas question Brad Please KeyBanc

Brad Thomas

thank Starting for same-store same-store Norm morning, ask you about margins. about Lee. sales Wanted good then just sales. ask Hey and my to taking with question. And and first gross

addressed new any remarks, on applications XQ. maybe obviously degree some same-store some ability to website and changeover around that the but more increased with in had You the sales color maybe website us prepared the give what your in

Norm Miller

Well disappointed driven morning. Good driven at, sales really obviously, Brad. the really by by Sure, same-store and with momentum three sales the quarter you in first the when we’re look things.

to I transition of website, was site the prepared first and did Magento X, The coupled that quality the credit comments, with e-commerce about and end March that our website. of traffic both in our occur the the at talked the the

Our delay the mentioned, XXX about We has in basis cost the of two estimation refund. us piece for combination we the same-store third tax those quarter. being the with the down points saw a number again, of items total then sales. that of And is as applications being

and down. furniture discretionary XXX are you but When from of the that products appliances shutdown, the positive government some basis specifically standpoint, and same-store estimate about electronic, you we were the see sales mattress actually breakout, the cost discretionary actually see us With will the points spending. in

Lee Wright

we’re is about what here, Brad. non-Harvey talking in really Yes,

Norm Miller

sorry. towards Yes. non-Harvey, I’m I’m bridging

Brad Thomas

you the category Right. overall category including you. reported Harvey, was Because right, appliance right. that strongest Got

Okay.

so XQ the X and to the And XQ quarter. I you’re and that behind really about thought trajectory get as guess, for comps the thinking implying for other you on should to towards about be you tougher specific that comps? to I the expectations comparison. X color they you range, back items you you’d be the your just think guidance you how any go guess, XQ are around these against are to in believe

Norm Miller

Yes. Sure, going on. Brad. couple of things Well, a

quarter the with Harvey we a will from impact, believe, First, we see standpoint, still second Harvey. an in

XXX are seeing reducing We’re we in improved that about basis will gap points, we fourth the be first the seeing XX in But where improvement non-Harvey to quarter, guided that’s in were. the and market. and we by That between, non-Harvey still it the the to although that. from expect Harvey an from Harvey, X gap or from quarter – obviously improvement down we or the

with applications to had mentioned, That’s quarter. first provided other then website up the the refund, tax in think we that we items May The being shown will I we the And how that the earnings clearly, guidance in sales trend our from same-store issues by significantly release. the pass. and get

Brad Thomas

be working was like feel just properly in you to? the And website you. you Got clear, do it what date to the wanted way

Norm Miller

happened April were Well, website. is coming of latter we wasn’t when transition, the of of track the March. until it and to that made we it on impact our – out expectations the latter part felt we through back part of the in get started when really mid-March was It

the they say, e-commerce as the we investment migrating months that we haven’t whether the the Having not, itself said decision shopping standpoint, shopped making infrastructure – months were significantly that until the the at standpoint it both very e-commerce XX with with customer customers transacted side to up that, I had an XX or working website on Brad, from that past that investments. our the or to shopping online a more investment our to but knew an make and they store financing for quarter. and But we it over website we online improve prior from past been to significantly, more to had website our whether mean, we’ve that least this do if transition an well knew which we on into as with will experience, advertised publicized I significant not come on could to actually Conn’s, even

e-commerce spring, And you with as that, a I from so resource one joined years have working resource I when since on from said, company ago, standpoint, if year infrastructure wise we last person standpoint both dedicated the look we And ago. four been had at an a e-commerce.

ago, it’s XX early years million number think last a transact we shift we approximately here people. in As $X to And material we’ll people we’re one, innings, the very, the before able and end and of driver, in people, a XX-plus the year. sales the Today, think, represent versus that. a have of very I we four material year $X couple when sales had people for performance being million represent in May’s as May entire have

So will to – them overall better, experience if shop customers’ our think stores but our encourage even it to not stores we prepared decide for those better is not transacting, before they and much be they in do to hopefully, online. into the come to and ability be impact going shopping those

Brad Thomas

very just here. That’s in if question a gross around kind margin. of question follow-up ask I’ll And squeeze one could I just helpful.

higher margins like your about gross obviously, is margins puts come gross a XQ guidance record done the and all going gross margin for driving job to forward? thinking for you a How takes recent are years in It great on down. looks XQ You’ve high. and

Lee Wright

Lee. it’s Brad,

obviously, we last at said, you as when QX, look versus guiding the we’re compare So down. year,

the price. the got last old remember, purchases with had benefit year, the obviously increase, the of applied goods price cost immediate we of were although you we As tariffs our and were forward, at done some that

we onetime that. seeing so QX in benefit you’re So a got

gross year, about for that. talked good still about for and entire feel margin the sticking the call, retail and we’re above really on the we Norm As XX% with

So continue good. feel to

Norm Miller

that out, back you If it’s basically Brad, flat year-over-year.

last got If second benefit that you onetime quarter. we back

Brad Thomas

That’s Got you. helpful.

all Okay, so over to I’ll others. it much. Thank you turn

Norm Miller

Thanks, Brad.

Operator

Oppenheimer with from Co. proceed. Nagel next Brian & Our is question Please

Brian Nagel

morning. on new questions. the for congratulations taking Thank Hi, responsibilities. you Lee, my good

Lee Wright

Thanks, Brian.

Brian Nagel

more where my well your to the working credit while having is for I you we is go. to now So know comments frankly, bit a talking ago or could seems question company, joined your when started company not as credit bigger very, drive Clearly, from prepared mentioned A think, you not do better the though guess, articulated And may times be business credit least I how and potentially bit now loosening I than question This tracking you Norm. now. while, for process sales. you question, better have, picture behind your sales. very right credit a a drive levels first But a followed these is, related few at in compromising what’s initially very, the good to thought it credit very sales?

Norm Miller

years we’re a one that would has brought talk guide credit we in four comments, basically at is which the And XXX within company. talked are would that point, ago about we is, you as credit regularly points, X,XXX Brian. it’s That’s we the essence, the where what got business approximately the business. breakeven, as which prepared there I be we business in that when And points basis I to, great Brian, mentioned about with the of question, to And basis spread.

and opportunity the there, better gives take are to that there and and will potentially us us and we we I it’s as run, of as that sales are. So get Clearly, way we help the from from an advantage absolutely underwriting take painful investors for there to understand some we standpoint even Brian, manage in increased the standpoint. short risk that from a maintain credit credit a business

basis, X,XXX we sales start the the credit with the maintain And made, points standpoint I still for strength quarterly of the total business. as we’re we’re in health stores because we’re believe things going confident of the standpoint adding long-term that from an and very spread on increased business credit from as and It’s certainly But to from opportunities not putting standpoint. do the retail And continue business managing a where our basis with me, at sales investments we’re not. same-store we now have the I’m will that peak with with the company. we’ve we and place, the and risk

that have from And better, people for and back-end front-end from retail still business when the the on never team standpoint in we opportunities stronger standpoint. with which the will you my a here investments four underwriting couple collection, us made the I’ve standpoint provides perform from and more the stores opportunities with years. – both from The more We a sales with opportunities continues to provide recoveries. only sales the both new has level retail over since been a standpoint, confidence been more

Brian Nagel

Okay. get here. solid it. – That’s a detail very very good I Thanks, Norm.

from the from follow-up have, what not I’m I perspective. But The totally in be Will second a question more this and applications in a tweaking store, a I interacting be now Brad’s both online, think, question yet about change And Or occurs? out you through think made that we of historically may guess, is again, a to your QX, is approvals? somewhat will online, to of advancements credit I in customers some before. you this you’re that called structural sales may clear here that online. shift something be now headwind lead should interacting assuming Conn’s as shift, customers the the that the with shift your it

Norm Miller

a is are of say happening, I’d What couple things Yes. Brian.

about months saw ago, more to of website web XX to before prior up realizing applications. were that, store. mentioned ago of XX the customers or were applications my we needed out game, process that web mean XX a we what transition XX, was than applications ago number well First, of infrastructure with over from coming this in months applications XX as the getting the we we ago, retail months applications than application I months ago, so were website resource we dramatically the actually the – by always standpoint versus the the crossed to between saw they retail and response higher our into both XX months that applications. from and started a part And of saw The is, months – that Brad, was it that – we actually over filling retail were web XX I reason,

application So our data they stores going ago, shopping they transact were customers online, our to a they though even filling were They greater at went before were they years and greater two level. the couldn’t even just consumers online showed web – online the they are with when store. fact showing the that JD underwriting the before analytics, a desire to be you And and investment into without – quarter. it customer the bricks-and-mortar. the do everywhere bringing from with out a qualification to shopping in as and with and knew underwrite ability closer couple history, we they come to store credit were a our our that first we the in the the XX-year the able in team seeing and And the getting team to this into business ever

sales with we’ve come year from ever of stores. thousand million to That’s month able the the do been to hundred significant of the time May customers part into increase a that’s our in to ability those first to $X prior in of was not financing And do having couple Conn’s the that that. a drove what plus

take had growing every we mentioned, that. through able to the we’re part and have I of aspect investment the what effort we but that and innings, now the to as we think of I said, improvement website, to in platform and we’ve came place on actually the we wise, But past to live, over still to early upgrading for year lots but from as some May room based application pains March, and the website seeing middle the the in next we it So level. have as weathered build went that we’re is on really, in be results

Lee Wright

Lee. it’s Brian,

to to and retailer. us, Just to in add such logistics with last-mile as all with background, additional is what need that that, your don’t those our I know place the retailer to make step critical true a We become to the had omni-channel and exciting offer investments omni-channel mean, so being already you customer. for we

just wait we to can’t as to Norm extremely take excited, continue of So and earlier, advantage we’re this said opportunity.

Brian Nagel

quick then final And more guess, for just I Lee. it. Got one, one

buyback it’s pace opportunistic? relatively buyback, of of a, more repurchases, more that? we it versus On Is think I cap. a your you steady the should How – market about mean, more the large think

Lee Wright

going Brian. a opportunistic we our It’s it. market is obviously our access true belief as question, we’re I is. business But is number No. position It a in we our where capital have and a the to Look, to think it liquidity the the Yes. to and value see large testament be that really great relative to or capital what we cap. stand

we make we that to the So made want to statement market. sure

Brian Nagel

luck. good Thanks, it. Got

Operator

next Rick Inc. question is Our from Nelson proceed. Stephens Please with

Rick Nelson

Thanks. Good morning.

you to So you sales of $X overall May speak seeing? same-store e-commerce plus May million Can growth there. what talked about sales you’re

Norm Miller

– that’s – our guidance can you with why we about as you, is where would an from tell partly that see based guidance the based is Rick, we we’ve I the first we the guidance May, gave, quarter What improvement good and quarter we gave we’re performance. the feel on performance on given gave

Rick Nelson

Got it.

you’re So zero four in minus that to range. tracking

a year got that belt. the have stores You now under full few a

could model you your how to to PowerPoint? speak those in stores the If relative especially performing, are used

Lee Wright

Rick, performing it's have been how they're very pleased stores with We're doing. and our Lee. what

that's again, what the confidence. gives So us

XX, to we've before. said, do our talked as XX to to we XX to about range XX original As be now used to we're going

and year. that We have confidence, than more we next really anticipate much doing

So have very much in PowerPoint. line we the in with what

Rick Nelson

accounts, credit-needy not are shopping changes they're customers seeing for landscape. And you competitive your products? these Are any And Norman if where there? shopping

Norm Miller

that it's in a partnership the retailer started past obviously, with Well, well that electronics months. Progressive several they had large announced a fairly publicized

from seeing in options major retailers. we virtual the standpoint lease-to-own to So a are continue that

core but that our customer Conn's – our financing with from above have been above – different we qualifies from anything threshold standpoint that lease-to-own core our is that standpoint, customer, competitive we're not seeing So that a seeing.

that's on much and there. for competitively impact financing out monthly within with folks customer competition But provide the they good lease-to-own as stores stores a aware fit some very Conn's be lower could financing model the that option payment else about that versus who's the where our lease-to-own average anybody them, we we that for than provides cost feel would Conn's a well. for don't that financing, if qualify our are the fact There in of for our our financing

Rick Nelson

And finally, e-commerce.

performance could economics and to seeing credit you're those if you any the those delinquencies e-comm differences in-store of for rates sales If speak the to the sales customers? or and compared loss

Norm Miller

into because very part with are first, that higher have than that fact start we from a Rick, I'll inherently customers customers risk conscious of credit the store. that standpoint, credit quality come online a

categories. that. May, best I significantly say largest the customers at our of for we're underwrite is the appliances, quality is $X gate, in a is, seeing that out of we the what of But of out which as any category least category of million will So dollars result appropriately credit those

but spread standpoint at And able it's that confident, pleased points conclusions, overall within gate – basis we're from we'll out draw for what can't seeing with the very confident early, any and of an credit of we're payments and be frankly initially it very manage the that and with where out to the first it initial of it you underwriting the appearance business with X,XXX we've targeted so

Rick Nelson

of the there stores? down – is know the cost e-comm to profitability stores, shop commission your And take in compared I

Norm Miller

is. equal. equal, of because you everything things the paying you're else impact that obviously, at same being what as the a inherently there That online not the have Yes. more some store is the – potentially is is all cost Definitely, being it. the bricks-and-mortar customer acquisition could – and be in that more on cost from is don't with would depends that it thing commission the it it interact standpoint, profitable, and level a only it to the cost But customer just be pure profitable would and

Rick Nelson

luck. good And Okay.

Operator

with with is next John Stifel. your question. Our Please question from proceed Baugh

John Baugh

Good morning. Lee. and credit title, the Dear in elevation Congrats the on metrics

Lee Wright

it. Appreciate Thanks, John.

John Baugh

First foremost, people the come these versus Or web and store? mix what to that existing of what's the – on are these any in the applicants, customers?

Lee Wright

Yes.

existing are Some of customers. them

but have involved that customers that number within material We of and new mix what before. are existing, haven't a there is between new published not shopped us with

John Baugh

and than could one much because Okay. there? is expectation two is on what then And year store lower you're remind ramp what used the so to us new you the it be, versus year the one

Lee Wright

it's John, Lee.

well a us, going known. our it's brand for to So in when as market store ramp obviously, a be newer in name larger a isn't

in So get-go. average out we've have stores two and brand call newer stores year company the for we average, we'll to the anywhere But ramp XX percentage much name there, topped from in then get closer in the stores. those it existing where already a markets

slower be that at will a it So point. ramp

John Baugh

assume whatever existing that – in some be year in the pick might markets you would in And cannibalization from I even that up there might you two, headwind two. year

wash to that So way kind it? look it's bad is or a a at of

Lee Wright

in the new existing and an grow existing reason will some will again stores we John, our stores some have very market, but we at overall existing markets – good it there new certainly And cannibalization because we But talked But open obviously, enough it's cannibalization yet. big aren't a markets haven't point, be cannibalization. this we most point. those market in is the only about the will in dramatically. yes,

a we get pluck it to that make that we As question. sure point, is good but we'll that out,

Norm Miller

years John. do that X, magnitude what to – ago, we the recall, highlight you used X X, X To that if of is,

John Baugh

quickly. trying P&L gross Is XX% XX%. on to you're that to your could deck, yield slide Yes. credit? thinking still [ph] I think about see it be in Just

stabilized ABS, know costs they losses are interest there's then certainly are, and but transaction on So expectation some upside your don't lower. there. what have your your latest I

points maybe go? assume how actually underwriting, trying sort credit your would that. comments play loan So make get two the any earlier, book just in didn't operation to but a I terms a understand in let's as to profit maybe might the it of where to of of changes we potential for But now. moment, you I'm or much take we think that money make year some the sense do to have you all a matures with? where of

Norm Miller

able would but – that so hundred a I'm of Well, midpoint points, to do basis and time XX% take I about done to sure do charge-offs the mid-XXs, you basis on X,XXX mean, midpoint the seeing basically we if several just maintain to to that, some you and X,XXX simple – of and the basis you've points doing the XX%, the you hundred that, John. for or math, you're the get couple risk in points range, if the give I'm XX% at at the you at XX% increased be are XX.X%, you take you. of math

John Baugh

And almost I go asking slightly? – you your when do I'm guess, contemplate you what's that And what's down that? time first, underwriting what's norm, the that line do loosening And path, think? on might you on clarity if potentially

Norm Miller

We this customers. measured, we look macro look I but John, like X,XXX that of the new on spread just we year, I to First all, word existing a don't at it look, and of by we share frankly, points half We've – is geographically. loosening. level, customers, we it we increased mean, basis I manage mean, past. – been risk. of at But at say that it as We burned back the you, before what prefer in would use tell to take the

next basis half of do cuts back a into keep it in look targeted specific in from of certainly the from us year us a standpoint it – variety that those of in we'll will fairly various overall. segments opportunities a different way. of data year standpoint points at give X,XXX at it a But company We probably in the and that a that very this

John Baugh

And Texas. then, Okay.

there place interest. Texas. and/or had oil You've your over talked what's night tweet Hispanic a coming about in last in Is past granularity any made with There caught some in. that some loan believe, We've your going all business the on concerns with I in the prices Texas? the of on Trump book was, specifically

Norm Miller

it feel seen causes of kind customer me We you when of desire what's because core our a reticence anxiety past respond pull as point, a have that, happening. seeing angst closely. I them, for will saw woke at the in with back certainly morning, the as they and from do you that unknown up we I tweets know, to that Nothing on the back in but – tariffs we're this end monitor the we that on we tell this

both have front-end customer with So we that the yet, what's focused and and we're that the measuring back-end key ours. although not very on of seen happening

John Baugh

Where that we it? not scary, on Why us? quickly, are schedule? letters And it last three kind question with ERP. the What's of are does blowup

Lee Wright

can for the again, that testing it. Thanks, get very of to scared everyone ERP one you. confident in John. done prior We're an conversion. Look, I'll we've

that So, going look, to it's long focus extreme I confident very go feel for time, a been smoothly. it's and

John Baugh

the Lee? timing is When on that,

Lee Wright

quarter. This

John Baugh

Thank you.

Operator

you. Thank

I remarks will the have Norm turn our question-and-answer the Miller now We end closing reached to session. of for call over

Norm Miller

We a second with you great a appreciate we and sharing results months. Have interest forward you. company, few day. to in in quarter the your Thank look

Operator

today's conference. you. concludes This Thank

You thank disconnect you your lines at And time. this for may your participation.

Conns (CONNQ) 31 May 192020 Q1 Earnings call transcript