AAN - Earnings call transcript Q1 2022 | The Aaron's Company, Inc.

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Operator

00:06 Good morning. My name is Elliot, and I'll be your conference coordinator. Welcome to Aaron's Company Inc.

First Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers’ the will question-and-answer be After call to Keith Affairs XX:XX like the at over Corporate I'd now of turn to Director Hancock, Aaron's. Senior

may You conference. your begin

Keith Hancock

and conference call. The you XX:XX Welcome morning, quarter earnings first to Thank XXXX Aaron's good Company everyone.

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

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

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

Douglas Lindsay

XX:XX Thanks, up delivered Regarding additional The U.S.A. team proud Through on continued field, support The the that expectations Aaron's manufacturing enhances deliver core quality with to I'm quarter, with consistent easy execute to XXXX. ability at of our we in acquisition retail options. us discuss our for with mission continue day business. the Aaron's momentum of first to we BrandsMart February April to Keith. despite to of we lease results all revenues Aaron's with X.X%. core at with believe our addition, high X, BrandsMart In Aaron's able our in their joining to within results you innovate today. The XXXX start every we and pleased thank of on strong Company. XX:XX everyone efforts, XXXX track In for expectations consumers report through a purchase completed financial morning, previously our consistent I to BrandsMart quarter. the a results two-year business, our for remain share to we business. products business outlook thrilled basis, affordable members I'm our were positive the our the we in Good hard expectations access who and work strategic I'm after economic and were for our our consistent we challenging the quarter The delivered initiatives the environment. provided earnings and will to related store facilities our same-store report to on invest acquisition Woodhaven core On XX release. providing continue insights and XX:XX center XX:XX announced We and to the

than To and look result, productivity inflationary model. team this significant the levers store remain first economic the the the quarter the business in the in payment with customer experienced footprint. the year ahead while member lease value goal inherent using gives normalization ended proposition, investments complex proposition in a challenging highest and the awareness chain. are operating our environment confident Despite with larger Over our Aaron's Aaron's remainder XX:XX a believe our a promoting from we Also model. optimize the outlook same to direct activity, several ability the our of pressures, have arising the to years aspects brand uncertainty facing optimizing competitive As quarter, and and including consumer compelling consumer we quarter achieve customer conflict in market continuing since made customer XXXX. we greater period significantly advantage. driving higher and in the geopolitical the exceptional performance core lease quarter. and we demand We XX:XX our many last customer addition, XXXX, provide expected the the is experience, XX:XX in environment, transformed lifecycle volatile also economic XXXX, all in despite in an I of also in write-offs. reached which navigating value in supply which The our In to to us lower the level for we the renewal ongoing we portfolio transformation, resulted our digitizing volatility we and As a of rates achieved

customer. a new to continues platform e-commerce enhanced attracting younger and Our grow,

digital our and platforms customers. to increasing Our convenience payment flexibility offer

continue a and platform like increasingly decisioning I'd portfolio outperform our stores. more legacy on an growth XX:XX of than stores our to predictable expand enables lease XXX to further centralized these GenNext initiatives. Our few

largest e-commerce the contribution growing aarons.com. is lease focus revenues our an of representing revenues e-commerce first and e-commerce quarter. channel total strategic since revenue remains First, revenues revenues area XX.X% of a the launching key to driver with fast This of in lease

to the importantly, with and the improving and doubled enhancing e-commerce we website, product introduce our more which than have rates we conversion meaningfully are experience. year customers to our We able the are We channel. last speed accelerated XX:XX customer products assortment to new more our online attracting in

approximately In financial originations We expanding than more average than the leverage continues Complementing to concept stores. GenNext drive legacy the our first Following a lease one experience in higher XX% investment a opening our GenNext business channels, performance. superior XXXX, points GenNext XXX less to continue revenues. our of marketplace, first of deliver for stores XXXX. capabilities XX of in than committed to and our our of to expect quarter to the XX:XX our stores a XX new XX:XX of for and drive and than stores a customer total GenNext this strategy quarter, than percentage GenNext GenNext opened company-operated retail We locations product by lease Aaron's offering additional to in GenNext rate add growth year in accounted meaningful year more at locations grow in the customers. currently our plan catalog remain broader these our lease-to-own to XX digital XXX more store

yielding Aaron's and great implemented the business continue have to at transformations innovate We are results. here we

earnings platform built We are will BrandsMart of As capabilities call, have believe we provide XX:XX opportunities. newest meaningful excited our assets BrandsMart our acquisition to accelerated we to discussed U.S.A. creation for value growth, the last the and apply in

family It We the this reports solution. to a their brand. an initiatives. our transaction expands into create continue purchasing and customer power cost total It business, We significantly Steve our to variety the and assortment BrandsMart deliver significant to business benefits. reach operating work financial and separate transaction customers, strengths integrating significantly expect are executing and lease-to-own addressable of BrandsMart in-house President, It BrandsMart our his The product and strategic to synergies. are Steve available Aaron's into yields on Aaron's market. lines of and operating The each Aaron's and hard XX:XX at broadens team our already also leverages under current strategic Olsen. Aaron's as increases

XX:XX the as it business making are the lease-to-own for in BrandsMart for of second it which Our focused transaction, company. to as position enable year. to future and initial implementation capturing launch efforts public effectively the the We as already have the investments the in-house on to on a for expect this we of customers, to work of quarter BrandsMart well an in operate solution synergies part growth begun

our XX:XX We are with of product end also the BrandsMart begun Finally, of year new the to businesses. to assess add stores preparing beginning by for aarons.com of value compelling members between to opening exciting time we some have BrandsMart have assessing year value intent locations for for we an two This in stores catalog is the opportunities the beginning are per procurement synergies and optimal to two as our long-term enhance drive and company create proposition. for shareholders, XXXX. opportunities new to the our one team

pleased combined to deliver Aaron's EBITDA of now the the in our performance let next with confident am making XX:XX remain XXXX. I for long-term expect company and the and first details of deliver how in to the billion second progress turn earnings than the I call quarter than our and We right have release. on outlook. that, team, stakeholders. me to the We XX:XX our results to I'll all core for BrandsMart's strategic Kelly strategy adjusted continue the more and in revenues million our to Kelly, business discuss to look total call Before annual right our platforms reiterate both by forward initiatives quarter $XXX reporting more I the Wall XXXX With $X we we're BrandsMart. quarterly over growth turn over to right

Kelly Wall

Douglas. you, Thank XX:XX

the the the to share prior financial that periods our not include operating BrandsMart. for Before and you results of quarter do want I quarter, for remind I and results first XXXX financial

be million X.X%. on of I of renewal and will noted, compared of our portfolio compared in These core first and in increased quarter year-over-year. BrandsMart ended company increase million, The lease offset specifically, was first early a decrease customers. of beginning an X, lease the exercise partially the expected quarter More $XXX.X a company-operated of for This X.X% with XXXX. quarter financial in due lease in lower closed Aaron's portfolio first primarily for decrease our quarter the the of portfolio Total for of for revenues the rate quarter were total to to all by second the XX:XX offset a size Douglas XX:XX lower normalization help the the With the with consolidated am stores results Lease on per of XXXX, purchase the revenues said, statements to average offsetting options the by $XXX.X in pleased lease the revenues attributed continuing were business of is that size inflation increase million March $XXX.X experiencing customer results an the from As delivery lease included financial $XXX.X benefited of volume. the acquisition XXXX. April for share XXXX revenues million to To partially lease in monthly also cost XX, XXXX. which quarter merchandise. the in of rent first company's agreement, high are we size lower

lease also two-year to decline contributed XX.X% to continue the government the of assortment the offered We our rate the quarter factors company-operated quarter. compared compared of and a for XX.X% of up in year, quarter XX.X% XXXX. The XX:XX same-store mix impacted increase revenues first the customers. X.X%. basis, same In renewal product for year a stores modify product to X.X% to stimulus-aided same-store adjust this revenues that were was all our revenues in have lease On the rates in customer quarter first XXXX to first lease prior

previously customer compared earnings quarter benefits continue calls. highlighted, from our we XX:XX lower in discussed result customers renewal in our prior the prior stimulus-aided at less costs to same we continued we increasing in quarter our quarter in quarter, of maintenance the as strong shipping up first rate compensation, quarter retail at period. hourly This due the partially to in XXX X.X% prior legacy the for GenNext operating to the expenses and the lower offset for expenses XX.X% contributed higher on the meet prior first XXXX, expenses, percentage to million write-offs first had year to company-operated a continue fees that X.X% lower the to experience leased staffing originations XXXX over in lease locations. stores. and And stores is of the $X.X XXXX. the locations At to locations the million provision costs to store we acquisition-related lease ongoing stores operational X.X% to XXX internal of periods, year. year. of prior of a merchandise when miscellaneous occupancy quarter In higher costs, and challenges restructuring of and will the XXX The XX:XX to customer revenues we represent percentage and in-store continuing our of XX:XX government the GenNext Turning end prior percentage revenues the plan to format related normalization in to These XXXX, revenues as in the Excluding labor to GenNext cost by the performance-based total quarter rates U.S. planned legacy Personnel lower our $X stimulus lease company-operated XXXX. as With and utility delayed will in in have total to higher expect new the which employees. costs, costs, our in X.X% to challenges XX% year-end, handling below other have to wages the by primarily rent chain, open global XX than target expect from last are stores our grow year in lease compared GenNext to decrease compared The earnings stores We lease We costs in supply to offset attributed continue as one quarter, depreciation and period. due due our and operating in change, levels this stores originations opened and XX.X% continued and Similar retail-based partially of the year in first than declined market XX:XX quarter increase Douglas increasing of to to our leasehold comp channel. periods. compared continuing occupancy is expectations. higher more of our XXXX. by primarily same and the stores after the remain increasing quarter. team advertising of stores. the for was to fourth favorable programs for As communicated revenues, are our the to for XX:XX e-commerce declined first With our addition, other total a this the compared GenNext spin-related and first has grew approximately quarter an also in when first XXXX. E-commerce performance first XX.X% of XX GenNext in to represent first the approximately Due from quarter XX.X% E-com GenNext revenues locations have into generating we year, average quarter improvement than year, members. expenses. incentive of XX:XX the currently points demand growth

compared first basis half this to in to XXX XXXX, customer year increases points as than the where increase points experienced lease were expected, and we primarily As basis what government pre-pandemic activity the of this due product lease write-offs our lower rates continued cost to merchandise. renewal in XXX was higher payment stimulus-aided

the We also same quarter was the high activity. $XX.X have in compared and conditions Adjusted with our $XX.X believe period the macroeconomic million especially for EBITDA are customers XXXX inflation XXXX. first impacted current that million payment in the of XX:XX facing

three April quarter. diluted non-GAAP XX:XX plan for XXXX. company rates XX% in compared period share. lease to in non-GAAP per $X.XX margin the first for quarterly of share cash and share sale March percentage a paid a the increased and Additionally, $XX to adjusted the $XXX with $XXX extended million share. $XX.X per higher $X.XXXX the merchandise of The of stimulus-aided company-owned compared quarterly the XXXX, XXXX, diluted stock primarily repurchase per for $X.XX original in XX.X% earnings and year-to-date per due the primarily for the leaseback an X, earnings lower remaining million company As the write-offs and were and expected $XX.X government same $XXX.X On quarter the maturity On the repurchase of to shares to cash was renewal million Directors year. million, lower to dividend quarter share expenditures transactions purchases levels was XX, of new company's EBITDA The ended plan revenues, compared approximately due stores provision year the lower of For December of flow XXXX. basis, lease repurchased total XXXX. April EBITDA X, EBITDA expected to has increase adjusted dividend year-over-year, share is common the authority cash XXX,XXX XX:XX the increase of adjusted decline company's XX:XX Free Board merchandise, the current the was last lease in from of under from $X.XX capital This of previous on XX, authorization is an a million. million. XX.X%

April had to on revolving million company $XXX which facility. Turning closed $XXX five-year under connection stated outstanding $XXX on our the $XXX.X replaced was new revolving unsecured million credit $XXX revolving hand, borrowings revolving I outlook. In unsecured existing available the million the loan. liquidity consolidated an facility previously, unsecured a cash a X, the facility million acquisition of under million $XXX included million unsecured X, term of closing, credit we with BrandsMart credit credit its credit we that includes As and our facility XX:XX facility. available at of approximately total XXXX. XX:XX As April transaction, with our Including

This months financial BrandsMart. of annual reflect for the outlook updated our nine We have results acquisition includes updated of full XXXX year acquisition. to the outlook

of adjusted $XXX $X.XX revenues consolidated $XXX million billion $X.XX and and million. between We billion and of EBITDA expect between total consolidated

non-GAAP between per share, per million $XX million $X.XX expect capital million to $XXX million. diluted consolidated expenditures cash free of flow to consolidated consolidated We share earnings $X.XX $XX also $XXX of of to and

Additionally, we are the XX% diluted weighted of million assuming and an effective share average tax XX rate shares. count of

outlook. Excluding quarter annual EBITDA consistent not call. XXXX revenues any share provided the Aaron's have purposes fourth outlook on adjusted remains this repurchases XX:XX additional for annual and the same-store acquisition, revenues, assumed our of earnings business in We total outlook XXXX for with BrandsMart the core

addition approximately respectively. We million $XX of position Douglas investing adjusted million, we BrandsMart, between $XX is transaction BrandsMart and post provide expect specifically, to provide $XX and assortment believe a More and of the to that acquisition. rate the the the this As many product and period this of we $X by also for EBITDA public and company. million call, will And to are business and XX:XX customers people, revenues expected the believe For increase in $XXX significant annual XX:XX run strategic procurement $XXX a discussed Aaron's earlier on benefits, BrandsMart for synergies million million as of nine-month synergy provide process of between financial segment approximately opportunities. million $XX and will we LTO improvement EBITDA technology million growth in-house of XXXX million synergy has and XXXX. $XX of operate in to to provided the end and opportunities the

these and of XXXX. now $XX be Aaron's, to XXXX. that, end million we questions. with greater EBITDA Net our your million by to to the $XXX annual forecasting believe GenNext to will the this the existing $X billion by with the We we net e-commerce $XX that expect run we and When over of XX:XX will than are combined business of by to call rate million XXXX, turn which the expense of incremental million $XX adjusted operator over who synergies assist total of investments, at expect end incremental annually. revenues deliver approximately will consolidated I growth With continue platforms double

Operator

Thank Griffin you. from Our first [Operator Bobby XX:XX James. today Instructions] question Raymond comes from

is open. line Your

Bobby Griffin

everybody. for my XX:XX Good you morning, taking questions. Thank

Douglas Lindsay

Bobby. XX:XX Hey,

Bobby Griffin

I on detail Kelly the first, everybody, guess, -- I and appreciate Doug. the rates. renewal XX:XX

given lot is done a some the around for move kind curious, we you the XX%-ish with Just and work baseline centralized at feel the level decisioning during all did or new now around of you've of stuff? the quarter that business that the are

Douglas Lindsay

Bobby. Yeah, XX:XX

As half economy. you the recall from previous year have stimulus and calls, the with over last renewal in strengthened rates

points of historic increased basis Our to with points. XXX XXXX, to were And half call the points renewal basis the XX% XXX are the of XXX they stimulus range. At XXXX, end up to XX% XXX then by rates in, coming first in they about basis basis points.

over expected. comping year. really now, renewal normalization So into we the expected rates as normalizing that's And what forward, were going is look as the this we're so as

we'd our guidance is in the really reflected is really than we normalization what our what's last out is as consistent call. seen So different what nothing coming aided-stimulus have with on government this articulated

Bobby Griffin

so words just -- the of you it just -- or as So XX%-ish make played is what's the I XX:XX as played to XX that numbers? of sure to XQ rate out way kind out understand say another like expected, assumed XXXX has what well, played forward in the type in that's the rough go out and

Douglas Lindsay

XX:XX it's business. that to seasonal Yeah. have we important realize Well, a

down. So QX, in you last we tax will then, in was it QX, two but believe be historic and into adjusted quarters. QX We in closer expected was last stimulus-aided we the expected. we because it QX know, be to still comping those for year, believe year still as to QX, negative get of we as seasons normalizing levels, but And QX as seasonally will those

Bobby Griffin

running Can just two helpful. of I guess that you follow-up the that else on -- of I work XX:XX would has help BrandsMart. to of questions investments in-house opportunities, would to but us I biggest maybe kind BrandsMart. understand sooner to little and little some that unpack have synergies a behind-the-scene that you there Perfect. lease that's large up of called in maybe by or synergy very the mentioned have That's for the came, get a and solution, compelling just two thought take some guys one detail was the buckets given the anything to in-house get bit out questions made the run have timing, leasing One, of be end the surprised solution there probably and place is rate the XXXX. And that a some to

Kelly Wall

you. Happy that little bit XX:XX Yeah. Kelly. unpack to Hey, a It's Bobby. for

standing So, the remember, product we a are of business lease-to-own as in-house this up there, business. it's on kind focusing portfolio-based integrating and

So day one, rate than we'll in and run over that a and full EBITDA of have then to agreements and first right the we'll less few revenue contribution time, associated grow a quarter, recognize year will that.

So as basis as stand the logistics well quickly. upfront help is portfolio ramp that to this time. the portfolio us size We're and we'd have to we product of time. we the contribution will reverse infrastructure annual up again, know-how that nature increases through do the grow across over technology, need organization of have over expect decisioning would that leveraging the our our you're that around believe we fairly kind as But what's leading expertise that we investments business, And right, make. on obviously some an that

Bobby Griffin

us then, XX:XX happening? consumer customers months? Makes maybe trade us would of right sense on some kind Have give you type you of fear have portfolio trended and seen how some the of have that to couple color and where I can in BrandsMart down their show of Just as sense. over anything more behavior out really guess lastly, your get And of you comparisons business from last that the is we size kind over of up, there as better altogether maybe a customer a slowed. any today? now there big-ticket help to well, durable the has on housing you go now lot turnover I tough Great spending metrics home some mean see but there's

Steve Olsen

XX:XX Sure. Bobby. to This is I'd answer that. be glad Hey, Steve.

to the little going -- I'm category you So a first bit on business. BrandsMart of start the mix give background a would

Douglas So at low-single XX% obviously weighted their X% is selling digits. last mentioned years, in prepared other their mentioned continue around that XX:XX nice Kelly the about of their of in they across appliances to is categories to remarks, the and and stimulated categories. furniture more over absolutely and by average and periods in XX%, over comping actually see BrandsMart mix, computers followed their electronics couple growth around but business As consumer ranging price

the benefit with of inside their BrandsMart them assortment, them store their and benefits and features by to to value is that broad product. the So trade compelling to sales knowledgeable their in the talk understand supported the with of get force up allows proposition each functions customer

So they're I a that average is doing price. I daily growth on selling continued and what believe supporting through as that our QX in see basis,

Douglas Lindsay

XX:XX Bobby. Yeah,

demand other so on expected is but I'd side, we're and say particularly strength Steve BrandsMart on we'll move we The as in categories, the QX as that as thing forward -- mentioned, in normalizing, seeing we're in and in margin report business. the

there quarter. was as expected. note in that of the during some my terms In environment volatility I normalized the Aaron's customer, comments has did the demand

to strong we very the our great in season. last sales you and was As were year. QX holiday know, very strong had a Inventory in end of position

tax resurgence demand, in Day sort We we sort and season January, Valentine's strength of the went came of as you COVID persisted all end where the into mid-Feb we As way as real period. after started us there's a of impacted March. through upon through us and know, that saw of the that

happy So volatility out say would the I'm really remained is XX:XX business about all there. the e-commerce One a our way strong there's that. lot thing, consumer, has I through of

up last So comps we've is up very revenue year, e-com, over X.X% in got XX%. strong

ours. real a it's of strength So

to at mentioned as ticket is ticket average able which to we've X% customer consumer. Aaron's margin offset that the with to I'm increases ticket look price seen continue we the our and offering, good. was the Steve Average we're really drive say up in year-over-year, we've preserving also of monitor And been paying forward. business been so and with we able that that sort happy the to business, higher Aaron's price we've and that is price

that that's their aspects Now the decisioning set renewal a move earlier. we has as cost we our under customer as success in have rates pressure. We, customer and believe increases obviously, serve that who of business say isn't up to forward we the us all credit-challenged communicated algorithms are, for not but I've

the So I'm with the really performing. pleased business way is

Bobby Griffin

XX:XX you Very to on Look all detail. helpful. the versus I BrandsMart appreciate tough seeing Congrats you. the getting guys with the business. Thank compares closed. strong what and quarter do forward

Douglas Lindsay

you. Thank Great. XX:XX

Operator

move XX:XX America. of We to Bank Haas now on Jason from

is line open. Your

Jason Haas

question. Good morning and for Hi. thanks taking my XX:XX

the first tend The that think year. typical had I write-offs. pick better about to call, last customer as liquidity. to the that cadence getting curious, I I'm on one on know through write-offs the they up year talked the do runs is throughout as their we seasonal

So for down expectation trying the come the the rates, that's reconcile year. through renewal if guess, curious year? I'm supposed that get, to with through just I And then, to write-offs you're which I'm to lower the lease

So moving two of I'm understand seem that different dynamics to to be trying in those directions. just kind

Kelly Wall

XX:XX Yeah. Hey, Jason. It's Kelly.

right. write-off seasonally we higher and had seen than prior on you're than out had basis, on adjusted the would our higher a first kind year kind write-offs So in last the what side, of of right. seen call called be that historically We on we quarter had what

normalization We've said plus customer quarter a increase X.X% think on that seen, for delay came the seen. So season. lease normalization has in charge-offs. the year. last customer this tax at up also that Douglas impacted things. anticipated the And been we in That as as by was a as and just briefly, the payment few the that One, to we've well revenues remind X.X% there activity driven the quarter in from we've for this you, we impacted that that's activity --

been Again, going quarter we're was merchandise. product book of due So as kind up. to up the charge-offs the other year-over-year that net XX:XX that were impacting pressure inflationary the in lease higher the seeing we're thing were that's buying The value charge-offs forward. of

end as well to as year. at we about look we QX for. again, to normal be improvement to QX at X%, and plan with starting decade. be that things It's the want very close quarter. going quarters be I would that X% But would coming facing we about annual seen seasonality our of of We've we to Now right and the tends high cadence, we're we're we're last at good that basis range. to of of some the thinking typically, this your when different end, the were out the original that QX and before a we've on talked about we and planning is with year consistent albeit range think continue attention to well. for typically we kind we we're because at feel like high in paying So do this our to rest more that's But we what some right we're again, X% then that a bit of QX year again, talked as land in in the some going about put of end over X% a four to this haven't lowest around period. increased The in of that that to the reiterate, feel now, get back year, see least at an to what annual kind high XX:XX

Douglas Lindsay

Jason. Yeah, Douglas. XX:XX It's

rates, comments comping kind my have half I relates pre-pandemic the admitted in Bobby, a may this the pre-pandemic normalization, than lease to second rate As in to normalization, seeing that of our and year, of albeit at higher and particularly renewal we're levels. the

XXX we've higher think than I levels. communicated points previously basis pre-pandemic

our put the with our over have levers levels, decisioned write-offs and see a through network which of kind settling of of correlates we portfolio. a now pre-pandemic that above of of the place. predictability our in because centralized normalizing, in in lot and decisioning algorithms that's lot and have we guidance, We being XX%-plus So decisioning we

Jason Haas

related XX:XX for bit question asked. a a Bobby And Thanks. to then helpful That's follow-up, a color.

guidance numbers revenue EBITDA the to seem trying Just quarters, BrandsMart I to three to try the does it I seasonality quarters four it you I'm adjust but don't step for like comparing know a XXXX. exact for like I'm BrandsMart, it's XXXX, the down. seasonality, with were reconcile that if that -- I of and does for seem know it's on gave which

compared of I'm just color could I on like on it XXXX? $XX revenue over to you think XXXX BrandsMart stimulus some and for side, you're public revenue EBITDA lapping provide the company you costs just any sounds comparison. if and on I how curious talked the million more think, maybe margins side, about, the

Kelly Wall

XX:XX Yes. Hey, Jason. It's Kelly.

in on million EBITDA. spot you're the $XX So is on to That of last a that we of million months $XX the range year. nine provided

there kind So last XXXX, of nine months EBITDA. of they the nine those and start if of months, over set $XX we level BrandsMart in delivered about million

annual back million way. we're onetime kind net It's from also did of that I investments investments that's number. adding that making of And $XX talk some along the so there, of an the about,

as into -- pre-pandemic, at in of the not the outside the that last in as We're see product kind from of support in net way more the be we the year, for think but of be Again, look of then also We're as the about things seeing where company there kind our to back we we that's well So as, forward to the frankly, of to to just to stores trends important as think store were into they this And set store-related that terms is and as to investments. do it's inflationary deliver to And selling. of lower. number what also would back in growth as at store of OpEx, it'd a million look we're back going this the looking slightly technology. we process again, year increases company. going a in labor consistent $X center up, stores. bring as just segment quite investments that about of up year likely what XX:XX all normalization the up public driven it operate staffing and like demand people other cost invest levels both to well remainder

Douglas Lindsay

XX:XX Yeah. markets I XXXX trends very been and Georgia Florida those in we're an strong markets. we are mean and look inflated year. that over our and two business, lower strong, very believe that I in at mentioned, just are you the serving it's three-year performance demand when

generally, optimistic is about say integration I'd just business the super the looking forward. so And going very well, and we're

Jason Haas

you. XX:XX It’s Thank hear. to great

Operator

move XX:XX ahead. Kyle to Please We go Jefferies. from now Joseph

Kyle Joseph

XX:XX Hey. and guys. me on answering question. for morning, having Thanks Good my

incorporate us at a just sense breakdown, as our one follow-up expense give BrandsMart model the for business? for into modeling kind we it Just that gross profit for on margins of

Steve Olsen

to XX:XX that. answer Hey, this is Steve. be glad I'll

So mix. back I'll to relate the category

and at margins appliances benefit you it, at range see the than XX% when lower electronics call their to weight the is retailers obviously, obviously, relative up and look XX% that other of in XX% gross you're the, of So slightly going in business having appliances other that in to to consumer range the market, like, players.

Kyle Joseph

XX:XX Okay. Understood.

Douglas Lindsay

hold his with talented we team of profiles BrandsMart move a that and it one you mixes business. appliances we've real seen that I'd Kyle, team thing into to and will we'll XX:XX those more business, strength as Steve our that merch categories continue we'll and of product business But merchandising our as trending is we're products add change. in -- as about and gets work say the the in very more detail shift give will the and margin mix, forward that we new more as in and mix,

Kyle Joseph

impacts a comp kind the just kind Can just you cadence to going going first lot the kind comp really XX:XX give of in was for and and through sense cadence of Got the of as well when it. quarter? since through on, Omicron on quarter a and us write-offs start into admitted write-offs refunds and both of world a give and Appreciate just saw quarter the the how and the and of us that. everything. you but then then tax as a hit that lot both there And the sense the there's for and April

Douglas Lindsay

being down year as I during month month we the in with That I ended Obviously, saw that the through January, our time, year-over-year. the showed during very year but we not great the year. said, that. Sure. season time last this comping store in so, demand of my That was a of back really our our We I mentioned our resurgence Yeah. tax Bobby comping at only customers a early up had Omicron. mean, all March last the But year business were little and end season, a -- strengthening -- as sales mid-February came that of think delayed in XX:XX quarter. strength ultimately visiting was out. saw not about tax business very bit remarks we're huge strong we strong stores, e-com softened a quarter strong, the happy with that comp employees albeit last

choppiness. and we to business, e-com see in the we As continue we the April, store but and volatility to our in business quarter ended strength entered continue see

on levers side we be in continue we to We're able of But and We our can have fortunately, able it. things that. business to the lot to a offset doing certainly monitor what promotional control control to there.

of big of a and pre-pandemic rates the is portfolio the business outlook slightly mentioned part XX:XX of quality because higher the normalizing, the revenue annual as albeit we remains on are still size the provided. we as our ticket, believe revenue than the higher I our So but not demand, earlier, portfolio forward, look outlook our And portfolio same. renewal at just going the softer slightly It's and range within levels. that staying we

guidance that our the us gives So year. confidence in for reiterating

Kyle Joseph

post-BrandsMart. priorities? And about you from are one of XX:XX your one just thinking GenNext me, any target on of and you do It so between sort How Got store a last us capital -- leverage it. allocation just us kind you're update helpful. of of have of sounds Very on new update capital kind like kind allocation then BrandsMart, priorities. planning and guys mix then builds

Kelly Wall

XX:XX Yeah. Hey, Kyle. It's Kelly.

ongoing also certainly BrandsMart we're remodeling And opening businesses. kind we've right, GenNext that's in growth growth with that is capital businesses, of excited as to on side, only as for on growth where from revenue Aaron we e-com and talked stores. beyond and both last the the not from acquisition, going repositioning program of forward. the both in then least, start and continue our XXXX and three our allocation platforms the new not Really, drive So unchanged into expecting to come what earnings. move synergies we've well they outlined, focus our as right that with have we about to obviously, priorities. going of investing past. We're remain We're I'd kind to but And now

excess all focus to closing it. we'll those three as be, returning an to at looking where expect continue then that mean, there sense as completed as to primarily to second platforms. we're across we're shareholders. capital seeing of third, I going as very any from focused we just this well returns XX:XX clearly, in integrating acquisition it long we're makes as investments terms So and and And we'd make them on M&A perspective M&A right,

So we're work at there. hard

these that we adjusted EBITDA. we utilize businesses, leverage. have Pro at to the for primarily shareholders with this consistently say to of makes So to sense. And overall turn capital, divided an that have From around will term, net I'd on want of debt forma flow free But opportunities be some it than potentially returning would the turns one as we again, I that operate do capital on at longer there forward. of were perspective, kind structure capital think same to as excess to cash we'd time, back the going as also. focus invest transaction business expect we'll appropriately less in lower X.X so

Kyle Joseph

very Thanks Great. questions. answering for all much my XX:XX

Kelly Wall

XX:XX Kyle. Thanks,

Operator

We turn Chukumba Capital Markets. to now Loop from Anthony XX:XX

open. Your line is

Anthony Chukumba

XX:XX Good for questions. my taking morning. Thanks

stores question, counts the a were First for quick just and end franchise then at of question. first quarter? housekeeping What the store the stores company-operated

Kelly Wall

Hi, stores X,XXX operating of total franchise or of the company-owned end franchise Yes. in across and stores here. the we Kelly. stores had stores Anthony. quarter, company-operated a the At XXX XX:XX X,XXX It's first for

Anthony Chukumba

That's Got it. helpful. XX:XX

Kelly Wall

of format XXX are XX:XX new stores. those stores GenNext

Anthony Chukumba

update on an like supply a And you fared admitted in just quick quarter know update, would And a most, get well I if but that it. last Got was it guys then XX:XX results? like of number a guess, headwind for year. a your I that's to there, seemed just real chain. first to retailers

Steve Olsen

glad I'd Steve. that. be answer XX:XX Anthony. Sure. Hey, to It’s

the inventory chain and his QX feel we business, in coming supply up, just And remarks, result of all mentioned strong the as having work, major the themselves prepared really the all hard teams well business Douglas as the out just place. in of Aaron's BrandsMart we're the in our both As right position merchandising that's setting within categories. right across inventory the a of

I and in business, learn believe to think just this lead team supply I the and times last done the stock in quarter. about got has all we've live the chain really correct done hard just building the over new environment, run and that's through work to that to generally safety the

Anthony Chukumba

Keep up it. the good work. That's Got helpful. XX:XX

Steve Olsen

XX:XX Thank you.

Operator

We Please turn to Chappell Bill now XX:XX from Truist. ahead. go

Bill Chappell

have supply find. just side, XX:XX specifically, little kind but don't didn't to retailers? BrandsMart last bit some it for full sales window if the are I will it's much a stores, full mean how tough compared talk know, if opening there's more guess or to that Can that all year, appliances morning. in much of to if And you an way sales hurts more in other Thanks. I still of Good quantify or start more impacted things I barely six you see of to particular, on where impact kind BrandsMart, appliances up -- negatively be a the next months

Steve Olsen

that we've talk seen in seen again. that is about be -- BrandsMart be some the to I'll has talk to this of Sure. XX:XX their glad Steve general business. trends glad I'd

supplier they the XXX QX, refrigerators, position range, So appliance acquisition, XX a at a They've of coming categories across ranges. the it business. XXX in obviously, assortment broad have partners, put their over great is payers to all the in today laundry to out and strong most coming BrandsMart out got a and inventory close very close and of importantly, in

from believe Their business watch closely, a to in but in items inventory continue be is an offering to we can't end details to looking broad any perspective, They strong them assortment, it an having appropriate that price every business hopefully, we'll were forward the speak we'll the the but point results their assuming holds they to maybe have last QX customer. continue there from always them assortment that I that position. perform the end. in well have year, positive about seen minor specifically appliances. continues in what the and to to to we'll had at have low but benefit the and gives high ability So may allows be -- trade

Bill Chappell

retailers with a do are XX:XX answer, so get you as that BrandsMart by inventory Well, I I product selection in lot to other think of start boost may that just mean, available or guess of a -- inventory. having places. wider appliances last short year -- got clearly,

for just to BrandsMart it net by sounds So benefit, was trying a having I'm just understand, that availability? like,

Douglas Lindsay

nice there. we've global sure the I going we culture, It's they we the we to Steve of supply as did there. talented as during say Steve more down mentioned We'll Hey, report their a same. was They like But more much And comment directly Yeah. scrappy continue We're merchant-driven would mean, Aaron's of really year. they're a in in got some buyers and on last -- the there, quarter in I their unpack did issues. chain stock XX:XX bit the see a I it's said, job, think performance very performance a they've Douglas. great BrandsMart listen, inventory making as business, challenging in periods the next and not job Bill. done to strength second appliances quarter.

Bill Chappell

one just last Got XX:XX then And for it. All me. right.

is quarter or of it pretty revenue to kind year Just similar of quarter third of Aaron's? understanding BrandsMart fourth seasonality, the fourth quarter for that way us the kind is optically there is any thinking for -- percentage just on versus of heavily

Steve Olsen

XX:XX Yeah.

But that I the we're for integrate trying hands in as most different to typical I this a think the a around quarter, that way what We BrandsMart at are may for we as fourth year. retailers see well. business heavier we same is think typically, XXXX trends seasonality have bit get our really Bill. acknowledged Aaron's similar than

but on that So not trends, do to seasonality going prepared comment we're a we forward. to and unpack right expect more now, specifically quarter-to-quarter bit

Douglas Lindsay

season. traditional impacted on will more retail It coming recurring of perform per the leasing in the a will to -- more a is because I'd But top BrandsMart a little similarly customers business. liquidity be has by BrandsMart Bill, different bit to XX:XX Aaron's is that, at what seasonality seasonality is business, than Aaron's retailers. just say the revenue that's recurring the

So you to a look that guide. as can

Bill Chappell

XX:XX Got so it. Thanks much.

Douglas Lindsay

XX:XX Great. Thank you.

Operator

to We closing XX:XX CEO, now have back questions. Lindsay, Douglas for remarks. no further hand I'll

Douglas Lindsay

Okay. us today. Thank for XX:XX you joining

financial we've our with we're As pleased we macroeconomic expectations environment, a that quarter. challenging performance for continue consistent to the navigate delivered

us members The value long-term for we're strategic today, service team both you to and and results being all the remain believe of core both our reporting delivering quarter. customers, with Aaron's Our to initiatives, we soon. we're and stakeholders our and look forward again exceptional you well-positioned and to business look the consolidated on focused Aaron's We in forward and speaking BrandsMart create investing for BrandsMart. of our value at Thank to next with

Operator

XX:XX you for is thank concluded. participation. now Today's your We'd call like to

disconnect your You may now lines.

The Aaron's Company, Inc. (AAN) 26 Apr 222022 Q1 Earnings call transcript