AAN - Earnings call transcript Q2 2020

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Operator

Good morning. My name is Andrea, and I will be your conference coordinator. At this time, I would like to welcome everyone to the Aaron's, Inc.

Second Quarter 2020 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 to the I turn over Mr. will now call Michael Dickerson, of Inc. Vice President for Investor Aaron's, Relations Corporate Communications and

may You conference. your begin

Michael Dickerson

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

are President this seen Aaron's, of Robinson, Kelly Web into Business; those site Financial and Officer. Michaels, were issued Progressive a of Officer; and the have Relations certain independent morning release Chief of Progressive are Officer Inc., already of Executive announcing press releases Chief of and Woodley, Aaron's Wall, available Chief Joining Interim business Aaron's and copy Also Officer and two and Strategic and release our changes. morning, Leasing; Executive press Chief John of me Many Investor the separation President at Ryan Incoming Douglas this Operations; President publicly-traded Lindsay, earnings Aaron's Steve our Financial expected on the aarons.com. companies, our you management

financial will earnings provision Safe may differ undue found certain XX-Q forward-looking for from our see Listeners may to EBITDA, detailed to non-GAAP and actual measures, to actual On attention be including During we referring into operational this the forward-looking performance update are of Also, certain no turn your company will cash Robbins. adjusted our on measures call performance. Safe cause with XX-K The meaningful earnings from year With of of today's we in forward materially business differ our to adjusted believes non-GAAP in of prior measures periods XXXX, assist quarter non-GAAP These for our the and companies. our ended the to to I the provide results that included comparisons content cautioned want the ongoing have to obligation I please them not the EPS, company's materially other company's be may non-GAAP call provides understanding performance provision for end our and the flows, Form XX, that forward-looking XX, of John results statements the that reconciliation can statements. tables Form statements. to the release. place insight with forward-looking. these at statements that are we investors which a will statements. identifies and net items, for to help to comparability XXXX facilitate financial be and emphasis to December March related undertake been to risks statements, risks any now affect The which description such our our measures for with the our non-GAAP release. operating Harbor Harbor call, earnings, these that, cause EBITDA call, over operational make results certain of and

John Robinson

thank you joining all today. Mike, and Thanks, us for

the $XXX and ahead adjusted more commitment, to Let generated pandemic, members the decisioning. June quarter, the expectations. resulting business quarter the company customer perseverance, performance. period. business, well earnings million over by $X.XX, strong share operating quarter, this ending conservative activity, [BI] expenses, The businesses payment our in difficult largely driven caused and the financial The company's of many sheet. and Aaron's balance adjusted past generated of and team substantial begin our EBITDA cash my strong also performance reduced well the In of $XXX This performed the few Progressive, on has COVID-XX throughout expressing the was during with per Woodhaven, second million gratitude months, [ph]. havoc by me by extraordinary dedication been the continuing outstanding Despite in

uncertainty the are of conservative managing amount continue tremendous business. the stance how to we Given we maintain market, will with the to respect a in

the and independent analyzing. amount to time would spent decision discuss the path board business into After the a the that our two businesses both increasing we management our Now, resources public of to been have is long-term thoroughly and companies. like significant options, believe value. to I separate considering an Separating idea best separating has shareholder

XXXX, and made the While two each businesses earnings greater growth path on of business can believe the its combination to in sense today a chart own. we

managed and practices, Progressive Aaron's best the technology the six stronger. shared past both Over been have teams separately, business years, and while have making important businesses

end-to-end launch return system Aarons.com of only company-owned transactional to first created lease-to-own benefited across centralized be example, larger scale most the at logistic its decisioning recently enabled business, Aaron business and today. all decisioning from a stores. scale the For ecommerce and as scale, technology Conversely, Progressive's Progressive it base from entity developed and grew the partner public Aaron's facilitated the a has to national retail its U.S. of

a stand ongoing management. infrastructure, model. with that years and which are to coupled own, of by by transformed Progressive businesses a well-positioned business In repositioning five capturing large to continue profitable has separate is The time business believe positive two lease-to-own expected to short, to and is for over of earnings look is and consolidating the believe their and is we past own its free believe scale aarons.com significantly its provide management the We well-positioned growth them. foundation store with flow. we cash on created future with synergies both having now capital-light Aaron's footprint, continue its we outweighed been to strategy the the opportunities focus ahead, pursuing As and un-served businesses each business the virtual market benefit independently team,

experience lend Progressive of significant team announcement lead executive the over Robinson, I earlier today, as continue Michaels substantial we and Douglas to our take its and will the and As management At to his CEO, chairman. maintain Board. Progressive, as business, Chairman Chairman Steve Aaron's separation will Ray as will current you released to Aaron's saw the will continue in his serve continuity. Lindsay will

this has executive outstanding As step quadrupling the infrastructure his building part partner is to business and has the growth while strong for Woodley support its as for me decided Progressive, an business, now Ryan that also been the next depart. leader trajectory. during tenure for the time of CEO, Ryan

no for of at truly we into than be be Ryan the test a of built missed, Ryan sorely will to leaving outstanding. grateful. management the is are team future, Progressive or Progressive While There has one much truest she business that, and will started, and when he great team perpetuate leader the he is stronger is question the the

has Steve positions several high-level most last of experience Aaron's partner strong Steve and Progressive, us knows go, leadership, your of trusted business. very the much So, as and combination at performed Ryan Strategic operational, been Operation. Steve broad-based and strategic lead we multiple in all President Progressive. judgment, executive of while unique leadership well with executive choice with a the for the the that business very as years has responsibilities, dedication, sadness wish at and you him is to behalf and and my logical next an your and that we of Michaels has the recently Progressive endeavors. as CFO the very financial, deep intellect, outstanding and see of leader Progressive. best future you on appreciate Steve performance,

it. our Steve performance, back has will Progressive it the the the financial outstanding. really both you. instrumental about the same Steve over second company and I'm competitive rest The He was outstanding of excited the opportunities excited I remained that in together operational Blake team, proud an do opportunity the couldn't the acquisition Progressive's confident partnership for but number significantly teams, a as for quarter of smooth. certainly and in management due past over a time of I'm future to be Business and has not since This transforming for few for for Progressive company's two the the be job XXXX, ever his I'm the incredible be we're performance because CEO value I'm past would commitments of Progressive to continuing more been position and close our over possible In the In in I Aaron's companies. Aaron's, and delivered an for teams the in with public despite six challenges was worked since. of thank our next Progressive, Aaron's Leasing to the Progressive and Wakefield Steve business Steve team into opportunity CEO. has for more so for more earned who period. team conclusion, Woodhaven months. work importantly a and company creation modern, the customers, businesses. the for the the XXXX, businesses. to BI Well company serving at outstanding and their both I'm years, it's exciting fact, optimistic architect years, equally to recent performance transition of have the into businesses opportunity. done team, this to into Overall, team am proud teams confident In ahead the the will the and the position separate outstanding have grow future without the significant

to call trends. I'll second to discuss performance over quarter the Ryan recent Now, and turn Progressive's

Ryan Woodley

including we've of five-and-a-half to for our President has and the a the the Thanks, total, of growth providing work Chief greatest me career my result and and over opportunities Progressive I Blake expert of team joy thank teams, direct to John. shareholders, Officer. including Chief significant of tremendously of delivered our years, recruiting personal customers proud mentor back knowledge also the John Co-Founder and for has years leadership in Revenue endless years In to the partners, served. results is growth. Progressive Doman, time Curt millions want we've CEO. serving Innovation my and as The during last and our Wakefield, the to thank want their I'm been years. as this over leadership. our It a the Officer; over over and together, I grown for professional alongside XXXX, business XXx seven past

to to gratitude employees to for my commitment thousands continuing success mission. the contributions Progressive Finally, and of company's express to their I'd outstanding the at like our

together we be we've context their I the in of outcomes could efforts. As to results to and of a our the partners, that our the be continue environment. not of the the especially team, generated, Progressive testament enter second-half year, proud current the

fully this leverage. year-over-year the point to the of active by XX.X% operating retailers to exemplary. We're We're our primarily as entering higher less slight for year-over-year increase second the of low declined and higher reopened government in encouraged XX.X%, reopened. country locations. deliver to volume in a resulted invoice buyouts, per a the lower the team's Revenues response period declined experienced well pleased XXXX. package. storefronts. believe been of have same last SG&A to to While relative limited we as the increased incidences in expense the in quarter reflected partners $XXX.X performance as continue spend performance in well mixed we to doors has across as at were where to XXXX. and of of points chain revenue, overall of our of Active primarily May, in we're traffic their invoice closed more We're quarter April, home, The XX.X%, portfolio million, X.X% SG&A second execution to temporarily many which during from many year-over-year balance in increase many Invoice resulting of quarter, trajectory pandemic. hours the an driven X.X% retailers quarter the X.X% basis even locations the to the during supply revenue year-over-year volume from retail in XXX period as due operate year, challenges, during for quarter dollars compared X.X% stimulus quarter, higher margins XX-day June, that Gross the compared the declined generating XX% in time a absolute shift door second and in-store was as now improving and an as from

new expected in XXXX, from of partners. mentioned the in national invoice previous in we retail two I calls, with the a first-half margins gross experienced growth meaningful significant acceleration our we of As decline onboarding of the resulting

dynamic significantly, Additionally, and season the increased quarter. unemployment our for in to benefits rates the quarter business refund akin creating during buyout enhanced second government a a second tax early effectively stimulus

improvement the in of While for lower represent margin to XX-day partners. overall expenses component at buyout of transactions compared important gross XX.X% our SG&A an and retail points. basis proposition the XX.X% the quarter, period, value XXX an in of were prior-year customers, revenues

our broader costs, at spending, business. economic managed continue to and first reduce all volume-driven ability have on high mentioned preserving while to quarter call, we into the As until across we visibility our discretionary better areas the we closely have levels outlook, of execute

revenues, strong least customer well write-offs portfolio as for down quarter measures, decision. to quarter lows the from Turning late This decline performance period, second XXXX. were write-offs reflects in the X.X% matching X.X% at payment made of changes activity or as in in four-year first

As mentioned market related remains a conditions. future stimulus, John overall government earlier, pandemic, there economic uncertain future and

expenses. quarter, As such, summarize, any COVID-XX a in quarter of partially XXXX. increase this second margins second invoice quarter. our $XX.X first generating to compared pandemic, volume retail we has of recorded an offset XX.X% margins have with strong of Progressive prior write-offs not was the prior revenue reserves of during we to year, SG&A To EBITDA nearly quarter, line in compared the high-level levels, door a in reversed gross year despite X.X% to growth, closures were significant specific primarily largest by in second many the the due in and million by EBITDA lower at in performed reduction XX.X% partners. in

the commitment has their and would efforts we lows, from SG&A employees The and customers. While low like to maintained write-offs. of over high an an Steve team over a have years expense on for now April of to by the have to this and for team relates about the combined to of the the publicly-traded which begun step company ably Douglas I'll the optimistic levels it Progressive conservative our producing Progressive led posture team. the invoice very serving all future I productivity successes. volume In decision, executive rebound cost thank closing, rest as forward at take it I'm business. exciting the to tireless update many is Aaron's independent, to Progressive as the next business, enabled management turn and on following look of to leadership

Douglas Lindsay

Thanks, Ryan.

proud support the the First, lead dedicated members centers, acknowledge Woodhaven, extraordinary the of into next not team our pandemic, at chapter say organization. to dedication work tremendous team's leadership made our and could our more to excited let I'm hard entire me business From possible throughout team, and be store sacrifices performance. who in Aaron's Aaron's this stores, without and our I have this not would the the be that of

due XXXX, For smaller begin were by of a due showrooms quarter, to offset revenues payment lower million, X.X% count, quarter a $XXX the second decrease lower quarter second for June of XX, deliveries and activity. temporary partially lease the our a ended the to a from to customer of closure XXXX, portfolio store strong store primarily the

stimulus activity, customer the As higher having including our to Same-store phase portfolio of primarily sales, due we the X.X% had Total of written of reopening believe of impact late more end nearly open, closures April. triggered payout the into aarons.com. were were in declined payment in lease primarily the up in to all revenue strong was retail on conservative we in stores showrooms begun government This recurring and by the Aaron's and quarter, partially second increase the the package. decisioning quarter, and our due quarter. which revenues XX.X% revenue both early showroom

year-over-year XX% declines to volumes May Within of June. rebounded in and low low written April's the down revenue quarter, from recurring single-digit

increased impacted revenue inventory by recurring the decisioning. and more During conservative negatively availability quarter, lower written e-com XX.X% lease slightly

better channel all significant lease stores. decision last instantly and out as allow regardless stores, efficiency business, to As us we all of risk, milestone ability labor in portfolio our lease The improve customers our control in increase centralized XXXX, a April company mentioned for quarter's members. we it expect of will both and experience decisioning, and team because call, the U.S. customers on rolled to Aaron's the and

to expect longer lower total we activity, impact term, the customer stores and and response lower decisioning as product COVID-XX, prior due actions supply in inventory were of revenue customer year well approval improved portfolio inventory major rates, payment write-offs. we second retention management to we and compared to At negatively to written our centers fulfillment due recent quarter, centralized longer took to chain While to margins the disruptions across expect to recurring categories. quarter, end the in revenues lower into our lease the as increase due

provides were expect of we it our or the advantage to over conditions should prior our an working While e-commerce. supply marketing resulting increasing point new quarter bedding current closely Approximately revenues, year remainder are signs marketing as This period over in expenses a offset seeing compared were from a In was by six suppliers improvement, supply. the next SG&A one-third vendors reduction manufacturing months. quarter, driven due upholstered have nine costs. permanent with and positioning, X.X% to chain $XX XX.X% control competitive an to increase of the disruption in by we're XX furniture expect us persist, and we better that with issues in months. spending, period. partially lease highlights to back-half labor the allows over conservative million, XXXX, second the supply deferral mostly activity more to our lease reduction expense the of chain and improve of division Woodhaven down the SG&A past of and closures and second a store strong was mix XXX-basis customer while the increased Write-offs payment

business to we'll members customers, customers a a margin by our prior during compared was rise increased payment remain and our primarily team continue all quarter. company, time. through partly the lower to significant quarter, communities points in I'm quarter. and extraordinary customer many improved SG&A year and diligent and safety of adjustments write-offs summarize, parts country To as balance the the XX.X XX%, and write-offs, lease the our serve for cases, thankful expenses basis EBITDA XX.X% their to portfolio effort year Aaron's XXX Adjusted begin procedures ago and members, team smaller EBITDA X.X% experiencing resulting our versus offset necessary. challenging we year-over-year. the activity COVID-XX to strong for Adjusted Importantly, in in from With our e-commerce million, make operations new to or

standalone I'm business excited transformation Looking Aaron's as forward, continuing of about the company. the a

customer right free compelling flow. strong and a over Steve opportunity, the now place the drive results. quarter market to second like call large in cash to earnings a have value and growth to future and proposition, team the financial We I'd to strategy discuss turn

Steve Michaels

Thanks, Douglas.

First, first-class retail have to continued challenged the before affordable simple committed team management the of been and for more let to positioned from business teams cannot into over me and humbled the and then I'm even company. future. and and met team exciting legacy with Progressive over has speak way consumers. acquisition, I innovation over growth chapter be had the great and my Having friendship inner it's and Ryan begin think dedication by saying honored start to results CEO the for workings the to of last its years. options as to a for assembled of Having credit with Ryan technology anniversary this purchase involved I'm with and themselves. you leadership joining mission He for with six a of it's many our Progressive. taken partner John thank Aaron's, The years familiar his continuing just XXth of for a providing

and corporate has of Senior Importantly, Treasure Financial hands. the Chief company's Interim Officer. office Wall, good the appointed I Kelly Vice been Finance current President leave in

function Kelly credit strengthened quickly and executive and our bankrupts XXXX, and the treasury part experience team. updated enhanced has our invaluable extensive financial became and of an our facilities. and He end During brought cooperate of

as an Interim to compared or a of an team, the XX.X%. a basis, for for same CFO, $X year a a will to increase was the quarter same and increase company of EBITDA for asset of million ago. were billion, great XX.X% X.X% As the John of year million compared for the in last second XXXX we year, second to on period he work of second revenues be execute On the strategic was quarter for XX.X% $XXX.X $XX.X the Adjusted year Adjusted separation. in this $XXX.X quarter ago. same entire the this of period over million revenue the period consolidated XXXX, EBITDA

the and related Given government the uncertainties, economic future we continuing respect conditions. stimulus

the have incremental We related the quarter. to reductions made reserves in first COVID no established

adjust We as evaluate the will necessary. continue to stance period and each

Our customer activity remained quarter. strong the has payment throughout

operating million business. of reductions million is in spending $XXX.X of operating primarily and which which due about the generated from of of $X periods. quarter $XX to a CARES a well activities in portfolios the slowdown the our and continue primarily reserve inventory our good COVID the on $X.XX to maintained of in of to businesses, related with expenses deferred increased the represent duration of the current XXXX ended versus year is government the Cash was for last the these have the have Aaron's write-offs June was may impact current About is degree $XX to in in customers basis and pandemic a $X.XX COVID-XX reduction quarter, million the caused and believe due second we is lapses temporary marketing across business the million roughly EPS six million store our XX expenses XXXX. reductions. due Again, depth by best year Aaron's the million stance to for of to customer is we months we potential Operating to due second-half the position However, experience closures will conservative decreased continuing lower activity, economic $XX.X quarter $XX when shape support estimate remainder respect change to the to from which and Dilutive performed strength reduced while the XX.X% stimulus unknown. the in are writeoffs. levels payment as reserves the year-over-year prior future today, non-GAAP of Act

XX, million gross the and balance million. $XXX had As company debt $XXX cash of a of June of

not however of maintained dividend. result full-year repurchased cash shares we early the During the we withdrew uncertainty a have did any our as totally outlook. XXXX of the we caused company's In common COVID-XX by year, June, the we are tremendous a of we the community. provided to we like a there be in consolidated and update. quarter. be are uncertainty quarter market, would continue for our amount big outlook Because diluted providing the analyst to continues Therefore, and this to quarter, stock, to revenue of In pandemic, third helpful March non-GAAP EPS shareholders

quarter, $XXX $X.XX. we outlook revenues stimulus, non-GAAP expect $XXX and chain the share some environment, per improvement supply in million $X.XX global For conditions. consolidated between earnings between current a of diluted million assumes deterioration of and level and significant continuing of government gradual This the and retail no

the nature and the expects the over call With non-GAAP in preceding that, third lease I'll correlated the operator and question-and-answer reminder, earnings of to fourth that period. the to the a due business, assist originations now two to reported of quarters. will As in will the revenues the volume with be company portfolio turn quarters highly who

Operator

from Instructions] our question will begin We ahead. the Joseph of go session. first question-and-answer Please [Operator now comes And Jefferies. Kyle

Kyle Joseph

congratulations miss guys. my along congratulations questions, and like parts, all I'd and you very Hey, know, to exciting. Ryan everyone the Ryan, Kelly, John, everyone; for my taking everyone, we'll miss on you, on but moving the announcement we'll good you, pass morning, to very, to Thanks

on how buyout that a July, sense us provided in quarter? sense to us give through you you the quarter, volume activity for XX-day be, color would that's trended trended the trends then as appreciate a in and Ryan, follow-up for invoice second month-by-month the how could to question give First

Ryan Woodley

Appreciate thank happy it. Kyle. I'm you, to

QX and I closed that providing to right improving report July able closed, invoice So, monthly aren't be expecting will say we out we're but to haven't of volume. that insight trend yet, in now, continuation for quite a

is growth So, about slight saw we which in the and QX, are excited year-over-year in up to expect great, that. we we see decline QX, from

bit that XX-day future in out bit, starting definitely expect going XX-day happens government isn't buyout a of we with that and single-digits. a just effects mid have any QX in trends, We on the buyouts, it's levels, QX, the higher play it's higher be taper of how stimulus sort year-over-year higher there seen we what dependent play might in stimulus. levels forward about yet will as out you did of of year-over-year wholly little enough see pronounced, kind talk to see On of as sort QX. visibility on what to The will that peak but don't levels we difference have

If just a of of last it's we in at variance given sort for gross you rate this you saw is look XX-day saw compared to we month year year, that buyouts the the that's year a before supported stimulus, peak the margin. driving continuation that this reported by

Kyle Joseph

quarter, about it then, payments quarter. the in very And lot of Thanks, a like Douglas. Ryan. fourth shift quarter turning that. the this Appreciate were I'll job, to that, as high and think sounds we the business the third Nice around the quarter, but

on you anticipate directionally based the how sense for going the sort So, can comp you trending where forward? ended of give quarter, portfolio us the how any comp, the

Douglas Lindsay

you despite portfolio, would in trends, our QX comps know, based mean, lower continuing see quarter, on our I attrition, lot of at these write-offs. retention and customer as the going XX%, portfolio say in we're out we that in looking April, written seeing and so We July, Kyle. a quarter, and collections and the we're all retail improve, as into strength, continued move saw continues in sure, early portfolio we Yes, low less really sales, revenue strong, to in enter rebound we're positive trends improvement QX. seeing on Yes, May to higher and through a we the saw forward. say, are I June, the say, let's due we increasing third in I'd

way So, the business we're about Aaron's trending. very optimistic the is

Kyle Joseph

much get from me sense collections, the Aaron's terms a each Progressive to much how for of what's still it consolidated since business consolidated is relied is of how each trying through on balance the just walk but -- and one sheet, in XXXX can spin, on sorry, relied balance relied just they terms Progressive changed on Got of on how kind us relied it. is then, how in And much on on the the sheet, much Progressive you the how I'm other? much relied or other,

John Robinson

Good a from tell back the constantly sense Yes. between we on of sense is we continue business I'll made point, like felt John. Hey, Kyle, of kind at information possible., great kind keeping made XXXX, obviously the of run to made firewalling as you separate of separately, wanted Progressive the trajectory a from businesses lot decision and a this to a to that was lot that that as also companies. It question. respect.

felt were we those like So, important.

really have largely we've run very businesses overhead the we separate the independently the teams, we because headquarters; separate efficiently allocated P&Ls. since to believe of their the of each acquisition, So, businesses means the

there technology know-how shared good but have back those We independently between the really been we and separately two and and certainly and has learnings executed businesses, forth, and and some examples example, from by it's logistics real imported that but wins employees today. for Aaron's, exclusively over that both Progressive executed was like, Progressive largely at reverse know-how was but businesses, for almost

between limited as expectation managed we've acquisition, splitting really short-term is dis-synergies way few businesses businesses all temporary, the they very due be really and services and if to because that businesses there's the at will shared the since our the So, of well. the

whole company forward. separated the certainly [separately] and but that, being to that's kind and So, itself lends there's sharing duration the like being going on [ph] going office some of boards a that acquisition, things around obviously back so largely public of

Kyle Joseph

I'll exciting questions. right, queue, for thanks a but All all announcement. and on back good the answering quarter congrats in hop my the

John Robinson

Thank you.

Operator

Brad from of Our KeyBanc comes go Please next Capital Markets. ahead. question Thomas

Brad Thomas

as to next is future the team the Aaron's and ahead Rent-A-Center follow-up my industry, in the of as opportunities its morning, think on think to time. in years? obviously set up I'd is non-compete and build Good anything direct here, grow out I I acquisitions the I of the think Progressive, competitor you business I there me trying add the some guess, exciting trend its acquiring to about guess, to To direct Aaron's standalone the congratulations step about doing many questions, few and Aaron's roles let well if be Progressive Thanks. own the back the business, that try any we on there keep to business? degree for to from main competitor your curious, would previous

John Robinson

lot say is the is about nor forward, is question, change certainly strategy would not of probably it's there market going pockets where moves, This I on the prepares a the -- on big goes, limitations company, market. in Thanks speculate opportunity have market, in for this John. their is strategy to in and the for there drastic different either historically and separation of been lot Brad. me and a there a market not no

on forward be strategies they different opportunities great So we probably but and great both more businesses will or going profiles, the going will financial have restrictions, have won't capital that, be any past, a on have position, good there competitive there but business. won't/can't haven't speculate separating no and been unlock either profiles, forward, they value, think in but

Brad Thomas

of the of if been late? and I of partners looking little could some your like today, side, health That's How portfolio insights a partners have been helpful. And performing on bit newer the have retail give have can in that Progressive John. retail bit fundamentals [ph]. [Artman] us the talk the is to move a then you Thank Ryan, obviously over more into how little companies about sector there you you, your you can furniture large some bankruptcies

Ryan Woodley

considered. generally, time. Brad. very was There period doing portfolio things I a of well, thing, all movement over Sure believe the lot this they're of well especially within

we saw As in subsequently reopen. doors and of late of to of early sort imagine, doors then COVID, you QX, thousands response QX, thousands closed can

the tumultuous how during best off itself been lining on which but I've they a all new this how to is a last great. and relationships very curbside silver the of kicked think that motions and time, We initiatives I and of COVID, find the our partners have and did resiliency much were admired it's we support, ways that, our adapt. about solidifies able bit grow call which is through talked to e-com quarter's been partnerships, So, of worked to a and that's and

that about have us closures, think bright. talking the speaks quarter, but volumes of for been due ahead absent think reported our would those X.X% the I saw would have second I of the decline have permanent we to for some growth and I year-over-year partners, I each the active remains very about locations our instead of would growth then I and would and any spite temporary which we small our certainly closures we partners growth, among resiliency opportunity of say, in is of think partnerships, think seen large we closures COVID, in both good, which

of relatively about new event have shared very talked relationships those I've long-term on hard excited very e-commerce to the those. opportunity a in of and for very growth significant compelling both online, I'm newest grow business and on with potential we're in working and we our largest some which lot talked store are We execute that represent and our initiatives about to sort still together

potential online there both think of a we is I go there as So, and lot in forward. store

Brad Thomas

you Ryan, luck much, going forward. so and best of Thanks

Ryan Woodley

Thank you.

Brad Thomas

last for Please, one question here Douglas.

You that availability quite what last inventory quantify product next months, nine selection is mentioned to six could today. help don't believe. issues be this, of want to think I I product heard it the not your degree to or where may for you to I some

Douglas Lindsay

Brad. Sure,

you pull challenges our the and As a of retailers orders. on when most our back we close like enter COVID we with crisis share rooms, know, lot

got Obviously, running, meet that's to anything, [ph], specific in have down, our there able my online, helps coming were really were you're the and in that when demand having shipped pre-leased shopping process stores FCs. do business was the and stores, our good generally around we been the our hard in our [FCs] shape suppliers began time and rebound, comment PO to we We like we're out a meeting the you level As know, feel have really back in marketplace. FCs our e-com than because customer looking more you're our really from down being that, and demand. product a for our us we and impacts that

going As orders We're probably improving advantage, in and remarks want FCs in getting I to store that the we're we really and facilities from asset store believe forward day about entering our our us basis, supply inventory to combined per get particularly for on that's team six that to are shout bedding our need little huge working appliances. of all a just Woodhaven gaming, slower products. and timeframe to more moving seeing furniture to but us, a can is just that appliances about prepared quarter we're I we as we on a be and computers control out also with want every mention think XX%, we that for supply down chain nine-month that is get so. a in and my hard to Woodhaven The and rapidly. on they're really real because third strategic channel furniture the is where fact mentioned but the

Brad Thomas

That's Thank much. Congratulations to you very you as helpful. well. all so

thanks again. So,

Douglas Lindsay

you. Thank Appreciate it.

Operator

next America. comes Suzuki of Elizabeth, Elizabeth from Please Our question line is open. of ahead. Bank your go

Elizabeth Suzuki

guys, mute. was on Sorry, I

any benefits the quantify to on of do you you more recent those What changes? wane, of both Sorry. of Act think you can noticed impact CARES as and business, net have those start the sides the changes been has and

John Robinson

going is there in is I'll different stronger itself John. is but are of impact with normal variables on is the might we There seen businesses have customer mixed. be it's Yes, an that year, honest hard manifests This to been you. a be than payments in because clearly in tough. lot primarily a quantifying time this

Progressive. and you in EBITDA an did at Progressive year-over-year the job down gross the through margin, which but XX flows to net impact control a days, the side, team the offsetting write-offs, to which of cost lower can did an it higher lower see On awesome margin level for

might it's of has there, seen in portfolio lot larger underway differently, revenue we positive expectation Aaron's the lower seen the the next have the comps resulted strong side, said and we've portfolio a for duration in staying it's than the portfolio, And quarter. probably lengthened has attrition. of out Douglas normally performed the benefits, in because quarter as which the positive resulted On and comps Douglas

attribute we completely that the be the you when of in blend CARES lot on it we In In forward to difficult tightened definitely there we of much it's about believe late tried expectations, that of on Act. we whole know can the really think how but stimulus quantify our how to with exactly going decisioning that initiatives it. talked an across it's enterprise. clear So, tightened to kind March, in and will impact we've guidance, taken, not as some sort about expenses, down we and of our we we a

a a a question, the we it's that, Aaron's moving answering the of but business of other lot There retail April. in that's can obviously parts lot probably The Progressive closed is tailwind, try are probably it still stores. a side been lot of during but net to best doors that closing there do terms is to parts. a of but of bit of quantify partners moving

Elizabeth Suzuki

there you. open quarter by and quarter into are all of think mean, this all your stores any I closed? next what being really of you about your we as Got your all was think that point forward portion go at is stores do And impacted open? way and partner stores to the of quantify in

John Robinson

virus was remotely, and job the ordinances unpredictable of still amazing given basically and an team impact, of kind for is a normally home you done done just in I to the both stretch. virus mean, a our has Douglas normal in we're bit a don't not point, affecting stores so May kind back-half just major an that but we'll from and has kind how different clearly be but June, and of think want at so Aaron's are dealer I and dealing still. where local end to reacting it, so, definitely April, of year, improving of it country through still everyone I job improve are both and as heard a low that issue Progressive any say working on by whole it the April sides, differently, pockets where we're reasons was so but woods, not -- business. has normal with it's say, still from would started seen opening started running supporting having of it's and different to the May out the we think to we're I for the spikes is a we're wouldn't The in and definitely come around operation but Yes, across, definitely retail back to just team really , point, little say with partners reasons and an it dealing of in agile I it's in areas I and there happened Ryan closing different would quite come going incredible have wouldn't but I

Elizabeth Suzuki

Right, thank you.

Operator

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

Anthony Chukumba

Good morning. Thanks for taking my question.

what it's enhanced little XX% right income. I of it's I get guess, of another bucks, maybe with was I first my could now, guess maybe color more that, guidance there's unemployment of some check I mean, round just and expectations to question. but sense, mentioned talk you there's stimulus, at XXX and think level that a crystal third to trying in but you're better about I some this that level are, taking So maybe you includes I the terms just specifically and federal government be continuing $X,XXX was it's tough point? of going a in know of to for quarter give the us I just if ball, wondering have your

John Robinson

what changing a moving lower mean mean, some, level let be, level, on what there'll anything be that? but benefit, we add probably unless maybe it to a in I in expectations an Steve Steve obviously some target expectation be I moving. continued expectation, but and right at some then conservatism be we know there'll do we think forecasting and our then daily stimulus. have news in is is probably some would might John there's of be you this just this and but will and will we now, it's The kind were to what of is unemployment here, have the we some fill I'll I what Yes, but terms level, say don't that faked is do

Steve Michaels

same and have some well I unemployment like both mean, time I those been passed, the are but we've think probably No, checks that's as -- right. so we've as the yes seems not it get into of their some yet, amounts John enhanced -- and something we guidance, will there'll as dollar said. the level the and level negotiations one at been but of be not expect benefit Probably, same

Anthony Chukumba

wondering And how thanks. a of of net sheet, balance just under question, do one it, portion then, think don't debt ton your just debt last off to sort Got do obviously, you have that but have a Aaron's. I'm about you you the

Of course, it's Progressive, once the businesses are separated?

John Robinson

will Anthony. good some take the over months. question, that work a next of That's It's place few the

their set flexibility, in balance but a that like independent net will sheets both up we said, and that of lot are we of conservatively a it gives with set expected really of position, us As process given position, of but we'll be makeup to year guys we you that, at the and as done, is the as in we're and we is been cash the much more. exactly released, exact that so this work up not will this how fortunate have be the kind you the of to that than part take the net complete on point more work decided, cash that portion to of debt has of or has know balance and update quarter directions sheets, businesses so cash a setting positioned be kind we're the capitalized end of rest at of it

Steve Michaels

thing last John and on is that right. Steve. is exactly add I Hi, One would this

size a our standalone ends structure to being capital that and -- a a so and access changed the Progressive what nicely those able great no the so to to have next and time be It'll growth, we support the while for acquisition have partners thing recording to of good balance us grown well, ability XXXX up call liquidity split on as we to questions that's years. back and the get to partners the at last Progressive, at be Progressive, be project the the to the has new retail and support one for able reason that's point ones. where and to another scale matter existing public a strength has additional and in our sheet really and balance six retail that and that the partners to was asset try sheet an date. the over will to first a so, well separation we're it visibility have the attract we retail now over will visible -- For business continue their and

Anthony Chukumba

Got it, Thank you. that's helpful.

Operator

Bill Our Please go of question SunTrust. next ahead. from comes Chappell

Bill Chappell

post-split to realized I something cost there everybody. Good and the questions; into Thanks. too? of will but both congratulations kind kind I quick any companies of know in of synergies I kind but of morning also guesstimate didn't Georgia, where one, reside was split Two of in we're on the stage, if and assume early there

Steve Michaels

that Let's a team headquarters talk little about on management point. in Utah. Progressive the a last has and

So be Progressive's The headquarters be Atlanta. business will will Aaron's in headquartered Utah.

earlier, about In don't those terms synergies significant. of we these we are think talked

all separately, between accurately we've Bill, and for we Given the expenses, pretty believe done, business we've very then we these years have them. allocated hope, run

shouldn't there. big there any be So changes

this as allocations, some there'll is of number was would have for be nature, the but company and board -- to material but so having add nothing terms of Progressive from that for In and we relative nothing do be and abnormal expect forecast standpoint. you To advisory a John normal because forecast an sort terms fees would you this incur exchange audit, listing forward, to to just fees kind in as but expect that do expenses, going one-time minor, audit, of of will it but to completed, a of said. the separation what kind and process the things expenses don't there Bill we I just this, of public I today, relates there'll be get of I

Bill Chappell

Okay.

company So, costs. mainly public just

Steve Michaels

company yes. costs, Some public

Bill Chappell

just start Got talk about Best the Buy year has their of the online, gone talk were I obviously know it. bit business business Progressive, And normally so didn't the going online. you of the then or Best -- enormous just online tell that I share of of Buy Buy that or with I your share maybe percentage have Best offline, amount percentage Have business changes just for you been not the you how about worked, with how -- that's in or terms can surprises? has little just all customers as any color mean you would at there more gone your some specific know with how kind the of of -- get the if a

Steve Michaels

on the a to exercise overall near-term in to reopening, store comparison, our we're balance shares where bit sheet that's tests we received experienced at anything so apples-to-apples and the online feel is closures we'd volume stores, with we to Thanks, and Bill. fruition disruption and those and great that just about all are good quarter making are and that The that. given teams before, to working very measurement obviously strongest excited I'll relative it extremely we're. so I stores the volume tricky incremental get Those sort in that track I there it's benefit. guess to be for and on I'm potential hard the partners happen, to a the and myself, bring so about said that of have expect initiatives repeat big

Bill Chappell

Okay.

probably tell guess tell to [multiple speakers] to look too best way the or I So is early -- too to which it's confusing

Steve Michaels

so stores No, the on going track in to about be I those happening teams absolutely would and good. what's to are incremental. feel good we say feel we're roll we out, We

Bill Chappell

decisioning. how think it's then, now there fair around Again, I And update that, was just a I pre-approval Okay. advertising any know amount any be Douglas to just update see a one the you centralized would have for but environment of process thoughts choppy you that that of Any went. great? there

Douglas Lindsay

a that our mean, Yes, and of applied your control We either phone approved Bill. I be pre-approved aarons.com go stores the we're our We're you that. power. or proud decisioning. it's our in rollout and where to to given centralized going the or get our of seeing can I get customers through their obviously, stores e-com us ability site all either to get and on the and And member the in stores; and people great easier. the so models leasing probably customer really just experience. now now on risk more get channel through our labor advertising of so profitability. outcomes couldn't in team importantly ask almost team higher stronger it's really drive you it I sort it's working, lot if with of and us It's this we're just margin, giving most have and much and what's, retention experience customer out takes forward think It going of that's in all of strong, a creating been really just happy confidence and and

So, a really, program we really to and the forward successful we forward. move seeing results look as

Bill Chappell

so thanks much. it, Got

Operator

Our next ahead. go Please James. Raymond Bobby Griffin question from comes of

Bobby Griffin

taking safe good my Good I congrats quarter a environment. morning, everybody, questions. staying hope thank is you challenging in on for and a everybody

if are of some if kind market to work kind of what is you're stores, to seeing highlight performance there or you've done first, maybe go, First, rationalization what lot back that Douglas, a business metrics of kind of have large to still go store done long-term of rationalization, looking completed, you opportunity you the on from already collective part basis? the the that the of more efforts, to is but those on your some comments and I a want core of about guys to

Douglas Lindsay

great a that's Yes, question.

stores know, You as for emerging business. mean, beauty business we I based that a while. the portfolio been the a closing we've have of

think in a be the and slightly have investing with increase these it'd same, economics and really recent to seen market that locations, it yielded larger bigger boxes close up Right significant benefit our we're take our drives of market, our proximity the repositioning customers, opportunity if two we that, places We've considerable of the close market getting doing at recipe. say just and through retain takeout. together at but the place revenue opportunity and in to has up combination we stores, effectively them further retain merge in would can you a we in cause from retail boxes even understand you the put So, that -- investing of We'll in heavily are we've retention so the there. and to I strategy place. as half been real and XXXX more seen successful within repositioning servicing better market think profitability winners the order in now books more in activities we and look that do a also of we've the also stores put gen-next work, model spot better enjoying from and and e-com, in greater historically from being in

for more to in flow pillar so I'd real So the and estate more a in are gaining our strong strategy. say, very strategy, we're of important long-term earnings be both long-term an and drive confidence how going important grows, and we that's pillars cash

Bobby Griffin

the if you're that the include throughout impact single I in And Okay, doing I clothes on stores digits I appreciate also of revenue the does May of into and that. the assume comments clothes in of that sense low written then like your strip is and June. guess same about kind portfolio, quarter? down doing store a count kind the And portfolio comp a so, way the a -- to get revenue on store written maybe is a impact there store of out basis year-over-year? what

Douglas Lindsay

you Yes, on store a so the were comparable numbers gave I basis.

bigger centralized be of So we that I it revenue statements, will I clear slightly, just use tool it the said a decrease we number as our decisioning in part portfolio. as and but we the becomes so, seen my and in this on the portfolio and -- as the positive that, importantly, forward, trends include to want look doesn't we've in impact yes, that, of written and

and We impact impact but written, many will revenue recurring positively be which not approving negatively our as revenue ongoing will margin. customers,

as think you that. important that's about So

lack addition, same-store and due XX%, see year, quarter year third we opposite negative know, negative to over in collectability. revenue copying of written about We with written to the by the In but you but revenue last same-store year should revenue. drove a centralized collections we positive this sales the revenue in last had due as third quarter, which initiative, recurring large had

Bobby Griffin

Is to lastly Okay, there stuff especially any for the the mix the up then and that's way buyout, the And me, separate Ryan, as ticked of understand helpful. very I business. numbers, stimulus think early kind a well with at as out just rate margin, mix you was because how XXX declining basis business if points of that early even rough changing the core stimulus? verse, do of it's being gross much buyouts much higher the

Ryan Woodley

well think, those as had and shift Yes, on and I That gross a attributable a decent We last about portfolio impact gross resulting calls roughly we or of good is mix you sense. a expect the an about gross We question. on driven trend that, say to the year. the I would talked, effect third the said the expected what and as give by is under and two the quarters would primarily of say is would recent can expected revenue in margins, national have government launches that it margin rest I I we stimulus. in

Bobby Griffin

in helpful. parts. very unfold and the team I all moving the the and of forward quarter. watching best third to luck Congrats look to that's Perfect,

Ryan Woodley

you. Thank

Douglas Lindsay

Thank you.

John Robinson

you. Thank

Operator

next comes Our Maroccia ahead. Berenberg. Please of question go Alex from

Alex Maroccia

the upon than you can tax mentioned Good received later how considering all clarity people well. any refund are XX-day this morning, doing you usual the some into guys. buyout you I provide year? earlier, trends you Expanding hope that

Douglas Lindsay

effect prolonged tax stimulus? addition to In the of in to expecting context attributable a government reforms

Alex Maroccia

that are XX increasing buyout, year? you given tax expecting date this so stimulus on a the July Yes, similar XX-day something

Douglas Lindsay

will expect levels see to to We have expect continue higher And buyout. that in an XX-day I effect.

I the stimulus. Although be it government of in will somewhat ongoing believe context muted don't

passed we expect continue but expect larger that will be that we the the given So, [indiscernible] future here in think year-over-year continue, support component, some the be higher to be I will of government trend to component to over a stimulus QX.

Alex Maroccia

in the from expecting any from changes you in secondly, any immediate benefits that Got you starting are know adoption partners to see timing larger I it, have And okay. online anticipating retail a July, are there? And at been Progressive, fewer there it?

Douglas Lindsay

do a I We Everybody teams, and proud on lately, teams to from been benefit delivering see have this Everyone QX of in the focused them teams expect beyond. of internal [indiscernible] made fruit QX working has I teams, on focus to on but bear to exceptionally progress has really those lot super initiative, those been am have expect harder. our initiatives. on initiatives, and all in and

Alex Maroccia

All it. much. thanks so right, Got

Douglas Lindsay

Thank you.

Operator

Our Please go ahead. from Stephens. Vincent next question comes of Caintic

Vincent Caintic

it first the have And question been work, to thanks this morning. to you Ryan, number hard you I extent one morning answer for can and investor Good you time so sorry guess see leaving for your go. Thanks. generally question investor all any given by so, Actually, your getting can And the been surprised the have this feedback are opportunity seeing? there? and at is been growth make of is I comments the we why leaving, you

Ryan Woodley

Thanks Vincent. tough but It personal ultimately decision, was one. a really a

in so of I really proud of never and great to is and I the business, future. a reigns new it play very I'll do just that felt and course success as the create and work sort has am continue their the things, excited about the with for advisor ability There at future bright for of leader Progressive, company success, to confident believe the the for enjoy time mission, Just I business a business am and team success here the a as I the and watch perfect to I Steve be these to to the the an like handover separation like continue will to the their out. and Steve as as right felt available watching of time -- time team right

John Robinson

Vincent. add, thing that I would Ryan Yes, talent. The obviously exceptional is this is John, an

have lucky amazing have an job. him. done We He has to been

build things and best thing done of grow maybe and a the One really I team. is really has the he outstanding think

business been and We year has since business. the Blake talent. completely the [indiscernible] is perspective, I a earlier lot extremely all of Ryan different from really, a it's well, He here strategy there lot across President and the breadth just Wakefield partners have of the got with knows He and knows true. of depth extremely is the is that really XXXX. retail conversed team know well, and said a

to development closely that of the positioned perpetuate we knows on, and that's has long of team. and at my time, that and further at put the has before -- judgment extremely time executive a development worked he that Ryan and and but kind that to So, help obviously of business well, business, enhanced a place view be rest and a Blake's even definitely it, now, strategy infrastructure with trajectory, it a Steve business just a very more for continue level, Ryan - its Steve continue been just long in it, not it's the what of has the business time for to the appreciative great really allows the couldn't the has same great has the Steve Progressive the understanding for strategy outstanding on and enhance will with and that,

talent would there's first because Ryan as for much and much that function needs as Progressive tell calls, opportunity, of out be team the lot great great a grown,and opportunity a you he is frankly outstanding So, is success a folks of as he on these has a an front of to the this change. is of

as want points So to investor. make I understand that important to an just those are

Vincent Caintic

and on. a you're you on quarterly hear to John, being sorry I'm to but staying too, that, able basis quite not Appreciate

of you and as could forward going Steve you. see particular be guess as And it your what to maybe any speak CEOs any forward? from For going Douglas focuses going you focuses strategy, to and that's the businesses, are me, companies, thank separate

Douglas Lindsay

Yes, Douglas, Vincent. this is

business changes, is doing. So I I consistent been with not mean strategy our we've in mean much what the Aaron's

macro customer and at have like we've resilient We large, back got our base, a from standpoint. a feel we little wind a

of business. and top to to we which improve service our experience, it's of provides really in just We really and our estate a and really can with we adds relative sort all cash real compelling, compelling. our chain, in which simplify digital decisioning, and platform on proposition growth compelling centralized excited supply we've which the and that doing else longer got approve embedded our flow this like strategy, or and earnings we than anyone customers positive believe customer think and for really advantage e-com really is mix the and that, with customer, to layer the we or marketplace, that to the starts we're competition. other now stores believe more chain, superior can we're value we're pricing, our about so If and advancements of term pursuing that enhancements So, overall our the about versus supply

So, at look and things couldn't be we more going forward, benefit business out and second-half optimistic when XXXX about all then shareholders. of those for you the our put outlook together and the the

Steve Michaels

this Yes, very I both the our excited leader, to at we're we to to both level, is a technology we've our and retail, at least Vince, this would high continue invest and mean be the un-served will where buy product increase largely online for is current just what in-store. and very spread continue team joining strategy and in at and I'm and strong got this John customers, and the innovate and betterment large, and sound, the of Steve. said, add partners, I retail future, market, that is really very massive executing basically

be in react And growth a portfolio with generative with we're high great duration able the and business that for the to visibility to rates marketplace. be great so, we've model cash at us and nimble got short to things seeing

it. years, down is over just working, time be will we it on it over like has the but evolve will last strategy the So, and six doubling

Vincent Caintic

Thanks so everyone. much

Operator

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

John Robinson

on updating luck am for and you definitely today. also a results look and you and It's I'd the thank to of Progressive, call, and lastly, we today to to progress. participation your I participating to challenging I on about reiterate our for just Progressive team in is the again exceptional. contributions announcement to Ryan for excited I over months. few appreciate in our like Woodley Aaron's. I'd past opportunities And forward for our best like you the hard ahead member's him QX much work Thank all such wish call the again Thank like his the strong would and the future. how reiterate how delivering time, on

Operator

you now for may now disconnect. today's Thank The conference concluded. presentation you attending has and

PROG (PRG) 29 Jul 202020 Q2 Earnings call transcript