CONN - Earnings call transcript Q4 2020

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Operator

Good morning and thank you for holding. Welcome to the Conn's, Inc. Conference Call to discuss Earnings for the Fiscal Quarter ended January 31, 2020. My name is Michelle and I'll be your operator today.

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

this is conference reminder, a As call being recorded.

The XXXX was morning dated ir.conns.com. April market website Investor release accessed this company's be and company's opened can at the Relations distributed earnings before via X,

of EBITDA, diluted release call, today's reconciliation share. GAAP their for to company's earnings adjusted Please was to discuss, income, issued and a financial performance among refer non-GAAP During net other adjusted that most today will measures. measures, management measures adjusted these earnings per the comparable

The based cautions the are I statements must cause remind statements subject company the which are actual forward-looking you made meaning present the statements the this that such from on today. materially federal forward-looking risks differ some expectations assumptions, those events. and are represent which laws. beliefs These of statements necessarily to that call indicated of securities in results within company's concerning uncertainties, could certain future to or

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

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

Norm Miller

who welcome I illness. hearts had business provide significant reviewing go our the who COVID-XX and year of fourth The of current Conn's landscape to earnings daily health COVID-XX response conference by been will additional turning the economic our impacted anyone to call lives quarter XXXX before impact COVID-XX a a our crisis, details the has Lee the call. has and quarter as situation. and out the George, on the to crisis morning want Good and and result today's to start evolving on to fiscal by rapidly over call

challenges occurred our our safety that has We decisive the near-term and began. The to and customers been top actions to since priority. of health crisis have are employees the taking respond always

distribution our doing customers essential we on in-home spread centers service activities prevent to state products lifestyle. to part federal while and the guidelines monitoring our stores, are closely that to of and are open the our help adjust in operations We focusing ensure services illness, helping and and keeping provide

are can of supporting am our I our affordable showrooms communities nearly continue all that necessary home and we and by pleased open financing As offering today, goods programs.

with stores and We provide conditioners, remain our regular essential are freezers, officials such refrigerators, in ensure contact products. as and state office open our to to dryers, products washers, local air home

our past COVID-XX our response to years are this operate uncertainty. the improve and business flexibility through credit crisis operation, provides to which four taken actions Critical balance our to successfully period over of to the sheet greater these we have us

and improve Conn's option. that while For financing times good essential over local providing XXX is bad the customers products years, affordable in services lifestyles of communities supporting our through our and

fact, credit workers business finance started In for XX oil our ago products during years homes over essential difficult Texas to cycles. market help their

and options grateful established our are of and relationships our pleased our I'm responded. rebuild. customers We has the we communities during recover support with as periods proud help financing our products, challenging extremely and how team strong

this associates announce to an for I'm associates, wages to by we these through have thank increased to commitment to $X their our crisis. our our want our to support I Demonstrating times. pleased employees frontline all temporarily uncertain dedication hour

salary compensation addition, and certain in a XX% for XX includes In leaders. of and Section reducing for salary. our are temporarily and XX% reduction my named a business we This officers reduction executives the salaries

demonstrated business model Conn's resiliency. its history, has our Throughout

to customers, crisis. this created remain community by of the fourth We time on While results unprecedented employees committed quarter our helping need. retail in and objective our were disappointing, navigating the our focused credit near-term is COVID-XX challenges and

and balance to resources sheet team, leadership operating this experienced period. necessary challenging and strong platform to profitable us respond the model Our provides with

So results provide operating COVID-XX actions will fourth the more with me on we quarter specific details this call let our who the respond the and crisis. to Lee, turn to are over overview, taking to

Lee Wright

Norm. Thanks,

did disappointed credit meet and financial with our and not of quarter we our performance are expectations the fourth retail results Our segments.

fourth quarter, and risk During in implementation new management we declining credit related the efforts with collection experienced in increase associated of new our trends loan an vintages, the customers higher difficulties system. to

and we in result, increase plus balances. delinquencies experienced XX an day re-aged a first defaults, payment As

year. which basis the fiscal fiscal John compared from enhance spread, fourth President is management In XXXX fourth collection addition, the points I've March, quarter loan focused the efforts assumed late Davis, the in points last associated our found. company, The until resigned system his us. of we replacement and higher during the XXX to our year difficulties largely for temporarily impacted are responsibilities behind quarter for quarter on And programs charge-offs and with underwriting Collections fourth pursuing are additional improving a to declined yield. & of In credit to basis XXX Credit

Looking approximately believe the our our at tighter market during in sales approximately conditions category, our electronics consumer to standards we quarter same-store same-store that X% announced call, retail we the impacted quarter we X% underwriting by X% quarter. fourth within fourth also mentioned to impacted challenging results, sales on X%. last by third The

the and fourth were the sales. from sales of the and I'm appliances, new fourth same-store margin the quarter, sales. able accelerating in fourth on maintain continued were stores. e-commerce year that cannibalization we of contribution quarter residual retail to continue XX% gross full Harvey experienced lower encouraged some impact weakness sales new well store during retail to despite quarter strong impact above for retail see as had has as we the we addition, the Offsetting In Hurricane some of

quarter we our remain fourth and confident results disappointing, retail are our opportunities. credit long-term in While

quarters, sales, base, to product committed over e-commerce our which we’d our are We and several credit strategies our include the our previous growing offering. communicated store leveraging the increasing expanding past categories, growth

to the crisis. COVID-XX to near-term, priorities respond However, over we our the are adjusting

challenging strong financial taking a So, detail. entered the position. let's look we this in actions are at We period in more

associated priorities and fiscal this As we to our From previously fiscal base delay in-store in our flexibility provide with year, our cleanings and an operational now Florida opening showrooms our a store any showrooms decided which more employees been next XXXX We've showrooms. revise allow new is expansion XX to store to showrooms hours fiscal year. reduced and year plan standpoint, center our to future for X XX adjust, have between shopping reduction time our distribution we announced. from plan on near-term additional also temporarily across for X to

and CDC a monitoring promoting federal We and for employees. healthy guidelines are safe environment closely our and customers

the our our and showrooms in required customers jurisdictions, and Meanwhile, in digital one practicing important in throughout experience with time we and are ability account providing distancing. limiting number and mobile In access updates investment of user fiscal we certain through role e-commerce, customers with an played the platforms as interact XXXX more customers a our online our day. to important made effectively, at addition, XX-hours social improving have while

in-home for furniture the have appliances and demand we increase lifestyles, demand adapt have categories recently and products, offset discretionary in an experienced home weaker mattress. like for partially which more customers As office essential home

customers’ us the we have disasters issues. an From operational to lesson learned quickly and provided a respond perspective, operating has performance past framework to credit from

to we rise. volume capacity of enable companies the quickly utilize as increase third-party delinquencies collection example, with around assets world, For the us which will

many of can operate remotely addition, our important third-party to continue enables which work us resources and In collectors function. this to internal

limit on platform us lowered will indicators. To in implemented during increased this period. based to credit evaluate continue we allows changes and to The manage series down credit control portfolio to underwriting we've of investments have originated March and selectively trends, further of risk monitor actively charge-offs, our made starting applicants, delinquencies underwriting to payments performance remove performance we loans and to risk a in changes higher improve

as the Finally, relief we are number have the a help they crisis. through COVID-XX customers a of result to of launched hardships programs facing payment

performance. my provide recent while the will experienced are us prepared our credit created. year made with basis sheet, we has through and balance retail we health as expand COVID-XX a challenges to retail believe remarks, unprecedented lot during XXXX conclude the the XXX our disappointed credit points, fiscal during fourth challenging the of leadership saw we quarter, essential results and model experienced progress operating spread customers full-year team, as crisis and and support well we products and our We profitable strong credit To

and hard updating working to period, this customers support are our on investors credit making pandemic our retail and as We and to we’re improve communities throughout to forward COVID-XX employees, I the progress look we respond performance. the and

through this you want hard I operate. to the On period. over which entire turn leadership work, George, thank to States behalf team, the of thank X,XXX the Before your I dedication we in across and call service for associates XX also challenging our

let financial George me to call turn the review to our Now over performance.

George Bchara

year, consolidated a a X.X% for per revenues for share, year. basis, share, diluted a credits, the the $X.XX GAAP fiscal quarter $XXX of this fourth compared XXXX per Thanks, $X.XX the fiscal to net from diluted were year. $X.XX for share diluted and quarter On year diluted fiscal fourth was was income fiscal million representing last On fourth to per last the period income share Lee. charges XXXX. quarter per adjusting compared period same the basis, non-GAAP same $X.XX for for net decline of of certain year fiscal

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

to retail fiscal associated quarter greater we've a of and decline for $XXX.X showrooms fiscal the in retail profitability X% total and more last million, operating higher Retail segment year. lower our compared support a Looking $XX.X to a same same revenues was growth. million at last was fourth decline new primarily in year. retail million, segment income SG&A our for made additional of investments The detail, with the from result the were segment expenses retail $XX.X sales period number period

segment, before the last same $XX.X year. credit fiscal credit revenues was rates. last same loss million, loss taxes incurred for $XX.X before and to the -- to segment rate from fiscal primarily loss Turning finance bad $XX.X defaults taxes well payment year. segment credit due the result increase X.X% other charges as and debt of for higher segment period up compared statement loss were delinquency in million $XX.X was increase the a million as in loss year-over-year a in the credit of the The as million, period to first an provision larger The

funding the this COVID-XX the sources to and in With pandemic. financial our situation diverse a want our period I financial and discuss actions entered in liquidity. financial We we results, current challenging response ample overview taken quarter position to on fourth strong have with this

have We our more we've ABS million two November. credit transaction than a $XXX or yield mature, high revolving notes completed until facility and years recently in

to mid-March, sheet. call, As our a as credit $XXX under in cash additional measure our of an over have million maintain balance borrowed we $XXX facility. flexibility, precautionary on of today's existing million And financial revolving we

approximately availability available have uncertain of $XXX facility, today's give accessing and of we revolving our distinct to as this immediately million bringing and the us capital also that of our navigate available environment. liquidity $XXX a We as call. markets, million economic advantage cash total our cash under and approximately history credit liquidity believe We

we are investment capital eliminating expenditures, expenses. managing non-essential operational and certain SG&A cutting or perspective, working capital an and levels aggressively more From delaying

of we have year, new this expenditures, For reduced our significantly capital number Florida showrooms we expansion. delaying example, open fiscal planned the to including to related

revenue high note structure is margins. cost variable important gross On even remain stores with periods, average, believe retail of economic showrooms a navigate the reduction provides us from including a recently to our in revenue with levels. significantly that with of result retail retail XXXX of It breakeven retail additional fiscal to operating as during most and profitable stores year that the our XXXX-XXXX XX% our recession. flexibility nearly model our We lower challenging

and prices including of several net the Act, accelerating carry-backs tax the passed higher certain loss provisions also in recently to We deductions, CARES benefit expect utilizing delaying at certain payment payroll taxes. operating tax from

has and In that unemployment a relief of help provide our CARES number to benefits many Act will temporary addition, the of customers. employer

financial press of third for the year have As issued you this morning, in quarter results has financial to our unaudited our financial did impact year we reflect error that know see results historical ended results This was -- been error. the not as you updated of year XXXX the correction XXXX. fiscal the XX, and can in full revised an for release January

COVID-XX, retailers, to Before final are we the near-term providing many CECL, and given that on uncertainty other like I financial surrounding guidance. the suspending comments want quarterly mention our

required expected over communicated have X, adopt we X, for will quarters, portfolio XX% bad total loss based February February and As increase of allowance adopting We the that XXXX. its standard CECL economic were on estimate CECL, of on to couple XXXX. credit XX% by currently accounting the our outlook current to we composition last as debt

As and the a change accounting does reminder, CECL not is of or simply fundamental cash an flow our business. economics affect

of will provision the that as for uncertainty debt. provisions increase segment adopting in bad higher However, could CECL future and of the surrounding combination quarterly the economic our COVID-XX we for bad believe of profitability variability debts the impact a result and

this Operator, up the I please open questions. and questions. take With your Lee are overview, Norm, to happy call to

Operator

Thank you.

a conducting question-and-answer [Operator We Instructions]. session. now will be

proceed with question. Our first the line from Rick of Please question Stephens. your with comes Nelson

Rick Nelson

But could terms -- quarter anything quarter know end outbreak? sales, the One the thing of seeing first you before guidance. that and delinquencies after have through were you if weeks to in credit book, you the I speak don’t COVID through

Norm Miller

start Sure, and trends Rick. the the on of same-store I'll then on house. can sales the credit side Lee touch

mattresses On trends trend. sales products. hit, fourth the improvement improved in initially purchases, shift store the discretionary we prior purchases, furniture had if significant will, the a were but Once to that seeing away and trend the more modest coronavirus appliances, virus same-store saw and a sales, sales, the from hitting, office you home essential same- same-store we quarter more towards mixed from in

we've of same-store weeks, volatile, sales we've in in mentioned, by our showrooms, be I we any with Also, limited one stores at been several factors. down XX% fairly pressure have say credit variety but ago of And we standpoint, more customer it's our mentioned, in we're level approximately than sales at at and the seen anticipation our daily a to our in driven about coronavirus month determine to probably it traffic stores can stores it same-store the in associates a in are efforts about a our customers time. settle The and an underwriting purchase is into at. occupancy the Obviously, tightening least accommodating to as on with started XX% slightly coming higher the typically to trends at than basis at estimating at the and point, the we a customers portfolio are down from our reduced several as intent be is. XX% this where last done hours that comfortable was that of stores credit changes impacted of the sales, continue about XX% will we examine as underwriting

So, that dramatically we're up by online XX% the customers come converting are Applications more plus. in. of year-over-year

the will I and the by week. day are dynamics by changing say the

very, high earlier, than degree shopping of variability, example, different were they what very As a for are patterns pre-coronavirus. I the said

week, week, traffic we during weekend, the stronger relatively the During heavier and get off dramatically speaking. pre-coronavirus than patterns the we the weekend. The traffic has much do on dropped

we environment stores dynamic responded. regular open able have. that our fortunate enough testament safely our operate manner such quality stress essential of customers, feel are with and associates on workforce of that has care a be responded products I our We way basis. and to able XX% very a our customers we remarkable to a the and they've to the provide to monitoring been take of can't it's our that a have So, and we're obviously serve pretty communities that the and these in

touch Lee? you do So, the credit to want on side,

Lee Wright

were to because increased due that Rick, the quarter seeing increased what credit going obviously, saw, we through. the for our believe the for in our on we was we’re roll future to you allowance charge-offs portfolio side, provision Yes, as fourth

that. we So, saw

having we come will tax the tell that economy places complete pandemic. saw to economy, will of of you tell Obviously, an COVID-XX down was humming I you the of along excellent prior to The I decrease. season. were activity shelter the basically we shut and started outbreak in the collections back. many post

pleased of unemployment We’re the gone benefit. some out, that’s stimulus the the Act, CARES programs with

our the XX% So, benefits have payments our as showrooms. open one in Norm our that historically to of said, is of showrooms customers XX% having of made

to So, people have also collections from from call that's enabled centers we a our standpoint, still home have work that. in obviously And us continue only still working, we not capabilities. but

seen things to actively standpoint, certainly we're time collections making continuing and stabilize sure So during collect portfolio a bit we from this and our that collecting period. we're have we're on focused a very from

Norm Miller

also of with predict what those level able unknowns are they number to to be we how not in stay with the portfolio. but the customers, which -- well. ability from showrooms. make to outside connected payment But XX% now, be collection and how turns forward with recency from as our we understand confident what from open, customers, customers feel have. significant increased connects a we’re home, stores sufficed correctors our want is for the we a payments, portfolio going difficult our do continuing of getting efforts and with third-party and predict third-party then of are diverse very the the issue flexibility the out Because having we've to Yes. We standpoint months And groups, we're cash collection to home will reason about to big why at it in working essential standpoint, which happen both right very plays the to products, to the be will at is a in-house but the our that to it of subsequent able getting stores, able deliver from happen the is now with then those just the and say, work to makes with difficult a to critical why the

Rick Nelson

color. that for Thanks

when market? you bit, could -- November, have go and If how forward that's just I potential? know completed Again to in the a anticipate market to a deal speak you looking but go how you

George Bchara

is This Rick. George. Hey,

today, Let immediately we about of we approximately the ABL sheet. million. on down cash had To by available and me drew we million ago, liquidity of $XXX as put start over month saying have our that in balance a when context, that, $XXX on just

we So available little over liquidity. the and used last essentially relatively cash month

market answer up few So completely. a specifically, was ABS ago, weeks to the question, your dried

cash on and auto for with Now ABS we're and But see going surely. we've activities as got available front liquidity here to liquidity this year fiscal million the market. enough get today, sit we sheet, dealers in of starting the more our balance $XXX

Rick Nelson

of due kind that accounting there finally, that kind about should And a is year? or restatement, we is the of for implication catch-up to going change think forward current

George Bchara

No. and QX. It's flip just a between QX

Operator

you. Thank

from Our next proceed Joseph question. comes Kyle of from your with question Jefferies. the line Please

Kyle Joseph

Thanks for you’ve all answering we’re of for provided, volatility my the questions color and recently. given the seeing

First, the some going elite potential George, to back headlines we’ve CECL, to just seen CECL. related about

it I think options kind to into banks. it to any going us ties more there potential delay go with CECL is the color you to quarter? or effect of consistent gave Are last

George Bchara

changes. our the the were we requirements brought some was this intention sit institutions conversations language quarter. to depository consistent CECL No be to today, with first CARES as in there But the and is here Unfortunately, in -- specific in. about being the about Act to

Kyle Joseph

to we balance we Harvey as of just for that the post give what what the you me and options a collecting but have have re-aged been give increasing the anticipate CECL in a know -- of see one see then And kind P&L? you're still sheet saw up us the to you sense follow your then impacting customers balances re-aged I impacted? and and us world you just sort credit Should similar well for related for sense how as of -- mentioned guys can that post balance

Lee Wright

It's Lee. Hey, Kyle.

point. want financial show fact Obviously, do and have in credit during programs great So their customers relief our we the extended a customers. obviously, compassion of paid. We still to need early. these for Obviously, time that we've to it's get to at ongoing lives with us are balance the we want same period stress

for a programs customers. Harvey, program. where have said do we you our relief we did goodwill in relief we to what similar, And did to So as

Obviously, still provide reach circumstances programs got what's to that We That out we to automatic see But have going the we them. an clearly us pretty us to to being their But to some some transpires exact of we're appropriate very of we they lot carefully. and said, directly. It's understand reach do for person. people and granting for we've what It's and understand talked happening. have means show of get it to every that's that not single customers is about, there. on them and focused relief. make to them sure the cash compassion still ways our what watch to call do roll also different How to want they have very us, but through? We a early Norm collections. importance

Norm Miller

we're of that are to we them, giving are that and an cash that recently them that in flowing the some standpoint addition concession ensure staying a in with some also have And there, where paying programs And customers in. cash. amount we to keep benefits keeping Kyle, connected from certain to a effort

of programs mentioned color to driven COVID all by hopefully portfolio well we portfolio. part portfolio customer. able will of some doing be program, again, the this and remainder are the the on not the as of Lee We're across forbearance and with the to anything what's track both So, going -- unilateral forbearance as give forward the as these not happening

Kyle Joseph

for last One me, one too.

financial downturn, Given you get can COVID going and to the economic you -- and last sort back third-party penetration how or use? guys a of the financial the and use rate options the we’ve change firms third-party you seen firms for financing guys of financing sense disruption

Lee Wright

have that customers. our have options benefits that financing spectrum of It's we is as broad retailer Hey, one Kyle. a the we fact of look Well, a Lee. the clearly for

our makes customers that where and credit, option. Conn’s financing cash lease-to-own more pay our obviously with Synchrony And customers. for interest there's extent no have want credit you credit score to the have a some with If best-in-class sense, it we that's for then core programs we then that’s fantastic, options higher to to our

other lot investor do talked a and have unlike So tell seen to about stress customers the our fall we see and what is, meetings we have what other you I we the during of time full start retailers, decks of is spectrum. in will see we investor what somewhat. we

extent been may use credit bucket. have or cash alternative in of or our may they able that So to use financing, means they the to fall

So, ability we provide Conn’s they or fall the them of financing got us, have lease-to-own. to if we've out

Norm applications So, mentioned what very has seen come we have have a number and up been of amount. to us via a web, large

seen credit, of understand So, beauties for obviously, the looking that's put and they one and credit credit we've retail together. the importance people of of our model

Norm Miller

understand And at a credit a in tightening Kyle's higher space XXXX, the subprime XXXX that you for the -- being and see know, as was the end. while market, in as you

options actually they through having the we opportunities as our to wherever enables customers credit But in start -- that spectrum mentioned us work typically So, credit. the ultimately core as some creates to spectrum. environment, ultimately sales fall serve across you Lee into Conn’s those fall the

Operator

Thank you.

proceed comes your question of Please the next Our with Markets. Brad question. line KeyBanc Capital with Thomas from

Brad Thomas

to trends some just the wanted the on follow-up I recent and of tightening.

to more same-store Norm, it has recently you down think closer settled I I just you that to right. sure So heard out make XX% said on sales.

hurting changes XX% sales. underwriting same-store hear you said that you in maybe right on to that think by XX% saw you Did right? now I I

Norm Miller

sit as numbers today. we correct Those did. are here You the

Brad Thomas

great. Okay,

headwind into am of to might putting the current XX% dynamic changes you be, thinking you help if has things same-store goes might all versus trying underwriting back XX% And we're running to as the so, place? us of make you change by separate can out, setup to social underwriting the plays and issues, much about rest where about so just scorecard how to issues in that the might out hit year your at distancing just of underwriting I What they that sales headwind, be? that some used you how away? some how think be traffic just a are

Norm Miller

you say, looking tell I looked the I we you happen. happening -- at bucket, What would you, what's give we cash literally collected. I payment early I could delinquency wish in to we trends underwriting, is, on we're to concrete fall, basis, I Brad the on -- will going had could information give what’s more daily projecting at a our first wish

changes of band. or different iterations XX% variety we're those portfolio basis. So, they've things, XX%, in with four to higher done daily done And where credit credit a the a based doing limit, seeing are that been we on that we’ve risk we've what on three that

as mentioned, more collection a So, we've from here in place portfolio recently the stable come a we seen standpoint.

us good and the borrow the through that stead come pay and of home. encouragement customers, going So, although essence, our us that some they have ability their with back products we're and frankly, with gives things us a with stimulus in us the in of they as future years, because, the doing from we and essential us, that understand with when these business understand are connect they're we And in in services from on. not that they for to provide, importance line credit, customers

and our that points forward. with that do them customer now, going for will not stabilize what connectivity as us for the to very right in the the continue if So, that ultimately pay will to do. portfolio predict efforts with can that, we impossible difficult But that we we to and to determine collection see that for us are future so them teams serve the keeping our importance important continue collection talk-off to

Brad Thomas

helpful? about liquidity that how it's If flow help being sales revolver in around that are takes give as you have down I perhaps guess and on your to and what sort more clear were a we've XX% cash is we tightening need ability you can question making us liquidity. to about us and the this then, don't that that much, continue around proactive of cash running could inventory puts access been just more I to levers the pull you guess getting any And business or sure be so and you would you some color see all color even at of the level, to think terms about reduction

George Bchara

is This Brad. Hey Yes. George.

I dynamics receivables different other of is but important continue out collect think we purchasing us business we're the from inventory. less to first thing to our are traditional on that portfolio, that’s and the and point still liquidity slow on our for retailers

it short-term. can -- positive positive So, collections be in is a from actually standpoint a

In addition our expenses. taken and level to improve actions working to that, capital we've cut

in of the has So, started. coronavirus two pandemic unchanged liquidity are things our the why remained the those combination basically last reason since the months

Norm Miller

we standpoint, Brad continue an from standpoint. And area a expense from to look capital an it's that at

Now collection -- still our stores centers open, homes. are are we’re into delivering our

service teams they down. servicing are still our break Our products, out if

So more able although to folks our continue a hope customers. and can whatever and is get way, customers our need revenue the number who to through standpoint, in is And be we'll organization, have from to take standpoint. field, measures, mitigate a draconian collect to objective that to our an service our expense are fill our we to on from here needs the remotely our of headquarters working

Operator

Thank you.

with coming with question the Oppenheimer. proceed Please of Nagel next from line Our Brian your question.

Brian Nagel

I the and questions my color taking so all for appreciate far. Thanks

topics I few had wanted into here. I a to So, dive

management in mostly about understand Again loan talked better now the is there? your those just are corrected? that I the happened off, Lee, for issue is releaseyou’re First the and this to more I with importantly, prepared issues press probably -- what issues guess we system. want

Lee Wright

morning. Good Brian. Hey,

great into go but to some not detail just color. add So,

system ability the last interface looked change. loan you visibility one actual models of from new implemented systems was system difficulties know, was management have which see at where The we collections year, we our created our would more a our we some made implementation we we to and had and as than liked. with that of As two

and nimbleness weren't as the perspective we a call. about from that act and as that would caused of talked the So we issues flowed ability That have to through we some that. to quickly in liked, do able

Norm Miller

and And expect need corrected that at at forward. would able we have we those rate going be are the have we those this effectively predominantly collect been to visibility to point, the

Brian Nagel

effects. there's different question, second COVID of with a the lot and the And of obviously, parts crisis,

that but could we going itself the crisis are business. sort before not functional discussing price is on, dynamic beginning lot really down priced the that more value were potentially dynamic? in functional that that or In higher as through manufacturers that have significantly talking, TVs they think has were impacted lots maybe TVs? how a and Again, talking had we as have we quickly that to in crisis, and more market. correct about before say about should Now that to as the of this COVID come the TV the within TV Conn’s introducing issue lengthened So

Norm Miller

a and significant it showing Brian, greater where has happened related down weeks which $XXX, I ever the from they're I ago is, if point certainly say TVs, actually online. purchased even a that's today. under what's but was That's big are out exacerbated it, what the the at where lowest data Because valued the up higher is box the know lengthened majority a TV we it's Walmart, on the was for units here open, don't are ASPs been. TVs two because national ASPs at I sit of from Costco, as extent being the guys and -- -- has board as are would it that never it that's NPD are issue. TVs The standpoint has mean, down across slightly,

introduced on absence gets coming out and this is with So we short-term. other which in don't stores, XK, nature of just plays functionalities into that my I year out assessment abate that the before that to and to how it the the the to crisis functions TV this would COVID-XX wise longer in new help believe us some expect depending or past occurred area. in a That’s the cyclical TV in improve going is electronics not is of be But the business. that the term COVID-XX,

continues prior plus is over down ASP XX to plus XX from still $X,XXX, be a it's but down Our year. percent, percent

Brian Nagel

and persist. final crisis headwinds lessen? we that you extraordinary how think standpoint, from a knows not But as future, retail know you my shock Then think the -- no does question, as crisis well. for clearly distant mean begin I will recovery -- too Conn’s one looking the in to potential about the a this abate both credit should the how assuming how But the business just forward, long

Norm Miller

core on credit is even they pickup tax say already probably all cash basically, the stages would COVID paycheck-to-paycheck. season were about we shelter things the recession And early is, first, and interesting $XX,XXX the a to that well. how our the were year And around the when do yet, in early nimble back understand the environment. starting of portfolio performance live customer enough, there’d depending not our on we from in customers one issued $XX,XXX, you to they relatively very make that were but of I about they a the time, immediate And been standpoint, employment the comes were stress in place re-ages orders very, and very of cut reserving had live in see initially, credit side, be very, because seeing more quickly. if those they're and the they in March, customers back very and in the

So, in be gets a the business by from forward will those way retail retail portfolio we credit going down standpoint offering And as now GE opportunity as where a it come. now stress been. ultimately our if have -- is the sales more has lease-to-own, create believe higher from credit from end it the in opportunities what ultimately believe to me with We create the credit opportunities more in will short-term, a full tightened the will that’s all it will spectrum.

Operator

Thank you.

with your with next question. question proceed Stifel. of the Please John Our from Baugh line comes

John Baugh

him. start hindsight Davis around It there factors, you wrong of if -- many, of What start execution John trying could wondering a what some course in there? which to or with making to decision for up was important color went are was either maybe departure. we just external I'm versus get built hire, team I his an with

Lee Wright

our allowances. from It’s the certainly restatement prepared obviously We said the us my resulted on I that But the we respond in resignation. that directly clearly as Lee. in weakness quarter issues operational increasing Hey, and performance our make charge-offs had I certainly happy. a obviously and to credit created Good his obviously, John. Look that, can't morning. remarks, we increased future foresaw didn't and material not with happy

So, mean into. can that's we most go probably I that the

build up underwriting that what make changes. think deep is, to built continue would did do credit I been that's I up a we team -- a and has though able certainly have why add to we we team, make have so been

team very obviously, closely we to the place. in We those continue monitor that make with have and

we're for forward. So, very are here, the add stepped team. closely you and with I've go obviously, very role we and working and important right. to continue He have into replacement, he was value was obviously, but forward. did full will And still actively looking while we he team And a that going

John Baugh

And with you much you as then there FPDs perhaps, deterioration “new tell due customers you -- up, and not, us are mentioned existing or well? are saying perhaps delinquencies up. or seeing are losses looking could to is that of Is a way up, at are probably all how customers”,

Lee Wright

QX. risk the to of and All as in the So as made customers. was have had even new we summer, we vintages QX. middle underwriting prepared changes and takes Obviously, I an we through John, in remarks, the certainly originally rolls had in we that originated some higher bake time than in the increase through again, it said that obviously, seen

talked were end And out new of importantly customers than last are XX%. we percent that customers even new versus customers the QX overall the XX% versus it and and was what at of of about saw fiscal XX% XX% the make in more about settle were approximately are always year. probably talk last new fiscal year, them year a they to sort them. From existing portfolio and time continue We takes riskier we've to customers

mix So, vintages, issues of overlay situation. things the as implementation system, that caused I as well and the we with had in our three then you efforts about and talked of the all a risk COVID-XX management difficulties then new collection the the customer saw to high those some related loan

clearly, monitoring we're very We're through So it. closely. working

us from the sure moves But made make you, with going is are I'll some I again, all back that that. perspective to we think pay underwriting tell an even COVID-XX on we've right of through. extending credit focused very rolling issues monitoring to just we're the to

Norm Miller

hundred, Lee a five highlight the team team, different me comments was John. too was very to the ago, things five the when million. of years of place is, a the was that team One $XXX than very if quality X.X, in the business credit sophistication made, could resources, just credit Let ago. amplify than of the two different I couple is is it the losing it X.X, years depth The

as quarter a basis that it disappointing is, place was of the of piece second itself put with flexibility of things a it coming place, the difficult spread, our points and the even talked be different coming also and in spread challenging to of multiple through through position that points of only going X,XXX out the give in in and performance part basis very deterioration portfolio, the is of to weather spread has performance, even weather disappointing we points company the in XXX, weather credit here X.X, about a the COVID-XX XXX during not to we outside solid the still in pandemic move in And forward us this some reason The are the of in times that the but months. quarter through With that the of we five basis control. of very fourth results weeks as with have, business at years, fourth quarter I've X,XXX is than third years it saw credit a ago. that, about for to

John Baugh

that. which for lease-to-own think was the on for quarter. And last then question in piece plus Thanks was X% my I January the range

be bit offset expect Where at in a March to And underwriting you to you're high mix, of we you of all Synchrony the maybe likewise, the other words, funnel what see your then buckets? of here an end underwriting, sort would see in the piece? tightened and happens of do seeing. three again As the increase that pressure

Norm Miller

of balance seeing early lease-to-own What Synchrony say the We're sale is, well. are would increased we also increase. it's mean, I I as Well, still seeing process. in

by ends either well. out also So both up cash, spectrum, -- credit credit is cash credit as card also is initially the on gate of and paying of the people

are cash all So like customers. -- and those us, for of

positive very cash flow from standpoint are those both a a portfolio. credit So and

John Baugh

And and maybe one one George. last, for can if last sneak I

or businesses kind last the breakeven seasonal Is makes other that’s number? season similar and some a there month number, unusual the of from being You all mentioned of the kind month different your cash that tax the period. flow next cash stable metrics a flow of benefit a

Norm Miller

and Obviously, that us I still we're monitoring a I general I business remain cash and going liquidity comment here -- here while our cash our got as flat in the is our believe don't expect here. closely know slow you John, think this position that mean think to I cash. our position can enough for we near-term. last cash generate and available liquidity to what and we've us portfolio

Operator

Thank you.

proceed the with of comes your from question Compass with Please question. final line Point. Ryan Our Bill

Bill Ryan

question on, various is all has deferrals obviously the some of states -- that related offering. your And the a -- second implemented collections moratoriums How interest lot question, the performing just First if and if forbearances you're and credit impacted collection SG&A. to companies various have or recognizing have that, to extent there’s in may what And income collections? going on do the any, the statement? impacting programs ability are to way a be that that income of there's then

north is $XXX fiscal north of modeling I modeling for of in kind of a think bit a bit -- been little million everybody or had SG&A 'XX. little

thought a of efforts be fiscal your new that thinking 'XX? if on pulled a bring those you and number us can it that back going down should expenses into give about bit bring back under You’ve How bit little got obviously down control some store on we openings. we’ve Thanks. to and little

Lee Wright

Hey, Lee. Bill. It's

on done actively are or -- states that the of for in, efforts. we each moratoriums third-party first-party your with have the least restricted collection obviously efforts, only Obviously, first collection and So states on handful and collector. it's it's at regard a we really to have that question and we're what a who seen states typically restrictions

at statements but us really they impacted hasn't us to state all out really obviously, it in is compliant monitoring a it regulations or anything, made closely. that still at had on significant much hasn't we're there that of all So I'm but impact there, by any the the particular, extent

Norm Miller

states just pull where that have we there do Nevada material. third-party we We pulled and do impact, some ourselves. back some house that collections been in not that it has does done back in states and Those it's and it

George Bchara

to XX it obviously, opening we've new of opening with associated about SG&A, stores, expenses as question XX your And to We gone relates stores. to incur to from X X. upfront

itself SG&A reduce have by been. lower that So will our would expense otherwise than it

number we've addition taken that, costs. to measures of a to In proactive cut

than And to been. should see expect it so SG&A lower you otherwise expense would have

Now, year about that's obviously, directional we we a it. think guidance here. I as did not full But to out think expect put put just out how sense, guidance don't and QX

Norm Miller

say call would close, of I what we because the end. when is relatively year is, earnings timeframe And speaking, next is fairly -- our Bill this the

a if early standpoint not from quarter, our for taken. be SG&A that is even provide -- would that to when some we we provide activities June So able be first the to guidance, expectation able giving we're on we've direction some report

Bill Ryan

receive on final just way loans recognize are And that you all income the some related Okay. to question those waivers Obviously, Has of the recognition. institutions deferments, impacted financial was or forbearances. granting interest various deferrals? income interest will impact that

Lee Wright

It the on of concession. the depends nature

recognition today that and here that’s the of policies the we account. with itself some income does loan extending our of on sit already, we have consistent As not change that a in

Operator

the questions any back are like Thank Mr. for over further at call to closing time. Miller no to I'd turn this There you. remarks.

Norm Miller

you Thank very much.

look appreciate times, investors results all months the times, Have company, in quarter update your especially and providing an forward the our your interest and of we day. unprecedented on participation, during the and first performance. and questions First, we especially but you these great a in couple at and to

Operator

Thank today's teleconference. concludes you. This

and participation time. this at wonderful lines a your your disconnect may Thank you have for You day.

Conns (CONNQ) 14 Apr 202020 Q4 Earnings call transcript