PROG (PRG) 26 Apr 182018 Q1 Earnings call transcript

Company Profile

Participants

Kelly Wall	Aaron's, Inc.
John W. Robinson, III	Aaron's, Inc.
Ryan K. Woodley	Aaron's, Inc.
Douglas A. Lindsay	Aaron's, Inc.
Steven A. Michaels	Aaron's, Inc.
Bradley B. Thomas	KeyBanc Capital Markets, Inc.
John Allen Baugh	Stifel, Nicolaus & Co., Inc.
Beryl Bugatch	Raymond James & Associates, Inc.
William B. Chappell	SunTrust Robinson Humphrey, Inc.
Anthony Chukumba	Loop Capital Markets LLC
Kyle Joseph	Jefferies LLC
Vincent Caintic	Stephens, Inc.

Call transcript

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Operator

Good morning. Welcome to the Aaron's, Inc. Conference Call to discuss First Quarter 2018 Earnings. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. is event this note being recorded. Please morning this are John Inc. Aaron's, Robinson, Participating Aaron's, President and of Aaron's of Michaels, CEO Ryan business; CFO Leasing; Steve President Woodley, President Progressive CEO; Strategic of Operations. Douglas Lindsay, and Inc., and the

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

proceed. may You

Kelly Wall

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

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

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

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

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

John W. Robinson, III

as The to progress for are you our We're business Progressive at for good a start thank Progressive by off the the line expectations. innovating performance. and Aaron's customers, making today. us great both achieved growth to teams exceeding evidenced joining our XX% year. both Kelly, the our our Thanks, and line top and business We better serve with in revenue Aaron's quarter strong first top

profitability the both While business. expected expenses, investments and Progressive year-over-year, reflected which higher at Aaron's strategic included lower operating

have our lease portfolios are to seeing visibility key encouraged the good trends continue by We are into across and business. we

for bolster to position. an the profit tide achieved stronger Progressive margin believe turning a decisioning revenues. growth. on market-leading we're partners are existing our make in retail store lease the partners believe drive outstanding enhancements new retail retail and existing in increase Progressive significant As and financial more we more team our the our we result, partners for we business We're can quarter our with comparable process progress as the the XXXX for and optimizing had about and invoice of year. beyond. full We're guidance and and in strong pipeline the continues together another of model, reaffirming can revenue we revenue making significant help The revenue to Aaron's generate our The bullish lease dollars and execution, our achieved and growth with quarter. coupled

to We we our us in our results from transformation outstanding the invest the initiatives to seeing and platform. have are confidence talent give omnichannel continue organization, in

X.X first cash capital again execute return to balance quarter. priorities while $XXX on to in times, to and gives strategic net million in shareholders, as our Our remains flexibility healthy sheet of the us debt we which with to EBITDA did continuing

to over discuss it Progressive. turn I'll Ryan to Now,

Ryan K. Woodley

driven invoice a doors Strong door door XX% per to the growth per continued We revenue as and active quarter our year-over-year number increased Gross the $XXX all Thanks, door great total growth of jewelry, primarily door electronics, an our a John. to in in both margin higher and revenue, The invoice in with million. notable and XXXX experienced drove the declined per strong transactions XX%. of start appliances. QX, growth key increase as verticals exceeding activity. gain in EBITDA number across in was average driven with well of had active by XX-day transaction strength per invoice volume, and The invoice buyout location active size. increased We in expectations. XX% by

shifts both came We're investments write-offs While under I'll higher our historical quarter. targeted Operating quarter and revenue year. to strong this turn and our X% expected over and to and ranges. Aaron's bad of track X.X% that remain to annual with normalized Douglas bad the our debt. well as mix. within in provided remain X% rates of expense. XX% and performance debt At momentum debt pipeline, and with came portfolio write-offs expect earlier EBITDA of levels believe the within for on this as more to first strong X.X% in We write-offs well pleased to of expenses for we to bad for pleased in reflect respectively, year-over-year, Overall, the are comments annual gate the XX% buyout revenue and and support we ranges plan for achieve it continuing now we're the out the on reflect business.

Douglas A. Lindsay

is franchisees, and lower revenues influenced the franchisees doing past by our digits, platform. in line driven with by pleased work to decline performance our non-retail strengthen decreased the which of several Total margin our to was low-single the our in primarily sales omnichannel We're Ryan. acquisitions team a Thanks, quarters. the top in

as acquisitions our expectations portfolio. Same-store closures. revenue John out, store negative average size ticket in the the have in revenues, a of impact came ahead As pointed of store revenues increased driven which higher largely by lease offset margin, higher from year-over-year

our patterns. the are with operational introduced aligned in see to assortment, of an marketing, improvements our is product a teams. the work continue analytics recurring as customer We and into driving portfolio increase revenue lease trends cadences in optimization buying our and positive pricing our advertising base. by operations merchandising, We've our more result great and and better of These

As the and operating improved discounting XXXX. make quarter, in fourth comparable shift revenue to noted in increased guidance, can to the significantly investments earnings and in Write-offs margin of driven in this also the believe transformation, planned expense in to trend support analytics, and slightly this of by margin quarter, the as X.X% continue the store continue quarter products. increased we on revenues expect today's higher merchandising, to lower and focus our quarter business positive Lease and technology. we

As underway in number initiatives various of have we've discussed, a development. we of stages

Aarons.com. improvements optimistic The and revenue our on experience as search our we've excited selection, over of lease assembled. driving I'll for also initiatives Aaron's underway made One business our We re-platforming the of new XXth, our about transformation the year on. future on goes to increase on launched growth I'm We progress the product talent we've financials. and while to updating the faster lowering for make customer and the look the initiatives Steve an is other the site. update products and transformation it to about that the remain e-commerce serve. experience, April enhance platform forward it to to cost and focused now these improving you on that's we're customers on easier turn

Steven A. Michaels

Douglas. Thanks,

March $X.XX hand million ago. in up X% in $XX for period the to income for with cash for period. period financial million XXXX. The the was refund for the million increase at period million XX, of ago. the Earnings tax the $XX.X the period on of basis assuming in down Adjusted $XXX.X of basis turn XX.X% year million the million from quarter for to were the in the in a Revenues $XX.X cash the year. $XX.X XX first for share with a same was company this year $XX.X same of earnings $XX.X same versus first months the a million activities of quarter company with compared and Cash last quarter compared $X.XX million to XXXX. on diluted At the on year non-GAAP were quarter quarter the had EBITDA the net in ended $XXX.X Net same for to compared Net of I'll compared $X.XX $XXX.X $XX.X of end in $XXX.X were XXXX, $XXX.X driver dilution quarter. $X.XX over XXXX for were up year's quarter. EPS versus this for a primary three first the million XXXX, XXXX earnings ago X% up for Now, million was quarter per million, March received the year to details non-GAAP XXXX. generated a million the the for were operating first versus X.X% first

we the had no was versus on net million facility. the ago reduced was quarter, during revolving quarter. and the of at end March, $XXX debt quarter X% total outstanding the in $XX.X Our tax of XX.X% year The debt-to-capitalization million balance rate in our credit XX.X% and a

During million. shares $XX.X $XXX.X XX, X,XXX,XXX an to ago. of million common a stock count authorization we currently increased the for Consolidated repurchased at of stock. additional We XXX,XXX XXXX, X.X% year common quarter, to X,XXX,XXX purchase have March up customer from

in XXXX. we the X% Based the of are the provided now Aaron's X% negative range guidance the revenues quarter. favorable for results, store to of to be annual expect our annual positive the end comparable fourth in at expected comps reaffirming on noted release, business QX As earnings with for previously we negative

Additionally, revenue moderate the outpace significant EBITDA. lease and half will second expenses. for for of as from This the approximately consolidated operating we QX expect portfolios growth the flat the the growth in in with quarter to believe EBITDA growth of increasing year-over-year year-over-year size similar we business, more growth as quality have our year, back implies

update free guidance, in for for I not want to While formal outlook XXXX. did our cash flow our

merchandising flow $XXX to for range turn to the expect million I'll Given earlier, it over mentioned With back million free that initiatives Douglas of cash we in that, John. now $XXX year. the the

John W. Robinson, III

by proposition make all do Thank commitment deliver such a that, want to our the operator I to all close call to Steve. I'll to the for your of value customers. efforts best it With and your the our retail We Aaron's success. you, franchisees, thanking for associates, Q&A. partners to and you turn appreciate

Operator

you. Thank

now session. will the We begin question-and-answer

of go ahead. Your from Markets. Thomas come Please Capital Brad first KeyBanc question will

Bradley B. Thomas

guys. morning, Good Hi.

Ryan K. Woodley

morning. Good

Douglas A. Lindsay

Good morning.

John W. Robinson, III

Good morning.

Bradley B. Thomas

if the think, other I drive just the the the business. seen, and here, I and on versus the operations side, you're Clearly, maybe how about investments dollars quarter to I was side ask are revenue could could spending in I future Progressive segment. just about EBITDA I base having revenue first Progressive help expenses as you're wanted growth on very the of will grow for invest have and just grows questions hoping is, be you that you and much of but going revenue us been side to to the zoom things probably the down well day-to-day of as think understand equation, expenses, in given this growth. the guess I we've where But this year-over-year terms on there

Ryan K. Woodley

implies try that, were metrics, expect performance margin know on I'm gross obviously provided and the answer it's margin explains time in then That SG&A other metric as some broad slightly which There's plan was I'll the in one. it We another seeing. is quarter historical to within Yeah. varies relative talk And do QX. from two level. prepared the buyout gross remarks, annual remarks, seasonally I'll bit up to there end to there. higher the generally you is but because we're one. SG&A questions you would and Nevertheless, year, higher there the Brad. prepared a we primarily that Buyouts that to the in year, time beat – – year-over-year. year-over-year before. a the mentioned we last components is then due high lease down ranges range I impacted two key remained we've through. and and than XX-day are happy a be the reiterated saw the compare. out write-offs in that but provide a Obviously, that appreciate to margin few for as know in outlook question. And I'll I the

write-offs but prudent working the can more with QX drive to on in talked I with how large we're we we've that it's of market being to where internally It's unserved operating of felt XX% as commentary kind us to in that past, and you reiterated QX drive to chose want intend comment within Coincidentally, some And compared very on do efficiency, X.X% – And and those XXXX. said the the X% of last we initiatives QX respect are the EBITDA not were previously and and exceptional of invoice year. back The we to to revenue five year-over-year the X% to here growth. write-offs, to mentioned of debt bad invest be that this As leverage being and in what to And to this further those there if obviously debt positioned decisioning basis also to was out allow delivered metrics, in look to out a up at expect there a if revenue, future periods, shift will provided, of exactly of in X.X% X.X% XXXX were in we higher, thing of a continue low. previously drive we X.X% of three that of we best expense periods, margin influenced bad those optimize year. revenue capture levels of at the Both decline two the we about and which five competitor the points making. revenue. we're more we which QX primarily on low. ended parameters to exceptionally of a final expect lesser on last last bad debt it. initiatives we to stay it we go in was is we further in be expense the XXX quarter as we call, XX% result factor,

us provided the good are XX% the well the a X.X% Both to low are X.X% quarter to at on similar an story. And X.X%. we're of deliver level. within XX%. we So, Both last pleased of numbers. range is keeps annual were Write-offs X.X% was write-offs revenue with It exceptionally in track good year. metrics. versus

the QX next same and five XXXX. five The back the QX In lowest you last X.X% is last QX do at of in only compare exception you fact, if the look the be periods. periods, level would

think levels well, why that low you of year. retrospect. mix would we last lower of an the we So, opportunity bad in is expense to XX%. liked have and EBITDA from when I a The debt hovering of with ranges, money on we call, and of we the in the tighter the table, than we've like of around And invoice provided outlook on end question, asked that ongoing is the delivering while reality leaving our those that said more was have write-offs perhaps had bit the it range feel we to by decisioning benefited previously strategy last still provided we're and to decisioning that capture low XX%

bit an pretty a answer a a to long-winded know, but that's margin. I fulsome So, give answer, attempt on Progressive's of

Bradley B. Thomas

you a sounds I question, come national the rollout this guess to JCPenney there's considering I guidance out the And ask with helpful. strongly across rollout pilot second with half – your into a a to side, follow talking at Ryan, we've and up, JCPenney there, it time? That's about. on guess factored they're JCPenney Progressive that is like is

Ryan K. Woodley

question. one the the I reiterate about retailer, won't you appreciate know. made will a specifically comment I any I as in past. we've answer

question been implies plenty as get year, and there for It's feeling a competition. sit of There you the optimistic. leave the here revised continues all to I competitive we benefit happy to say to pipeline. our the and shape we it's today, As we've now. what's be this growth very and the tend not additions of from point outlook has to us time know. new some know pipeline they're to in extremely lot, positive with there. conversions obviously and we're strong leading embedded pipeline, which out for seen very not up strong The That's that

think be. always I to they'll continue

than fair market I others capture It's think that's and the of large U.S. our an more well of go proud growth to easy I'm an XX% what are the of as it's It's on of intention it's And the third maybe about doing share an and team; that's expression base, of (XX:XX) how belief they're invoice the delivering the roughly in of job. big. our large quarter, do a increasingly to is. excellent households, about. the investments all that. not

Bradley B. Thomas

guys. I'll others. Thanks, hand over you. Got it to

John W. Robinson, III

Thanks, Brad.

Operator

Baugh ahead. The Please John Stifel. from next will go question of come

John Allen Baugh

Thank start Maybe you. with Doug. Good for question I'll morning, out all. a

I in a lease on agreements you've improved referenced compilation numbers You that? was, doing margins, believe, obviously, that's Any core the your that detail or this I'm or business. of are what you've of what what prior kind time. you're driving period to as say, will like lease how, given in trend some throughout over looks quarter past quarters of written written whatever. XXXX curious it that margin And

Douglas A. Lindsay

asking from talked the things I'd Yeah, say a for we last lot about year. question. traction Thanks getting the broadly Yeah. we're of

Our merchandising an delivering team job has awesome broader assortment. done

strategy pursued We that which ticket that have we has portfolio. items trade-up putting boosted all then higher and this led into ticket these have to strategies really And our that. we're the put forward promotional

so, we're margin and to seeing our lot And a revenue present as as strategy, that better churning ticket into the away A ticket discounting well in margin portfolio streams. less higher of to handle we've better promotional lower items recurring and increase out consumer items, putting the higher we're are as really our finding is seen on the items. giving health merchandising

a forward. done lot a So, job. of of that This team great the nature going visibility business has portfolio us gives

more So, value churning the leases and see few the look lower out as value next portfolio at higher we quarters, putting in we we're into leases.

in have the And leases have We're good of than have, higher at so, revenue stream. because really visibility past. we recurring our collecting into we we length the the rate of a

than a So, even this from before collection healthier standpoint. recurring revenue stream is

margin get believe we're on that's expenses, And that's seen we to business, the the continue consistent if as range. pointing and and to good flow reaffirming higher the of end guidance. we through our our we remain comp guidance, for operating good store from we're you've so, And to why

John Allen Baugh

Okay.

of as down – margin the expenses being through the first quarter, are mean, where about up lease builds EBIT, cite year? you when the think equal, of It the stays it for year? So, I in will would if and the goes investments. guess, level we to helper was trying we and but annualized Do to investment, go like they year, maybe I EBIT offsets margins at their how course, investments. sounded everything be the I you think because through these year. How goes revenue and mentioned yet made in helper just we imagine it as core a personnel, I'm do the constant, go do, an, and the the are – were you expense we I of the in timing a of sense margin numbers the core going gross be not last up, get what year-over-year through as the

Douglas A. Lindsay

see, increases that expansion of at we Sure. OpEx. lease and Yeah. as expect of made steady be these do the which I mean, from that are of over see higher or the with we the leverage we're A and the margin we value leases any up that year investments and We levels. lot into last over if into, year, getting build business putting fairly you and to QX we and don't again has on visibility transformation. portfolio, year acquisitions see OpEx, course course the a we better significant our getting we We hold year-over-year. normalized those number look would being

John Allen Baugh

going or the what's Could I discuss improvement believe I change, And as to relates Steve guess, it there inventories in core. on and numbers? Okay. describe you referenced

Douglas A. Lindsay

speaking was cash the he in to from merchandising merchandising flow our believe getting I team. benefit we're – Yeah.

comparing drive this of the One is getting inventories. down of they've the effectively to our to we initiatives vendors can vendors great on product best cost the and our job sell, talking pricing a and of and just we year done our

benefit to course as the over product buy we enjoy of begin we the year, purchasing of So, the efficiencies. those should

John Allen Baugh

read balance or XX be there the with year-over-year last there days are you, going I in is then, partner to I in The do importantly, into guess, explaining there the not, mix mix when of will vertical XXXX, first days, look look retail on we you what if anything And that? Or up out XX the is that you was And more that at there quarter? fact anything slightly? guess, it my Okay. as question, Ryan. for

Ryan K. Woodley

of pricing, Good question, seasonality, might cetera. on (XX:XX), take days. influenced John, you et mix, retail which Yeah. rate XX days on is variables behavior, XX lot The invoice as customer a includes by imagine,

lot we verticals XX-day higher rates. invoice when carries be given tend in for right? puts try retailers the and account we the potentially buyout inherently XX-day see a any some tend of takes. verticals, to some developed unique XX-day that certain rates. see or So, fact there'll plan, period, from we Obviously, In buyout buyout lower profiles, we or In retailers, to higher and

when all And was goal was a from And are say, what so, and puts is are puts takes, takes, get those. play. right always it up But varies there lot we've exactly saw though because for we I at account seen within so and to the variables QX the in we while year-over-year. to there many don't of it historically, it in factor quarter just what quarter. you

buyouts XX now. going offering inception, since everyone, been XX-day on have remind to of Just so a our feature years it's

seen we've buyouts. lot a of pools through with XX-day play So,

John Allen Baugh

that in that within XX%, same is I Are still believe, XX Roughly, XX% we execute the to days, ranges? still boundary? was it

Ryan K. Woodley

Yeah.

origination financials base the it pool. roughly origination number the for right don't but pool, in pool what influences that's On that the of in accounts that to calc, I do our those that's pool front the rather period And is lease me. lease range. – in than roughly choose have obviously

John Allen Baugh

Good Thanks. luck. Okay.

Ryan K. Woodley

Thank you.

Operator

ahead. James. Budd Raymond question next from Please be will The Bugatch of go

Beryl Bugatch

for Thank growth. on question. the you morning. Congratulations revenue taking Good my

Ryan K. Woodley

Budd. Hi,

Beryl Bugatch

the – like concentrate on expense guess I'd I to you. growth. thank

a those or can bit Are in little people You segments bit grown segment XX%, little us year-over-year related and they $XX or distinction talk you about of initiatives? think us I about facility have worth a both, growth color as which growth. related? to give of million faster? might the new – initiatives. more maybe like the of they a you Are each give XX% Can almost

Steven A. Michaels

and This reminder, table, filing that there's bad is this a Steve. that just afternoon that write-offs X:XX. then increase debt roughly I'll $XX is at million take on a chart $XX OpEx million business. the we'll in About And categories about the should the or a is $XX million. Progressive XXXX. the $XX off up that there's and in Budd. start out a that business say, I cost, that XX/XX of side just XX-Q some was that about make or the is year-over-year in pointed in does increase Hey, up be other and right shy really personnel remaining Ryan split roughly and Aaron's in But low show base a which of of Progressive million between

OpEx the the the the of $XX the backdrop, Douglas And with a just categories for about or drivers as transformation. are those growth so, specifically investments talk let growth, business. in business and And million that I'll then,

Douglas A. Lindsay

Yeah.

guidance. the teams, return believe revenue our pieces our business the are the been So, biggest analytics transformation side last on that many quarter of we're it, of the and the we comp which business, in that's we've you're got investment merchandising and what and tentacles but business seeing and beginning seeing we're year on side one of the in Aaron's and investing the calling of to third of

driving lot about the of direction details some behind a that, So, traffic. that. the driving customer guys of happy and There's also trend on in right but ticket really we're are these

also right resources and far e-comm investment We the upfront do that to new launched of technology a site took and in people as April lot in as XXth and brining that. our

So, we're business a That growth we're driving that. been first quarter. of has other the about accelerating the lot traffic lastly, testing And super concepts things pace testing concepts. then optimistic into those in growing of in are Many of and their we're in some centers investment of all in-store and technology, and learning and infancy, from. those including call investment including operating efficiency and

of replicate those Some early update those, we're quarters. we'll future on you tests of are and the trying to positive the result in the more and

Beryl Bugatch

Progressive? on Ryan, anything

Ryan K. Woodley

Yeah. Sure.

of ways. Third question, and the in growth, the a because delivering. and systems ahead (XX:XX) We few lot. is ongoing we lot did growth business the a used It investment requires about characterization out people a talk of

in any organization. growing at XX%. it see virtually that's As increase relates the revenue to teams every to It's in the not the area of functional hard across people, organization,

systems. kind It's the substantially will believe we sustainably. in more context As relates help story of it the well about we're center, future lot Think are part up make people of Internally, systems, surprise that of more heavily efficient. nothing into investing a the of tools the think in probably the investments mobile, processes in business and grow our investment to people of of the unique in be tools, in what scale to and to Wouldn't a as to that'll externally that efficiency e-comm of these call period, customer self-service and our just as in know internally. us big business investing in years the come. roll we of all systems

Beryl Bugatch

the have might on understand give don't been maybe existing I support retailers. Can to yet? have OpEx growth us much how to the support any color retailers you you growth of

Ryan K. Woodley

Great my in with imagine, might a come question. opportunity don't the we I way of loaded. certainly off know could you I head if as breakdown, new but top a is good front the up invest

our and revenue lines get do lines on account people programs front up it's So, front. to – primarily volume. running invoice we Obviously, anything that an front and

before ramp a do and we're them. people So, investing programs programs. in even our we our first lot Think to lease retailer of and training with

don't a through, what a bleeds that happen to be. top that's of I factor mind certainly breakdown And so fair question. just would that have

Beryl Bugatch

active from? And I came was for have been Invoice Signet, might door, up Can with How related me. might that Okay. jewelry concentrated you were? last if much where or characterize think, it where it of been per that XX%. have

Ryan K. Woodley

those Good how Obviously, with doors. benefiting doors existing both maturation doors are from in performing. new happy new and Yeah. were Certainly the some question.

we've well from to both quite cycled is some at those continuing which past. of you're you the Progressive the help. retail per to the And what is as about increases lot bigger in scenes a as a team time those the certainly transactions get that increases in in haven't better transaction, also transactions that lot at out a of Certainly, it We sales doors, introduction associates mix here. it's drives behind the door, The number look as completing the the increasing going productivity size benefit accounts and seeing of big of doing talked motivating those through a factor the invoice components that. really effort spends for of of in and of that

Beryl Bugatch

much. you very others. I'll Thank to floor cede the

Ryan K. Woodley

Thanks.

Douglas A. Lindsay

Budd. Thanks,

Operator

The Bill next question go ahead. of SunTrust. Chappell Please come will from

William B. Chappell

Thanks. morning. Good

Ryan K. Woodley

Good morning.

Douglas A. Lindsay

Good morning, Bill.

William B. Chappell

Just stuff? second to were stores. move there does I that question. we Was as Progressive with a a anything I just returns notice mean, that higher quarter both Budd's how more look it average Aaron's you tax was into going ticket on follow-up or on at the overall And healthier? with and the consumer want and in little seeing

John W. Robinson, III

activities. our would perspective ticket Bill. for both say higher John. from in the by is the you businesses driven largely Thank company It's specific Hey, question. I

Tax bit a done this point this there's puts fairly seems we higher all Ryan strategies consumer specific ticket – that, drive hard a our as and other the change health year. to specific to from the another the that think about higher us were There's of for be could direction. for day, perspective, few it's So, perspective normal talked their there. in see in reason developed But a have a – very a little takes with I which season XX metrics each time, From strategies us business in increase. will and have that for mentioned. big

generally, like reform. this so, And has we there feel been tax

necessarily We haven't seen from consumer, we either. worse through that but our get seen perspective any our consumer flow haven't to

quarters. ticket, related changes our So, about last that P&L feel initiating that we happened feel proactive are in the this strategies prior happened to have we've changes our and we the been to directly have like the and quarter that in like company-specific

William B. Chappell

a really but to to schedule. out move if trying terms the but way I it just I is was little of was you moving have And of tying maybe, any moving it numbers Did is schedule. quarter guess and other then, was in regardless. And impact? ahead understand going more And And laid sell clothes pretty mean, of ahead fourth about that, that it, it stuff, kind of Aaron's pretty the odd to the if weather. it. third you was weather-related And quarter, were or could we like talk core Douglas, bit it business. I strong Got sounds it this a I know don't as rebound think to into start it's the

Douglas A. Lindsay

was in mean, from I the customer lot of There a places, the listen, of in Yeah. was kind Northeast. weather traffic as perspective. expected weather was quarter but there

customer the traffic Our is still rate is but of decline down, declining.

So, we're happy about that.

merchandising big and I we've to ticket the the think story been is the strategy able drive.

raise rate team before that the pleased I to think but same traction right, is they so necessarily we items, results just there. seeing and buying higher the customer customer, than inventory we're price, is levers expected. reposition have You're but that our we're the the the And do at pulling with not more ticket

John W. Robinson, III

traffic he improving. want are says they negative, but customer And clarify, to are just – when I they're trends

clear he see projects of we're as initiatives a when scale, we wanted – working and we rolling make targeting which better. we out those there declining, business directly small still talk So, number larger other in we're I a have underway and correct. reasons Douglas seeing And getting seeing be in a early trends want toward site, our that, one driving is that those. the e-comm the were directly stages we business. refining said traffic, results we're on about on clear, inside Aaron's focused optimism at the we're number that's and of the the scale, talk mentioned, which just but good to of technically of sure and But and about underway to there's it's

to which rays driving In success drive hard the has and more two feel to good Ryan the market we light addition give to optimism years capture us worked of big this And seeing the population, said, about last great a we're ways potential lot we're two higher with traffic those like as a higher, on there, also in the and ticket, which of average Douglas over around of it's a and future. the more third innovating customers. right customers, in we're of between seeing models

William B. Chappell

Got getting it. own the of freight around product for country? any have terms then do last one higher in And fleets, rates local me. you I realize impact your have but

Douglas A. Lindsay

We move absolutely. Yeah. day. every I product mean,

we've that quarter a all own have in that the of outside centers affect we the as fulfillment we year, and is of and baked go shortage drivers shippers, increases we bit costs first in it absolutely And into our to fuel monitor us. seen into continue but guidance. use in little so We and our

John W. Robinson, III

And another focusing more we're where future getting on area, Bill, the that's in efficient.

we said, one of that focusing the certainly And it's innovate we're chain not areas footprint this certainly return, as change e-comm as but work we our now. Douglas on efficient, for the more to we've We on and we're And that optimize a was right and we baked good really to lot supply probably going business, there. stores, a investment becomes expect our have and that already time, there there's all that's our change supply we're business. for more as But customized a making guidance continue XXXX chain as so driven, given the over into is of a XXXX.

William B. Chappell

so That's great. much. Thanks

John W. Robinson, III

Thank you.

Operator

ahead. from be The of go Chukumba will Please next Loop question Anthony Capital.

Anthony Chukumba

questions. Good have two morning. I

I doors anything So, the for XX,XXX. I when you you quarter If clarification first make more it's also your else. and results, year-over-year up XX% just were than to active to gave fourth number same The recall Progressive Progressive question, reported doors. that – want correctly,

essentially that to wanted imply that. flat quarter. confirm Progressive sequentially that doors were just fourth the first So and would between the I quarter

Ryan K. Woodley

but be wouldn't here. little just activity than anomalous given bit year. play which to give QX. Yeah. in it year similar QX, that rounding QX that you retail see a we in out We was after We're tend Anthony, when it was a little higher in trend stat, Ryan of the volume

Anthony Chukumba

Got it.

was So, it higher.

Okay.

a So, bit little it grew sequentially.

Ryan K. Woodley

correct. Yes, Yeah.

Anthony Chukumba

Got helpful. it. That's Okay.

John W. Robinson, III

in the on quarter activity basis. more a fourth see also seasonal you But

deal within often fourth deal So, the are quarter do same doors a in retailer. in will the do that may the that quarter a times, not first there

Ryan K. Woodley

active growth. growing happens quickly It count actually that but exceeded because we're that's of rate so that door of only the so in just we high the QX over QX,

Anthony Chukumba

Got it.

what quarter. saying assuming the active door, are in might that been to the fourth active there I'm transactions and a threshold that active as have first of fair in Is is doors an your doors because of you the based assessment? So, answer question, of be on sort some minimum there's Christmas not counted essentially some quarter to were

Ryan K. Woodley

is a door how as the single in door lease a counted The active be we and threshold to Correct. that's an build count. transaction

Anthony Chukumba

Got it.

is my business of best traffic seeing acquisition Okay. you're mentioned, That's any that helpful. you of attributable average the I terms increased year? much sharing SEI well, was question, And getting to how of, of as customer – the practices Aaron's size and if in clearly, ticket second and of wondering that from the last the of the so improving, terms some improvements just clients then in in terms in as your smaller,

Douglas A. Lindsay

ticket. the from right say revenue coming most would I or portfolio is increase now of

As still improving. traffic I is mentioned, down but

ticket And about place processes way that decentralization, There little in operating that. the our those say, go the our benefits And from in coming And product really bit that positioning. team and so, from more techniques is past we've centralized would we've things is and put more inventory I and really in really with practices Aaron's. gotten a we at merchandising think becoming centralized operating of I our we practices.

consistency past practices. in and you stores you'll and a pricing into in the Aaron's the what product operating think more in I So, see the go if than great deal

were Some of (XX:XX) continue the sort – and of practices and embedded we different SEI network. choose been implemented our have practices pick of over the that's brought into divisions and to best the that from all that, across from operating

Anthony Chukumba

That's it. Got helpful.

you. Okay. Thank questions. Those are my all

Ryan K. Woodley

Thanks.

Douglas A. Lindsay

Thank you.

Operator

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

Kyle Joseph

the have seasonality, gave appreciate XXXX? little but color the you Good on guys. ask expenses for Thanks you just perspective kind more of term business, thing questions. the a shifts of this from for expenses Hey. you of answered. seeing taking any my I'll the more or on them been of one-time if of or a Most a Steve, mind. morning, are is in a don't bit seasonality modeling just guys longer one

Steven A. Michaels

and seasonality. timing to going plan. There we we're where normal marketing do just I how in going don't some depend to execute some last to didn't that's on our one think may we're we that – want are the seeing in year things year QX do shifts in we

the though So, just that with are going side. to going to Progressive ramp side, having see SG&A be – the the and a they're leverage just growth is on even continual on we

modeling the I like seeing purpose in expense think So, growth. don't we're shifts for any permanent

John W. Robinson, III

to roll for I is, just the you're No. out but when decide kind to going reiterating, I you. of mean, I'd – that add They on one that with can't you obviously decide retail Progressive mean side, thing partner. – a

of have to because complete give have are ramp but annual don't that basis, and try the expenses we unpredictable, programs cases. visibility national we schedule hard their on in so, to it's you to rollouts, on somewhat visibility particularly of to And reactive many related and be an

innovation predictability trying a and things, accelerate time We it's to that get things, of So, making can't investments we as that. that try new lot In we're and something Aaron's – visibility from business, things around expenses constantly work we these scale, have the some have that time. we we testing scale, don't may we move we necessarily to new calls, as and something we're on right all. is to work That's we doing and our seasonal things we're the that forward that's choose small just we'd out more scale luck may now. but more in we just not on that's at that put have aggressively. good that there And based on

Kyle Joseph

quarter, think but balance, capital the back bought strong dividends And some repurchases, this and/or guys helpful. your very us in that know That's strategy, helpful it'd refresh year, for in if you I allocation that. mentioned Appreciate the of terms you terms acquisitions? cash Steve be then in – stock guys I just could to on of flows your

John W. Robinson, III

Yeah.

at Progressive and So, so model business despite cash. we're generating growth, these from pleased. of levels Aaron's perspective so business. the a about cash is it also is flow One obviously cash is pleased the with really generates generation thing its great business still that And

it it gives pleased very the talked market but large past Progressive maintain side, capital past. make investments to necessary want gives leaders that us lot, retail We've to a be to the the foremost, We in and that's adjust us we've to ability So, to a model on we're conservative the the that with think to we the the flexibility partners our and about the structure. been the are grow in case. Aaron's on innovate side first

Progressive to of And the acquisition, different so, to that are in structure significant businesses processes, we're there any looking going absence really that XXXX. conservative made acquisition for can the business, we're that technology out that or which maintain similar augment Aaron's our our to a in add the capital product, could always things

always we're So, looking that. for

strategically have from full perspective. job We our an time, Steve's looking team deploy to to at ways is Part M&A a a that's have team. of capital

maintaining conservative but through dividends we'll continue buybacks. continue of to return We we capital in a backdrop that to Beyond shareholders to back bought capital to stock the and first and and structure, quarter, expect forward. framework it'll kind other maintaining a the a keep in going of and that sheet. of from conservative We'll standpoint future, the in place that a strategic balance activities be do function

Kyle Joseph

I Got lower call. that you this, apologies one rate and And outlook? little if the bit then prior was than it. change on Thanks. guys talked the about to Any last tax one, missed a

Steven A. Michaels

for in It in the of year. it's going to you're the still think quarter. came the XX% be We No. neighborhood for right. mean, XX.X% I at

XX.X% So, I previously. to XX% said think we

for XX% to closer maybe year. the So,

Kyle Joseph

All answering for my questions. helpful. a right. lot That's Thanks

John W. Robinson, III

Thank you, Kyle.

Steven A. Michaels

Thank you.

Operator

The come Please of from next ahead. Caintic question will Vincent go Stephens.

Vincent Caintic

so quarterly questions guys. asked, My maybe ask some I'll have morning, been Thanks. broad more questions. Good

on the so sales. to side I'm there's from of but if more with where retail retail retailers retailer your to you positive the you the side the retail engagement same-store particular side, on in retail we've might get actually partners, areas are maybe concern On maybe to the Progressive, mix so base and wondering your existing terms been cautious sales? see any hearing maybe from new pipeline specific – on trends and seeing looking some how side,

Douglas A. Lindsay

got We've large Vincent. question, base. the a Appreciate

literally So, of covers thousands locations with XX,XXX retailers. different active relationships

So, of we are that course, better folks some see than the others. in that basket doing

exception, I comps. of they're quiver is arrows maybe think positive what us without helps the Progressive instance as that drive one to in looking that key to the in

Progressive that better if not may those support to hope, be So, think retailers you as as execute how can program they about their on the even they're doing well they focusing comps.

with across but across big key I really one those and think sales. the and So, the support But the looking support I retailers business those the say drive improve Obviously, team will a where not to hard we that and of we're see a comps across driver. we pleased what of to to is see got us fair very comps. that's it's initiatives think for and what working characterization the work we we've as that help that the thousands same-store us instance to portfolio, across single it's say portfolio. with, are in they're That's that positive every that's that key

John W. Robinson, III

always with trends same Ryan we've the And thing reasons I'll And retailers' is, Progressive is Progressive Vincent, continue seen – as that John one is the this that historically – to product. one one door thing, the of the is add we with time mentioned. innovate trend the to over as aren't same

investment in and sales also, investment sale the job motivating as the lot mentioned, partner better the last seeing has of a spend amazing the of lot the easier talked product of an we associates. part for the easier of productivity, better, that. over and Ryan retailer, making team of a is about And time done point for same-door training in of continually the of results And that we're the our and years. at business. faster and customer, drives and Part we itself – So, that the the few

more doors. the know-how of of decisioning about that's partners, we've investment for big together, around is built that talk out that. those so more And And productivity don't applied Progressive to differentiating that. goes the some we more one but continue well. gotten things with technology, the a lot We've in big all And at We've better infrastructure that drive enough, factors of we the of one retail reasons as it's and more of that.

continue we that where that. all better, this. the that's success, a is business to time, we've better is of our lot happened better investing want that's that do we're of getting just what's talk and had and about making has Ryan think business I over that's a gotten and that things the we such the we and And of driving in the and to the competitive lot said, business. the get sure mentioned pieces And position, success, we've what's not have because so the why and make and ahead So, We're of these right maintain investments. we'll continue better of been right today but harvesting key doing as we've to we people

Vincent Caintic

Perfect. helpful. That's really

same front, on use know about cash from and there or Just of you benefiting the side, anything consumer, on as all? XX there. you're behavioral is maybe you? I consumer. sales sides, last upside, the – propensity consumer more at different the a still side, leading whether on pay you so same-store business financing changes that (XX:XX), Maybe some the Aaron's to that's more healthy spoke engagement seeing that Progressive on it's Are seeing seeing any days, the question to maybe switching downs

Steven A. Michaels

think don't think macro we we have earlier, that can to from – put said business. answer that Aaron's anything the specific I place more see It's in is that I mean, in a don't I I strategies think I perspective. – as the it's

and for If and reform we've us. a tightening rise customer to tailwind the sure, Vincent. there's help something that been time that to think our flow look in It's be over can and tax the our forward of can generally, as could extent can hopeful markets a in low And rates customer and credit to you that's that cause typically time, we're through expect for seen it tailwind, over rates very, happened, interest low down the but of the know that haven't we cost but a to – capital, we that lot period options. you our very and of that actually tightens, so, a And demand. of if future driver as expansion a yet, happen that could

Vincent Caintic

much. Perfect. Thanks very

Steven A. Michaels

you. Thank

Douglas A. Lindsay

you, Vincent. Thank

Operator

And question-and-answer conference hand to over that to gentlemen, conclude his ladies our will the I back and would John like session. for remarks. Robinson closing

John W. Robinson, III

Thank for you. you the on you QX Thank very much to participating in our forward We updating call. look results.

Operator

Ladies sir. you gentlemen, and attending has you, concluded. presentation. for conference Thank today's Thank the

You disconnect lines. may your now

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