AAN - Earnings call transcript Q1 2021 | The Aaron's Company, Inc.

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Operator

Thank you for standing by. And welcome to the Aaron’s Company First Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Michael Dickerson, Vice President of Corporate Communications and Investor Relations for Aaron’s. Mr. Dickerson please go ahead.

Michael Dickerson

morning, good and you, everyone. Thank Aaron's Welcome conference quarter earnings First to The call. XXXX company

this Lindsay, have issued Aaron's Joining Officer; are questions. earnings we morning me Douglas release call the a Aaron's After prepared for and copy will Officer. our open Steve of Aaron's President; Kelly seen Financial this Wall, you morning. Chief Many our remarks, already Olson, Executive Chief of

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

will forward-looking companies. These CEO, that, the may our On risks are from During may adjusted XX, net results outlook from turn want actual periodic non-GAAP related EPS, items, materially affect will with our identifies Lindsay. and I to our harbor have financial our your to safe results measures this forward-looking Also, that December today's the non-GAAP for provision content forward-looking non-GAAP which our filings the with the the we non-GAAP may forward-looking, be over our at of measures, of to now make referring to which XX-K found other in for for end of please risks that call call, certain ended The XXXX, for materially been statements Form will our certain statements With year tables to including our the and statements. to a call, be comparability see detailed our release. differ earnings release. included actual description Douglas that of safe attention SEC reconciliation performance to cause performance adjusted harbor EBITDA, certain our the other provision I with business we financial could be the XXXX. call earnings differ EBITDA statements. including earnings for cause and

Douglas Lindsay

first strong first demonstrating the business. increased us and positive today. start leverage margins the our for and growth adjusted over that Company operating momentum XX.X% stand-alone same-store is the with of strong in reported I'm and Thanks, in a has very revenues. The in quarter, pleased thank the EBITDA joining the you same-store XX.X%, revenues improved year-over-year of as full the revenue in public revenue our to Mike, Consolidated first and in revenue double-digit we to included XXXX that margin increase delivered a quarter XX.X% company. we delivered revenue growth. This decade quarter

and are store teams at support Our a performing our Woodhaven very at centers high and the field engaged. in and and level are energized

seeing the pride I brand and As support strong operations and visit our stores of Aaron's team, our optimism I'm about a to position. around our country competitive sense

in we delivering the team innovation Our lease-to-own are the embracing and that are customers dynamic market. members

provides greater we've last we quality operating provide today, portfolio. that exceptional five the while platform transformed and team control our with I'm customer say of in centralized Over also years, a that the an decisioning predictability, as experience, a in greater the efficiencies Company goal driving to have higher of significantly continuing proud resulting model. and to member lease

We made have be stores. outside to of that are payment XX% of customer monthly enabling enhanced digital over platforms our payments

with that a in pipeline. openings our platform We a that younger portfolio is expectations, fully have And an customer. outperforming and many industry-leading we XX e-commerce currently store of more have transactional is attracting stores new GenNext the

to model performance combined enhanced to operations, of our enabling underpinned initiatives our that more quarter these growth. of us and in to made have outstanding are efficient transformations and first when XXXX. our are contributing are with earnings deliver strong analytics All we the business investments by revenue the in These

ended which and write-offs. by strong encouraged size improvement end driven This lease continuing the quarter primarily to of was products, returns, the the demand compared by quality our lower XXXX. quarter the in first improvement our X.X% of inventory are up for We portfolio, fewer of and the merchandise same-store lease

benefit to continues ongoing the customer our stimulus. from government addition, In

most both centralized enables across decisioning, greater to originated this better lease was spring delivers number made on to It at nearly Aaron's, consistency that provide One of in achieve customer decisioning with contributors we Centralized our focus for to of portfolio goal stores our same of predictability strong the meaningful company-operated the using the our portfolio the and customers and portfolio. the all XXXX. in time servicing. performance of of technology. outcomes of XX% performance time, ownership, flexibility lease implemented serve. reducing the up our such their store U.S. agreements of sales Today, our cost in which were the as algorithms growth-oriented while activities and the believe managers lease a We having is

drive We continue portfolio. this channels, to our refine from continue our will to greater expect productivity decisioning this across and various lease we

strong our in the to of contributor than represented e-commerce was Another channel, quarter our revenues. which XX% more performance lease

our growth days ago compared of XXXX, COVID-XX during quarter as the e-commerce by closed of has stores compared by the increasing significant early year shift the quarter. increased online pandemic. prior the despite of platform to XX% E-commerce in year as customer revenues really delivered, the XX.X% driving as to in through and aarons.com Our to team lease quarter activity March traffic originations the first

and year's primarily decisioning write-offs addition, result than compared ongoing a last activity. quarter, of by enhancements improved as operational In e-commerce customer payment more optimization, to strong XX%

Our capabilities, in momentum leading team online growth positive channel. deliver margin conversion to e-commerce continued and important ongoing servicing is this improvements our to to continues customer acquisition, which and

just products enabled mile quarter service last stores, showrooms expanded is and delivery. are but by assortment also Our in which centers, the hubs, an growth with are next-day our delivering or e-commerce logistic same not of

real and gaining it growth. our we estate strategy is drive Finally, future and repositioning will expect momentum, reinvestment

exceeding have digital technologies. brand To and generated and modern and our Our in store meeting date, stores return. imaging of targeted assortments, monthly the new new XX that GenNext more stores more first opened encouraging, have Equally our quarter. product originations legacy and or we results lease expanded have larger these rate in GenNext average internal stores rapidly showrooms, are grew much as improved than

Our plan open planned is new the stores more open the than and in GenNext to majority quarters. third second for to XX with XXXX

we're a about of both results strategy. While our infrastructure, progress, we're execution building excited the approach early continue our financial maintain accelerate around this and to to the we disciplined

how strategic our experience, of the initiatives now the our to proposition turn remain and Wall We and opportunity the Kelly pleased the of the simplifying results first over let to to customer our high the our aligning me strong results. I service. I'll this promoting of am and delivered payments, footprint store to discuss teams have Before best-in-class year. call of I quarter and over turn rates our digitizing in low reiterate performance the approval customer value with call Aaron's Kelly, key focused on we financial

Kelly Wall

Thank you, Douglas.

For the of improving and million XXXX, prior in during strong million The quarter customer $XXX.X for by of portfolio increase part net of first XXXX, XXX quality quarter first increase due in revenues franchise our the an XX.X%. reduction compared offset company-operated government year. to the and aided quarter, activity revenues compared the partially lease and were stores of of to the $XXX.X and by increased the stimulus, payment primarily to was size

sales early consecutive a We fourth compared was revenues quarter positive the payment XX.X% the this e-commerce the growth As XXXX and up XXXX retail believe option primarily prior XXXX. lease exercises. to larger revenue and out of to portfolio same-store overall quarter. prior of including On were of our growth quarter strong to represented called growth earlier, XX% customer first basis, lease Same-store the revenues is XX.X% first by since Douglas first a purchase double-digit in in same-store increased passed compared quarter, partially a compared stimulus the the revenue year programs year same-store driven and in XX.X% government revenue result and activity, and XXXX. revenues

filed for decrease lease a of as to the the This the collectible million X.X% Additionally, $XXX.X size size all lease compared of year. first March $X.X size million, quarter write-offs, to company-operated represents reduction and variable an million recorded see the spin-related or first stores store XX-Q due the with for credit offset an to an impact costs period month's costs additional for of increase of lease by XXXX excluding expenses, and XXXX down closures performance in transaction goodwill fees. lease recorded higher compared Please expenses, compensation, was outstanding Lease for ended of was last of higher of portfolio XXXX. were restructuring partially next in same XXX.X%. XXXX first total with payments marketing details. and XXXX, of Adjusted $XX.X in portfolio personnel Form quarter agreements. a in impairment Operating the customer card-related from EBITDA both COVID-related our and primarily the portfolio $XX.X million and aggregate morning Company $XX.X first bank XX, increase compared to this increase reserves were the quarter quarter million other the XXXX, the expenses related our the as of which of in expenses,

generated the decline recorded primarily a earnings the of On $X.XX share due due of the channels stimulus and the the diluted revenues, improvement quarter million adjusted due working diluted first total write-offs the was overall to points. The changes to was of improvement revenues decisioning increase first total of compared to XXX.X%. by XXXX write-offs XXXX, earnings were the improvement for share and XXX purchases, the items repeated compared to higher the in same first basis basis, in and and new first quarter inventory customer percentage of improvement store lease of of $X.XX reduction million first per and in technology, in reserves both XXXX of last that merchandise in higher same e-commerce X.X% offset XXXX COVID-related of $XX.X a implementation EBITDA capital. increase prior basis year, Cash year. quarter a of of of non-GAAP partially the a X% the in improved origination including activities operations, revenues, point other not in quarter from was XXX compared operating impact to in margin As drove with an the $XX.X adjusted compared XX.X% payments was XXXX to an period primarily quarter benefit lease government quarter or for of XXXX, for The in the primarily the per non-GAAP $X.XX of XXXX. in to EBITDA

During common stock purchase price purchased XXX,XXX Company $X.X total the approximately the of of a for quarter, shares million. Aaron's

Board million was on our of Directors the repurchase our X. share the Company's we of the under that we of March end the per Company's of dividend Board year. As X paid dividend authorization this on $X.XX cash quarter, by remaining declared share approximately quarterly also April had and last The first $XXX.X approved month,

the had $XXX.X than As debt available less of XX, of liquidity $XX.X million, a XXXX, cash and balance March of $XXX,XXX total Company of million.

the our and to Plan American Turning revised outlook. quarter first we our passage full the in XXXX on outlook. of performance March, have the Based our year of in XXXX Act Rescue

year, revenues For the an our representing billion, consolidated of expect outlook we $X.XXX increase between of billion. revenue and full in $XX $X.XXX billion

We adjusted EBITDA representing between million, our $XX of an increase million. and of $XXX in outlook also million $XXX expect EBITDA adjusted

the depreciation unchanged. and average outlook share For our amortization are diluted effective year XXXX, count for and full tax rate, weighted the

X% the a to from to the We to adjusted of half of the year outlook also revenue our revenue and our the have child of be outlook, and expected This range expected total in expansion of Similar half a outlook original X% first to XXXX. of to X% increased in in XXXX no EBITDA full X%. higher assumes to same-store July tax range XXXX. acceleration payments credit from impact second are begin

who no significant chain your as current the or I the will now supply current deterioration that, of over retail the condition environment conditions. with to turn the and Additionally, the to assumes state continued U.S. improvement assist in compared economy global our call operator, will in questions. With updated its outlook in a

Operator

[Operator Loop Chukumba Instructions] Capital Markets. Anthony with

Anthony Chukumba

of a have couple questions. I guess I

question. First

maybe an Kelly, You in year terms a mentioned, us chain to the and mentioned comp conditions was to give you wondering supply on market seeing chain headwind you're variance wondering supply if supply update you late chain. how of I was just how a one of was drivers? what on I bit on last that just the if improve could that

Douglas Lindsay

both in channels Douglas. Thanks the of got right for and business really say Anthony, energy just proud Yes, the now, are want question. it's the of team. I'm I and a well. momentum to really lot We've performing

I'm think the inventory the definitely little Steve we're kick our sufficient business in in chain, happened we on chain. inventory terms Olson, a run supply have detail give more to levels, improvement our right and now. I supply and to just to continual in you of to last seeing outlook quarter there it what's going for bit

Steve Olsen

Yes, saw Douglas. QX Douglas and across improvement, that as Thanks, we said, seeing Yes. level we're supported the and continued continued that absolutely demand of high categories. throughout

of we're inventory across As we're looking to we we fine-tuning balance to price for. to that believe get continued QX, and the now categories across improvement year, just the and points, about really exact it's through look to see just from level going that QX

Anthony Chukumba

said write-off you're too improvements that if your I just when what then given X% was But Got make guidance it. to I the expecting to X% for notes talked with if had you to given provide about given XXXX, could, you all. decisioning and my in the rate this the I about want granular. changed you and and in rate look And at a guidance one just reduction follow-up that you [indiscernible] centralized and write-off stimulus. wondering has

Kelly Wall

as kind stimulus Yes. changes certainly tax the of for the is right, QX, guidance delaying. of rest of the the we That to the year. going I absent a credits as and Kelly. Anthony, impact start the it's QX mean, as into go to still child through holds reminder,

fine-tuning X% the be kind range our so to our lease And of we're really in model of as -- kind we business we optimization write-off X% of that decisioning. to

And so see P&L. into to to through the expect continue flow we that

Operator

Joseph Jefferies. with Kyle

Kyle Joseph

buyout quarter, Congratulations on the impact -- you of know to the I hit. even just the walk if versus could that? and really when I and year. to March April, want us through if a a us start really, want of the and don't comp I dig a trajectory consumer and February activity based January, give can stimulus stimulus to sense strong into new just the for just leases, we get on on between into saw behavior on kind you

Douglas Lindsay

is of through our about sales you of performance would And we product. in And to I our payments, It's portfolio our now, ever saw I'll lease than the there because what this centralized difficult but churn of the our in but Douglas. customers checks higher that say XX.X%. number, sort in come we're larger really They're We part decisioning. payments receiving strong liquid we've customers and despite more of more customer, start. that while, recognize seen. right seeing Sure. because are our we've in marketplace, due more the they're ownership size, for getting liquidity comp challenges. that From achieving the time, same-store than store portfolio and but out to relative a with sales also really lower of as I'd is unemployment up chunk say and unemployment seen there's making online stimulus the payments X/X more and demand that's

came portfolio which good I which And our related out end our the in up customers at call, of activity. were So mentioned same-store to the customer strong this number. X/X same-store the the a we comp that's when in was and really our lease of in higher, on checks is X% about quarter, is as Renewal that quarter spike of lease About saw the much and rates of just March. X/X quarter, another portfolio payment that. our

that in higher of early was higher previous comp And our about payouts sales years. stores retail than X/X we've in $XX.X million helpful. was And seen related so performance of to then super our and

we're that's way kind so looking of at it. And the

portfolio portfolio. each retail payment know stimulus of to disaggregate of hard the are relative we're contributes contribution to and much a have stimulus, sales definitely held EPO business And We the in those and pieces. those lease was and so where customer The the business on side it's doing by things how the pleased to decision on side. stimulus influencing know the the and and to other really payments we're our to today. healthier all with business, streamline is the to We

I'm comps look outlook, of terms to In forward. going we as let really to those at Kelly speak going

Kelly Wall

Kyle. Yes,

very between then to we're obviously, So a guiding for X% posted strong the we and quarter year. and X% first

that see three play and QX four. out in we As and

comping to and that First, were X.X% nice increases remind X% right, I want you QX. QX of over QX in last last for year, year, in QX X. up up

less be what QX going strong. and QX see And will So is QX. to QX be will you're than in

kind that what something of excited But the about. total, in is for we're X% over. through that the year As we're course slows year again, the X% of up comping very to given

Douglas Lindsay

Yes. And performance portfolio. churn the reduction also and performance and health rolled and we've I to control mention optimize of really our to more about in have we our levers of decisioning, want ever Since centralized thing the The product than the our write-offs. one the out returns portfolio. or

So saw that April quarter decisioning in out since year. we this centralized We've experiencing is last been rolled new. nothing we

our to future. and health And about sort when optimistic to what the in seeing. the portfolio with We're in down so drive portfolio and you ability the the levers control performance business the our strong combine we've ability of demand the up and of move done we're

Kyle Joseph

independent two me. Very company. you for have guys helpful.One -- as it. Obviously, a quarters follow-up as Got now an

you back that confidence Going strong November, in guys really in talk the X-year kind your longer-term about longer-term the of the to out quarters can of on executing plan given kind two of out you plan? laid gate,

Kelly Wall

just the for Kelly. at and that two speak we've it. QX made split performance as right, obviously been to business, was decision across the businesses the year, confident as it's Kyle, we're say any since point, Yes. the last I'd

The making the to in around seeing investments estate on brought marketing side, investments right? technology, behind we're the we're people we're making us that making on Board. what real our the fine-tune scenes is not around our the So model, strategy, investments continuing you're we the

this remarks, Douglas about where we're his at where and prepared super in mentioned excited we're As headed. everyone is

I'd that really X-year So we about good yes, plan. feel say,

Operator

with Maroccia Alex Berenberg.

Alex Maroccia

we've First many cases, one consumer market. pre addressable stronger In sheets are pandemic. seen is your than balance today that

you However, government the improved that through have all customer quality implies stimulus? credit anything seen has

Douglas Lindsay

know our our tough believe of customers, had because It's get customer now right -- out are we our And things with more to the that all, seeing with payments, very and and Douglas. monthly that's got buying necessarily -- in size We've times the for not is monthly actually recessionary place. we're at We customers the we liquidity times, this which the has using roughly graduating in paying our Yes, What low they obligations stimulus that have more more say. well, we're and of cash. same. first still They're is market have unique our market in than offering, is their expands, lease rate. regular going product they're liquidity, past. they're into a to

So about general that's one the thing customer.

are our liquidity And terms up that's believe our down quality. and in more are seeing the our coming are our have quality customers into credit for We higher better out into the a customer above. happening have portfolio. of that that coming credit just credit, -- our from into we is that tightening approving we space In reasons. customers space portfolio One, there making customer two two, falling

the space the more saw we or two. demand in definite So year than we're in so seeing past

Alex Maroccia

really in out the to stood strength e-com me. second, Okay. Great. And

e-commerce store? the of are amount and between strategy us and in stuff acquisition remind can your online Given retention customer you competition, and how

Steve Olsen

starts key marketing our strategy Olsen. our Steve really Sure. acquisition Alex, is this differences The digital with efforts. on

digital content a invest right there, and the user marketing relevant with audience So really these efforts about to it's experience direct engaging website. great we of our them marketing and And on from about continuing more messaging. targeting then and then them are dollars a giving our

our assortment on our offer website. to continue expand We that we

five in been visibility and call us them give the years, our e-commerce just And to -- third the FCs our piece, decisions our our and We to stores. continue platform engine, to navigate it then make I'll and inventory, backbone it, our about, more helps e-commerce both the decisioning talked right really customer. it's give the of for and mention functionality right with the to Douglas over

Douglas Lindsay

a Alex, Yes, is competitive real I'd on the we that thing advantage feel like have we last e-com. in say

not their showrooms, logistics think just infrastructure our there centers If retail about and are our you embedded hubs. stores, service stores last-mile are

So high-margin we're as ways same-day in find assortment, attracting better to we're customer that and expand we cases, And online or and younger customer. many business, and getting we more efficient products our ways and and the a deliver new more convert can a product day. more It's next online.

team's us. super but it's of for that's proud made, the progress I'm So delivery, just in channel customer the not acquisition, conversion really and encouraging, and an and in exciting

Operator

Jason Bank of Haas with America.

Jason Haas

the wanted change little I to bit. into dig guidance a

you So a really strong XQ. had

beating I'm to versus XQ curious how XQ, raise beating your guidance was in know XQ with that your to So outlook expectations for or and of whether XQ? much changed anything due plan in

Kelly Wall

Yes. Great It's Kelly. question, Jason.

that So talking in piggyback large as new the was QX. to But some of that demand continue making that of us well great of even see payments and kind the is to performance had driving in certainly, beat customers We Douglas as of a our about, raise agreements. terms on part right? things we

we size, kind to for through with higher We resulting the the it outlook, customer expect larger prudent take to was lower just year. see of kind of the portfolio the the of for remainder So write-off. performance the felt not out activity that but that the payment also and QX,

Jason Haas

base, you really makes just that to some there's think given given accelerate it. I if follow-up, to questions potential like term. helpful. bit received, recent open, closures. it a I've the the performance. pace you that, keep plans That's just And of more any strong the feel for the causes your that that just strength least at some been sense reducing about stores to of then maybe as little a Got change curious And I'm store more longer then

long-term anything's changed that with regards if curious to plan. I'm So

Douglas Lindsay

mean, assess it, nothing's continue strategy same. our changed. really but the to I is Jason, we

profitable we're have to fewer, in same today. the Our is markets objective more serving stores that

super a having our logistics hub, optimizing being it's is lowering also but markets having And excited to to our stores, which, serve about about you that see, servicing think storefront combination case by grow. we're mean growing quarter, efficient, strategy. more store during markets. we've and presence. as of place, also footprint cost just a serving. or effectively the to the market And is efficient that's XX And being e-commerce a we're a of sort presence, repositioning we and in these [X:X So and the opened that's date, renovations shrinking a servicing still not It's and I a bigger those mergers, our strategies, hub and those in X:X] creating more of markets merge for we're

want do great I really positioned call and past, our in lease the term we're I've be portfolio, so and pivot moving over to of terms faster, intentionally making which able to optimally to we've do really progress to past out, that, shortened few In there. done the we're years

have our ground teams real-time estate the scaled we implementation faster our and the on real actually implementing We teams to have move store operations rollouts. teams and

we as construction really stores which as which and portfolio, conditions, of is the the of which possible will end be are And leases, to plays seven to a continues But are, long-term if and would again, much this renovate a call we're our subject commitments accelerate as of us. we at and take to course, XX% where work, market to approach disciplined relocations. be given do year, selection, efforts real way. well. next to will we be, estate, it, it However, it's, timelines, our with to negotiations as years, which combination XXX site these which year our disciplined try permitting, landlord may of this will is approximately limit a let's and five always, so to But effectively kind believe progress this in our of trying

Operator

Northcoast Tim Vierengel with Research.

Tim Vierengel

central summit decisioning much just off understanding all was e-commerce Based hold normalized higher-level more around continue just from my to quick, Do historically. question, commentary. in risky And write-offs guess, higher, typically have longer-term write-offs team brick-and-mortar brick-and-mortar? write-offs that our can a versus a been maybe this I it I e-commerce your outside stimulus. in over maybe one here, or wondering, will or in-store be guys than noise environment think of be a line you e-com with

Douglas Lindsay

proud what to and the e-commerce really our of years. over team's changes with past made accomplished decisioning several our business optimizing We've there. Yes. decisioning the I'm few

As may there and of benefits centralized the many more is had e-com, it about you years e-com approve We our customers don't decisioning that. we're approvals. smarter know, really of decision, as X-plus sort established. seeing for our out We've in but getting

don't and and have rates think, The year-over-year, products new we we new lower will a and each mix come And they product, new more that couple value. and it's sort customers have and but e-com go attract a about if and down new customer think naturally much improve. loss And ever the -- mainly Our match has you a XX%, stores, between now there they reasons. to pre-leased our higher a write-off. of and and They of improved I as occurrence have higher delta pre-lease a a E-com, much e-com, continue however, new in-store there's it which, is considerably. about products on book lower than are write-offs. of other, of highly customer have used depreciated to be

of have when tends you're per so higher to it value piece off inventory on writing e-com, a SKU. a or book asset an And

of So pleased the really but always we're new products, customers a rate, with way really, loss new we're naturally combination and performing will have higher a there.

Operator

with Thomas Brad KeyBanc.

Brad Thomas

great start as that I just follow-up congrats on the on a write-offs. wanted well my here. add question me to Let the to about last year

really central obviously the around compelling doing things You're some like decisioning.

piece for this guess How I the in of the apart, are behaving go time hopefully more favorable world year shaping out making. as so to unusual Where you're starts with customers term? model the in in back where to write-offs you kind you to a much all And of it adhere? fallen you target do see normal we're some the as do longer changes

Douglas Lindsay

an of on the great one remiss it, big performance also appreciate to I'd And No, a and just Brad. activity to to question, centralized monthly great our collect is on teams and across Yes, is that that those be customers difference day-to-day important kind part to well. with a your those out. to decision of the The point if I in ensure part. payments we as calling goes of field. make in payments the making teams But didn't and that work they're our position our

So balanced I've sure, I've we're for seen been that's today more really running a helping. much than business and here since

little the As start think coming this insight, it cycle business data here, back of for And right, looking decisioning this well the but of this a our that, do about it's improvement into just how attributed and stimulus, and the exactly of relates put expect our is to expectations that continue year. to off longer-term very -- the hard understand our at the is much us to modeling kind of through kind and government to know and -- going the to with parse as and we view bit centralized of our following we performing year. thoughts certainly, around as we'd we piece our that of half just

underlines will XXXX, kind much fiscal it north of it, by that periods. the Our confidence our expectation is on business as continue 'XX what is levels provided in, to our this perform end what doing the increase call at we that business government. 'XX, of as we're drive that And saw that it's forward the is to

to a just before, thinking back, bring X% we mentioned forward here we helps managing even right? longer now, the towards. That's little today. X% may sit it what as managing And think bit to we're change going right So we're and about term. is better essentially. as I Our target hopefully, That [indiscernible] get unchanged what write-offs. that we to as continue around improve But that's portfolio

Kelly Wall

which of we are future P&L we reduction a X% portfolio in emphasize just write-offs And -- recurring net big returns talk when our look the that returns and in the our lower book how the I our up about churn, we'd write-offs where not a reduction Brad. lower Yes, influence being value increases from portfolio. year-over-year, It's benefit about lease and at an value revenue to size the of a in our periods. which metric, revenue, can't is that portfolio is portfolio,

Brad Thomas

Absolutely. I think, it I as to sounds store want That's encouraging. To Can you new it, And little doing Douglas, strategy, talk bit but had a you you the really how on follow-up are the versus like well. accelerate about and on talked more to sort hear. factors? stores of their how about you gave more overall about, out those store potential encouraging comments talk can results. other some some you are openings? just concept you

Douglas Lindsay

Yes. Sure.

and in originations sort in at said, stores and So watching legacy expectations group how you also versus demand in is We've the date. demand I I mean, and in stores we stores, XX% terms One is XX we're these we but might been I early the IRR. these pro think against are these as and are buyback stores. the to new months. rollout of greater keenly them I delivery on performance, stores forma, them two our driving pro of mentioned and we're really that of got forma at than are exceeding a we measure as pro And that's XX curves first the forma, of And lift have what seeing we our the imagine, about on we've look looking factors. kind side control

encouraging. tracking that's deployed for targets payback and we're We're our capital pro So periods. And our to to very forma. tracking our

open a think these And we it's we is future really as about it things so encouraged in monitor stores. that. more the way continue We'll one not all. The by fits we're to size

We have our suburban rural strategy. got strategy. a We've

We have concepts markets. each work those of of in

stores our of about, stores of and smaller we've that. be showrooms to Some like I'd will those markets. be with that will built about are XX% in XX% static date larger the say, And

still introduce technology footprint image display those and the We'll want we showrooms. the smaller in that brand and modern have We stores. the to

that. and We've and our to we built flow. our that know is where free about up we We've We earnings in XXX efficiently freeing that and cash excited position analytics analytics said how our markets super estate can drive stores, where to markets. do serve as with we customer growth we've and heavily we're a So fewer before, invested and driving capital those believe team strategy. stores real while believe working

initiative. bullish very that on we're So

so And far, to everything is plan. working according

Operator

[Operator Griffin Raymond James. with Instructions] Bobby

Bobby Griffin

results. Congrats continues up, into mix very of E-commerce dive to on changing impressive the here. a want good kind model quarter. I more guess the to first just thing business is I

able happen, the opportunities savings As notice you're a bigger you of find infrastructure, seeing your portion to coming from bigger in that incremental are and is given that and store online? business labor

Douglas Lindsay

yes, directly Bobby, I our store, is say, wouldn't Douglas. increasing generally, would in which to great. volumes it's I but e-com. E-com's point

Our to serve labor we average customer need continues so and grow, customers. those stores per to

know, you channel. And e-com enables are of built-in e-com platforms an what As is stores. our infrastructure acquisition

we're value-added being to we're extent we technology and up that servicing. selling the leases. we're more as on is do volumes, freeing getting the greater said, in to our so more putting And renewing That such things however, leverage labor that need driving people the and stores, in place

to Centralized it platforms e-com, X We have of our And of decisioning pandemic this quarter past. and that transaction transaction, XX we takes efficiencies we but to a levels to used not payment staffing in to lower took efficiencies definitely XX into turn attribute minutes only sort in I do. the decisioning. in XX efficiencies out the our to alone, seen in than a take have minutes and centralized it that coming

scale up it business prudently not the and labor said, needing the And in freeing great which labor so is our That capacity stores. so much we're continues as people being as and time. over other for grows we to do grow, will to things,

Bobby Griffin

when XQ helpful. guess, big I the very the great million. I look $XX That's for at Okay. secondly versus as maybe by think, guide And you me, million $XX well, Street, increasing beat, EBITDA

Street looked would quarter. of numbers, and mostly off most don't came could second from XQ, guidance will think how versus raise play Or you have conservatism So the stimulus there, favorable been some will from Anything that built-in the is just a the there that XQ you guys the that would stimulus increase checks stimulus which know benefit? a too, just versus because XQ up model, contained most be how of exactly inside things framed our around guys impact $X,XXX out the at like be in least so we be how 'XX that sign guide in the at helpful. forward carrying the impact it. you is But

Kelly Wall

color A bit of Kelly. it's there. Bobby, little

you B key right? million versus So I referenced our beat on versus think point, the hit a internal consensus. That $XX you not That's plan.

numbers. the We So that's this is customer annual rates impacts continued guide. unemployment check then for What that impact -- That's us, in stimulus you ours associated in with in that is believe how received that our are provide fourth benefit varies a we recently. December, terms in space. also don't to beginning upfront degree good is the as some of customers shows they largely on us you a down, then rely quarterly been from company. tell that Obviously, an know, that the they QX, of or a which enhanced And QX. kind those checks mineral right? receded it of We and unemployment as on but and unemployment I'll provide up coming provided. There

the checks at government ledger, and side federal August side or least expect to government continue We ledger. run through out the from those see of when on of the the elevated levels

said the What that what our in tax start has QX, in we upon do yet stimulus enhanced to what factored season, out don't is from credit, has seen the know, prepared and So we've child at of haven't seeing. is second tax been in could, how long before. course something has we receiving short, know change continue of to yet said we any refund the in benefit that year, Again, that's IRS fiscal It form based exactly our in never will some industry from but government used. We this going is story called impact remarks, the level our customer the in right, QX, it July. that some right? effect, what be the a

that's you all. specificity want able to know in guidance it, don't an right, So if to to factor you we any area where to about because our just that with being think conservative, we're inform enough be to yet maybe

Douglas Lindsay

behavior and checks time. checks over tends come of only terms payouts thing the I the would in things large is when checks, out than smaller like add Bobby, to different $X,XXX that be other there to

year. wait part we'll like and so that what And the the in of see looks latter

Bobby Griffin

do I already appreciate COVID-related at mean, I those the in reserves follow-ups. point? normal guess released Okay. one, back quick very Or I Kelly, booked on That's you helpful. will that. were XXXX. those? two some release guys levels to you that more

Kelly Wall

completely, percentage a percentage of of activity naturally is as write-off payment the against. and portfolio we So way I merchandise, customer to think activity. are not strong that as down terms in result, the work, coming see the our ones of them kind lease low That reserve very continue to specific right? we're released of write-offs calculations the as we've just that serving

seen year. going through and of how year course the this out So to next be certainly it's that's to play into

some customer. answer small our just we'll normal by a expect As of some do to to portion haven't material specifically, question released more at back item, your point, we we activity any return piece. right, of level But that

Bobby Griffin

Okay.

helpful. And guess That's you, the was Kelly, to the on balance Okay. thing last I me sheet. for

great anything you and are a how you us things, at just you -- like $XXX basically. you keep for the help Just cash liquidity? do I about how do you frame you when are funds million for balance, to up Or like debt for different mean, sheet looking it of target powder think buybacks no how using guys managing buybacks balance want and like, that, liquidity to dry think different about considering, or activities? you

Kelly Wall

great Yes, question.

we to And Which now fund make liquidity, as right sheet and thing repositioning that is sure balance to normalize, going We have on -- that the the chain wanting happens, if able to to business. $XXX we beginning continues at well to at share we our selection the short-term strategy scenarios we it's cash say, we at kind mentioned use we're of our of the Outside to as Board then we as the about the authorization make strategies, fund QX, the do As taking investments, And of without continuing to to in accelerate got I of make sure price. the technology strategies. then adequate the to one share think opportunistic believe real that right? as of risk want million we site is specifically, look capital can. to March. sure best want just have $XXX those like supply that. capital million the we to which see As side. Douglas If right? we those right? liquidity, as where do. around continue we're approved of want that, our The estate to repurchase we be making things run time, execution you as We and just

plan. the in So execute to quarter we three of on weeks had about kind that

But think there. for that look course some over or the on not to the start you that [indiscernible] targeting if Again, in view might going quarter-by-quarter quarters. hope liquidity take see that to in is upcoming to of be a so the what kind informs a thinking like we're And basis. how about needed the it towards with year. of I it we anything specifically of

Operator

call now are to this like CEO, Douglas Lindsay, remarks. would to turn for further time. I parting back at questions There no over the

Douglas Lindsay

future we for day. joining great to Aaron's. interest look thank business. Thank really and you. quarter. strategy today, talking as a in your very next you in for momentum about you all again you our to growth us tell, the your to the Thank want Have can We it. and And for I appreciate support, forward really you excited appreciate we're

Operator

earnings concludes your We Aaron's This XXXX thank for conference Company First call. the quarter you participation.

disconnect. now may You

The Aaron's Company, Inc. (AAN) 1 May 212021 Q1 Earnings call transcript