PROG (PRG) 20 Feb 202019 Q4 Earnings call transcript

Company Profile

Participants

Michael Dickerson	Vice President of Corporate Communications & Investor
John Robinson	President and Chief Executive Officer
Ryan Woodley	Chief Executive Officer of Progressive Leasing
Douglas Lindsay	President
Steve Michaels	Chief Financial Officer and President of Strategic operations
Bill Chappell	SunTrust
Brad Thomas	KeyBanc
Bob Griffin	Raymond James & Associates, Inc.
Kyle Joseph	Jefferies
John Baugh	Stifel
Anthony Chukumba	Loop Capital
Jason Haas	Bank of America Merrill Lynch
Vincent Caintic	Stephens Inc

Call transcript

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Operator

Good morning. My name is Carey and I will be your conference coordinator. At this time, I would like to welcome everyone to the Aaron's Inc. Fourth Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After is Please event recorded. note this being

turn over Relations the Dickerson, now will I call of Communications Inc. Vice to Corporate and Aaron's, Investor for President Michael Mr.

may your You begin conference.

Michael Dickerson

you Aaron's fourth the quarter Welcome call. Inc. conference and good earnings Thank everyone. to afternoon, XXXX

Inc. President Robinson, Steve this Chief Progressive of Executive John President Financial of Aaron's Chief and Aaron's Chief Lindsay, business; the me Aaron's President Joining operations. are Executive and and Michaels, Officer Leasing; Inc. morning of Officer; Woodley, Officer Douglas Ryan Strategic

our have release Many seen of you already this a copy of earnings morning. issued

For Investor have Relations who aarons.com. not, the our of available website at on those of section it you is

call forward-looking risks During forward-looking harbor cause earnings our certain results this make of that the harbor statements our will provision call, identifies that the content we attention to provision your safe statements for want be The of safe statements. our be to end from may found can release. differ at materially actual to I the forward-looking.

our please year XXXX XX, December file for morning. we XX-K will Also, ended which later the this Form see

For a business results may forward-looking statements. we and our to differ any related description obligation risks update actual place our cautioned the such statements. on of materially from are not forward-looking statements to to Listeners cause to that emphasis the under undertake no

insight included EBITDA and to to understanding measures company's companies. which believes non-GAAP facilitate performance. financial and into ongoing performance are investors comparisons of adjusted the non-GAAP comparability call, be been cash to non-GAAP operating provides may these with assist The non-GAAP that EBITDA, with On and measures, referring prior help them reconciliation adjusted in our with will periods performance the other company's the provide release. and we including and certain our affect today's operational items tables company detailed which flows measures the of results earnings measures operational these non-GAAP to meaningful in earnings certain for have These EPS, financial

equivalent of call to Lastly, comparability provide the compared. accounting adopted the the we leases. beginning to make period release a this have comments revenue the on company an will table in a basis. year effective quarter Throughout these comparison to to of made press In year-over-year related we new was information the comments our new you adoption our the first and items each today, related that added the for prior assumed with XXXX, some standard XXX, certain of as ASC standard of at

will now to With that, Robinson. John I turn over the call

John Robinson

the improved on strong positive basis, all of also offset of adjusted in Progressives Thanks fourth same quarter a of half EBITDA. X.X% contributed Aaron's Mike. performance XXXX a The today. underperforming result invoice primarily continued I'm Aaron's as growth ended the we nicely. and same-store achieved note. revenue in business pleased And growth by thank collections of XXXX. growth you in Progressive, This On revenues closure first a in is consolidated the such us accelerated invoice the joining partially of stores increase the strong quarter over XXXX. for expected to quarter positive which

$X.XX team Invoice earnings. fourth quarter per Adjusted delivered the XXXX. dollar of from in estate Expense the as retailers gains XXXX revenues from added the and locations EPS both productivity due million and quarter. a and throughout diluted year revenue the from volume up adjusted digits Progressive collections existing over XX.X% prior The grew real improvement year for additional a $XXX.X in low of fourth quarter to non-GAAP and another rollout EBITDA and retailers. result respectively, on record were increased and from and store Aaron's increased double management business quarter share recent of the the same both sales. The EBITDA performance prior

strong progress for XXXX, by prospects Progressive's and results business. encouraged the we of I'm in the As enter continued the transformational Aaron's initiatives

our We net and debt to people million. one remain with invest deliver technology with Given approximately EBITDA less future of a turn growth. into capitalized we the in conservatively to of liquidity to ratio and available fourth optimism, quarter continue than adjusted $XXX

allocation opportunities Our to pursue strong to and disciplined shareholders. to in provide return invest and approach sheet capital our M&A balance flexibility continue businesses, capital to us

also $XXX compliance release we related and earnings and million is as which an FTC FTC Finally, as such reporting. activities in agreeing principle consent Progressive monitoring, morning. will the this to we a with order to paying in agreement reached disclosed disclosure in staff our Progressive expect with to result respect

proposed to to by of company settlement Progressive's uncertainty so has the care Taking litigation. the have agreed centerpiece and protracted is avoid caused of philosophy customers and distraction success. this had We the the business reason much great

behalf and on customer Ultimately fully are For exceptional period, customer. the and in to has customer and Responding regarding numerous significant offerings to always The also innovation amount has XX-month a inquiry new better to provided years, about to There to of have meet Progressive's is an willing as objective practices. significant subject many company competitors in feedback transaction records attention for our team FTC's to capable the constantly answered management other how industry always of team required the and has ways their questions but business incorporate the informed objective millions innovation over leader at been and are innovative on of Progressive customers. serve looking this scrutiny. resources several more the lease-to-own driving is the experience. be marketplace Progressive an led and every

is has having in believe been difficult, competitive While this better this position stronger a inquiry and been Progressive we through process.

plans discuss outstanding I'll XXXX. to the Now and over call for turn Ryan to fourth-quarter performance Progressive's

Ryan Woodley

team's very quarter the John. the for execution of and XXXX. Thanks I'm in all pleased with

which revenues XX.X% and help the to to the continue fourth quarter future Net a to people of the quarter of $XXX.X performance growth launch compared a record retail growth strong fourth throughout X% key on contribute investments million. driven The as infrastructure, We year will deliver door. active and in the retailers the XXXX to quarter. in XX.X% rose in national revenue active invoice consistently driven was in including partner in growth quarter objectives large increase by The a rollouts of in of and locations by new in capped per result invoice fourth increase XX.X% doors the a was by a increase periods.

national Adjusted strong last EBITDA increase revenue XX.X% slightly offset driven as by than in for the write-offs. to and a period higher growth the increased year-over-year same cost year, expected retailers onboarding and by compared

the increase impairment reserve in originated on an our in As anticipated leases. accelerating driven quarter invoice initial newly growth fourth

As of We performance targeted of a from XXXX the in the the XXXX, were within X.X% the of ago period. X.X% result X.X% revenues at write-offs revenues in range demonstrating year to full our X% year ended of revenues. compared of consistent annual X% X% fourth XXXX, reported quarter to in up

expect business our strong from improvement of partnerships. across to onboard long-standing customers. we continued productivity of As by repeat partners, our well newly retailers, existing from with look we've from ramp beyond, as incremental as growth to a trend plan many existing over rate of our a time and of exhibited benefit opportunities XXXX increasing and Historically, the supported we for growth

near conversion. retail continue. and continue in market XX% the revenues. technology due we expect XXXX remains to resulting buyout of is low where opportunities. We to trend acceleration attract within half from a expected XX% from to target That of for investment on disability. is The pressure exceptionally in available a have the as EBITDA said we expect people our XXXX margin the large successful to was to margin XXXX. year of past of plan to EBITDA an XXXX practice partner that portion of will day first and convert well term XX well partners XXXX and in includes which growth addressable a but pipeline the our and be younger growth range existing annual activity with in invoice long-term margin increase Consistent conversion new terms we primarily of our anticipated retail outlook portfolio our gross in expected as below pipeline rapid

incremental includes tremendously grow I'm proud the team's believe retail initiatives investments We agreement relationships million the partners. compliance performance We highly productive well for these customer existing plan the partner our profitably believe In and to Again, the of Technology enhance support addition, quarter FTC. to this new experience to of in the people our with well enhance and with scale as further tentative our position. as year will convert and partnerships, continue we to retail in our investment position related competitive approximately opportunities. and as $XX investments attract, Progressive's strengthen forged

business results Aaron's turn to the over the fourth Douglas call the XXXX. plan now discuss to and XI'll for quarter

Douglas Lindsay

generated these quarter that EBITDA happy Ryan. the by our and in in performance. returned to increased collections quarter, the Aaron's business levels revenues. primarily fourth I'm report successfully Thanks store and collection both sequential Same and efforts, operating improvement collections growth as We same achieved results to to adjusted as by due the X.X% reducing in well in sales rebalancing store revenues expenses. the normalize

in of lease improvement efforts. written of impacted revenue declined the store X.X% collection sales of rebalancing the consumer flat, which originations are XX% basis into the negatively and quarter of revenues points year by were an electronics XXXX, in same weakness lease ongoing as Recurring For from XXXX. in the XXXX. full And portfolio for XXX was revenues our

in electronics, recurring our highest growth portfolio into occurring revenue margin X% the the categories. written increased in Excluding with consumer quarter

been the representing positive be key of overall investment. in E-commerce indicator leading revenues continues business have the XXXX. and written to as electronics. in revenue recurring bright XX.X% for quarter spot a compared fourth Recurring the XX.X% an continued of of written same a E-commerce excluding single-digit of written of was XXXX which remains to both one low of up growth up consumer in the recurring store in from initiatives quarter revenues XXXX. fourth would fourth XXXX E-commerce area of impact our XX.X% the revenue quarter XXXX

increase the in compared quarter. an the of result on revenues. created in or period primarily X.X% estate a X.X% performance higher Write-offs same XXXX The to initiatives fourth performance, closure collections increased and was elevated increasing in stores $X.X the by negative management gains quarter year. from sales sequential EBITDA were year the Adjusted to quarter, e-commerce of expected third revenues reported the driven in and mix XXX on and sales our last expense write-offs by quarter. in offset the new in is the The write-offs. third as a Adjusted slightly increase collections the impact of improvement were million by X.X% X.X% down real partially compared ago which EBITDA of

We expect the as forward continue sequential improvement of return to performance. going normalize write-offs to we collections

and portfolio lower fourth the elevated into than written revenue XXXX entered recurring write-offs we and XXXX. with reduction the the portfolio a the of result balance a As quarter,

As business we look the to pressure the challenged partially write-offs. consumer continued from our portfolio by lower to XXXX be throughout expect business electronics cost the savings offset size, we and outlook, continued lower by

various store are concept. newer you next-generation several we've far As the to In few stores thus significant nine younger XXXX, know, and years our stores and new states, achieving been formats across over are origination, and these attracting customer. last opened a develop next-generation lift testing lease we

year. that expect XX next-generation this open success, Given approximately we to stores

We decisions. take a approach continue future and of to result these to will investment to continue monitor stores the measured

to I'll fourth our results now over outlook. turn and to XXXX the quarter discuss financial Steve call

Steve Michaels

to were up points of company XXXX million a basis XXX. a EBITDA a accounting the year, of ago calculated adoption the a quarter was of of On compared consistent increase for XXXX fourth XX.X% from million basis was constant period on over for for an XXXX, million the Adjusted same quarter or base billion, last of the increase Douglas. the Adjusted for of consolidated $XXX.X Thanks the with year $X XX.X% fourth quarter same in X.X% revenue of when the $XXX.X year ASC is an revenues XX.X%. basis. fourth quarter this period $XX.X on the EBITDA the of fourth XXXX in XX

progressive increased reductions fourth have $XX.X period. Operating from to operating the basis on write-offs the quarter XXXX more and gains approximately certain both personnel of than to ago in year expenses a $X.XX expenses, EBITDA sales million. million and by $X.XX costs investments decreased increase advertising would Aaron's estate year-over-year in and business. in Increases operating of approximately compared in businesses business in prior the the non-GAAP includes Adjusted versus in constant EPS million expenses $XX.X basis, Aaron's occupancy increased accounting increased for XX.X% locations. On expenses Diluted in partially related quarter. in the account real $X.X offset the year a to quarter for

$XXX recorded for activities compared quarter, to generated $XX.X full we fourth matter. and legal FTC million charge with the the to related and fourth from expenses the settle the end an Cash for the quarter million $XXX.X $X of at year agreement principle million year to $XX.X XXXX company in progressive million ended million a operating was cash XXXX. the in During

of repurchase average During shares dividend. of at XXX,XXX quarterly the our per repurchases the through these quarter, share an $XX.X our we price $XX.XX approximately common company's returning cash million to shareholders and stock

liquidity approximately conservatively For the of $X.X approximately the purchase X,XXX,XXX capitalized million $XX.X $XX.XX full We ended to fourth per in $XXX ratio returned of an the share common January and and from the year shares of available credit in XXXX, other the related which changes million. quarter January to company dividends. its remain to million date $XXX million maturity with On approximately adjusted to million increases facilities commitment a the and maximum X.XX. the net EBITDA amendment XXXX, to $XXX of XXXX extends completed revolvers XXst, among debt at

with For activities issued of morning. are in the agreement from release have $XXX charge related to the million this FTC flows million earnings before to $XXX operating XXXX, included approximately impact in to the the initial expected outlook we our be XXXX. Cash tentative the

and the We returning investments businesses evaluate share will by and of in continue activity excess to to M&A cash, potential shareholders prioritizing through followed buybacks capital our use our dividends.

availability had on December $XXX million XXst, of approximately million company the of repurchase XXXX, share its $XXX authorization. As

results be buyout On business, of and resulting buyout at to Progressive Consolidated XXXX, adjusted expected are year of adjusted to XXXX Progressive we gross prior the half will day EBITDA quarter between lowest half EBITDA half lower margin of lower and EPS and at Due be we to in a rapid the half in and therefore Aaron's increase the younger activity. the adjusted first year. non-GAAP adjusted the which non-GAAP consolidated EPS higher expect XX/XX and in the acceleration in quarter lower basis, in roughly is second the to first XX EBITDA growth prior and year half. trail split expected expected first are margin the first the the expect year-over-year exceed due to portfolio the second while and activity margin the invoice revenues EBITDA, the

These estimates approximately assumed on effective XX% effective an of annual which are tax to trend rate similarly tax will based quarterly the rates in XXXX.

assuming also shares the million XX We are approximately outstanding throughout year.

the staff. Form in incorporates approval, in is XX-K still outlook final pending prepared release, XXXX Our to are with FTC our fourth-quarter comment of what impacts Progressive our unable the earnings principle matter we is beyond comments. this agreement and expected Because

the now will with turn call operator With over that assist who to question-and-answer I the period. the will

Operator

Instructions] [Operator

come will question first of The from SunTrust. Chappell Bill

BillChappell

of first back as you and guess customers how early Two expecting to how portfolio as are have the as new of and the on stages kind to move help the you into they it will XXXX throughout Good is year Q, half so --you to relief still on X on appreciate in and them, of and assume half me of they understand bigger I transactions payoffs Progressive. kind XX-day terms into alleviated. at back as that questions, trying and fairly keep two some the to move understand the ramp get continue or the get won't big due I it percentage just color these morning. Thanks. we XXXX I but

Ryan Woodley

Thanks here. question, Bill. the Yes. Ryan for

we back quarters the back to of latter part and XXXX, XXXX trends generating what's that we're if saw out Q similar look growth play interesting If year, plus latter you in XX is of you look percent rates.

experienced the the buyout thing first you younger portfolio. netted you rates happen of saw same in had half You where a a XXXX higher because average

the know their blend sort levels dynamic So they're leases And those you trend on and outside which early older when invoice for that the you we're generate I where in high in to buyout be opposed and definition growth, of to those younger by to know you stated average of same eligible portfolio just expecting play of XXXX. out of in here leases as but options just period window. older that lease are younger discounted may

XXXX similar Obviously, we're out about they in trends as play long-term delivered in you realized be of year expecting were to big contributors pointed the optimistic potential. certainly they'll we the be is pretty just represent them going won't for So far think we XXXX expect incorporating in growth we've in and great out we're about saw which and opportunities as we all do to plan which but one, and excited excited those forward. that results XXXX very what thus

Bill Chappell

color just And closure especially even Doug, a new two it kind back I'm the we over looked sales to of negative with of for long-term same algorithm and it four Just then, a great. nearing missing? same past sales again that that doors a store else is this of store Thanks. something the pressuring more is would years there flat year. more Okay. of kind mean the negative for kind performance that the outlook be maybe were little couple or like it the business the I so or

Douglas Lindsay

Yes. Bill. for the Thanks question.

of over raising merchandising you mid on the the quarters As pressure the the digits. several in which get saw that our and had comps few positive we've last we has ticket down to single years we've And delivery by allowed us business recall, which consistently kind overcome had strategy XXXX.

out comps lift a in for fourth pressure, got really scrambling back the they a rolled the quarter. to we came sales also of great recall positive in and particularly business be third proud sales but collections portfolio may and collection quarter of we team to the get fourth the in need where initiative in quarter, under You in that delivering

into portfolio of of in that the pressure had the continued net-net through the portfolio were we a carries off in impact the we portfolio. remarks, into XXXX XXXX. in fourth deals out writing as put in part As churn on the QX were as I things did originated in the the top that high we that pressure had churn in my with quarter, revenue, portfolio, year QX. to that, mentioned where some we we portfolio On of to lower course The on those of the with were ended we of of size both putting And electronics size than lower year. consumer

As we QX. entering with additional happen to some have in that also we XXXX we'll look charge write-offs into first portfolio not quarter also lower only related size, will the

to expect through in the the were write-offs write-offs next to We that be over year to our the year early of the year better and for portfolio than the and lessen churn course in XXXX. they full-year

continue. year which the despite improve seeing furniture the despite consumer those course to of over growth down, we'll I news over We're the electronics. margin as mentioned, in higher we're being appliances also expecting year course margin and is products good and of of are to course the in pressure the consumer year see begin the both of The the over lessening electronics consumer electronics

collections range. X% see do beginning net-net, consumer the of we be causing over improvement to year the see as our the a to trends same and expect write-offs margin are course store in could balance, component. lower We negative on comp that So X% that in lessening electronics the of

Operator

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

Brad Thomas

need you that at affecting slowing down. is and the to that try the to you. everyone. be coincided a for seems question, dovetail industry assessment CE curious the I with to ramp cannibalization core Thanks. how underperforming, side. as headwind you look the they off occurred your Best I Good But latest just guess pretty on the Douglas, Buy ASP dynamic just declining morning, be widespread with at I What's is the dynamic business obviously, that think CE last of

Douglas Lindsay

word? Yes. you I'm middle word catch there. the repeat sorry, that Brad, last didn't just I Could

Brad Thomas

up in the consumer is as electronics. how around Best cannibalization like evolving partners Buy Question ramped

Douglas Lindsay

as Oh the these and lessening we We've much on headwinds look the If We've I hearing a that long defined our Yes, way not in time. see. as business. all we're I a consumer for actually part been gaming. back facing television, audio electronics electronics business. in of at been and seeing consumer by that

So the down see at revenue you'll in represented about chart XX% ago if our it's revenues. pie to it's down you -- XX-K seven XX% about look it our of of years XXXX at in to

over providers of then as price significant So you it's electronics To the these about all new innovation we in we've us, time. light lower-cost know generally been compression these products this seeing lessening the and have there's market, commoditization in been entering market. of

expect We that continue. to

se. cannibalization is any per just a seeing of not a trend. are We this continuation

fact in else. As look TVs costs them and as challenged TVs, Walmart or holidays in we're of the over a at lower anyplace any at purchase business purchasing matter the buy we to Aaron's can you

$XXX So is a for it put to challenging on it when XX under you're very inch selling leasing lease. a in becomes the when business, TV

to that addition preferences changing consume way else. you know, the content as In people are everything and consumer

whether declining re-merchandising see our over What of But we to those stores to is is the you and we be to continue test, in replace to coming we new should price need So now CE other showrooms year. this category drive a actively it volume we're products. pressure. we're products various on term, in be bundling really and CE testing working doing with which it about and long expect this our under it expect think things right with to

Brad Thomas

it? strategic may transitory, the it options all be items big might your chime Does that to guess looking we're have that Great. on step may a just about you thinking and in EBITDA then headwinds I John how down be these change if thinking of for, some work in persist. you for the question Steve, the the potentially in, core should given core about And want and any for of some XXXX, core at be

John Robinson

perhaps and Thanks to direct-to- question. business John. the it's believe think investment customer stores markets robust looking, be and believe probably to for model for channels to those an to has We the it has that that a a the been and for able and direct-to-consumer control the we model. --the in in better Yes, attractive located some even place the or Aaron's better new advantages decades ultimately fewer that to we in a volume this believe chain last There's ones us delivery believe overtime lot same We and execute for we're be will will make business supply ecom and and in Brad. continue Channel. us fortunate still Aaron's to mile leader got place. we've really of higher support, consumer and on to because It's we the be platform two already channel

we have like right feel assets. we the So

really a good The continue job but job, results with concepts team going they're done approach and put the new to track done also And really while Douglas a of much transforming of is a and believe water that managing on them. manage and team the we it's with a profitability. store evaluate prudent we go. to capital keep how terms in But we'll we new good we're e-comm tough. right good to doing as of these faster discovered on business. moving in taking near-term trying transformation that some model, kind They've job to have toward They've

think the And benefits. that's I of one

to the bit business model, as cash quite as is move that system. good of about we working the that Aaron's it the does out take a you One of capital of news generate

with very that's of So a attractive the aspect helps model. that. business That

that long-term opportunities that's ongoing to picture to He ways best can that understand kind Steve, it's the terms assets the we thinking we that strategic the process And constantly bigger do strategy the all out optimize and I we're job looking create our team. and outside thinking what about work a with of enhance then kind has time do In thinking, company and that how about and we of of we team have. figure value. for an have

sorts always things. of certainly So we're thinking those about

Brad Thomas

usually may What next good That's to model impressive that's get next helpful, the few I'll John. about invoice quarter, indicator you really the revenues in us growth help look might squeeze push here even think you're in guiding this up this off a to in And a you of here bit year number on one should little have Can that obviously what to guidance I coming at more XX% here Progressive let if more cadence like? would about quarters? you though fourth great like of right here. be and Any for ramping revenues guess look quarter XX% least think XX% if I up we're to Ryan. you the And to revenue number directionally. XX% the try I in revenue Lowe's year. how A could color how great. full off

Ryan Woodley

the thoughts is that excited Thanks a those XXXX, and that ways just QX some think a very deliver and XX% into as growth hard Brad. it obviously share sort was about I'll strong very to about really question to at for results quarter team worked Happy of that, mentioning the Yes. to offer on it. translates appreciate few that

First, a other we quarters. extend meaningful doesn't of portion QX that electronics similarly the to or necessarily in season experienced of trend obviously seasonality that growth holiday that shopping other to And particular. in was verticals consumer and related

that's thing say. So one I'd

really of other a is multi-year with improving previously national earlier The is we've opportunity. more seen I productivity bit launches a and this second thing mentioned as

practice. which in conversion mention would it's market at that only it other have unserved hard working opportunity partners that thing, remains while we that pipeline with We're there. obviously in very keeping is we're very XXXX visibility. the but the We've the vast happy And large our lies the really past And majority ahead we're in opportunity. and be opportunity we're and a that of that with seeking we the also I years to happy believe factored continues with to is -- where realize near-term

That's very about revenue just that we're of we're it. just on and $X.X year so the where think in to that with at. net accelerating where that's those about We're assumes So approach growth blend the billion just it's all a midpoint bullish how take we we revenue. guiding

So very it's has we're the on. trajectory revenue accelerating be very that business on I growth and becoming we expected a think to of excited generate raise on us to large

Operator

Raymond question will come Bobby James. next from Griffin of The

Bob Griffin

aspect. far, Good morning, for guys but and have in pretty you detail on appreciate the on seems understand you margin business consumer higher weak so out still the year. everybody. the just category. the questions, my other We're stay has taking electronics given all on all profitability to I like not Thank calling in as struggling It areas the core parts moving right I'm been

So XX has next changed go profitability year? the of to flattest for slightly all XQ have the down a what of from sudden end plus in core down to since really exactly EBITDA million

Douglas Lindsay

this Bobby, is Douglas. Yes.

as some margin related it on Delta So is our we to of of than are there quarter the EBITDA pressure we're bit portfolio of in look higher in growing of and but balance more on XXX% the The CE. the are lower benefit course fourth do beginning on to getting and balance or beginning I that coming the of that XXX year and quarter decline that put XXX, of out we're softness that if was and to that XXX, same-store good year third at that do now the other a categories, and news major earnings. churning comps that lower of the has we before deals three to overall growth number collection CE and to with has despite categories this down you has at last offsetting XXX% came mentioned in and with in into right our year little hurricane

know, cost. high and fixed you as And leverage operating we're a business high

So we're working out. actively to take expenses

We the are main the and we lower our the over course making over delta are impact the and of but respecting the in balance year CE. write-offs year, course slight to is real the strategy beginning of some investments estate ecom and and year-over-year

Bob Griffin

I real then or are unrelated just kind guess more holiday -- for where originally is the to per opportunity normal can turning less new the there in the stores things? the quarter what is second how this have side weaker or any we completely the core question of XQ of first is end to part thinking but stores, try there to pulling where of Was my improve that initiatives Okay. this and If core, itself on stores of kind then out volume estate but anticipate is is the of profitability business? the we around

Douglas Lindsay

Sure.

them energy XXX of positive they outdoor. collections softer we and able First we up our team and were of quarter, had collections we all, are anticipated. in in through lot spending We great CE the points back were basis was But of all early categories job from to that. a holiday a quarter. the quarter, fourth Again, in saw really post which in and comps primarily in furniture, our in positive went the third appliance the quarter strength the other of because softness were the saw growth which fourth season was in three where than they quarter of getting actually the line did

QX of I highest growth think we offset efforts were But in those the year they bit our a of but we're three came margin categories. enough sort attack our out collection and portfolio, and CE. by ready in to and the to sort I categories, feel dampened so not continued fully decline rebalancing balanced this new expecting of

constantly mentioned real three at our shorten last think but estate I looking years estate leases. portfolio. of In the over real One be John term real is our terms we've to of the this going done thing estate, we're well

have a in of we our portfolio. lot So flexibility

into we're profitability, opportunities committee store new merges. close in our and meets we But where there potentially for return. in excited one concept estate and that our with get concept. couple on lose customers a estate think regularly real that We those fixed lift and a see getting believe repositioning good are renovate we to that But are with you investments. This have really leverage store just combine box. We new combination our higher store place about are and base merging cost our when a real

excited have hired will to than our boxes profitability. us building in stores do they're the over team new we of with in to you with store and We're real concept. that really portfolio bit course and bigger two that. We've pivot those be to store closures these drive past. start going or should it's And a a into merges about of faster estate of sort capabilities in expect of but the lease to allow shortened terms, we're going So more many doing year, the boxes continued the XXXX, little of that

Operator

of come The from will next Joseph question Jefferies. Kyle

Kyle Joseph

just of Hey, outlets for what good morning, on Ryan, buyout the Thanks XXXX portfolio taking and XX-day has in impact rates. sort that performance sort the activity higher given loss more and your get particularly immature to immature credit --the questions. for of guys. want I my

Ryan Woodley

Thanks, QX the in in provisioning. Delta happy of little explain Kyle. a relative with by we're impact talking we of yes, to, our Obviously, we growth XXXX what bit see portfolio metrics. about Happy the QX to leased the and

we increased of drove to happy But lower see XX-day really is which but primary how and Delta. growth that driver buyout with have on you tends year and higher you when looking quarter think we do the the any the strong and reserve. there and assets this, rates I you is book and leased sit book new where so that know of into growth the doesn't The nuance favors write-offs. an that accompanied by obviously, that you the be initial provisioning,

portfolio and healthy a So performance of metrics. portfolio it's comes a metrics it's dynamic it when kind to

Kyle Joseph

talked terms Got touch the environment us And on more pipeline in the of in but you it. in well, And you pipeline competitive overall your just That's given lease-to-own a virtual competitive helpful, the or segment? a you it's dynamics conversion give you Ryan, about sense for follow-up your regional for retailers? can as can nationwide your whether

Ryan Woodley

remains years a but in sorry a record Yes. of be competitive broken to competitors this on intensely that it's market. I'm very There's now. lot competitive. for one, been It

been of Those changing future we're we been become working on threat how customer a own retail have as kind their we competitors we've the business. of go involving or who've folks entered, folks and their kind in and very but regard. invariably. people will teams I And they'll in expect what we've who happy strategies. be continue in why right that's and it we've as have strategy hard that have also in new to constantly the response that sort and into technology, we're that marketplace. people making We been the expect larger to thinking That's to position continue our around exist the about seeing out when will I'm execute and of more are for offer, trend I the a lead our innovating comes systems of very while today. of they to with investments sort

success we're billion just I lot, it's served go think positioned of to it a believe $X market, but back is a billion currently $XX billion for $X to if you and a lot of we today. being which

among the we're competitors. shift existing majority is greenfield about what of talking vast share So than rather

Keith Hughes

Ryan, related to you're or electronics electronics. Progressive for but me, sort last and that of color Aaron's consumer for, sorry you then the also the any talked Can about one any impacts seeing side business consumer And of business. on impact us Sure. give on the the just

Ryan Woodley

there. front that Yes, of of so on that end And having new we've given recent pleased obviously, given in we're vertical the that opportunities sort partner. of introduced with we're onboarded. activity experiencing growth the We're that dynamic that we're seeing

that less in an exposed So trend existing variance on a regard. to

Operator

next John Stifel. Baugh will from question The of come

John Baugh

asking you is there Thank really my about extend, the transaction I'm have presume I simple settlement whatever morning. about the FTC called questions. one-time and million economics do whatever is of you taking don't for to from expense talk to do. question know that, other the the a of any I but my want FTC not to than --are to or talking curious do sort and or I'm Good you to to out monitor what $XX the changes is $XXmillion track Progressive you what

Ryan Woodley

work Thanks, the great investment work. We've the John. a lot doing but because I'll we're excited the business, the doing about about teams there. to in question I'm of are respond who got

provide partners. trying our people customers the benefit a that enhancing and systems people on into A is information the this process our lot I'll will and where customers spent help lot know our of facilitate the innovating get of hands experience frictionless them working those more our the bulk point-of-sale. Generally fully both of disclosures transparent and in time on there. big tech and innovation spend continue retail presenting ways a to a that's to application bit we of online process process. we've in think I that a new customers for And say, the speaking the that We part of to product is as will to got possible. at directly departments a throughout of

are to expect And lot strong product, our our time very compliance doing a result in teams and again experience there. We think continue seamless for tech, of will that. to it a our spend We customers. some on our work excellent

John Baugh

haven't your at two side specific refunds materially in on buyout Buy and any with well you but first your the around Progressive it early tax quarter in I general, activity with with is and we're the to into and accounts. then the broader you expectations And accounts maybe new you, -- is off is seeing heard those Are question Lowe's. staying Ryan, commentary accounts line a those or Best look is question as

seeing on some pattern You in Is out to that. where them for account assumptions annual obviously terms had profitability you're changed so the with basis an of start all outlook do or whatever on on they get that the or pricing at at approvals come far? based and you

Ryan Woodley

didn't XXXX. would. the And national is I say We of accounts slightly toward right in intuition predisposed also appreciate out playing see from that lower thought profile generally what expect one would of accounts you to stated expect incidents expected see the but a rather we how playing obviously different XX-day you compensates exactly, more trend but than than --you'd you P&L But opportunities. I'll buyouts through we one question. from generally our write-offs sort of that's line and is that's the that's that it sort dynamics comment your for of with in national that Yes. will with expectations on and that. I'll sort what I specific there think application on of you

John Baugh

on Could then on lastly EBITDA. be the than why if this will expectations don't continue XXXX reasons XXXX all as And John, the until Okay. side, the CE appreciate that color know think lower we Douglas or pressures I will store but and about for CE the And on is where not CE business. the to inflection point an gets minor furniture be or continues if still environment outweighed expect the whatever shrink your do be get progress just to significantly? appliances in even to by percent continues year of you at we business next a looking

John Robinson

XX%. is as is today I seven John. I'm it And as said where other a correct much and you more mean me wrong, than this the I'll shrinking The it's good important although question, years CE was XX% but to Douglas still John. can and and important give shot the it at five categories Douglas ago business grow. a

So there will our is be an point. inflection expectation

we product be is still as expect with talked the decline new a introductions headwind. Douglas to it to about, goal offset but Our

kind a going when catches a if to you might happens probably an you point. could at But perspective. standpoint is faster than we've even sales in there of trends margin point aren't look We experienced you there that of from that figure inflection if inflection continued and same would be an the kind out estimate certainly from those store

thinking So kind to in but leads shrinking and innovate that We're around the it not that definitely the other be that at the just waiting categories offset could is and you trying think it we're to growing but case. XX% near to kind find to ways term, that. the of sitting of on

John Baugh

of in different thinking new looking we talking CE new what products you Or are Or at? terms here? you products? So verticals are

Douglas Lindsay

at outdoor get to ways elderly gaming, of sporting sort mobility we're are John, looking devices power tools, that. Yes. around which things particularly people people. like equipment, Fitness, I mean, goods,

you past things. multiple tested the As know, we've in

in our and we direct sources with product we the technology procurement past. much can and are where activity that think great innovation have franchisees get offerings place our we and in put efficiently product I the to in more go of us than allows

John Robinson

The furniture I more Douglas a to other the just concept and of eccentric. more the that furniture. definitely has the fact add better front static that new thought It's store showroom kind thing that with kind of is afterward is the of is in developed I'd team

more So store prominent I stores as dynamic system become think it probably from those a the the in accelerates perspective. account

Operator

question Market. Chukumba of next Capital The will from come Loop Anthony

Anthony Chukumba

taking question. for my you Thank

sure much this the how Aaron's it are business and I'm So the about Utah. two is in users headquartered businesses from business Progressive Progressive I just at businesses? going those reverse are integrated had those Aaron's to be logistics to terms not seems I business. how Aaron's mean aggressive I'm a a time? that integrated for trying get sense largely largely like question Atlanta. in is like two of how headquartered

John Robinson

John. back question. acquisition, on and good the of Thanks learnings such been as of years as integrated such we've a a could a for I'll to Progressive led a tear office It's going and Hey, has you number It's strong the Anthony. by companies. tell certainly really for has a There's lot between perspective. the from much them team we've passed that back have not Ryan Woodley we question

customer Progressive service is that lot Aaron's out, for business. standpoint. came example lot For the of came a of built lot A at know-how Progressive the ecom a from from enabled Aaron's the largely knowledge that by that a a decisioning of from hubs

I largely say ideas, integration but the are there's companies independent. been operational perspective, So from would of an

CEO of business of of when some you data sharing the where other perspectives. are largely from functions. services financial and very that There a business, separately. much sort we some reporting firewall we about a shared of type of and share Ryan in to From perspective. generally a think but we're run businesses course those have But can, the runs separate we try So lot of Progressive

Anthony Chukumba

on your know before. retail I Got large quick I want guess this it. to partners these and ramped those expectation? original up you just of touched your wondering if to how like retail of could talk simply of you relative sort up And don't And I businesses about talk more some one just was know about then large follow just just you but I -- recent partners, relative

Ryan Woodley

with pre-exists. worked the those business transactions they to years know, We've locations. And and really in here. themselves really the aren't Ryan Anthony, and those relationships first happy in cases relationships. prior pilots those you The occurring We're extended as hard in our both

really incremental happy good periods already worked We're about is growth relationships. represent and and the the We're the those within not the we for the team excited with into delivered in opportunity they about we've focused just in So XXXX build fact XXXX on future. results the QX, excited multi-year hard opportunities on very that working opportunities. to hard out

them. work we'll treat like has with And them relationships. set the a have the up with of team done happy our So to lot that's happy right now. and I'd for of each There's every day work those do we success the other I'm say us which work there. cooperation on to hard that's we're that's is happening just partnerships earn we to going good

Operator

America. of question next Bank come of Haas from The Jason will

Jason Haas

taking Thanks Great. question. for my

were? called what cost initially Could You those onboarding describe than you you out had higher expected. had

Douglas Lindsay

especially existing some of well growth and with larger for our across --as knew big of we we approach of are really to book those happy period business. as QX us Sure the we obviously as they opportunities growth onboarding

pretty a say And for season We had strong. make to high support how a a our shopping results invested, service season. we with delivered more just bit for Took preparedness set good were the for And that did levels there. the holiday extremely and job QX throughout so. teams during got smoothly period. partners were all operations great plenty I'd from maybe the of QX hiring big our And sure bandwidth had of infrastructure to marks that exceptional bit tech sort than of a that we goal labor a planned, on up and more we ended growth

exceeding the at those rather Now on high alternative. the growth rates side the than obviously higher higher decision expense but we of obviously came on in service of the planned, performance err to than levels margin I that a made slightly had

and investment I off an for people well sets it So in think for was up XXXX. us paid us and it well

Jason Haas

curious there's for went would you have proposed been Great. your could if And on the impact changes my through, business? I'm to comment proposed then changes for Thanks. rent-to-own if the California. environment some if they that regulatory that in follow-up, any

Douglas Lindsay

the at to is not credit so. about our that to that and subject really but we're to in for tell going get it we in a going even you and And can I'm comment being leader this regulatory while but time Yes. challenged particular that our we've our in it's Aaron's more talked that spaces, scrutiny I business Progressive, on been serve customers business company attention. those given filings

great service We provide their a rules all company. from regulatory expectation tell it's activity give a need So to that of they a be bed sleep time as a time because an be job sit a on, and to customers, industry sofa have cook have to kind also to our will our compliant, or on. we to an that as families it's story and to that great there whether stove with story we products very it's follow and the to

more than provide We that to of more people anybody.

innovate we that customer. our on keep what proud work of And the to We'll our part doing to we'll continue it if and think as of our for to for relative industry positioned working competition that will better and keep I'm customers. just as I offering we'll continue for on customer. that's to be make better businesses our better industry all gone be positioned. across company the that even We'll make the the a to we has better So and do innovation have on an really that. can

think about that's kind of So we it. how

Operator

The will Stephens. next question come Caintic of from Vincent

Vincent Caintic

Good Thanks. morning.

First the Aaron's business. on

growth, of I up a say step us be? you you you what's Thanks. core though taking the when you kind your the like been and on think in Where of just profitability a a XXXX cleanup years on If maybe kind the about where there's industry this kind think sales looking third of seems of ongoing store there's think an And collections. ongoing same your you remind of of lot business and margins here should guess So happened of think it could quarter of about right now should of be? business couple back over what XXXX into volatility down. how core past basis. lot

Ryan Woodley

or the started question. Vincent, without We've changing years its for mean, of six decades to lot a rapidly think ago. And us changes I Yes. Aaron's the tremendous pretty model. growth had customer business five a plus preferences I for great in

which And got going again. of it's by located, supported better can market Douglas ecom that. profitability we're back that But just to business and I business trying think We that us have for some that adapt to to platform, we've that so but on maintain to to growing business, while have we've model to it's trying looking, better we of customer to kind near-term do certainly done sustainably a some grow really mean be stores should better having to to experienced adapt to that. do and a challenging. a get we our job big allow think that team and a this robust they is our take prudently. good the platform can chain his a time growth But They're supply got and get can if a investment

just position the trying prudently been future of the customers a do the been with occupy act a market it unique Aaron's to for you served We've number a we forward keep. that in there's to to serve that trying and it's honestly we've But lot be and years balancing there's look can there's a to business that. of if and into

a we're going So be can optimistic sustainable grower forward. it

Vincent Caintic

on there's that two then business, practice you're if about And you'd changes the part, Progressive if Okay. any just foresee. it's wondering XXXX, business maybe I'm Great. thinking when

won't sort or practices which you of also bad say you or selling and expense So then the about in going that you revenue there's the guidance, business, forward. there's then specifically any investments if if but talk talk and for debt write business maybe there's changes investigation are about for happen assuming some -off FTC could what might

Ryan Woodley

said for the range earlier am is but repeating continued growth the implies And growth And My I've question, for opportunities. of I XXXX. business Ryan. our our happy through that. accelerating with very setting say if accounts plan a the job which for we're success for new thanks that existing apologies we're midpoint year's up the something a this Obviously, identifying incremental all setting excited accounts, work hard of The about. of last done result we've up onboarding is lot of good

of XXXX, rates to into we're the But every how that's to trends translate We and excited about as dynamic quarter. that trajectory a some accelerating out that bit expected QX think directly able revenue we're a very I where I sit don't of explained generate of necessarily with that's for mentioned coming we of the growth. we on. be

your what the provided. that that question? So all that sorry, -- second outlook is then into factored sort And of was we

Vincent Caintic

right there's X% or expense of is customers? XXXX, maybe about have Just because terms you debt still range difference write-off for the you're of thinking X% Thanks. to in new bad a if any lot there that

Ryan Woodley

to expect to provided we continued we're Definitely of with reiterating that portfolio be seeing X%. a and Again to within range well on that out happy the be metrics No. guidance coming of that lease X% range.

Vincent Caintic

last markets. appetite stocks indicating XX% Thank And and down and of And remind there. but your share us you of aggressiveness your Okay. you. just I want your quick me, buyback if one for could kind thoughts pre

John Robinson

Yes.

capital a We of active. of have have million on existing We've to over buybacks program. still our share our $XXX of shareholders obviously that So been return been component buyback availability over years. the major

way the our we anything changing allocation about aren't about we So strategy. think capital

buybacks expectation forward. my going is would there So be

Q&A of End

Operator

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

John Robinson

you in very our on first look retail you joining our of hard updating to our members, like work year all again next partners your Thank for life for I'd much quarter team record to XXXX your company. Thanks and results interest And for franchisees products. us providing for efforts, millions today. enriching of call. families Aaron's. thank on to another the Thank you we forward was your all

Operator

presentation. The conference attending you. Thank Thank you all is for now today's concluded.

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

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