RCII - Earnings call transcript Q3 2019

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Operator

Good morning, and thank you for holding. Welcome to Rent-A-Center's Third Quarter Earnings Conference Call.

As a reminder, this conference is being recorded Thursday, November 7, 2019.

Your speakers today are Mr. Mitch Fadel, Chief Executive Officer of Rent-A-Center; Maureen Short, Chief Financial Officer; and Daniel O'Rourke, Senior Vice President of Finance.

to conference like to now would turn over the Mr. I O'Rourke. ahead, sir. go Please

Daniel O'Rourke

Thank thank everyone, us. morning, you, Good Latania. and you joining for

Our webcast, results after our distributed materials, investor.rentacenter.com. including of earnings yesterday, to related on release outlines the our link which at live XXXX. market All operational available the for closed financial a third are quarter and was website

could of are to reminder, some the actual that forward-looking many which a on expectations. call statements differ As this to subject statements are factors our materially cause results provided from

revise no forward-looking in undertakes obligation yesterday, the Rent-A-Center to release publicly filings. earnings These described as update or are SEC as in company's any factors well issued statements. our

I'd over now like to the turn call to Mitch.

Mitch Fadel

everyone. us. morning, for Thank and Thank you, good joining you Daniel,

the providing on We a shown to over voice presentation be webcast. the will

you're also can the to be view found If the webcast, investor.rentacenter.com. presentation unable at

line I'll quarterly Overall, numbers turn with we internal in and strategy over an of the this our a overview then call And to strong had results on our an Maureen. with expectations. update and quarter provide

resulted and in good progress on quarter execution both bottom the fundamentals Solid lines. with top and another

million same-store an and $XX.X X.X% sales increase consolidated year. last adjusted was of EBITDA quarter Third increased $X versus million,

more points. while cost sales year proposition. Two compelling a the business solid EBITDA third of performance our margins turning quarter our around speaks more year business. This consolidated strategy increased last of to executing expanded same-store a savings In XX.X% value is up adjusted which XX.X%, the with basis XXX over of stabilization a EBITDA result than and was

for our e-commerce U.S. changes retailer. line same-store in same-store Core growth, Core increased two is the Driven by sales our and to X.X% impressive our which proposition further X.X% increased sales expectations any year the and looking value So with

were and refranchising down rationalization. X.X% largely store revenues year-over-year to and due Overall

the higher X.X% you than impact our refranchising when fact, last year. exclude In of revenues were

higher basis than good finished future approximately expectations. the indicator last for sales a third X% same-store a leading quarter on portfolio same-store Our year,

all Online traffic agreements orders increased will approximately represented about XX% year-over-year originated seen our of equate quarter, to lease-to-own of continuing XX% in the which trend year. Web we've XX% approximately revenue. the all

of XX% of stores customers confidence from And with our slide ability you e-commerce X to giving grow our in are for agreements to store. new web coming continue number Over the and this on on per customers can distributed right bottom our our historic highs business. chart see

that million of As result positive above improved period XX.X% the a EBITDA or same adjusted $X last year. momentum,

usually product virtually tariff we a tariffs. have impact that where -- I'm on our future do who about and no we tariffs. any to-date tariffs get based report impact from from pleased impact have on tariff seen based Lastly, the on Nor asked get Core announced, we on lot we business, from, any foresee our the been purchases products and to these

on of partner highlight moving our the as Acceptance which we and Now that business to business. sometimes refer include our So to just Merchants to also retail Preferred then does results

$XXX of the impressive an Our sales Merchants sales higher last Same-store Preferred same-store quarter, than enhancements two XX.X%. the acquisition and for year. proposition increased volume X.X% invoice for million to of and quarter value the year drove XX% increased

consecutive last quarter. losses sequentially than quarter Now skip/stolen the revenues, lower points improved for XX Our Acceptance third X.X% in basis to of

so currently exceeded far So expectations. integrating progress of has our the Merchants Preferred

sales in identified team, invoice to call synergies, million we've $X of are much volume As growth. talent to center, $X investing and realize additional the in although sales support to the of integrated today annualized starting million

in we initial disclosed. still Merchants acquisition, since on Revenues mid-August. for Preferred about integration, focus Even open was with are million Merchants to locations closed which $XX annually approximately previously Preferred managed achieve XXX the to on the pace as

our sales position Top opportunity are priorities relative for industry ensure capture value platform team the the superior to white and competitors. adds space to to our business virtual

talking transition something to the differentiator virtual to for about system, of solution, period. hybrid in And continue view app volume can us hybrid and as or we technology refine about model we're combination model a meet a the there the you our unstaffed the or when into or talk staffed needs periods we a low peak it staffed sales point-of-sale during which launching to hybrid our solution. also is that mobile talk heard the Rent-A-Center unique flex retail will the and the of about before virtual We order us be partners, models, integrating it, The in and industry. whether key during and

a We a am we believe hybrid space. leader our very retailers. With large partner lining attractive we unique about hybrid and national additional of will offering I confident the goal small also I'm the and more both have and even of retail growth an quickly excited we in for become virtual opportunity will be partnerships. that

future larger focused part our we're we're additional business. this for invoice metrics evaluating locations becoming business [disclose] on analyze to way active platform a performance. and virtual of more illustrate the With In quarters, to best business, and the exploring the volume

that's also will likely an indicator a Now not in virtual as next Acceptance Acceptance We Now world. segment reporting in year discontinue -- in performance strong sales same-store the e-com as as

want strategic How where to moving discuss to to our to plan. our on few within as some enhancements are fit spend And highlights we industry? guidance, we the minutes a a before I So and financial company?

what and with very solid we As lease-to-own by been is and fundamentals stronger positioned dynamic We're turn few stable more the company we've most as pleased served customer market. period over large sound understand operationally business a the know, we the to past are the able underperformance. company. around following where of base years you accomplished with we've the of I'm

and brick our in footprint mortar largest locations With the industry. Rent-A-Center has physical X,XXX

advantage stores by have and customers unbanked in Acceptance our We and both businesses. banked competitive Now serving Core

initiatives e-commerce. well hybrid virtual to our and as We significant as have also growth potential

value got revenue conservative flow. provide optimizing of share our Our through significant and growth record and potential track shareholders advantaged a in generates recurring model dividends both to us business sheet streams enables proven opportunities We've balance costs cash and repurchase. and invest

Preferred, by in We're a for provide model And in to we staffing platform our relative competitors. the meet partners, consumer. which Rent-A-Center we company a needs virtual are hybrid retail investing again a will to differentiator for investing our of and industry transforming today's the key is Merchants

multiple industry on attention rate. space and annual approximately in a lease-to-own in Calling There grown Slide additional for over the growth and into by product platforms verticals. to opportunity is on XX significant the presentation, virtual compounded market X past the e-commerce our years X% has new white expand

through XXXX the resilience recessions and the In you stable. of in has remain macroeconomic quite slide cycles not recession demonstrated of performance this did including see can great fact and during industry Rent-A-Center alter on addition, specifically

the balance more conservative opportunity and in formidable growth competitor cash to this lease-to-own our With flow strong we're sheet on become necessary market. capitalize making to virtual investments

the brick I mentioned payment payment we mortar with is Historically, As and in stores transactions served today's relationship. customer evolving with continuously to earlier, on industry personal-employee our a keep the with up customer consumer. -- in onsite

This to underserved meet one almost Acceptance of did Now our partner increased base evolved, and to locations. industry our ago a us years XX here so enabled the at customer and fill new the market. we, need was retail As

with of our e-commerce multichannel at Preferred. platform we’re acquisition presence once again a virtual expanding market the Today with rentacenter.com. provider And customer the in lease-to-own our serving we're Merchants the

a platform gives within on turnaround billion retail going Virtual business serving market. in partner our us the forward the strategy And focus over the flexible strengthen that us, continue to technology, continuing to segment, mortar for through growing technology stockholders. with our domestic $XX behind will Now maximize allocation Acceptance capital business model in advancements the and brick e-commerce will maintaining value and our growing

on of our business. And process, exceeded retail internal accelerated Our primary its our has Acquiring Merchants strategy. few in partner Preferred months our focus progress timeline. of virtual growth is first integration the

providing earlier we spectrum to because with capital grow said retail partners I hybrid And virtual from the model, a mix staffed, business. differentiate ability customers, a ample of the have the customers. model, our to unbanked by a as serve broader of a of option virtual including or the We competition our

Additionally we’re growing the e-commerce business experience. top-line untapped the on accounts our customer aggressively stores Within this retailers grow and market. we in this will improving national well we're focused ecommerce and platform, positioned and to pursue for largely

the We footprint measures and to optimize will we and cost by sores to concept enabled are further mortar continue savings. brick technology testing taking some implement smaller

new verticals new in Expanding and is in into tap our stores product such tires to as also customer base. jewelry a expected

enhancements e-commerce with platform to we mobile and experience. improve online will Additionally the to customer in invest our continue

growth higher consumers past online conversion penetration we've growing in the Over and seen traffic, year, improved substantial trends. with

fastest our and channel a Online opportunity. growing significant is long-term represents

across customer technology. to focus through multiple channels is lease-to-own seamlessly Our serve the

we said over next In future. the what As probably excited, can you Acceptance excited XX previously retail being about the Now years. tell, believe Page grow we channel business reiterates extremely we're our of can speaking three we

Again, businesses. to goals rate ability Merchants by believe to approximately $X.X capital and million versus $XXX position XXXX, revenues annual respective grow approximately we Acceptance Now current increase We growth our the aggressively to forma expect to of an Preferred will improved of sell and an billion, over given XX% pro and pipelines. combined be our our achievable

very, large leverage verticals, with as to a As product in put expand hybrid ourselves mentioned we exciting. forward, the model, more new we’ll I move position earlier, into and partner retailers, very national

for I highlights that, our turn the with now Maureen on financial call results. over to And will

Maureen Short

Thanks, call our and up cover XXXX financial the an close some capital Mitch. of Good before allocation everyone. provide overview our highlights for guidance for framework quarter, third morning, I'll questions. the for opening with

million, same-store same the rationalization store points partially margin last last refranchising $XX.X revenues in by were million year. the the increase driven total Adjusted quarter, offset of EBITDA X.X%, approximately and year, primarily X.X% third basis was up $XXX over XXX consolidated the a by consolidated our X.X%, During of higher base. quarter, period same and versus was sales EBITDA period

GAAP quarter up last special with XX.X% items position, closure transaction Non-GAAP Core of million offset the reserves The the associated related to acquisition year. diluted third reversal was benefit of certain refinancing Preferred. over debt tax totaled a Merchants which EPS $X.XX, for charges, credit by a costs stores included U.S. of and $X partially tax tax of uncertain in the

store and base, revenues U.S. same primarily initiative. the quarter last of decreased our in primarily last due a X.X%. and of Core segment, the decreased X.X%versus by driven increase the savings third store total expenses efforts the period partially same In to offset same-store cost Core refranchising lower by rationalization count labor and by other over Store $XX.X million sales period year, year, store

Core EBITDA points was points XX.X%, up was approximately basis in year. higher $XX X.X% were the margin XXX than of was the and revenue, year. in last Adjusted prior losses which the EBITDA XX Skip/stolen quarter basis million, versus

increased due quarter same-store third to primarily the X.X%. last turning the Preferred, other X.X%, Now over Acceptance revenues Now Store and segment. Total X.X% same Merchants increase $X.X to of a period million increased year, of in driven primarily store our the expenses skip/stolen of with the which higher losses were and line and by in acquisition expectation. by revenue labor

was Now of and EBITDA Mexico the and cost in due $X.X third was the in segment versus the quarter, prior Franchise realization $XX segment $XX.X by $X.X revenues expenses was in the in revenue approximately Acceptance million by EBITDA. EBITDA initiative. generated million, X.X% year, quarter million. million adjusted primarily was million savings decreased increased Corporate to margin $X.X the Adjusted and XX.X%. EBITDA adjusted In third

the activities down $XX sheet million facility debt was cash balance sheet, cash during cash from XXXX. million operating the months $XX the Moving ended closing new the in since on credit nine on balance the was September quarter in quarter. which ended to for with flow and $XXX XX, on million $XXX million highlights, We and generated

continued X.X debt to to ended quarter adjusted net the and of Our times. EBITDA improve at

maintain significant metric the are in graph. was at to liquidity debt shown the refinancing, which end the illustrated to have the adjusted of Even we in been third with quarter. $XXX and a in EBITDA million the reduction liquidity, able results with These debt strong net

opportunity the sale footprint. competitive not company headquarters back agreement material an in a to recently a Due of corporate the by to realize being to addition, an building few restructuring significant after past its years, running building utilized, efforts value leasing In smaller and principle company the selling the over presenting process. the a reached the portion sell with was

growth and taxes allocation million Net expected utilized advance the be of retail fees company’s returning be to will funding and and business stated to proceeds the capital $XX after are capital approximately in to shareholders. priorities initiatives partner

Slide XX capital lays framework. out our allocation

on priority virtual channel. with first the is Our to invest to continue in a business growing the focus

opportunities balance as advantage conservative of we'll a maintaining arise. to strategic they sheet committed take are We and

the $X.XX the quarter of through quarterly to of value financial in performance, declared in and per Through refinancing and the our a introduction first share out dividend with we shareholders improved early returned the paid our October. third

continue the As to previously to flexibility we maintain communicated, shares. buy back

guidance, guidance does guidance the and of reiterating annual on revenue note, our for headquarters. guidance our the sale increasing and our Regarding the proceeds corporate narrowing our the also is XXXX. not company earnings I’d include

As our website third by company for always, and XX-Q are by detailed be statements will the posted tomorrow. quarter income on segment filed the

your time for you Thank today.

Now, I'll turn for call over questions. your the

Operator

[Operator instructions].

first question with comes from Bugatch the Your of James. Budd line Raymond

Budd Bugatch

Congratulations good I morning, if have on questions Mitch, morning, I quarter. Daniel. a a Good solid good Maureen, morning, could. few

year stolen was the the what it. the on and expected. Core think just with Is anything there I consumers than or skips start I thought know? but get little skips in were usually and the there the I let's at that higher that half I which second mean elevated Just stolen, going of I investors know from X.X% a should higher about

Mitch Fadel

Good don't think the range. slide, the we been Mitch. is want X% if years Budd, you Xs, but in range for morning, resistant there and for -- ago in X% recession to least decade the mean this to Xs, has our At this was I years X% at be see X%, I it last is. to a

on And execute what so that X.X% on a with say above just can't pleased X.X% X% because really slightly It’s it’s execute our we're is nothing no, business. outside of We that. normal other nothing there. team. the we But to range kind X.X%. range. can can there's focused I that, markets, are It’s running with things certainly X% going But that there's at of we're at no, better. there, being a slightly better, really than operations little outlying like outside

the on highlight. need better, with going but we to there execute consumer So just there's to nothing

Budd Bugatch

is that fees so like Okay. And getting and cost the about XXX the rental points Acceptance basis in the of into detail in the pricing that forward us year-to-date, -- and Can going of I increased over multiple Now, forward and area? X.X. to quarter points going what's has XXX and actually noticed there second had to looks XX.X%, to give basis understanding come something and on you that down what an going

Mitch Fadel

necessary took companies comes out of business it, being fully the value place. Budd, lot there’s it back -- we lot can inventory that standpoint. cut I between proposition we a we last on of made business, we at changes from proposition the think way the The the the where all it’s when overhead proposition out the marketplace, to The in came year when ends of we was back and a overhead value of we so the charges look is, I both course of stuff. improve in and last a year, value

get that. the EBITDA. with And add have having points EBITDA I losses to or and looking overall lower other. little the going But overall more same-store and XX But do, So lower product we're versus that, margin here can a gross our can customers the drive little Having we we an XXX basis over that, months, XXX what step focused there's trying the we get some We're up Preferred overhead the the about and on did in one we things virtual overall, the get overall, That's the basis value customers, business improvement worse another each out people we end like It proposition, on and we’re you EBITDA of points the we ultimately so higher no more costs focus really business, don't good cuts XX took point more working. there’s the a mean to labor really or there. the EBITDA it's line in in have EBITDA stuck all any Now. to Acceptance proposition when Core serving a that. basis not points sales cut feel made need value and not because up virtual business. cuts improve when basis between do so forward you think in the we last value we're growth. we get proposition margin, overall, can margin XX always and tweak and to with with pleased get we the we're more on the they improve And said but store. can or Merchants segment we so again, customers doesn't

could more Like So raise even line. we margin lower going I virtual over get EBITDA one EBITDA time to up hung overall said, margins -- on don't it's margin. too but gross

bottom-bottom. really we're on focusing So the

Budd Bugatch

I it. maybe kind particular forward whether I understand partner also we kind XX line Acceptance for way us the And in Now program a what percentage could to curious of was share just and retail is What's that. of of XX was model since curious that day you if day? that's the now? penetration model right do I the

Mitch Fadel

execute that people it? The

Budd Bugatch

day that execute XX Yes, options. the

Mitch Fadel

It's days about retail out of partner. ends It's XX a on paying of XXX rentals third. within up a Yes. third about the our depending each or all

Budd Bugatch

a now to curious forward? lot only with? Obviously, that character EBITDA, knows Okay. than you're balance comfortable level how to now but how going -- of think the there god think a the sort when, on the in sheet. I'm to and had And goal just it's has of balance me about about stronger the sheet last leverage -- the Is about debt debt think for to that

Maureen Short

we ratio see, is we've that quarters. to couple sheet about And we're as want below Budd, leverage is way last the been X.X times. of the balance can for below this Maureen. The you thinking the keep

is we of max think X.X somewhat to post after the given of that that of a would So we refinancing. business, go existing what and

Budd Bugatch

we're below that. So well

now debt do should you you're looking not that, just to So really We is anymore. pressure at feel don't any the it? way reduce that

Maureen Short

No, And expecting, will down If given the we're cash in We there, further the opportunity our priority virtual return priority. from potentially that invest continue believe our is have debt save the excess we one on investment business. investment. the to require then number that's paying to some we're just on to interest. that

will $XX through As shareholders dividend. to you to And be lower debt balance million capital lower we're from our the interest then interest know going $XX returning -- lower forward. the the million

So priorities. those are capital allocation our

Operator

Your line next Joseph question with comes from Kyle Jefferies. the of

Kyle Joseph

thanks Hey, good and guys morning for very questions. my much taking

business? on view optimization back I’m any not Core, that the long-term the and longer just how business, But for terms XXXX of you are the there for a given of store term looking refranchising of and First, from growth of the opportunities or performance kind overall the in you guidance the where side outlook anything. perspective, your

Mitch Fadel

Sure, e-com if we as the mile, morning. for the vehicle We're stores and mortar, it’s or you the have Kyle. will the used certainly partner stores final channel. Now mile thousand and our -- as that's e-commerce, final the Good couple in are growth opportunities we We of our brick Acceptance a very the grown. way piece growing. -- is also excited of about retail big the virtual But

sales. know, in a as growth before little of refranchising turned again in earlier quarter, think e-com X% with number what sales mid-single-digit year-over-year, to with specific as XX% the opportunity single-digit metric it we an of really it ended see forward great keep But same-store which we As range. now grown more of where about We portfolio opportunistically. mid have which forward. I the count stores we to mentioned way for to low is, going you you is years. indicator want there's look low maybe about There using as moving a at, we about the depending we're that -- it’s to very talked around. in a The same-store it is, it talked We

smaller to test like a So we're I things we're a stores bigger it's our XXXX, and is footprint -- going view only in a to can run the somewhere. test some of part few you sale can -- but not our leases. a That’s or -- stores for because And of we're opportunistic. prove test just space way. little we We less as in part improve any are mentioned, margins we got business, turn leases e-com five so more start a that, over, is have technology ourselves that to kind we as long-term year can bigger business, of

So year it's transfer if we can points model. basis year that to footage, plan the add so that a works every can five

and the verticals. So some e-com the web continue adding way the grow, way is to going orders we're

our in tires as mortar partner testing added the I like and tires brick retail in now, right and well stores As jewelry mentioned, jewelry and channel. verticals as in

answer. So that's a long

continue I number guess believe same-store a for in doable of we the mid single-digit short the is to business low answer Core to sales is years.

Kyle Joseph

the I the appreciate about be that. that you at That's just rates to was performance longer from great term credit a loss ago. in color. than thinking also but perspective referenced Core, more decade a used X%, And obviously,

Now X% X%. does impact rates they're the overall the of kind the Core? loss How at e-commerce or

Mitch Fadel

is -- and matter slight it's orders approve of e-com so tweaking executing We've forth when a few don't and We and so looked we still way way at orders and mortar, the it we very a approve the a higher. the better the customer and difference slightly the between it’s that brick the times forth.

and them is, -- raise, don’t we're under get let word going execute know not can losses to e-commerce is down more to higher I going back tweak expect to not enough say So It higher but I’m what better. we forward. the some just X%. of our say, and slightly to need We processes going business

Kyle Joseph

two And you That's mind. Maureen, if it. helpful. don't very for Got then

of to we you sure press Merchants just I make in about anything. But Preferred the I Maureen miss contribution Just can so -- looking didn’t release, through want a about half quarter quarter. talk had the a

say that to contributed the million fair of in million Acceptance $XX the on Now based the about revs, to is just quarter? segment $XX it So

Maureen Short

for Acceptance with of Preferred that's Acceptance revenue and within quarter the to within happy performance We're the growth Preferred with contributed Merchants channel. revenue third higher the the Merchants Now Now. the definitely helping

Kyle Joseph

Got to guys Now business. Acceptance of of be it's side the it. pretty Acceptance the of but know of sort right? the -- Merchants in none from the of -- sorry Preferred I just locations reflected or store disclosures But the And then about talked none you counts Now evolution that the wanted clear, in quarter, were

Maureen Short

Merchants included counts That's correct. the Yes, in those not those in or Preferred is same-store storage sales, numbers.

Kyle Joseph

Got it.

Maureen Short

And as Mitch mentioned.

Sorry, Kyle.

As of active Mitch like volume type mentioned, we'll forward. some things start more virtual those tracking metrics invoice growth, of store going count,

Mitch Fadel

let add Kyle And just that. me to

mentioned, as -- a of Acceptance we've -- couple months, we low volume Now you on and of As it as -- just had I were doors XX the about a slide we them those Acceptance in added shows hundred just locations. couple

what just were few -- because we out didn't will testing there put hadn't were in those and you a much it were we were it we about, our test. bought kind have those stores, doing out trying virtual talked yet, volume were as well, in We running put sell. Merchants there, a to out once we there really Preferred, meat we own as recall, any we team So parallel behind process our not acquisition. stores own Remember really put we negotiating the had to

that. keeping the things doors out of going and back team converted we they stores Preferred, there we of and the like where active XX in the those to converted Merchants the Merchants had So XXX over Preferred

just were just So much they dormant Acceptance because pretty and there. those were them out in rolled sitting we kind of Now XX

get we're full just The we're one, so still those -- part is part as months a in that, XXX deal that integration. were your switch. close on XX priority locations a is we new day was XXX that that's But we that you So that doors. focused of got like to pipeline able open of overall, When doors. couple those

opportunities I always course, just plan you're you're of an there that's grow to and And indication trying believe. putting to so Of the and integrate forth. your together grow,

Kyle Joseph

Maureen, One the the this, last referenced I and sale you from there? on one missed timing me. but apologies if of any leaseback the headquarters proceeds

Maureen Short

I'm was? sorry, what

Mitch Fadel

sale leaseback the On timing?

Maureen Short

the The timing, will early end be or The sorry. XXXX timing XXXX. I'm of

Operator

from question John of the line comes next with Our Rowan Janney.

John Rowan

distance want With months at stands just allocation go back just debt for in now free even I of free in bit. the debt just chose and sheet largely to understand funnel looking to year if flow generated where this next of don't capital of your cash I cash balance year, mean you something. shooting ridding to nine a debt little flow the into are you effectively the I first repurchase.

So stock. given repurchasing where million figure tolerance know start stack. the authorized. for just that I'm to have stands that to $XXX dynamic, the I of is out where kind in? where trying in we you said modeling You want

can you down? of much if pay you down? pay much year versus free pay next year? $XXX what have Next debt you How much is like revolving? Just that term of walk million cash of dividends. How How looks a that through flow, loan you out debt $XX do me million

Mitch Fadel

detail -- business to growth. virtual Maureen Referred big well Merchants bought capital John, still is as debt business, with get need partners. room start national let And grow then business. that to grow And I'll sure certainly Yes, the the for our the have some it, as as partners, we there’s we we staffed split But make up. about of it into is how we big hybrid the focus especially to depends, some

business. grow cash, take some it So investment, the will you right, as some up

committed dividend. So certainly to were the We growth is first.

in it on at. presents we're the stock But and repurchases started to certainly an We tell we board are point that through down start go and is, not much particular opportunity have let but buying and so already going share stock any the you depending where could don’t the the number it’s I at will is that. how I debt million far pay we time you know, as forth, can $XXX split as

Maureen Short

Right.

we've of a we've $XXX revolver. borrowed on got revolver that So and million, $XX million

that that have the it's have try having interest the then term going take million we But to opportunities so. $XXX opportunities lot flexibility lower we debt the do the there, of and on that choose if is But rate. to business. liquidity down reason will shares a there's loan. grow And purpose Mitch forward in or to repurchase we the as that for opportunity to of advantage near-term, of lot liquidity there's to if mentioned So the to definitely really a said, we those and like of pay Mitch

John Rowan

I cost quarter Obviously, rate this of don't what going off Maureen, blended it off. of was overall might to a because be this reduction in the big Okay, the is debt quarter debt. forward? the want interpret

ongoing the rate fully all commitment your run rolled what's cost everything with debt baked in out? and So and fees the of

Maureen Short

around It's X%.

John Rowan

Okay. opened it. I'm going And through walk the door, Mitch, you to so

large know on You pipeline what the look talked about partners, large national we anything that retail like? does front, partners -- retail should

Mitch Fadel

we’re a that. sales gearing for large the far the think, great after they and partners think as and to together, retail unique upward them Merchants lot we've and it, the of do There’s the partners as and it. POS, be the got with offering to we've -- got through however Preferred We we're team buying just specific there on large it just very getting want that a don't a lot a lease-to-own yet retail option I of putting started virtual have do people out opportunity. a there's will resources

things on However weekends them on if stores, also will that. we depending certain stores, all the like Staff it, to volume. the staff and retailer the just do wants

So the able retailers. the offering we're optimistic and we we're to big find national going to that some large unique got be in space most

John Rowan

mean up skips/stolens Acceptance should higher have is obviously me it looking why or year-over-year Now be a point then the it? just talked and to it sequentially I is Mitch number. Okay look the to stolens over we sequential again got in-store skips better Now you and the conversation at number at and question. obviously year-over-year. and that it's the shifted up. year? and obviously year-over-year right a point about past on I Because on a you being mean the remind but way number basis? a Can higher Acceptance may the last about basis some still I made But you at just

Mitch Fadel

Yes.

normally look We the both due It we we was normally side it the I out than was year a coming year-over-year are because sequential side only it’s the I just was but last we important It think anyhow, just run. metric. really was to had of the Conn's outlier. our and at It of real low certainly pointing mean, X to recoveries XX off exit. low the would lower on HHGregg range. year-over-year

In a there fact and X. it two or were think quarter I under was

HHGregg off -- we because booked was coming we recoveries. had had a that Conn's on and year then just closing big last So reserve low and some because recoveries we

it. the So why But of side last was don't we're point than sequentially. sequential year the was That's that we just year, points last fact certainly why low. talking outlier. higher That's the last year out about hide XX we

Operator

Your comes Bradley the Capital Thomas next of question from line with Markets. KeyBanc

Unidentified Analyst

and this collections about the components the you are Hey, comp Core Andrew good were and the is by morning. if talk This for encouraged I on of ticket could wondering Brad. in how We X.X% segment. trending? traffic was

Mitch Fadel

Certainly Andrew. it’s not depletion -- all it's And on it’s Good question. growing. e-ecommerce but more just lot but traffic lot it's traffic, getting specific a where like get the morning, of it's it don't get we're harder makes Good that a out to it's not -- of pricing. tickets. ticket electronics in pricing but too traffic stable, is on it’s primarily, We

furniture. your a out AND You it's overall, get more answer traffic, to little questions. of so

we could to where want were But From a from slightly collections a probably within have standpoint, collections we range be been actually, better. a standpoint.

it's on all much the positive So traffic pretty side.

Unidentified Analyst

Great. bit thinking about about quarter, for little promotions. how the Understood. you fourth you're talk a upcoming could then And

how differently holiday If up And go the this year. season? might to remind what market you you're you us, last against could

Mitch Fadel

worry year. pretty as last that generally, a last for -- like generally the much want collecting, things of you how that I that, like and competitive eight But too don’t But -- similar to reasons are no worry promotions away to down. are And from and deep But need things last and much retailer. how seven, much we're going we're what promotions top that’s year. year We to our of about revenue promotions nothing get obviously on than different we speaking, really detailed. week Friday about course you Black to -- think there's would giving don't and have again, drive and a

Unidentified Analyst

the you what and work I talk Then you that understood. as about more Okay, areas my areas is last Merchants have integrated was do steps, been wondering on the next Preferred. have are question do? what to

Mitch Fadel

back Good is on at obviously a big hired with back getting numbers. we or do far running to of that. the growth doing, running there things really team But person happen center question, call Merchants the have two lot as sales the a have Corona center good Merchants good Joe A here integrated that's more teams we've year. about a which and have add Preferred, is of of sales office to accounts the talked hired to job after synergies. have sales one been more Andrew. those We're up a sales call process who the just already like them, team next -- office, --we people Preferred. -- large we into we're in doing to team, hired about, out The few sales are people more The focus as people synergies on call to a work it’s integrated. half integrated and center integration but But will hit and about or adding it's we Merchants, more as to add the smaller more but basically

center we as and call team didn't earlier, Mike have. The think operations job we said it with timeline, integrated I well. down the get a centers great when the our fast done Dinehart we as the they've integration. exceeded at sales So it's there, gone And team that runs quite Merchants just Preferred, that call in

-- are we So team. to hire more we seem the to of in process a adding

Operator

line Your with next Vincent Stephens. from of Caintic question comes the

Vincent Caintic

Good morning. thanks. Hey,

question Preferred. Merchants Another on

I'm to is glad rollout kind well. hear curious. that going And of So the

in of has And any offering? way going? offering, the combined in I product how guess, that's that of existing of to having the had gone, say is how the lift sort offering of retailers, Now any Acceptance the there that that development measure to by you've So combined of the terms -- the the rollouts had you’ve

Mitch Fadel

and the comes partners. out next lift some a year, as of offering say we it would lot our of to combined new I current partners roll

There's is so really bought have something Merchants that we kicks much next January of offering pretty the if combined mix, in the year, been opened volume have differentiator starts but the because XXX already models the early doors will far few solely you off January. fully of hybrid, So Vincent. Preferred really that And those staff, in staffed opening virtual. stores, the since a

Vincent Caintic

investors seems are what question at at and a strong, have to that been going lot retailer operationally call appetite Okay, point far And integrated then so do of what guys, you that's it national is, fundamental have so what point what part a At because helpful. for of and be the -- asking you you've you'll I guess forth. center you've on? sales, and trial point the -- to highlighted of like ready retailer particularly is all able so ready, have think

Mitch Fadel

the next national trial XX by We days. ready year. will a be in for We'll Xst be of retail the ready

Vincent Caintic

you're is kind question. as of season? what for prior just year, any last wondering into but if as question get on sale related go In how the getting there's just the were of holiday there consumer, quarter different separate holiday seeing trying if to of this particular it’s I'm they're a sense anything the year? they season, a fourth strong particularly A great. into to we sort sales Okay, consumer for looking as nuances

Mitch Fadel

about what comps talk this comping Good last little as we year, lower but comping strong. over last really question. that's just we're why a measure over we'll That's year. we're what sure We're seeing than I'm the partner hear segment, just And the will. a about being that’s Now a of to versus year retail two Core when Acceptance at channel, number the or it in where both year you Core segment, three the and A at you perform. year, look Now continues the look the if you the

they're online So as the store. more haven't every -- they're Nuances, are versus for, no, their we looking have putting far the as we into day -- ordering coming what customers, strong.

in and mile shop of use I earlier, on final doing people just it's don't do think of And come a the a Core want side. they wherever way have have come more and can more like for brick home. to the and But thousand and to our we’re shop. people mortar don't we They as do all into it that. there to their couple said with us. the from locations I they comfort store business are They to

them than to of. trend in the other that, take home care But of coming versus Let’s in their store. speak no really there's

Operator

comes question Chukumba Anthony of from Markets. next with Loop Your Capital the line

Anthony Chukumba

a sort if terms just get on guess of particular any can terms the that? that's Just from were XXX just doors conversions color that out Preferred doors, in excluding of chains. you've doors, or of Merchants we the I chain or look one us that was color few Acceptance any Thanks. or like rolled those XX you I in any give vertical wondering verticals can Now in

Mitch Fadel

we players that we as tires business furniture been without and virtual the furniture in capital looking both to far. Good retailers some the about business No jewelry in Preferred well, business others and pretty lot at The of a really so and think It take like Core still there, it. pipeline we're question. big in with and newer It's a much the a of as yet. primarily -- bit Merchant up. building begin testing regional just verticals is to aren't had advantage local the those of

up go up people lot that sign sign then and capital just a is the of before. the So to

for your on still the now much space answer Anthony question. furniture pretty to So

Anthony Chukumba

at Got us do how it and -- you up you then question. Merchants merchandise? that returned just all handle Could And forward? thanks. guess just going changing does follow I And remind see currently one Preferred

Mitch Fadel

it help those the but of our improve stores things, side. to help think getting few on maximize to value it through it, primarily we we of and some brick different that the and side a merchandise -- that. of like do certainly Now only mortar Acceptance and things like collection get I online returns methods We're rid the on of will Yes, to that, mortar be not some through be on footprint rid we and online that have of of able -- returned selling brick on ways able

Operator

final question line comes of with the Stifel. Your from John Baugh

John Baugh

to make to go on Preferred QX of want and revenue help there? or seem But and QX either EBIT it should of side look the P&L in interpolations any at QX of You, Maureen, sort Merchants into is an impact. question expense kind and to didn't that then terms compare the then earlier to impact or we maybe way

Maureen Short

or talked being We expectation and Yes Acceptance differentiate trying segment one the We revenue forward. between $XX Preferred Merchants range. going it segments Merchants for in about with see to Now. as John. not annual We're the now Preferred that million

higher we’re that seeing. around, we door hasn't count, bit I little on what think The changed than a based expected. reflects So growth

hopefully provides to able color be Preferred to enough So model that the Merchants impact.

John Baugh

a Merchants more Preferred I of But would this it national be on regional. time of call think And talk the lot or thought may forma. That I may be million as identified be the opportunity, Okay. local, $XXX last account. talked mistaken Mitch, off. memory which sort then my I about pro about you we There's in

in maybe it at the local regional something least has a going starts be there, to going that or years expectations as the the is of with guys? you’re changed million that to So smaller win lot initial XXX

Mitch Fadel

billion revenue dependant right, I large million think to million The retailer. three you the $XXX national a going up $XXX years $X.X of remember John, on to not over it next is

not larger would It's growth, there. laid in general, but a out players that. But years dependent. lot of growth. do some not and national is player can just regional growth think kind few of we've be that with the regional regional to that players, avenue Now that players we obviously a for of obviously, actually next there's We for another additive that

of not we're those guys, big the don't if So get to one hit numbers. going we

So accurate large we've opportunity I to about. memory in already addition and that your talked partner think just retail is is what

John Baugh

see around good that XX trending third. a number Is what's on a in pretty then the being commented in Do you you economy up And been higher? here? that day moving general

Mitch Fadel

been No, pretty It's pretty been been it's flat. flat. it's

John Baugh

times X.X of sort other? you’re with or are that or discounts retailers, Okay. we of any of pricing, And any approval Now the terms of the the A on world? terms still the that promising direction -- in cetera, Is et are range pricing, the rates, moving side in one the

Mitch Fadel

and year that's no, it nothing It's that so and has margins or retail than No, like two. deal more not last like partner there that the the in the you in really. through anything has said. retailer it's you and been competitive range, how some changing. on and having Xs, do It’s impact make It's out the pay in differently any trending you competitive wouldn't there. you I still with low forth. the the quarter But margins out so up the X.X And last impacting forth. or say end But

Operator

Mr. questions. further Fadel, you may remarks. no any are proceed There with closing

Mitch Fadel

plan you for here behalf of all I and all of very your Rent-A-Center, much. leadership thank everyone at team partners growth co-workers, Thanks morning. everyone. of and of Thank the our and want franchisees, executing all thank and solid our everybody you, forward us, this our on time our look all you we we building again, whole thank On And you, of our retail foundation. to

Operator

conference today’s concludes call. This

You may disconnect. now

Upbound (UPBD) 7 Nov 192019 Q3 Earnings call transcript