PROG (PRG) 27 Oct 172017 Q3 Earnings call transcript

Company Profile

Participants

Kelly Wall	Vice President of Finance, Investor Relations & Treasury
John Robinson	President and Chief Executive Officer, Aaron’s Inc.
Ryan Woodley	Chief Executive Officer, Progressive Leasing
Douglas Lindsay	President of Aaron’s Sales and Lease Ownership
Steve Michaels	Chief Financial Officer and President of Strategic Operations, Aaron’s Inc.
John Baugh	Stifel
Brad Thomas	KeyBanc Capital Markets
Laura Champine	Roe Equity Research
Anthony Chukumba	Loop Capital Markets
David Magee	SunTrust
Kyle Joseph	Jefferies

Call transcript

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Operator

Good morning. Welcome to the Aaron’s, Inc.

Third Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. this being note, Please Instructions] event recorded. is [Operator Robinson, this morning Inc. John are Participating Aaron’s Douglas of Lindsay, Lease CEO; and President President Michaels, Inc. Ownership; Aaron’s Aaron’s Steve and Sales of Operations; CFO of and Progressive Leasing. Ryan and Strategic Woodley, President CEO

Now, of Treasury. Investor President Wall, Finance, like I Relations to would Kelly Vice introduce &

Your may proceed.

Kelly Wall

available Thank earnings our Form archived the today. call All webcast on material, morning, including to release, which discuss website, to good this as you, results released Welcome Aaron’s with for well. we QX the X-K are and everyone. Relations and Investor conference third quarter there Company’s replay related investor.aarons.com, be will

Before the information, Safe historical matters the results discussed today about statements. are I’ll investors are statement. for remind Harbor Except forward-looking discussed,

which differ statements. year results a the As cause differ. such, certain subsequent could for our XXXX, they cause results and risks materially to that Aaron’s filings forward-looking those SEC involve to predicted Please in see December XX, the XX-K for uncertainties, actual ended several actual of from and description may risks

earnings Listeners that disclosed to forward-looking the for statements. other release undue today results and any projected strategy Progressive’s Aaron’s and and periods; statements, today. not undertake emphasis future such including be statements disclaimer; our statements to we those published update listed matters, may forward-looking are include in obligation cautioned Aaron’s Forward-looking on press place and no

will including adjusted which adjusted with Robinson. Aaron’s in with net our call, also been These call over John the may certain non-GAAP included During to financial tables be EBITDA, are now performance measures the will companies. the we detailed measures, and to our affect of the other items, turn which comparability non-GAAP referring earnings release. earnings certain I for CEO, have reconciliation EPS, non-GAAP non-GAAP

John Robinson

support by replaced both quarter. customers’ more communities to and company the importance support of teams, entire for challenges raised areas to associates. joining of homes. Leasing. damage charities our activities, impacted and their suspended excluding products our our XX,XXX affected I’m scope Harvey Irma and associates in many overall our mobilized we’re increased In performance Texas you approximately proud the local the the to the in given cases storm. collection sent Thank extraordinary the cases, need the from for Total customers, morning. outlook, quarter and Aaron’s than employees We business the revenues and this we Business of temporarily our of Progressive full Hurricanes We us crucial executed year in impact the and our X%, our water we our deliver third $XXX,XXX in to and and Kelly. Despite track significant the for hurricanes. distraction, effectively. Thanks, presented on Florida and provide and to to organization areas,

excited to market lease productivity door a the pipeline test new Third our invoice in quarter The That positive top our the also (X:XX). in portfolio in to Progressive underscore I’m with the and confidence size performing by per current increases driven and Aaron’s and of our [indiscernible] both significant significant Progressive’s line line outstanding the to expectations, with team in momentum gain volume, in opportunity. potential deliver volume was growth. is continue is Progressive Business. and Leasing level trends business’ a performance XX% by achieved doors door. at momentum existing strong and in

progress, seeing in The our in revenues and investing is operating and our particularly in results, drive work some We’re of encouraging to we’re leading platform omnichannel efficiency. indicators.

on line lease write-offs benefited margin, and better-than-expected continued third sequential top from year-over-year and in The a quarter trends. progress improvement

the progress we’re momentum. quarter can fourth the build We’re on this making excited about believe and

net $XXX of debt million sheet balance in XX.X%. is quarter with and shape to cash capitalization the great Our in in

the the $XXX million. facility to lowered During and $XXX our credit cost the revolving million from we quarter, extended terms, increased

us to position in to investments, Our I’ll over share strategy repurchases. it the the Progressive. acquisitions, managing flexibility capital discuss gives balances remain dividends strong With to business. opportunistic and that that, strategic financial employ to turn We’ll a Ryan continue

Ryan Woodley

Thanks, seen and since the John. virtually every XXXX. existing experienced rate all volume and million. an quarter revenue solid of quarter Progressive of period biggest with vertical. increase second in our XX% achieved Total metrics year very industry partners. acceleration had Growth XX%. from We both a quarter and strong to increases strong That’s growth the the growth new the $XXX across this first profitability. the we’ve increased came from revenues Invoice across in rose

New LTO market to the with incumbents. retailers over included in new as retailers lease-to-own who as experience partner growth Progressive chose well

the We’re versus very market. in on with Progressive with encouraged XX,XXX. cycle wins both very proud new lease-to-own fronts during bringing strong doors by We doors we’re addressable year metric. up the XX% growth a very significant to this penetration of lease large and were the of in the total started some year, additions made with the last continued continued of doors to number approximately that a quarter and Active happy a completed ago,

new to gross two There of main versus year. both versus should X.X% existing and We’re revenues of their also Recently door, last lapping driving in future with strong or invoice existing contribution continue are factors pleased nicely, This of production mark. volume from third likewise $XX.X partners invoice levels anniversary periods. and from enthusiastic decline the the doors million per are quarter about XX.X% increased doors which XXXX. EBITDA quarter. X% volume added increased benefit in margin in we’re the to growth the active ramping the

third the approximately estimate by XXX points is the storms, EBITDA we in quarter. margin basis which first impacted The

debt mentioned, John As the a quarter. and activities suspended that write-offs we higher and for affected expense customers, in bad collections provision for resulted in

on as to investments fuel XX-day people growth. younger The Higher as growth make results of a activity and growth. pressure account, levels absorb stronger systems is payout and the in that rate normal second in margin factor invoice modest average we of we

that impact range of The annual growth. a debt process. provisioning hurricanes in was expense is XXXX. the performing XX% Write-offs we’ve Excluding full expense, implied to well the basis increase accounted QX for estimate portfolio continues reaffirmed provided. also XX is of and approximately points increase the basis write-off being debt of of XX increase bad the driven the of as over debt invoice revenues, within increasing rate from our The of X.X% bad as were decisioning percent EBITDA our to approximately the by well of points expense bad and reflect We XX.X%. revenue hurricanes, disciplined previously outlook XX% and margin year and the lease

good Overall, extremely We expect remain and X% pleased pipeline to annual our portfolio, the in existing to quarter performance We these and solid the we’re visibility volume industry believe well all with we’re and metrics have our XX% serve and the efforts for in achieving doors. to invoice from to and within their of we the verticals. our in across X% ranges proud results exceptional the respectively, acceleration customers. full year. I’m lease new existing XX%, team’s of

for I’ll continue about uncertain market it about to to Business. an the Douglas update turn the ability to our now the optimistic on large excited grow business. over Aaron’s and We’re

Douglas Lindsay

Ryan. Thanks,

the and franchised consolidate programs. our positive XX and able with part cases, a year-ago decreased revenues and than stores to favorable closed or with stores the hurricanes and nearby ago. Business. store X.X% lease trends we’re period Aaron’s all store. year from fewer ended Total customers impacted declined in quarter company-owned a We sold in X.X% the exhibited and quarter. store third seeing In same-store the margin our most by were momentum an versus Delivery a the results period, revenues Aaron’s closed additional We’re revenues pleased activity, into quarter in the recent in closure a Same-store X.X%. we

estimate for our beginning attributed in The for Adjusted storms, The approximately year-ago year-ago the impacted team, in down of by the Excluding days temporarily X.X% year sequentially benefits operating cost-cutting to quarter, well-executed of a margin quarter, marketing investments new off. margin adjusted are X%. of in full to stores total margin with reduced closed, to closed quarter. fourth were to its and by business customer trends average EBITDA We resulting compared XXX At Merchandise the and in team same-store efforts agreement hurricanes, initiatives. stores, offset favorable improving of Both year, Revenues X.X% remaining were the of very early saw this EBITDA Hurricanes revenue store. Thanks with difference versus but effective reopen we the quarter, them the in expect hurricanes. and quarter write-offs we rebounded we all extraordinary by from in five our and points. of quickly more which basis in from new lost as promotional three per were last was the ticket Irma. and the revenues affected X.X% of transformation to in the guidance. merchandising more from remain to the the activity. investment the of average XXX days quarter ahead Harvey revenue closed deliveries, X.X% initiatives the for an promotional events due by store traffic the increase reflects were measures the storms two and increased pay benefited store period, aggressive expenses end which XXX revenues driven

encouraged of direction business. We’re the with the

and we’re underway, improved as discipline stronger and seeing the we transformation operating business. are results Our well analytics initiatives apply across

while of the bundling We stores in and merchandising, the the a distraction, initiatives product And the were In improve on the selection, track. also to quarter. significant implemented began SEI integration we integration is hurricanes pricing.

in appliances. we quarter, saw bedding the During furniture, categories, and across deliveries including sequential key improvement

Both to in penetration further financials. great initiatives, with of our the improving club met our their XX,XXX We’re Steve program, increase while, to we’re EZ same is in represents saw stores and are at you to cost automates aligns customers, increase by customer our quarter In our which to customer enthusiasm cost. We’ve and quarters. also the the base. recurring pay experience. to club updating to approximately reduce on look which labor Pay and our the it solid lower turn customers. our payments our summary, progress collections, ownership approximately have business the our of moving over progress out and pleased One a I all initiatives Pay forward club EZ experience to I’ll the discuss future and to EZ which serve example our impact payments with time, been with transformation cost and rolled rate to agreements, across active enhancing on dates. forward now Pay positively is reducing X.X% serve. have and the program focused starting associates

Steve Michaels

Douglas. Thanks,

shares. an quarter Earnings $XX.X to million, in September increase same compared revenue for million the million and which increased Now damaged collection X.X% merchandise basis $X.XX, negatively Adjusted our EPS this versus XX% for same on currently in share, quarter the The in additional I’ll QX million for in the with per quarter. shares quarter. the earnings $X.XX in third turn activities the at base, year-ago a third Net basis This write-offs to is temporary reduced increased the to year decreased reserves over financial for year stores opportunities assuming portfolio did for ago. $X.XX recurring million were XX.X% in our rate Progressive in XX.X% of declined of not from the revenues to XXXX. company between compared XXXX for Diluted EBITDA period quarter of the $XX.X any tax our XXXX. XX% by XX.X% was ago. We on of in the same our is This the period $X.XX of year $XXX.X to a ago. $XX.X dilution for nature were compared was quarter Revenues the $X.XX hurricanes X% have XXXX. quarter We suspension $XX.X $X.XX of XXXX versus X,XXX,XXX was to months period Consolidated generally down of a X.X impact missed up details million made The and our third Losses period for authorization Business. year. destroyed homes. for and purchase a non-GAAP million for delivery an estimate XX, with company the million customers’ up XX, in and to to year the approximately last $XX.X quarter customer the three Aaron’s quarter. in or the non-GAAP X,XXX,XXX Net the same ended to count versus the the spread that evenly affected our XXXX, EPS earnings a September were our $XX.X a for business. repurchase quarter.

from have the unfavorable to effects in QX. modest expect We storms

Our various currently book the is including estimates calculated insurance days we insurance extent maintained interruption. expect the probable, interruption, value receivable for over tenant of coverage, impact property the and for months, be the is customer in We non-GAAP lines the shopping and to $X.XX EPS to To have lost Business proceeds several of a the store net disposed and business $X.XX. we including merchandise. recorded the operating disrupted behavior, will XXXX. be and received sometime insurance next recovery

days three stores We due day at stores lost for XXX closed At closed. and total the to quarter’s one remain have XXX storms end, store least the during quarter.

accordance in We definition with our these three same-store store of our base from the set. have excluded stores comp

QX hurricanes quarter. the presented XX points in comp reported have our by without and stores. with the lowered storm-affected the The comp basis We

we have expect seen be methodology QX comp short-lived, previous store-based storms, we we during reporting. in our to impact maintain will the As normal and

we increased cash the ongoing $XXX and borrowing were We had two which, existing term was the up quarter, and add $XXX.X senior capacity. support maturities available to revolver over During facility. XXXX, third extended At our our DAMI the terminated facilities, and pleased was banks and company the new of end the of appreciate increased lenders additional was September $XXX of we to to both million were XX with at on the The by provides credit are million, had points. with capitalization by total $XXX off paid and to reduced debt At basis we believe, the company of able our of of the liquidity facilities XXXX $XXX net hand compared credit quarter, September cash the loan us to $XXX.X amended XX, XXXX. million with and million, to XX.X%, end extended million pricing to million.

million; months nine SEI offset million, the drivers the generated and the $XX of repurchases cash main by are of repayments from approximately totaling operating of of $XXX.X debt XXXX, activities $XXX in of the During cash million; million. change $XXX share acquisition

a our year we ranges that EBITDA impact adjusted hurricanes. approximately excluding we of in our margin release, the As outlook. prior to That estimated note, year for earnings QX of are the the the a later. our to hurricanes, quarter a will midpoint we our believe I’d prior and add stated XX-Q will full today, practice impact fourth opposed the excluding versus reaffirming end basis, and expansion from full XXXX implies year be XXXX year we final we as QX filing the the around periods. On like week provided, QX the the consolidated have of On later

Now line to I’ll the over turn before we it John open for questions.

John Robinson

Steve. you, Thank

your you showed back truly during lines inspiring and quarter, turn despite our teams our focus my concludes operator the dedication, in We’re compassion for beyond. Aaron’s. pleased level I’ll quarter now challenges to with this results the prepared underpin open the third confidence for remarks. significant of from Aaron’s The to and Thank storms. for our call XXXX interest the the for in and Q&A. That are

Operator

We come will Please from question the session. John ahead. now Stifel. go will of Instructions] Baugh begin The [Operator question-and-answer first

John Baugh

Thank you. Good morning.

I curious, an from know had on debt also out could growing. And I’m provision storms. So volume impact and bad the the we maybe Progressive. guess, I invoice start with we And we had the

year-to-date really all metrics. wrong, I – had me correct those think saw if strong performances the on we I’m

be how or us other of any is, with question Conn’s where all. recent bounds tell influencing anything you. new Or are kind you we origination, are interested forward at the within about I’m numbers those Signet whether you to performing? Thank of tightly losses? they’re there or customers particularly pools is my So can of the going expect

Ryan Woodley

question, for John. the Thanks here. Ryan

growth. pointed hurricanes in stories and bad you As out, debt the are really the

even And on we that bad you ceased mentioned, hurricanes, move which, accounts those requires to activities areas, in our so caused status, provision as couple policy as impacted increase obviously, I’d growth share into shift to the growth, portfolio of the delinquent sitting grow. provisioning in that out, reserve current in in translate that For then paint of pointed help bad John of expense. for points debt into caused receivables, inside just an overall healthy debt a provision. collections and There quality we will the are invoice to given year-over-year the picture in

that really the and pointed growth. I is out provision are and there is really The storm stories first the in the changes the

down I revenue charge-offs sign in of you which, the a year-over-year, actually quality at percentage of in strong If look portfolio. they’re underlying the a gross is as think, quarter,

don’t second The the you about about are are mentioned very pools the percentage. are of those is performing the adjusted write-off We expectations. meeting the bps another think, due don’t delinquent three-year dollar accounts but The the excluding indication that I’d the this, of share and were accounts just is lease storms, year-over-year to storm feel quality make down is in in year-over-year, the good just I percentage quarter, in that insight of effects I And account will point of traditionally of on is but the delinquencies. you basis. at I’d that light thought point end And to it we help supporting our in with line for at give be the the I which, know lows delta good the Once really also as I the of performing. make particular, of know, final talk the on expectations. additional bit you are how measure, the both XX that portfolio. we

are and we’re have visibility good performance, seeing their the trends good. We continue to into

John Baugh

guess, core the so go there the deliveries The cited. in believe, then were, and year. could least, well, of same-store at was happening pricing color. increasing we the as things right. I and side, how much All I particularly latter I year-over-year into and margin. interested indoor, if for that improving, into not I next think, in Maybe plays QX out terms you’re what to lease Thank comment three sequentially, you sales, seeing

Douglas Lindsay

John, Sure. Hey Douglas. it’s

seeing what are is two last but margin mentioned heavy quarter, the late in we out in the XXXX, XXXX, portfolio. of early think did really deals we’re doing I we lease One is we’re promotions, rolling that So this things. the

that’s in lease natural giving lift some margin. So us

about rent we’re into balance higher margin a agreement. same We’ve we’re We so cadence couple a between margin there team more translating importantly, with and merchandising driving of job less We’re great probably leading job At customer last a We doing our to happy the that that doing We traffic. these and and great higher-priced we’re promotions think be doing It’s And I it’s quarters, new there is a the customer better of seeing with per has finding deliveries. what margin improving raise items. better driving marketing so discipline. less balance. also in and that enhanced more lower-priced that, it are and forever. improving. strategy, that. and really margin. promotion, merchandising to deliveries, promotional more doing we’re and That’s product that attractive assortment items trade-up driving realized can’t our we’re strengthening our time, the seen and see Or team where are that’s

figure in where out lot sweet analytics a to try that in investing spot our function and is. to We’re pricing

John Baugh

helping of not a on my thank But And suppose time you. loss guess, annual it’s guidance the was question, performance? your relative quarter. terms Or it. spending I is I is, pretax or is – DAMI the that guidance? get in $X simple Steve, Okay, lot there any question in million the you worth a you part there hurting of of this to annual change this

Steve Michaels

the part, question. to. was our included John, DAMI was included is on reaffirmation, annual lower DAMI towards and it’d in – I It reformation you to is is appreciate end. it it in the – in included you giving Yes, But would on particular a continuing It our in as of our me although probably alluded line our that included guide the – with the guide. segment, small listen, is it perform expectation. be

weighted weigh book to originations, So post there’s growth as more that of a to becomes kind the post-acquisition on us – of composition provision continue the towards in environment. is going some

in So – but it’s XXXX. having with for performing line expectations our said that, still

John Baugh

Okay.

slight be but the to guidance, it headwind for original a So maybe that not fair? part year meaningful. might Is

Steve Michaels

meaningful, correct. Not that’s

John Baugh

guess, final one Ryan I were from to Okay. some reference LTO And either then business of or Did partners hear a with But could I think picking LTO you question retail my up is other there and I John, playing was this. take who like – as how Thank don’t that the expect curious me the win but to there, and/or as you and why extent discussions go, I’m right? give landscape you names, well. accounts lose to – that’s I how And you. maybe those what to to happening providers. competitive is

Ryan Woodley

appreciate I well question, I’ll let the in John here. as Yes, chime John.

pointed material front, everything, of active which record XX-or-so I success always than in bit sound out, it what’s go, I but in the about happy don’t win a healthy here, strong quarters. that fair from and very change doors growth for invoice driving – a a come you’ve level today. think, some that On our like way and pretty it’s market, And this but We’ve no but competitors there’s but are competitive as with seen the been been win hate is, while. There our more I a previous broken we I’m volume. competition. share, we

quarter, talking we’re don’t team I both of who dialogue to folks out is folks we’ll those and, and gives we’re potentially, considering As I’d a partner. passes, are so. rent-to-own the both as the What to being is wins. press Progressive currently of time previously. of to quarter this means tend move are billion billion-plus expect $X with the a an addressing those first continue those went new expect rent-to-own $X executing from do excited well me on as job about pilots for we to any And who engaged releases you even on time done you has existing excellent say with accounts that in But couple had publish in A mentioned those know, to most the robust of $XX math that that $XX today. out I ongoing That billion as have which if who conversations, are always market, plays types us because to that which just billion that’s folks of only are about with only new an set opportunities, addressed. pretty we’re how

John Robinson

John. to And on that one say I’ll John, thing done I has this great is a add Progressive not still. thing that the that. has would is offering The such stood job product

our ahead the And who’s So team that’s accounts and innovate from when able Progressive to think And product, merchant better incumbent team – every keep providers, that retailer. better. retail your doesn’t reason. a be down value-added always that, it hear culture, we’re do out we and the job, our one a that and to Progressive taking make get we and of do support it doesn’t whole there It many that’s better. partners made and Progressive to day we in It product team. pushed and customers, to comes innovating. better we’ll team that team the But we partners ops to got been and the come price. been and keep to to reasons just have so of stay And – continue getting always And up that’s and better sure cases, because lot continue in continued one invest continued testament businesses in the And things maintain we’ve for And so the that supporting incumbent we – products, pushed we’ve to our the the I the a value-added to the us price. so and of at done partners. and to about that’s Progressive we for successful. the to successful. has the working the for to of pieces partner coming that’s take stepped have of down because to down Ryan our a there talked have being one has itself about been

John Baugh

Thank you, luck. good

John Robinson

John. Thanks,

Operator

will from ahead. KeyBanc The go Brad Capital Please next of Thomas Markets. question come

Brad Thomas

sides color maybe the fourth Yes, thank more hurricane about are the hurricane both before could and ask of in of – customers the trend you you. give morning and new post top the about line Good see guess, to, the move little everybody. here if move us in first Wanted area after business a and up I Houston sort how agreements we look what reacting as and wrapped Florida quarter like and into as quarter. for

Douglas Lindsay

their think many now. customer got that is many And in we a are – went a more it’s relationship average of our were lot five And first the customer. the cases today, Yes, they sooner. our where proud of we of for Brad, an way Hey, big case to rallied, I’m which Douglas. in stores quarter way deal I the days, hurricanes at long demand handled team. much really the with seeing probably the And all, a proud of we’re of way in our team opened

So we’re us. seeing needing a the coming door, lot of in customers

we we which we employees some of that, our As did a mentioned, gave that our to as did in in We that I that. associates we and the our goes by think feet. good well suspended both grateful ourselves very the customers did we a their and I think activity, and And about our and customer, business collection long think by them were get chance good relationship on way.

in markets. proud both strong their of team and So demand the

Ryan Woodley

Progressive periods during to both business to on similar dropped Obviously, then just levels touch normal off we and relatively trends. of thereafter. And soon areas well. most in the as Again, then storms saw intense returned the

John Robinson

little the our would quarters least, both done I as would going And affected our of kind said, based different on Irma, replacing past and process they’ve in Douglas as as customers working performance, a something we damaged for – And – Brad, areas, collection for and well hurricane-affected of that’s go over that’s that and the activity and businesses Harvey but excluding doing, the and bit. the portfolio And we’re the storm, in particularly at still products. add better. a maybe performance certainly customers it’s of and few with are on – like, a the feel areas, Harvey the on going to through the

it said long-term I relationships. our about So mean, think in we both – customers and businesses Douglas just right. as

them them And right help of right to so trying to and take care we’re do everything now.

Brad Thomas

the a a of the There’s SEI this and to great. try the have about That’s quarter in look may and Progressive? here structure do you’ll we here the third a expense growth Business And about as like to talk or expenses. and little does if question amortization could noise what’s accelerated I within adjustments, guess, it quarter. Aaron’s nuance maybe lot on just going Could hurricanes. underlying bit the I acquisition you expense follow-up all of between have ask the that the

Douglas Lindsay

Sure. Aaron’s Douglas. start Business. This with is I’ll the

the pressure pressure. half of our mentioned in to that margin under last year I was our hurricanes. relative to That As was comments, related

transformation of in in just write-offs the of expenses those to that related was that which form related expense and markets. Some we remainder hurricane the business flowed in increase business about we’ve that to The was were both less doing past. of the through talked the initiatives,

it’s reduce third in an doing getting customer serve. invest incurred we experience a quarter. business which that, the projects – underway, beginning in transformation to the those to and little cost in both upfront to our We’re investment And enhance there’s

credits some In third as our over. last were addition, quarter the store aggressive we we were benefits comping We initiative, some closure got year initiative. cost-cutting we in that comping over started

know want to don’t the I address Aaron’s Progressive. you that’s Business. if So

Ryan Woodley

Yes. isn’t dissimilar. And story in too the Progressive

us. know, having of margin due to revenue slightly the average other drive half And a XX-day between buyout slightly the on decline tend see And pressure So a the expense. their younger, the we is that an hurricanes. gross evenly of lower you more From buyout just is split which account. perspective, revenue, will younger talked year-over-year, account SG&A which those window, accounts to is, about as about percentage that for margin margin, half when bad higher gross is you within from arises pretty and a debt

systems, higher the well. continue. see gross maybe XX-day though and calendar the And an investment pressure earlier perspective, to, you’ll it’s really revenue and of people and expense. and requires down John’s storms growth periods buyouts question, on a in SG&A we that growth as From story a But referring XX-day in a bad or of an then on slightly debt even obviously, growth buyout So attributable vintage levels see provisioning to margin was about to as periods, flat covered, given that John percentage high expect we growth. especially

Brad Thomas

in we for you here third getting But think happened some of once growth past storm path the what do a quarter. OpEx XQ? we’d flat of Just pretty all – if so and some the I strong or been had quarters tie I operating trend clearly There’s here on over get leverage here the uniqueness to together, issues several it last mean, expenses. your back be the of

Ryan Woodley

the I think we about range business, what within to the we’ve – – stay Brad. just Progressive guided

Brad Thomas

I two and should as how model at businesses level going a will the think just putting about we together flow forward. the say higher

Steve Michaels

the Well, it Yes. think, year we included talked to Brad, Douglas this in Aaron’s is were Business. as were for doing cost this. onetime of a Aaron’s some in reduction which doing was and some onetime, had and I extent, – force the the this some we last reduction so credits compared to specifically as year as comps last year-over-year this year, last, Business and, for AAN Steve, business, about,

are cost You’ll XXXX. see And pretty also early an we’ll file quantify, in there previous doesn’t that later started aggressive actuarial the but back it some report in some campaign our we comp landed swings QX in had this of got afternoon pools XXXX we that year assumption, and our commentary a you’ll so favorably. actuarial we that our claim in – Q – workers’ manage and see, to there’s in last

report. actuarial So there year, changed on we the are some sequencing adjustments there. this our And cadence

there’s we We’ll out the bone not get so initiative some in there on So to is a as not get comps bit the caused was is little report whack. look that But there the last of not timing credit. expecting we’re year-over-year same there differences on QX. much that an meat – did The actuarial one in meat get QX. – we’ll year,

Brad Thomas

Got you you. Thank so much.

Operator

from go question next The comes ahead. Roe Laura Champine Research. Please Equity of

Laura Champine

impact but your in are then with quantification who’ve these a hit in the from do in I customer It forth of recover to new storms. to that QX? expect there? the you XXXX? affected on hurricanes the there morning. of $X.XX terms And by would a adds QX, in products areas appealing so really the offsets seems And expenses Good what lift appreciate as having and be people if $X.XX been offsets some are are there your as

Steve Michaels

on have you in already in did Laura, Yes, traffic we after then demand as the customers’ portfolio, our But Ryan I’ll start some majority can this homes. other businesses activity this of storms. the know, side, Douglas Steve. said, the back as the bounce see jump and it’s in. is out But the and

to the so chime and let last revenue some recurring But from since years, the But XXXX, demand mid-September. new in get QX. previous existing of we’re some seen the storms the so like be on as bounce as XX But in some back even here a into have of not And on we’ve Ryan have side, be seen base. But – effects and we basis, will Douglas a best we customers that but the really contact our our done And experienced a lingering commenting impact we kind I’ll on for expect sense we’ve would well. back. the over storms. there bounce

Douglas Lindsay

what I said. you think just and reiterate I’ll Yes,

all particularly pressure Texas. flooding the in areas, are the Our customers under affected in South

– had which is there’s challenging customers under those the a but while And collectability while. for, have the are more lost to But some pressure so going markets. on coverage. there new product, And property, be for we insurance for becomes demand

John Robinson

out But aren’t – for that. necessarily Laura, hope tailwind this a we we it there’s John. it. coming of don’t we planning from that And is

not unfold, watching certainly kind it just but of we’re that’s So part of our plan. current

to it on customers and to We’re react the feet, can just we get comes. And hope. as them. it back serve That’s hopefully, going their

Laura Champine

customers – if replace you who new to in-stock to adequate do have home service are there see if do positions their looking or you a you resurgence will that And furnishings, see surge? demand, a if

Douglas Lindsay

Absolutely.

right stocked are up the Texas were after in and storm, And – running. ready and centers for fully we’re and fulfillment they Our business.

John Robinson

price the on points the And our put Woodhaven most those help that I – standpoint. division And I special in – other actually customers inventory to as but especially items side Houston Progressive some upholstery people would was prevalent, positioned well to and into and where Woodhaven Ryan with price the add that, preparing the or those – opening think flooding is extent an to lines well market, that chime try are the the here, products. retail point certain runs partners retailers need wouldn’t from can our

Ryan Woodley

think I mirror they John’s statements.

all see here I them. think the based in will that support obviously, to And their they’ve on with they business. previous they’re – experience in we’re, their to field expect recovery And that, hurricanes, hopeful ready occur again.

Laura Champine

you. thank it, Got

Ryan Woodley

Laura. Thanks,

Operator

Capital of from comes Markets. ahead. Please next question Loop Anthony The Chukumba go

Anthony Chukumba

morning. Good

wondering improvement color changes. more you terms the alluded the can I Business was there. to that in bit give And us those if So some the a of in in your prepared you merchandising changes just were merchandising in driving little just Aaron’s some of remarks,

Steve Michaels

Sure.

brought merchandising we and best and approach which of for a brought at We’re is our category program, looking better, true the more options Chief making each number Olsen product a sure to going merchandising. in customer. good, in have our analytical Steve through he’s initiatives We just as of Officer, some Merchandising

our In just It’s bringing TV more more color, addition, and in we’re in not electronics, rationalizing into and functionality it’s furniture. it’s assortment really And of computer our in more style, in mix. sort assortment.

job as before, different price-driven and that. from share-room more on customers advertising, our products to customer great also good floor seeing So I our lot at with a getting response feel the points. And advertising. those price going of products mentioned advertising great on like of our and want leading we’re – doing And base is a product we’re

So really happy with that.

lot can We’re and the the afford. attracts the pricing customer price points the that various that and well investing as – customer customer understanding a in

by So lot execution good team. of just merchandising the and a tackling blocking and

Anthony Chukumba

I the you early learnings one one had I just alluded of terms the SEI. I then And it’s from sharing know in helpful. best follow-up SEI. mean, And on update that’s where terms practices early, to big of I but as since of just an are you opportunities acquisition? Okay, in with any guess, obviously definitely

John Robinson

any of to of team proud team, free I’m But really I’ll color. acquisition, This SEI here speak. the the the terms storm give on ideal. timing the of in in had was not during of the integration is John. because But more And Douglas, then Aaron’s comments, mentioned feel at distractions the we and SEI the track. and is the Douglas his close as

takes But it’s integrated operation plan on – Douglas broader there. employees to within have sizable as organization. expect, getting effort a it’s a Aaron’s And into of integration, now, to his region a transitioned pen And over. just we the matter Dave’s for a and of he’s leader with just We’re right really hard extend excited we’re along that a Business. them to Dave their Edwards And over. working get there’s the over and time, team, all

feel process. Douglas, track it’s free… on that We’re but in with And plan,

Douglas Lindsay

Yes.

actually, SEI from just down In practices, we DVPs. terms business and he’s here. business. of we’ve best a bringing review attended the And integration with lot Dave and quarterly socialized of ideas the a had good our

account so I team. go broader I’m taking SEI the begin into everything, think we pleased XXXX, as we’ll efforts into with very far and But the as the business. those in integration

John Robinson

Yes.

to them XXXX team certainly, as to get of Dave terms try I was transitioned in the and to over. then I beyond, them and But we get In integrated spread expect stores. over get and expectation XXXX our be timing, Anthony, learnings his real mean, more

Anthony Chukumba

Got it. That’s you. helpful. Thank

Operator

go from next Please comes David ahead. SunTrust. from Magee question The

David Magee

the you expect impact? the morning good be sort elevated expenses guys. things. One would above and to of hurricane quarters, Hi, the Yes. of is, beyond over Couple of couple next

John Robinson

in and we as best we a the as we transformation, But talked full expect business QX year-over-year the and will Business margin in to. the I basis. as I consolidated tried Yes. Aaron’s has Douglas for can. in be alluded investing but little QX, to we on year we’ve – into remarks, our But will hurricane far – be mean, are Aaron’s impact, the on a EBITDA expansion don’t as as bit there that said as Business in know, about. expenses the we’ve they’ll quantify

– investments. well. to but making And top have we we’re line we benefits as also some So those expect

David Magee

differential provision the And than on of so quarter level that Okay. to come wide? actual that less side fact the the provision, charge-off Progressive numbers expect that down being the from you because would the third

Ryan Woodley

We’ll On be underlying quality that, confidence. the what in provided I feel XX% about for I said, that David, that of revenue which of portfolio, we XX% bad to to us means range overall debt components, that will few so continue those But is QX in charge-off gives a provision think tell get change story XX% recoveries XX%. those and we are There to the being one, that to expense. being being good will of in one. one us and

David Magee

number the or that – comps this the relationship The Okay. and how give of that’s on point, system were maybe can of Signet any at at on you going? stores sort this color point

Ryan Woodley

I question. the appreciate

business. our are it both I comment unique understand press releases issued two know, those I’ll and a with I to earlier, to just bit expectations. As And leave we reiterate accounts. in on were try partners that what their performing you in said on line

accounts. earlier. sides retailers. upside both really of a Great with lot working I on are of both that referred be of grow working remains to Teams hard happy each those to kinds really wins obviously to for the And businesses. think examples of We’re both I

David Magee

and guys good Thanks, Great. luck.

Ryan Woodley

Thank you.

Operator

Joseph The next Please go Jefferies. from comes question of ahead. Kyle

Kyle Joseph

questions. answered. Hey, thanks and them good Most taking my been morning for of guys have

you, I’ll Just line with follow-ups. impressive. growth is top very sort the start of Progressive, a few Ryan.

number, the storm-impacted stores. quantify you kind number for it’s you there, or impacts the core excluding the and did what sales sense including you from whether markets if wondering impacted of any the of and storm Just gave can same-store and doors

Ryan Woodley

Sure.

looking if an did I see actually we So that much invoice. in know was. don’t Steve, impact how I’m we right? at quantified

XX XXX gap from On bps tremendously the help storm we spread between impact debt bad overall does quantified – of storm and it kind the but and and the arising of write-offs. the wasn’t the basis quarter, points meaningful, you it for

is remainder the invoice think think and from rough I would contribution of volume margin a impact the about to the have come that. that way the

working say. the remain with remain what about We on and really growth. team hard. the really really bullish. comment Progressive work pipeline about really that’s I the retailers proud The is it. who of So and overall excited excited just of would Appreciate distinguished Super at list

Kyle Joseph

hurricane-impacted Got it. areas. Progressive other Progressive comp. And Have you then in in terms partner’s? guys – on actually, October a trends Have and your commented their guys recently in stores – partner seen you both similar

John Robinson

got side, Progressive those in beyond Aaron’s retail inventory the know markets. more back I that. the which insights continues. said, mean, if But know don’t talked we’re the if And beyond we’ve we’re Kyle, snapped was exactly know that in of I we’re sort one think as partners. side. Yes. if we’ve Aaron’s have don’t or is we’ve ready – – our this But on John. more to we’ve any we that. aid I I comment any we Ryan seeing got But increased retailers that about side, And on with that. to the serve the don’t some demand

kind as just it We’re comes to and prepared it of taking be help.

Kyle Joseph

are credit seeing segments see to kind that why and card I’m it’s customer? seen Got decline back you in perspective. if asking started the one recent just just any growth really macro it, or stepping thanks. And credit of changes last periods both Have then your from improving availability if question just we explains of because in more a execution. sort this of to

John Robinson

a – from seen improvement. It’s know there And years, frankly. the customer business. market earlier, our on calls. either prior a seeing, side our think for pretty on the for said don’t been bit that And change I a as I I open about available from talked it we’ve just, perspective. so standpoint, last credit don’t a of been little we’re we’ve few It’s collection

the may some doing little cases, which in bit more better. customer buyouts, be says So a that’s encouraging, even

availability of continue. like same standpoint, that’s it’s that the feels how Kyle, and going But it’s So from us. we’re we’ll But as will for and see an that, hopeful that’s trend the kind goes just it forward. this been quarter

Kyle Joseph

Thanks my great. questions. for lot it, a Got answering

John Robinson

Thanks, Kyle.

Operator

I this remarks. like to would our to session. Robinson over And for closing conference concludes any question-and-answer now the turn John back

John Robinson

this you Thank forward you quarter your very call. full updating look results for participation and And fourth we our year. on year on much to next

very you much. thank So

Operator

concluded. The attending you today’s conference has now Thank for presentation.

lines. now a your day. may You disconnect Have great

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