PROG (PRG) 29 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

Michael Dickerson	VP, Corporate Communications and Investor Relations
John Robinson	President and Chief Executive Officer
Steve Michaels	Chief Executive Officer of Progressive Leasing
Douglas Lindsay	Chief Executive Officer
Kelly Wall	Interim Chief Financial Officer
Anthony Chukumba	Loop Capital
Kyle Joseph	Jefferies
Brad Thomas	KeyBanc Capital Markets
Jason Haas	Bank of America
Bill Chappell	Truist Securities
Alessandra Jimenez	Raymond James
Alexander Maroccia	Berenberg
Vincent Caintic	Stephens

Call transcript

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Operator

Good morning. My name is Brandon, and I will be your conference coordinator. At this time, I would like to welcome everyone to the Aaron's Holdings Company Third Quarter 2020 Earnings Conference Call. [Operator Instructions] I will now turn the conference over to Mr. Michael Dickerson, Vice President of Corporate Communications and Investor Relations of Aaron's Holdings.

conference. your begin may You

Michael Dickerson

Thank you, Holdings to Aaron's everyone. good Quarter XXXX morning, Third Welcome Earnings the and Conference call.

morning. morning release Officer; Many have copy Executive Wall, Aaron's Joining and of Officer of Douglas you this are Interim issued Business; Aaron's Executive our Robinson, of me Kelly Aaron's Holden's Lindsay, Chief Chief Executive a of Chief Steve already Officer Chief Holdings this seen the Michaels, earnings Progressive Leasing; John President Financial Officer.

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

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

John Robinson

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

the was record reported. of share businesses, ever of and $X.XXX outstanding a in performance quarter third operating non-GAAP earnings Consolidated also $X.XX, EBITDA environment. results. quarterly Adjusted very our the respectively, across face especially $XXX.X were billion we've difficult quarter revenue of Third was highest and per million revenues

we While been never continue demonstrate customer believe COVID-related at businesses. each in by the our I've businesses' prouder teams strong volatility. their government aided has payment stimulus, revenue of our this models to activity of that the economic period of been strength recurring

company my a me before In this maintaining during extraordinary dynamic you It demonstrated respective to all Leasing, difficult and team I driving continuity, legal our performance. minute, October members of members spin expenses led sincere businesses' while would update Business, tremendous to and leadership portfolio to will Since business onset resilience, protect for On commitment, Vive occasion. has customers serving but customers progress XX, that, compassion actions managing Kelly financial like our our Officer, the time. have Financial Douglas significant change. the has Wall, our a our Steve of by their gratitude and thus structure on commitment members The take the we have holding team and team Chief you team just far. pandemic, and is risen and status your the at environment, express Progressive made our XXXX. Aaron's transaction. to let Woodhaven throughout we taken Our through to the resourcefulness Interim performance the completed

Xx contributions Progressive your be Trevor the Garner, Woodley, a goes through been X-year developing has when stand-alone a anticipated consolidated with public will quarter Brian a Progressive as The deep Ray, controls Progressive's Form-XX at culmination of discuss issued few thank I Ryan the highlighted EBITDA I and low Doman, webcast a business enough, the couple by continuous expect Barney, over of at the Tanner Michelle since and bench respectively. the existing success. Over trading it we sometime Wakefield, team go annual successful the revenue team document and talent double new Our separation Leasing billion, rounds Nate to development, end digits customer of between executed strategy Marvin Kurtis the we revenues fourth Blake volume complete the Roe, business have the exceptionally adjusted profitability. Fentress, the non-GAAP tremendous Ben the well and SEC, compound that sooner. building Leasing and EPS can't transaction teens, processes more businesses' will the a Business. growing high period, has single-digit $X.X perhaps Curt acquired strategies. approximately at transformation or by begins, attractive Progressive and Hawksworth, experience growth including annual to The with stand-alone Leasing Thatcher, invoice growing more, growing Parker of to effective than a the retail partners, of business growing with period, the to Progressive Hilton, rate hold performed investors next with improving and In product company. through Aaron's XXXX, this grown and time to their tremendous and Aaron's each short, in high and for with of growth Ryan many weeks. Form-XX effective each of to expect expect

many team, of during transformation, of strategy and the made of been Ryan Douglas come. once appreciate of Varghese, company teams proud as key Tommy believe Aaron's Cory direct and retailer. yet that led stand-alone functional for all the by Meek, side and work fact success Steve a profitability. areas business, overhauling equally well done while have Malone, the the maintaining many efforts, I of to strong Olsen, is John Aaron's others. Trainor the positioned a Voglesonger, including this their digitally I'm by us shareholders is Russ lease-to-own and a has Manjush that Aaron's omnichannel is transform result their progress O'Connell, best Falkenstein, Lindsay standing the Business tremendous The enabled to Rob business Business We into in the the The business, the On again

Aaron's maximize team our more billion. believe position members the management I of net example capitalization returning and our this look of by growing the serving of debt nearly by separating separation, the Since million another value shareholders actions as forward form of a Aaron's $X Chairman $XXX approximately and million Business. rewarding the these $XXX We by XXXX, market we of for taken reducing and than and customers, by at to Following Board capital to Aaron's history continued dividends had in time shareholders. our businesses repurchases, share is

store We has to well are free I'll to Michaels for scale is I due both now unserved future to preparing strategy, Aaron's Progressive earnings the an cash transformed performance, with and As importantly, more teams the repositioning over market to third exciting capital-light positioned flow. from footprint, the to on and past prior strong its for company and performance. years, model. with for detail which our lease-to-own platform, the X the to to expected management aarons.com spin. Business, the In recent Progressive's having of with management share its because earlier, Progressive continue conclusion, significantly investors is their capturing consolidating completion and The believe a provide opportunity team to time of growth mentioned the large our the and turn more Business coupled foundation over the strategies profitable Steve provide continue future virtual call quarter the Aaron's but e-commerce it's businesses. business been

Steve Michaels

sequentially structure, model portfolio offset for gross results the quarter. up a drove cost as XX.X%. XX-day quarter. quarter third of Progressive's performance, higher believe XX.X% outstanding of XX the revenues margin of increase record $XXX volume year for more decline which revenue $XXX.X we of just XXX a levels than from EBITDA period, quarter volume the slight represents of And The in reported million performance X.X% is margin prior with by points partially Thanks, third We variable government improvement payment basis buyout recurring strength stimulus. we strong Invoice experienced the year, John. a the and of prior of second the million, were result in grew strong Adjusted in and than improved points. from the along basis over an elevated the

and the conditions ongoing supply volume shortages the next levels invoice supply due furniture, will rebound chain environment, face our improve While the believe chain quarter, at the second We normalize. few quarters, did continues macroeconomic over primarily to global retail inventory market as appliances. from a challenging partners in and to retail electronics the

platforms. adding focusing their capabilities of are part In e-commerce offering are Leasing's addition, e-commerce many our as Progressive their and partners retail on of

performance. in from normalize to continuing these Currently, over in to to returning portfolio expect and key basis, quarter. X Write-offs, resulting X.X% macroeconomic which expect to partnerships. ranged historical lift fewer X% well have the delinquencies customer our We into channel the very strong write-offs see invoice fourth perform Over were between on are to quarter a metrics conditions portfolio and activity growth payment to next months online the historically XX to time, accelerate, in an we and annual ranges. to X% due material

expected discretionary believe performance while XXXX we to record XX.X% reserves have across continue a EBITDA However, normal reduce quarter range primarily better the the $XXX.X prior we with our have uncertainty in execute performance ongoing will above costs. manage the ability by COVID-specific the due compared costs period. we and managed the at XX.X% XX% associated XX%. in was recorded adequate. preserving economic Until visibility million, margin, quarter SG&A portfolio high pandemic of and of were XX.X% was levels to continue quarter spending to driven revenues year-over-year for year well annual expenses The to increase broader the and of areas our maintained are our XX% an of first business. our the to a into economic improved in the to reserves margin and Adjusted all outlook,

Chief been that we Financial role Officer. result the One Garner, to Vice to leadership was of current the Progressive Brian strengths as Finance expected One team. conjunction over its at as Progressive's Accounting, President of appointed organization leadership pleased held did Ernst as Officer years great has Brian talented that a spin. I'm previous has of separation tenured need Senior announce senior & the and will leadership public since transaction Chief positions XXXX fill the since Young be and includes Progressive and at at technology Leasing Financial has with finance experience His Progressive in led companies. XXXX. financial the accounting senior positions of of well

the knowledge profitable very how have guide his the the model. to pleased organization period growth. high Brian's in challenging and public reflect years, speaks track environment to the this difficult of to leadership has Progressive's strong team's economic extremely internal has a execution. the as optimistic in this team during performance company. of a a Over financial experience I to environment. record am been about And stand-alone and remain Progressive of help providing proud business the results instrumental and control I a believe the insight ahead his navigated opportunity of our Overall, degree business of quarter's resiliency I'm contributing

the today, likely to Finally, unmatched is speak commitment as about most customers leadership, time John's be to the team, group speaks John we will his to Robinson. express last together this the vision, appreciate our his his everyone you. would and one to to company and We friendship. call for I on to importantly, We our this and communities like speaking his volume gratitude character. and serve is his

its friendship over Speaking much and to will have serve be X as learned and Chairman. the personally, John last immeasurably guidance I've and so benefited fortunate Aaron's the years, John's from Business

turn Now the to I'll Douglas. over call

Douglas Lindsay

and closely comments echo work friendship to thanks continuing Steve. to his the with express as like years, Aaron's. John leadership Steve's Thanks, forward for him my to and I'd look and Chairman over we of to

high Aaron's team's performance year. The by level, is Business proud a as the our to I on of Moving quarter operating be at business. our was cannot third very of more performance this our results. evidenced

same-store has the the partially performance that believe The collections in best and customer of and team pure higher government lower result tenure. are a activity, third We quarter, stimulus. returns delivered payment my write-offs were in the quarter revenue experienced growth as

nimble COVID-XX productivity businesses our and pandemic. as year decisioning, to compared investments in operations And ago and store Additionally, we've e-commerce in yielding remain to health response higher a improved the period. portfolio made are

ended and XX, payment third Aaron's increase the from September third due activity X.X% stores Business quarter primarily the were rose having customer million, XXXX retail despite quarter, the X.X% $XXX stronger revenues pure the quarter For in sales. of in the revenues in XXXX, third of XX system. Same-store higher an to

into experienced level fifth portfolio the This written XXXX. out the The with last XX% quarter. revenue declined of the in we've quarter highest comps, third X the Recurring quarters positive the in lease decisioning, and since launched last more year program. result supply sales disruption our was comparison with field a and line expectations chain difficult conservative our of when represents training continued and performance a to we

you year, stores. we out recall, April U.S. lease this of decisioning all As in centralized company-owned rolled may in

impact to lower to XXXX half recurring approval rates. through rollout this expect the negatively written first We due revenue of

as over revenues X.X%, XX.X% have the expenses and months, team $X.X extraordinary our our Aaron's last and prior the quarter XXX XX% supply EBITDA payments, would took to from possible retention the and stores down expect we our entire a improvements we lease driven revenues are homes. as in team, categories. future the mostly conservative and highest the strong as inventory year-over-year expenses second year year the to the due written next over affordable search results, quarter However, prior write-offs. decisioning. XX.X%, shortages pleased million third period. well seen was centers been XXXX chain and increased due approximately in None and and centers customer the lowest we've work fulfillment prior in were third of dedication of in of Woodhaven. the chapter compared to third lower was by strong third increase our leadership last year. decisioning dedicated across disruptions the online XXXX several X.X% million, quarter, the hard over At into inventory customer EBITDA increasingly the down primarily Permanent Write-off continued due product the in quarter management in about an activity our and improvements in offset conditions aarons.com closures the lower impact and this lease to e-commerce our for site in expect stand-alone a to as Revenue points margin stores, store quarters. public and in quarter quarter third time, encouraged revenue reductions, Write-offs marketing major total E-commerce and XXX% our as of recent past of activity, payment the experienced their Adjusted of from Traffic customer to compared days the continues more our the grew X.X% costs company. to than quarter were in members XX COVID-XX, write-offs represented improved margins of these in to longer year X stores and and store as by for of XX.X% versus declined customers products COVID-related drove in cost quarter result to quarter. end portfolio more increase our conservative few third the on XXXX going in deferred inventory controls the of partially the spin-related X% quarter improvements. year were were of before in quarter without XX% marks support payment second to I'm next improve from to the basis margin organization, was over actions continued increase SG&A response years. and We've chain the supply customer by XX I'm $XX the our aarons.com. or Adjusted years. as last the lower the of

As in compelling positioning opportunity, we and market look forward, more team cash large value could have future competitive strategy place I and flow. a transformation. to the growth a we continued our earnings proposition excited believe we and customer about right be drive free strong and not

the Business, Kelly Aaron's Chief as of that like our currently, Chief join agreed Aaron's interim team Officer my to Financial I'd has following immediately the announce Financial Finally, spin. Officer Wall, to of Holdings,

Over have Kelly the worked have and lead and Corporate through activities, experience has I'll Finance, his closely recently our and Finance leadership quarter organization help I Treasurer, as guide Kelly to public the Investor discuss last to several I'm spin the over company. Corporate for the M&A and turn Kelly and company's of years, now has role led Treasury his call a years helped the as transaction. to in SVP the third and Relations, stand-alone consolidated organization last results. this X thrilled financial more to

Kelly Wall

Adjusted billion, for were this year year for same third same quarter Adjusted $XXX.X an compared basis XXXX ago. period basis, of Thanks, record a increase XX.X% the the million points. XXX XXX.X%. period EBITDA period $XX.X was $XX.X to in X% year, revenues increase million year an of of the quarter ago, a to the last increase the an consolidated million for in of $X.XXX or for a compared record On third the quarter X.X% Douglas. EBITDA of was of company a revenues XXXX third over same the a of also

Steve each of businesses. our describe John, customer at continued Douglas activity heard strong the have and You payment

stimulus to changes future no conditions, first the established and continued we economic made However, reserves with have the of in uncertainties given respect related the incremental COVID-specific government XXXX. quarter to

have and represent estimate best the experience in believe in the portfolios reserves well are of potential we our While future performed shape these we may periods. today, good impact

We Diluted $X.XX from basis reduced primarily for months the the from quarter, payment cash continuing the this will At of due write-offs. million share earnings $XX adjust continue million quarter million third million quarter, write-offs company of XXXX. strength activity of quarter XXX% non-GAAP and September XX, necessary. the quarter $XXX ended to inventory for across decreased $XXX each in X the due year $XX.X to $XXX the to per generated as last end on a customer prior in and a expenses the and stance versus primarily a year, Operating increased activities evaluate to Cash was businesses. reduction had million. the operating debt $X.XX balance the of

by maintained During quarter, shares stock. repurchase our uncertainty of not result any caused withdrew we COVID-XX the of of a common In pandemic, the did dividend March year, the the and quarterly as full our we this company's cash update. to fourth analyst EPS consolidated and outlook early shareholders community in to quarter. diluted outlook. for by XXXX and and our year the In revenues continue want provided again being we August, providing non-GAAP June, We helpful a mid-quarter

first current consolidated $X.XX. billion, in earnings outlook between of in $X.XXX state Estimated no reserves assumes non-GAAP expect established share reduction quarter non-GAAP deterioration gradual XXXX. We per no and the retail $X.XX between fourth significant assumes the the This and $X.XXX the the improvement supply diluted end and earnings U.S. in and the economy of COVID-specific the diluted of quarter global quarter revenues at environment chain or in in billion a share per conditions.

remarks. for back to call the turn I'll John Now additional some over

John Robinson

group who members, partners, and The the always Aaron's. reason has an franchisees team fantastic Kelly. of colleagues, It's Barrett significant Curt Board our The Curling, along Cynthia contributions Ehmer, during success. Aaron's It and is the list had tenure retail Wal been people includes team Kelly advisers, my suppliers. Doman. of made long. at Thanks, Herky Doug have Kathy about Harris, Board and business It's amazing the Directors by to culture of Day, success led Robinson, starts Chairman, Ray Betty, with our the with

Kamerschen, change others, and an Charlie Charlie including the long-time Danielson, Robert commitment perseverance, and Board, operate Harper, In It Ron takes and through communities In shareholders. are It Susan Douglas purpose lives to of honor customers, like Sinclair, complexity in Business Mike to the Smith, Steve businesses service been business a very better our to be a anyone serve for skill, positive closing, Leo Army great company's army founder what Aaron Kolb, our in Progressive Jarnagin, Benatar, a the and and Hudson, for it. and me a Both Aaron's that access Aaron's with cost Ryan provide I'd addition has and serves. Loudermilk. at ways. else Aaron's Michaels, there The tremendous to remind Carl the scale than many you Woodley, real and Lindsay, lower to customers CEO, customers' products has Allen, delivered Gil and consistently David of Robbie ethically market. a Tommy part

stories businesses hard-working a many of spent careers have who company. at success the their great both place Aaron's provide members entire addition, for career. a team team to In amazing members has build

company With up the I long of to a has to history focused youth. who pride question-and-answer to done call the At through that. the and we at-risk company the giving assist organizations communities of we world-class our partnerships the Aaron's, with importance communities understand will with that, the over take building the will do back just Lastly, in has the work period. great operator, turn serve now

Operator

from Loop comes with Anthony Chukumba [Operator Instructions] question first Our Capital.

Anthony Chukumba

assured, great like John. a there But rest appreciate will And end it's be end, covering companies. at your still on Congrats the an feel I really of I the quarter. comments both I era.

to me you're get of So not quickly. going that rid

John Robinson

Anthony. you, of to We don't want get rid

Anthony Chukumba

a -- for questions. of quick So I couple question guess,

sort $X.XX, the when quarter, $X.XX, second to to consensus early you gave now, that revised that above September, fiscal Then to that $X.XX -- your guided from question, which you dissipated. the to stimulus, in that, that reported First time. coming And $X.XX I up you're time above guided well you guidance. of you would mid-September, guidance any have in would guidance so And the at think well tailwinds you so is now to $X.XX. hiked

So question to to the certainly me. was is, I $X.XX upside guidance, what attribute revised guess to be? Because you very to do surprising my $X.XX your that

John Robinson

certain this And approach I'll ahead, a which the generally, would of at comments to this have it your guidance mean, But it's Anthony, begin I we a been visibility. positive because shot take question. a I is but very a we they've John, outstanding appreciate Yes, -- kind just it. and just And despite certainly uncertain of upside, but limited period, and limited we've crisis deliver, we stimulus there's is obviously, have of probably an our attribute business. to frankly, had a the through customer no lot surprised can other we expected than we part better the as and expectations. sure. part, great pretty that, tried a factors, give of surprise, behaviors changed, certainly, results, number of to large in although a to a to to believe, poor been they this. through say a in been guidance is -- quarter. terms to way just the and money, and maintain we've they're that in really third visibility the managing since of it summer, We've It's have internally have we've I lot wasn't things forward. done been the tried of we've spending the having just with It's conservatism just businesses said tried lot we've the -- we've that, pulled visibility, hit, of exceeded hard where of But business. customers quarter for focused. work And by maintained for But just of manage that job. and terms get it's are levers across going a businesses was managing And members that Steve conservative outcome where been to in we're even how done COVID the both a throughout Kind also way. team Douglas us to more is

Anthony Chukumba

in love as And Got on about inventory mean, consumer sounds kind it. inventory business I core it I some follow-up. and you some know that as talked That's it's but helpful. have. shortages Aaron's this, to any even were on the there Progressive one then in were there the like just the electronics, clearly, well. -- you business, of answer just hard in thoughts in sorry, issues furniture, Business, the appliances probably

do performance table wasn't those guess, the I because how that that, much not better you're the even about sort for right? how your you quarter could that? fourth think but I your almost if still would on -- in about could even or you Kind So been have higher of guidance think third that left it for of I think quarter mean, how shortages. of do you only

John Robinson

Business. good. has I good feel Yes. around them on left mean, a we specific is point I he because the like me to that's Aaron's we your point. the data I'm But going certainly more let table. Douglas definitely answer mean, after

e-commerce. in that comments around Douglas' heard You've

I we've experienced think partners also side, the on Progressive across of some our retail that.

this maybe about chain also that. the approach onset But left a around you, on give been I a know supply left But were detail disruption. you good more number say, our which careful conservative I some time changes made We left table the point do a in few more little that table. pandemic, think can Steve some So across that small, in on they took terms there. of the we've still we I may the very We talk and Douglas conservative I we're one, Business. We've terms changing about. businesses the of for of some We've than year. a table would your a and on is to have we is Aaron's a believe the at And last the stance our don't more be we've decisioning. would

think, things, teams payments customer visibility. didn't to table. that were of have So have known of through business different, And left conservative definitely the some something we the management led I kind of have that. approach to just we're those we we But taken all but in kind that going we in historically. this, If but we've managed be, we've strong how done might on March how

probably so on table. let And the about I'll answer left we supply Douglas chain. some have the

Douglas Lindsay

In with terms pulled outlook. sort That deficits in we unclear able to purchasing of and the the our of on back product, our very able resourceful -- and were fulfillment both products get stores, -- merchandising operations to in created and our scramble stores, we we on in our really get centers. At definitely our side. side for which return we were was teams, March

numbers the so So lighter ordering in versus of were in But maybe you saw great into product e-com an than issue. inventory centers is We're categories. storefront heavily improving team because all definitely day. absolute news translate impact And we're probably stores, our products. fulfillment we more business. less is good issue every the doing assortment improving. in Merchandising job much business new a our our that an But an the across pretty

on basis I of quarter, year. versus per-store about think at down XX% last we're end I mentioned the the a

fulfillment going into lot a now, have right inventory seeing the pulling of and centers. And October. we're we're actually stores Our out improvement considerable

definitely it really the QX. feeling good we're season, So holiday had but on an impact about

Steve Michaels

promotional, especially and I cash options. credit some Steve. and seen, are is you And medium-sized for line before finance it inventory or is we've they're and as if appliances would some some that's in they're repeating would their on retail inventory. of our hearing even some But probably part -- behaviors take but product the payment in that's only the their their to change point-of-sale wanting have decision a they more in and well of tight personal on that relates that. being say, on or in the because to small our at of disruption a Progressive from imagine margin to retail POS they're last short Anthony, really partners instance, shortages furniture, it pronounced gets as in not fulfilled. electronics they sold we the not that sales the they're in to chain, truck partners point-of-sale sales, seen card much on -- also as the showroom. at necessarily we're businesses, in side, But retail holding risk get even as as not that supply smart just for This in in of

leaving that our same And the quarters, lingering in it's for QX, extent. kind improve drive impact several we a it hopefully but for QX, was to to invoice volume us expect in over to inventory the will it be less not of next retailers. and impact So available an

Anthony Chukumba

just update it. to of the Q&A, in one quick Form-XX? of Any terms not the bogart real but filing the question. And Got

John Robinson

spin the say. the I thus We near process good smoothly future. trajectory. track It's well, generally, or the the got of we're a happen, maybe going end That to to been for that for the on far. obviously, be would feel pretty spin is XX by Form even year And We're the -- on going like earlier. still completed has in

so. so going well. few all weeks the or that's And expect you'll over next And that

Operator

Jefferies. from comes Joseph Kyle question next with Our

Kyle Joseph

quarter. on. you. the I going going get on want congrats with thoughts, what's lot there's really Anthony's Steve, Obviously, into on invoice echo with start I to volumes. think a I I'll

for providers the invoice a supply Can then credit, pullback then have your give of of issues. some own in some volumes third they tightening how October? trended just throughout quarter? of how you traditional us and sense looked And You underwriting chain

Steve Michaels

as kind would we of the up to months XX% in at yet. XXXX. on increase I in were dynamics to not modest Kyle. the closed Yes. I dealing this said But QX having are far as sequential October see of I earlier we're be as remind the it alluded we reported stronger, year insight kind giving that mean, you, Thank some we're last a QX. very John at well. expecting monthly from a mean and haven't and we you remiss you with, hit of and that, QX time, strong I we And of against in -- QX even didn't X.X% it, if improvement

always we're modest on decisions we improvement. opportunities -- decisioning side look good for for for looking make the us. to a sequential So And did

to we partners. partner use customers want look yes and better to decisions, As but make We good data for to be conservative team. opportunities our also more a to we're John said, want a retail to profitable say to

used for in to to pool that look had tighten the the certainly volumes. did and we we and performance data more back impact And on opportunities So an invoice to the effectively. March, learn over summer improve and data

And here so of in the quarter those QX. that in to third end expect we moves of some we the have the made to subsequent October. And help in invoice

more time already year. prepandemic we posture would than moves, or those even in conservative this after were However, John we're last I say, said, a as still

Kyle Joseph

activity outlook did still what's very it. I in of But third And that in second you helpful. see quarter? then for your margins the in saw profit quarter, recover. did year-over-year. you sequentially, gross than highlighted buyout fourth quarter? XX-day know buyouts XX-day is the fewer And the terms up we Got you That's

Steve Michaels

Yes. the was by margin XX-day that seeing to payment margin for the compression flat elevated. is couple QX. now what In activity the more than OpEx. compared strength to revenue gross opposed being continues last offset in years, in in you be and of from above as down It customer the the you're XX-day line to the really as QX, of down up that, performance know, expense line is to the portfolio slightly

the So gross margin on point was XX story the basis that improvement.

Even dried July, days. XX elevated QX. elevated predicting going the after year continue mostly elevated at the see to last up see into continue and of levels from days, on we We certainly end -- to we're XX similar stimulus

Kyle Joseph

from me. last then question And it. Got

relatively the Progressive And I a you think percentage Progressive you long-term know about, of it's talked for from you a going how here. balance the about accelerating small talk of I but and see perspective, forward? business, still from e-commerce can share

Steve Michaels

small, growing partners' are partners' Yes. payment Certainly, those but sites that are accelerated carts. winners my an investment Thank you're in the e-comm. our retail retail be investing those retail about super have the if fast. they're many partners type our our Leasing and all bigger, teams to you. are as time. they're e-commerce XXXX, and COVID traditionally, those Yes, continuing over checkout e-comm. numbers our certainly, getting working invest And to And of we're And of online It's mean going right, a that it's our and Progressive on more those you during teams to has retailers in in And I because have been has top excited retailers to application of Progressive -- been to, our expectation. experiences our add their site in growing. our retail we've not partnering that and are app checkout payment most with type hard been partners' recently, as alluded websites. channel we're But there capabilities has strong available as a into already.

Kyle Joseph

Understood.

sustainability positive thing sorry, pivot you, forget one about of want I questions you're from stimulus, to through a there? lot how and so get the Don't is I'll specifically the more about more But business walk the Douglas. the And can positioning you that Business, me. to more if One there us just no thinking business, into -- of stimulus, you, if you're Aaron's given Douglas. less results. there's the the how if stimulus there's 'XX, uncertainty on

Douglas Lindsay

strong in customer We operating X habits. think talked we've that about in risk I benefits the business customer drive quarter We've leverage the of mean, rolled of our QX lower spending business, obviously, that But have this base better over last of remarkable of seen and quarters. and us gotten collections write-offs. sort this high the also Malone, a decisioning, out. now is our centralized really year. control attribute Operator, allows to It changes we've haven't a of stimulus team we've some mean, enjoyed the I and Chief that job. Sure. and Ryan But so done retention to we that got and I really yet.

exciting. that's So

and stimulus, will habits. sure probably levels happen a normalize, how in and and we expect certainly, of And all write-offs. going early be sometime and that's this get back these our all that's range, to normalized COVID about we write-offs forward, be, back more some spending going comps to and in normal the out going XXXX, As what's when with we're with dependent economy it think and external on plays stimulus to customers' will but further of but revert to we comps to factors not will

payments we primarily. taking just lease it So look at with controlling I going controlling. think because say the decisioning, it's have quarter-by-quarter. I And will gap look into marketplace. strong mean, negative pressure, can things on comps. as But the and year, really customer terms fourth pressure to the hard We we the outlook, will appears will what's and as we're collections probably of we written of I be the our say. going still quarter, looking next we're We're at in we positive just under stimulus believe just of to be health in cost control, and in restricted

to terms margin, around And at our Ultimately, bottom continue drive and will of the the So we and we business. a a look think stronger business it's tailwinds expected we're of write-offs write-offs. EBITDA not very and to think that's we've optimistic line. the that about positive. we dynamic. decisioning in there's We with in made, customer advancements lot profitability And of demand lot optimize at coupled the

Operator

comes Markets. Thomas question Capital with Brad Our next from KeyBanc

Brad Thomas

to and all. catch nice quarter you up with Great

was you separately. up, that to forward looking really to break the I for just want write-offs, from the knew but about Sorry as working band exceptionally has XQ, number here all we low that an to your function and ask about of with pre-announcement you decisioning of a write-offs how the I Douglas, done tightening you just can in the Ryan factors? talk guys more low that have the quarter. the versus hoping much environmental are

John Robinson

to first, a Yes, I'll it's and I comment. kind I'll try Brad, give of overarching mean, go John,

there's both that's the for stimulus probably to of no of what that summer. dynamic to spending for are there been helped behavior kind related also like things And that's travel, I or has no tailwind question said other Anthony. customer the a this home, that less written customer payments. on think question, earlier idea about there's probably on been sporting and say a back you've example, customers with businesses changes, sort I through reverts -- events and more But will entertainment, or thing eating out. actually their I

stance from the wallet that process The a a share as at getting it more of as be customers, pandemic. of have for and a kind the more digitizing to they'd of We easier making decisioning may And went lot focus perspective. conveniently the made changes. possible. to then both on kind teams conservative payment great we of so the And to easier how pay like of have and of teams job customers onset done for pay also,

But from as and to it's good hard know. a really And what impact. have to resulted confluence third stimulus. things kind even variables lot of have in further It's do of at and almost all play, continued we decipher, are a the in got performance this impossible those it's kind we it's of quarter which of so that that think made

it stimulus just piece much So in hard there and time, to how in customer if stimulus, some to each changes it the we But what but improvements we would normalized But know longer. there future some future, are exactly behavior return made better expect that is no to more over and maybe as played. wanes may levels. believe knows comes who we've result being that do

and have we'll just to see. So wait

Brad Thomas

look John, and encouraging if it connect to guidance trends as dots you where the is. back try And you guidance? earnings pretty -- like to we to your your fourth commentary, that terms quarter be may of write-off would trends modeling me the write-off a What seem obviously, guidance, that would But in Street we from assuming triangulate big just reversion above are you're to helpful. the That's going that before. what

Kelly Wall

Yes.

Kelly. it's Brad, Kyle, So

I -- chain environment, for the will We're there's think any we in here, we're want significant also stimulus. retail our just and not outlined out assuming call in better. as no that right, all, the assuming to right, of guidance, U.S. economy, supply new additional be I deterioration we first

the revert in to start level just they But this we that, with be better levels. back to more have some continue been past. towards normalized So still than

were historic as quite not than but again, levels, better good quarter. as So they last

John Robinson

they doing lack really really -- give don't -- to that the that the they We feel like we to to stay we know. continue But can don't probably guidance don't the And -- to just to the we know. visibility assuming have. best at Brad, what gets based do. that And we're right just thing to just hopefully, same some level. stay we investors on But -- it's of just rate, we have we

Brad Thomas

could. last the about the That's commentary separating quarter, very X X that was businesses. just last John, I great. really there if one separating cost associated housekeeping, businesses immaterial minimal, the And was with

Is X the you're dot being here, and thinking that about still guys you you cross these is an how Ts As about businesses? case? us operationally update give Could just separate

John Robinson

as some these additional Yes. free EBITDA of -- public maybe way both are and I sides, profile businesses about we'll about will replicate set it, think there to forward. The that's to you the costs are and substantially but as will they mean, companies, did splitting these to think we think independently I that longer-term cost. we really both margin those built on materially teams these don't to of We place. change in operated have some have additional kind go think is, very operationally the in businesses. But were some roles have been way largely helpful out. it already teams there from the as But the businesses additional costs promotions be a CFO back-office

a than really I quarter higher when margin number Obviously, point. than But kind it. mean of this talk was the think way more seen But I this normal. think that's probably of about I over So then we've to believe. we years. of about it, levels the the kind won't at historic any guidance that that give that's more way to profile, the And about

Operator

Haas from comes America. of question Bank next with Our Jason

Jason Haas

new And their everyone on congratulations roles. to

I So volumes invoice for more bit wanted ask about Progressive. to a little

for like there you understanding that is the I are cause retailers. those consumer So of shortages. understand the pretty inventory But those some well some about in, appliances, categories being furniture that doing still our compete electronics,

of just like up, the these been the retailers So curious just on pandemic there's masks fact at hurting more maybe it's is some retailers with that your elsewhere. the or going penetration maybe kind what's if turnover, or anything have if like employees wearing to related the there's I'm that's plexiglass shields focus

of rate maybe isn't curious invoice what it, I'm you is think long-term any for right we're now if so your making not seeing run So that that volumes?

Steve Michaels

Yes, mean, associates I I There I Jason, haven't retail interesting certainly I thank assume. you. say down I showrooms had have sales come all turnover. to those have them guess. are shut of and that. have been back, furloughed not mean we've heard partners theories, and I

of the maybe what excess retail in normally So is there would environments. there be turnover, in

of train to redevelop part and our those So get knowledge their program of sales -- and program. our with free into out it's

we in a not traveling normally field-based hindered in our because much do we're that are as We little as sales bit team.

and be levels we I hearing So mentioned usage -- the finance to than more personal the an retailers' are financing as anecdotally that that mean, developed. could I the historical point-of-sale opposed think stack that cash card there's kind I they've of in options impact. that

standpoint. don't rate. invoice we've enjoyed be run definitely expect back expect long-term furniture impact. the up does I it with that is an has especially that growth Inventory last and impact our think And over retail we years from due -- ultimately, this what continue forever. wrap that I continues we to number to be do we to partners. with I guess, There's But growth at disruptions do the to -- be not to an in would in us get of to expect an the COVID dislocations

Jason Haas

just little planning it also And I overall the tightening if are little you've loosen given wanted guys, environment. guess that's expected. for maybe up the like, as Great, the consumers one a seen performed to than you that then talk you helpful. bit ask at could question, I And to bit general a more least better in sounds follow-up credit a little a about you had

higher all if if I'm the credit that to to starting So see from they're out loosen? tier some there, you're providers starting at curious of also

Steve Michaels

own. tightening seen profile part in we've our taken that's the your of the the question. that's question, average we've tightening on that of that actions a the in Yes, of the the profile good of average been applicant approvals first We've form conjunction with done, and

it's exactly to said many for above a that gets us in the in because credit primary and taken secondary us what's it stack calls, difficult As very cases, we've to previous has before us. look on a happening there's understand

our in do like have some customer internally But whether to continue there. we tightening, available we the same see that of sure read whether strength like into and we we at having I to you still and are have we providers do, is discussions look sources look XXXX. press loosening and -- supply and are as what us what's using predict the into QX much data drive visibility we But there's business And prolonged trends seen kind the they're they're in targets the happening to that still as data still that the we hit we'll and tight. have So can't make can to possible. this and not. the just that those about some or prime hear

Operator

Securities. with Chappell next Our from Truist question comes Bill

Bill Chappell

but reserved would have you'd of covered this, some may the fourth quarter if with you housekeeping, match reverse more first the what guess you it doesn't for? in I accruals

Steve Michaels

is this reserve Are COVID-specific the to Steve. have Bill, or... you referring we that

Bill Chappell

Yes.

Steve Michaels

the imagine. customer we've due this, way And detailed, You evaluate not And reserve month obviously. payment and we there and -- we've has that's reserves. our something activity, been the for there, and we difficult looking this at a is that looking this as our reserve AR. right? side, the calculations each Obviously quarter fewer been study really The each can't is Progressive to for delinquencies you can fact very non-past just reserve way run them at normal been great on it's

this nonaccounting not. to continue COVID constantly at we're special and Whether in it's -- we the So decide or of appropriate sidecar, quarter, anything to haven't and and that we first each that. established And it we've got date. we reserve term reviewing whether look kind for released quarter

our that We to as level, at believe the assume can continue all and we uncertainty not is say, out did factor XXXX. that QX whether relief will XXXX, determination be appropriate or put finish it. look exists, that reserve. think, evaluate any But at the COVID-specific we I currently we specifically, or into same will into We a guidance reserve the for did time, of at consolidated big that continue that in the of part, reversal in we and

Bill Chappell

mean, to year? the following Got is higher standards new it. payoffs? it the affect Is mean, that as of Got would tell last it too move that tightening a that or getting it. on I there And any customer. XX-day question. is up to you're continue then sense affecting into we early I kind maybe credit of credit the

Steve Michaels

I certainly, the we about, buyouts. and profile our Well, been to XX-day I customer, have stayed bit of QX customer, to see And little and impacted as change or a XX-day buyouts the profile decrease of normal levels, the our August it be I John customer in it's into our has slightly tell mean, September, the expect whether that and higher elevated. think, -- they -- you, from talked behavior customer have

understand that quality to and difficult like from for of just other are it's the elevated from driving a exactly next that, in composition we spending what's that. changing difficult it's XX-day so things, to if But money not better or the And of on several credit much liquidity payment quarters. determine customer more buyouts behaviors how planning

Bill Chappell

demand forward is spending some Got home furnishings since it. they the impact if then more that would more. in Or are their potential it anyway? last people type sales sense it holiday Any concern need -- the pulled strong that one, breaking of still the -- time more start are or for things be especially down that pandemic Douglas. houses, And or or would

it's so back do at into coming steady. And look December, going they so How especially? and pretty you

Douglas Lindsay

that I feel know Yes. been everything discretionary I towards There's we what I read going that of think goods that's November, time alter really nothing of, there the going about a good how frame. plan mean, think -- we strong. mean, a reports out, we've income sort that. we into I for demand for I but the December and of demand home have lot analyst -- is out got

to more as And of will in sort that. out super December the of you got our go month end towards moving November period. We've we're over optimistic marketing so spread year. whole got that and promotions that benefit of time the -- to the about know, We've of the we're

into first normal November, is in we're big that. event, position we our and So behavior Friday expecting inventory going good Black for believe a December. is our

of written into but expecting, lower much better to we're decisioning for inventory to in be have the portfolio as because slightly mentioned, revenue place. So I a

Operator

Our James. next Raymond from question comes Bobby with Griffin

Alessandra Jimenez

This on Bobby is Alessandra Jimenez Griffin. for

the First, going Can I some forward? would just business. of impressive be want of expenses, write-offs, side to Operating about portion start of And leverage sustainable this the drivers the what you savings cost behind the Progressive. showed Progressive might excluding on talk leverage? in

Steve Michaels

some yes, pretty -- early We decisive part cost actions. of Sure. highly -- variable Thank the a the we Obviously, in the we Progressive model. you. pandemic, took is

this but layer base an tighter to into all on from generally is discretionary point, while and not -- just the growth drivers standpoint, for So also are an app important activity our the mobile not down, be the and the spend future. activity-driven and have we costs cutting reduce e-comm spend, been -- investment of looked and while

So the in leverage we bps quarter. of XX saw about operating

invest We some But the continue that full these to but costs come SG&A future to -- yet, for drivers. of and but and we in we'll expect -- would on see, year, -- guidance given substantial XXXX, leverage. expect haven't will we the back.

we get. out continuing several there's basically while out growth for ahead goalpost go with this opportunity we we big ago there optimized out EBITDA invest the that we're are unserved to to comfortable still we're and and put margin confident XX% that there positioned of not margin XX% are to well So and because years think that

Alessandra Jimenez

Could to Okay. question. it? that added e-commerce an back the the That's of helpful. Leasing you quantify have type? retail any payment then circling when partners And volumes seen difference add the do percentage invoice earlier platform as the in And you have to they Progressive

Steve Michaels

is we the partners believe year, is some and Best big very kind and And a adding that the we channel. has e-comm they e-comm this note, that's but to of partnership. Buy of incremental. and are do successful, important future, it's don't we We invoice appropriate been There's we where because shift, talk do. want And particular driver very from completely prefer to be to about great retail And applications perfectly about channel and initiatives think one their unless certainly, really certainly, talked to Yes. it's of good which want not composition customers volume see where they shop. was

just a of their we us, follow So integrations and let we with the done for have e-comm lead. really retailers number and speak customers

Operator

with Maroccia Alexander Our comes Berenberg. next from question

Alexander Maroccia

we as numbers strong those at a same-store foot understand dip customer us see on in trends especially and unemployment enhanced progressed, the ended doors, traffic Aaron's the Can after help traffic Aaron's quarter July? basis. a you Despite the benefits at did in that web the

Douglas Lindsay

referring our Are you being Sure. counts to customer down?

Alexander Maroccia

Correct, yes.

Douglas Lindsay

Yes, yes, yes.

which one X I last in quarters is years. So was actually better we've was our -- customer the had of down think the about it count X.X%,

shopping good paying traffic Fewer record online. e-comm But There're news We more and were but visits. online, into a targeted at stores. levels, lot people our COVID. is through us the have people more traffic seen soften also is going seeing

So more our collections. different ways, of being efficient our higher us benefited and that's in number having considerably, spiked a online operations in payments and

necessarily stores, in necessarily And what don't is attributable traffic seeing thing. think lower bad a demand, we're which our times to is demand. we in of strong that So payments, is many terms

stop. half seeing, themselves I the cuts and dampened the think by is demand 'XX Those April. we for months, decisioning be lapping comping as over that numbers before, next the we've being bit comping in you're a in over themselves made I XX of cuts that or should second little the mentioned see will

we're optimistic. So overall

about traffic think plan got great specifically. customer for a I holidays we've concerned the and not

Alexander Maroccia

charges us for purposes, for sense expect Okay. Understood. separation modeling you And secondly, just the can you give restructuring on any QX?

John Robinson

Yes.

for if reported we expense with that can earnings specific this. like on in you'd as wanted the earnings a I'd the any consistent So I the what part out, did costs, our be expenses as our guidance of transaction, there say we on you -- that that is we see in provide about non-GAAP million. haven't release, back that you point guidance about we some incur But will quarter. or spin that for What Alex. those to non-GAAP QX, think the do the is see add information normally provided which $X EPS we in

to as So future in do we'll continue that well. quarters

Operator

from comes Vincent with question next Caintic Our Stephens.

Vincent Caintic

I Aaron's you've on years. missed calls. the talking achieved congratulations in John, these at all to several on you past

John Robinson

you, Thank Vincent.

Vincent Caintic

both of can On the volume invoice if But anything and wondering do from kind of -- volume been Aaron's to rentable the Understanding headwind just Business. invoice on improve the some for there growth. or just products. progressive you shortage incentivize there's so there's question

So and early offset penetration high, lower like, it because then I'm more for sounds is being maybe might the if volume a maybe sales. there's from frequently, just used early guessing headwind example, cash actually, payoffs. And payoff is but be that, rate more origination

if to maybe you there's loosening invoices? break then if could outside do anything could that And So you out. that credit of just improve

Steve Michaels

This them start. and Steve, Douglas over. But promotional drive Yes. take we And in with that continually. ways partnered will with Vincent, all for won't can be it of other and campaigns November packet and is December partners. out we're least This season won't always have do and most looking be -- time marketing it and our ready we're retailers, we'll type that I'll from invoice in interesting I kind at Black stand be obviously more there Friday to spread on to an frame. an mean, Friday, holiday be -- hearing acute in the but over more will

and invoice, invoice. just that get with a as doesn't for mean, out we not correlate -- I to in be business on invoice. size And us, the to days, and it us. extent benefit have it and that portfolio XX be relationship. how on XX-day an and would measured XX-day customer directly have then drive increase -- we see looking to the careful We're drive -- partnership It decisioning, far things necessarily lot that to will but gross margin. that. we'll preferred doesn't at impact it's necessarily and and -- yes, into doesn't But would the can an our impact from repeat of want we're doing that have plays customers with So that as on a great retailers definitely repeat our we're repeat But necessarily

we've partner just successful So and on beyond, season our with great partners. this nothing to retail be a in but XXXX got and in how them holiday with plans in we're -- specific. We're great communication

Douglas Lindsay

Yes.

was -- is offset and Aaron's lease On return the lower our portfolio products, higher offset than more customer material rates retention our but in part the of of see some less on XX-day by Business, in is strong. which and a XX-day, We increase our business. much payment it activity did

like In into our terms which portfolio, the of revenue number, that our is origination XX%. down written was

quarter, normalize. believe comments, that really in quarter tough we see third of did should QX of my negative program. of decisioning. centralized against I We initiative. was type that will fourth April that training it year, be probably a next that to again As comp due a was through I mainly part mention and mentioned biggest the year sales our in to piece that And last

impact, but quarter. So in had normalizing we the see fourth supply the has an chain that

more you the so factors has see what everything we're to with portfolio. to external really really, down do and less And do doing with in

Operator

session well Thank today's attending you as for question-and-answer presentation. This concludes today's our conference. as

may You disconnect. now

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