RCII - Earnings call transcript Q4 2019

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Operator

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

As a reminder, this conference is being recorded Tuesday, February 25, 2020.

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 Lisa. and you joining for

Our the financial at after outlines distributed All Web related quarter earnings site yesterday, a XXXX. are release it link available including and our to and market full-year our webcast for investor.rentacenter.com. results closed and materials, the live fourth operational was on

statements many As which provided filings. that some a well the on statements, results to in of in are undertakes no actual from are company's call cause update obligation subject materially as to statements. as the forward-looking our are our factors These any Rent-A-Center this could described forward-looking release differ earnings publicly SEC yesterday, reminder, to revise factors or expectations. issued

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

Mitch Fadel

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

it webcast, We be found will on shown be the investor.rentacenter.com. providing presentation a can also the to and voiceover on

for as the growth are and business and retail We year was to as our revenue cash by milestone profitability level, segment a strategic we next investments driven and made Rent-A-Center, the flow. improved partner see marked you on efficiency grew three, significantly and taking XXXX Performance we slide profitability that can well. initiatives. Rent-A-Center

operating and debt, sustainable well on dividend. in believe sales our are in balance business, strengthened We fueled feel path the initiating XX% of Comparable to great our and investment a increase positive in by cash growth We earnings significant our and excess all quarterly strategy, our reduction simultaneously while store we growth. the about ecommerce. in value segments sheet in were continuing proposition enhancements in used a due

In strategy. am generates proud continue of and teams We significant intend I optimize our and our channels, a to have confident extremely to capture growth. that we business evolve in to cash.

they last the our Revenue lease the slide were store. and the in to volume have retail in quarter We Now, our four, margin performance in fourth rose for over with and favorable we double-digit the quarter organic are XX% a efficiency well-positioned same-store XX%, approximately record expansion improved We per trends forecast business. X.X% build consolidated includes the by volume two-year to same ended in EBITDA points quarter helped on and the initiatives. channel XX% in believe our the number Rent-A-Center turning invoice fourth and and average the increased basis on versus up XXX growth sales Operating store earnings year, customers performance basis. driven with sales comparable on last growth year over accelerated year strong of quarter these while XXXX, partner by for up positive invoice quarter adjusted virtual.

a specifics over go will in more Maureen Now, moment.

-- few So, next years, on to I earnings minutes comments focus including want we about the a how focus my goals several for strategic are priorities. and our thinking

million and with the sizable we lease-to-own think the remains ahead. $XX north is markets. on and ecommerce opportunity We opened ample five, slide and resilient, up As outlined dynamic of virtual runway market

virtual, with offers to As a you unbanked partner of retail revenues flexible hybrid with an reporting under renamed we the decade serving It banked experience driven incremental revenue earnings a serving for priorities our preferred saw model our of consumers by has retails partners partners. solution potential. includes organic momentum expansion segment offerings, virtual staffed have in The model and with and the quarter, the virtual our launched integrated and omni-channel. evolution on growth. and meaningful preferred release, lease our the We XXXX, and to around grant and lease align start

and true omni-channel a network how business segment they to the benefiting channel to from We customer where is last cost segment stores The effective from think drives revenues, XX% highly XXXX of shop. create It This Rent-A-Center for advantage our our up platform. work acquisition a to ecommerce distribution at approximately Rent-A-Center our includes want lease. Ecommerce higher a that ended The serves and XX% stores that synergies that's drives economics] leverages unique business and both year. preferred ticket. provide and [ph] attractive with [unit experience.

the scale. single-digit our via slide the can business $X.X combination We billion EBITDA combination preferred on] long-term preferred strategy revenue This We XX% the believe preferred believe profitability achieved consistent as a revenue Rent-A-Center to returns. for an So, our to grow lease turning XXXX, our to drive we in includes goal by significant [ph] Rent-A-Center think lease shareholder XX% six, to drive lease expected single-digit with mid [comes via over growth. can business. sales adjusted over same-store low and benefit margin in

focused retailers. turn let's starting We revenues, should six even financial of Invoice both billion growing seven. achieve goal I that on offerings, is does over slide on in a catalyst large assume currently out virtual staffed So preferred lease revenues national new out with to for goal in and furniture the and $X.X point top are existing our the to we volume goal of not two-year so and with partners retail in increasing billion partner. five conventional our operate $X.X

traffic our the sure or on will either this our addresses transparency. on and "How with acquisition be is during ask, process, be key for can standalone consumer slide or differentiated purely basis, operate is heavy and this can a integrate or desire flexibility, for lease Partners control, best partner's eight, And I solution option driver, not preferred lease-to-own will and is whatever be the fully am answer staffed virtual, staffed credit can periods, our can fully model. work appreciated Turning a weekends it to us?"

model. think very I -- effective a highly it's effective

subset than we're serve also make to our for consumers retail benefits and a of times just sure and bank consumers address described. competitors than I spectrum both, the just by experience of of given the over powers model partners decades combination revenue that The seven location of it. full in the higher credit-constrained fact unbank the is We of proven we with going rather per

to leadership drive ecommerce no pure-play execution I our about the making and prospects streamlined both a we're traditional the the improve preferred investments our to process grow include on ecommerce experience very integrated and partners. ecommerce, say. lease. To have and excited on These should and sites we're We checkout growth, least, say pipeline to

segment slide we're Rent-A-Center our pleased well. with in as to on performance that Turning nine, business extremely

two the to in over made low growth our the merchandising supports portfolio growth we're on years. last comparable building we sales XXXX achieve Solid and single-digit in improvements XXXX, in plan the

handbags, consumer continuing to we XXXX, and assortments to in we're categories. our higher offsetting mix merchandise, jewelry, products tools, and in aspirational tires, performance into expanded some electronics the example, of this shift For margin

skips Turning for payment achieving XXXX levels sales site about month. the last higher risk. customer just We're and loss are ecommerce new from lease costs, expanding increases a to the improvements and lower younger with rolling reduce enhanced also rentacenter.com, higher customer in additional site platform This they products stronger improvements first market new Ecommerce relative and record out our slightly for resulting also excited ecom. we're slide thus continued in These process platform that of application sales. agreements, adds accretive updates. store mobile went acquisition have transactions We're functionality, in-store traffic offset base on which growth speed and traditional live are demographic. rate to performance comparable XX, in to helps

the Our focus lease-to-own channels. is multiple fueled technology across by customer

same-day it mile Our for and the provides address delivery and highly final a store we're delivery, base effective leveraging to for collections. network

intend we way. and want organization work support growth will I stress for in we and achieve We've growth, to methodical revenues. investments objectives tremendous the we're excited what though, businesses opportunities, manage a to a amount the of and returns sacrificing about our we're to our not done ensure improve the to potential to disciplined

Maureen, lease year, or in the to to large Now, period permits of of to of to last announced to [ph] read selling admission settlement of the may into us demand, before I consumer the as we release, and are the subject unrelated there an in no fine, the the fault business from The penalties, the April lease mention, on that settlement Commission statement. company. and the investigative purchasing part with no you purchase to customer FTC in entirely [XX-day in Federal continue have the the turn progressive Trade related the wrongdoing, I received resolving sale agreements a and entered difficulty] liability want counter] is FTC it [technical Rent-A-Center civil we agreements. with no press week agreement over regards inquiry This to last

understand as value regulatory the We working the They have well we with provide bodies and other ensure have distinctions customers we to to and clearly a FTC, will added as our from inquiries and so. in do received flexibility continue not FTC, long transaction. of key history additional the

from time. additional FTC no have the inquiries this We at

I'll Maureen and now turn XXXX to over discuss the to guidance. our financials

Maureen Short

Thanks, fourth XXXX. Mitch. the highlights I'll for review for guidance morning, everyone. our quarter and cover financial Good

were XX% increase Starting by the the fourth increase store million the an offset rationalizing year. X.X%, and quarter, up same-store driven $XXX consolidated consolidated revenues a versus gain year. total last approximately in XX, with sales period slide of quarter, same The and same X.X% the was basis last points Adjusted margin re-franchising period our million of EBITDA over base. in by XXX EBITDA was partially $XX.X was

over last year. was EPS XX% Non-GAAP diluted $X.XX, up

release. the fourth lease sales results, year. the organic Turning revenues performance year. incorporates same invoice in the and Preferred partner the in increase reflects expansion Same-store versus model X.X% increased channel. quarter up XX% changes in The total fast same in noted volume the driven performance quarter in to which strong the last XX.X% quarter versus the by last segment retail the were

volume we segment. are for prospects achieve This final the quarter preferred report will encouraged and optimistic each will growth to the lease be in the about quarter results invoice XXXX. of same-store by We sales

is useful hybrid and move we volume virtual launched forward with we the invoice As model metric our believe newly offering. as more

believe skip/stolen lease profitability was quarter. locations. higher support quarter, as for margin investments growth. technology million scale driven was was also and Lease for the a staff In in people fourth lease and The the the Adjusted locations, segment preferred the in XX.X% virtual losses EBITDA after we mixtures sales to we or losses to to year-over-year by of in performance line revenues. by of change offering. have the in X.X% virtual The improve Delta preferred integrate impacted can EBITDA expectations skip/stolen was our which as $XX.X total, sales percent cost in with were future of

Adjusted increase in Turning $XX.X to business, quarter corporate million and the increase stores revenues and rentacenter.com, which $XXX.X an quarter was in as for in vendor of driven a fourth by a points the sales. same-store percentage business. were the benefited performance supply X.X% the from The Rent-A-Center expenses versus includes million, revenue was as streamline XXX basis EBITDA our Rent-A-Center to same and contributions U.S. owned business lower continue marketing last we chain year.

of flat revenues skip/stolen XXXX. X.X% third As the of a with sequentially quarter were percent losses

the by performance-based percentage corporate fourth in basis increased adjusted Finally of year, points million, prior versus driven segment, a and the XX revenue increased as quarter $X.X EBITDA compensation.

the the million EBITDA million balance the million compared $XXX quarter of The activities equivalents to cash fourth times and cash now fourth ended in cash third to net generated outstanding The paid operating XX/XX/XX. X.X from for XXXX. at quarter year-ended In company from over the cash quarter. Moving of million of of times we $XXX flow debt-to-adjusted ended down company's quarter and end $XX.X sheet the $XX down XXXX, $XXX X.X the with million, the fourth the ratio indebtedness end and highlights, debt. with

the the guidance of $X.XXX we're consolidated range in to ranges to growth. basis, in investments diluted revenues EBITDA modest billion. on also of on our revenue Rent-A-Center the adjusted digit million expansion We're for XX, to both of lease growth, lease earnings projecting Rent-A-Center billion share preferred and and EBITDA mid-single EBITA XXXX per and and $XXX the the To and to guidance slide margin summarize, $X.XX. priorities capital of to The for million business. EPS $XXX to support double-digit revenue Turning a equates in guidance in $X.XX providing business. Adjusted our includes $X.XXX non-GAAP midpoint preferred the even growth

$XXX to to For full-year EBITDA $XXX of $XX million. and million XXXX, preferred of adjusted the we expect revenues lease $XXX million

doors We model, hybrid in the the ecommerce channel. segment preferred addition expansion virtual expect partner's the lease in and organic our revenue growth with of growth retail staff and across

volume growth. Our XXXX estimate assumes invoice roughly organic XX%

We expect by improvement and for even lease a be support growth growth. and investments preferred shift additional influenced mix margin to to

offset will A of We will reduced result by skip/stolen in virtual gross mix for expect EBITDA change also to low mix a maintain lower losses. double-digit impact a profit, adjusted preferred The operating margin lease. higher expenses.

to for year higher basis in average metric -- approximately XXX lease XX% the the segment. points be of XXXX in preferred XXX an expect to We the

of $X.XXX For the revenue business, XX-XX Rent-A-Center to billion we're $X.XXX projecting billion.

does the segment. As new EBITDA $XXX a the reminder, million for franchising the transactions. We're impact not projecting of any $XXX guidance of million adjusted include to

Our offset sales as same-store revenue by projection for assumes accounts. expansion single-digit the in the from low growth we increase benefit ecommerce portfolio, store and in lower year,

EBITDA ecommerce. from losses benefit XXXX in skip/stolen approximately We're performance business. additional million the an costs more believe $XX than million from expect initiative, slightly higher to which is Rent-A-Center losses in growth X% $XX to a projecting offset we We for of skip/stolen in

versus which shares, the ended of last like additional acquisition. due to issued quarter As Preferred items compensation point I'd and to first million count, employee is higher out, year XX.X connection you look shares the Merchants a diluted in with share the stock to are there full-year, couple

practice repurchase XX our incorporate outstanding. not additional and projection assumed XXXX activity, diluted million As does shares or share approximately

the The of is second cadence earnings.

As earnings comparison expect grow XXXX, in each of XXXX. we quarter to

the driven by we in invest Looking preferred digit lease mid-single savings initiatives. accelerate we quarter QX the in first-half, growth expect cost first EPS to expect in as growth and at

pattern The quarter. traditional the should second seasonal the half quarter have third fourth in a stronger with growth versus

our close on XX. framework of I'll a allocation brief capital with outline slide

a Mitch business cash profitability, As made we're the deal generation we've growing progress mentioned, a on to focused disciplined rejuvenate way. and in and great of

M&A potentially opportunities cash returning invest for priorities shareholders. business, of and taking by in Our advantage to are to our followed cash

down currently XXXX reflected pay which in as and Merchants we our of the dividends, these yield business Preferred, priorities debt, X%. a a invested increase purchase have

of million in We XXXX. $XXX decrease expect to generate to is free million cash which $XXX a relative range XXXX, flow the in to

cash resulted related million Vintage XXXX settlement As you in flow. in one-time merger the a benefit recall, $XX to termination free the risk for

by $XX we in and lower increase to support fund taxes to will our EBITDA plan digital for capital order and retail for expenditures to investments initiatives. and be and partner costs grow higher million in which growth expect $XX year analytics We million offset Additionally, channels interest combine platform. our benefits million year-over-year, cash to to $XX in to the ecommerce of business technology in the invest to growth

cash high these Free and of investments cash return also investments volume. working to We and believe and guidance will generate capital a profitability flow includes fund rate invoice support flow.

our can conservative we goals. sheet We we financial also balance long-term believe on and operational as maintain execute our

million net has historically. had shares It our adjusted million. XXXX, quarterly XX,XXX XX% fourth over repurchase increased share shareholders. excess currently and EBITDA dividends Our end to at authorization We and we to year. return was times, We X.X of quarter, repurchase the the we our have practice total to liquidity by the start been intend over in $XXX cash of $XXX

returns. the the to We've augment returned last to dividends capital continue over form to and nearly opportunistically $XXX XX in million share shareholders and of we will years, allocate repurchases

detailed Friday, our and statements by February to XX. by always income website, will XX-K be the posted filed As segment are

turn your now for your questions. today. for you time call the Thank over I'll

Operator

our Thomas Thank from KeyBanc comes you. [Operator first Instructions] question the from Brad And Capital. line today of

is open. line Your

Brad Thomas

Hi, good strong Maureen, strong and quarter congratulations morning, Mitch year. fourth on a and and

Maureen Short

Thanks, Brad.

Mitch Fadel

Good morning, Thank you. Brad.

Brad Thomas

we on your Let's see, just start sizable integration in ability in a today follow-up on I to landing we that I new the of and new offering of and accounts? new and are be Merchants that some guess at to business with potentially from and where out stand pitch go where wanted and the market lease position more preferred Preferred, just integration off first --

Mitch Fadel

Good question, Brad.

integrated Maureen to I mentioned, technology. made We are mean some and to we as ready we We the enhancements, go. are are there.

that's issue. an course, ongoing Of

going and in are enhancing to be always We this age. day especially

are So being it's ready. enhanced, always but we

We are out selling.

XX Since We people maybe added as sales we days almost about for release team. national have we to added a triple Probably Preferred, specific press a bought number saw ago. you team. of person our the Merchants sales large accounts

the added we technology. to to added sales the So, team,

added to focus accounts. integrated. person And accounts have national the we are a bigger solely We on

So we are off and running.

Brad Thomas

see that of the feeling mean are you that fourth has side selling imply have in portfolio? the period. some over that things did other how we industry on momentum, like guidance business, holiday potentially consumer you and headwinds electronics any season experienced about feel clearly just seen shorter faced health Great, What and the deflation had the but all I And you and quarter? would the of the the Rent-A-Center yourself. about from you if curious dynamics the

Mitch Fadel

do it. good was We something over that. comped felt Rent-A-Center last We feel segment the We X% whatever really about really, comp tough a know good about business year. had you quarter. fourth that as or We the

now are So, mid comp. the, on think, we XXs I two-year in the

the happy turned So are we way very with it out.

week calendar mean was the from one time. have period that our a for standpoint We shopping long plans. you can see adjusted I the less on a

knew Black before So we year we started we was things Friday that. it sale there. like a than a week had earlier our And

adjust just about and you have we feel good to So it.

for a have have am As an done Yes, mentioned, issue. going not even I I added I we years. this. the have been new how Brad, know long has number you this deflation product a to of done I tell few lines. you,

to been the technology UHD in regular of so QLEDs electronics few days the a to than -- more premium we a adjust, of these cycles bring having is the So, rent of and technology, category quite have TV ramp we through Samsung try forth. more newer

we to. are used a it's headwind So,

sizes, your with proposition, technology have of the change your adjust value adjust carry kinds with. You to your adjust pricing, screen

we of bit to a overcome we with been handle say this with have electronics and headwind, not -- but today, only times, but it's other number we way categories. a not have new of the and continue product through one the it's overcome a it's certainly We will won't I

Brad Thomas

Very much, Thanks Mitch. helpful. so

Mitch Fadel

Thanks, Brad.

Operator

Our question comes from next line the from Joseph Kyle of Jefferies.

open. is line Your

Kyle Joseph

about good the lease solid guys, and get your end year. to I and business. Hey, morning I solid echo Brad's sense statements on quarter will to for like preferred the the just

the step and in perspective, sense overall us compare in think of about out? it look a how gave the but Rent-A-Center first shakes And of a that business? we the versus back color you where for margin you that us plenty maybe as just term margins You give can looks context side XXXX, EBITDA at from eventually longer

Maureen Short

Sure. Thanks, Kyle.

EBITDA about expect margins So to the segment EBITDA for this segment, thinking the guidance year. for we that similar XXXX the double we digit lease low within preferred performance had

business the a to continue business the to the EBITDA scale slightly full some that scale early Merchants our we impacts was on up investments. we We integrated Preferred have dilutive time. in to with not invest as margins, in We lower business EBITDA but EBITDA return and purchased margin, so we had up a which to made investments that in that and recoup we within that year, QX, negatively quarter margin, the the over as build start and as performance business,

ongoing to around is an rate business, XX%. expect we the double-digits which low So, Rent-A-Center EBITDA of relative

significant you cost this initiatives had $XX year. even million As savings to $XX we've segment, expect know, within million another that business and

Kyle Joseph

sense are there? with guys Got then diversify are it. the And in you of looking terms of players, but merchandise business, are Appreciate just -- know the merchandises, can and us retailers more partnered That's you regional you of describe some there the to they guys a that that. you I and know, they you integrated really helpful. are the pipeline nationwide, for give

Mitch Fadel

Good yes. Kyle. a it's Yes, Yes. morning,

The this he's accounts for he -- national define looks starting have, we ground done but because before three TD the those yes, we is our ago, Paul pipeline he Again, of weeks actually doing person players to pipeline for was Bank national for itself. hits this hired All Hamilton. the running, good. really to hired

that we weren't So, either. that on before not working

both yes, and the So, pipeline in all national good regional is accounts, in accounts. local,

necessitate talked going we've don't the couple remind players. and of player national pretty the to forecast the doesn't regional -- we again, a on need we're next numbers So, the kind of years, keep excited, about I to just you, hit over

one, have two. over So, but next we that feel I get we don't really, really accounts even will some good national year or have the to

Kyle Joseph

in the it. trying here, fourth is kind Got And little a quantified with not one CapEx on semantics XQ, for investments preferred low XXXX? the of the me but then, the last on quarter? are reconcile in your just was lease to for as segment I'm business in bit that CapEx that one outlook CapEx

Maureen Short

Yes.

which the most have integration There's lot investments will a continue we've Preferred So, to been of investments, team. grow been of to the but of some which made some far with Merchants we've expenses, what XXXX, in technology sales that some to has seen the so is expenses. of far of that a of CapEx, related people, been but grow operating is operating so lot are

Mitch Fadel

technology always the when CapEx, expense enhancing that something it's exists. of and lot you're already right, enhancing Yes, isn't operating a

Kyle Joseph

makes Yes, very questions. perfect no, sense. it for Thanks my time the much That's that me. from and answering

Mitch Fadel

Kyle. Thanks,

Maureen Short

Thanks, Kyle.

Operator

Our Baugh line from question of from next Stifel. John comes the

is line Your open.

John Baugh

you and right business morning, CE and fourth it, Good store into where and tell just how that I'll XXXX? versus on you. year. maybe now, is percentage right in could the the Thank XXXX Mitch, congrats changed in the quarter us jump

Mitch Fadel

of XX%. the of revenue, was It's it running XX% about at the XXXX, and end about

XX% in XX went from excuse growth good to at but segment, what XX about, So, XX, me. that's to it not that math, I'm very from XX,

about in of when grow, future. come that So, revenue bit the we we and translates of little are talked indicator, that of the was orders the continues lease-owned and last in heading look a the in and of at about how leading web to of fourth off number kind quarter the it's quarter, being our towards which all orders the XX% agreements, a web XX%

fourth were obviously -- of the we revenue forward-looking were it agreement, the agreement but agreements XX% in the than higher to towards build writing indicator more all so forward. the is of So, continues going a the revenue XX% quarter, of the just XX%

like me XX% soon. that'll to looks it be So, pretty

John Baugh

consumer asking that about versus I in products appliances mix XXXX products the was versus I'm or the sold you're XXXX? sorry, electronics business was in that ecommerce of talking about there, store the Okay,

Mitch Fadel

Sorry about guess that that, I I wrong. heard

John Baugh

That's okay. That's okay.

Mitch Fadel

many been I watching consumer in than the wanted ask answered talking electronics? CE, I so time, about sorry you just to answer headwinds but at question so I've rather was were I about the politicians. wanted to

John Baugh

Yes.

Mitch Fadel

we've bit down this in that category, We're time, but long-time. Yes. followed together and long done you John, us a a for again, little know, you a

to size, of range You don't and have minimize cell you anymore the and and stop stop nano to, consumer when screen like QLED TVs the you bigger that carry carrying from become we're you electronics. and XX-inch kind start carrying at XX% XX-inch from up just them get mix and Best the and in in TVs LG the Samsung TVs Buy, still that deflation you $XXX of those in stuff the stores disruption you and just move

we've we So, either XXXXs to XXXXs. of the when when it from to style from two before, done those early adjust TVs adjust have and in back out went

a it's mentioned, categories, testing revenue. we times, running and getting then know of the tires to around and categories, our a doesn't to do and this another you it's about not value of bit with maybe so short and a XX% your can headwind, it's few headwind we're above handbags forth, It as is it. question your lot but proposition, but I of mix, answer your mean So a just like how a done we've make

John Baugh

XXXX, right, organically that like I mentioned XX% comparing about me define that in growth you something Thank a Great. number? help or in that is Maureen, hear old I invoice Lease the that. for Merchants you did then Preferred think Preferred And

Maureen Short

in Yes, the organic XX% is growth that XXXX in expected that business.

benefit you and know, Preferred. full-year Merchants year a we August As of we bought also Preferred will from Merchants in next

of growth, $XXX impact a So to If just you, equated with we we million the it we isolate in would wanted revenue. but about another Merchants the have full-year have year $XX Preferred help revenue of would Lease. to ended Preferred organic in the had to just million

starting growth. $XXX million So year a volume the organic it's at invoice XX% about

invoice higher growth. because the of segment than expect that XX benefit total for organically Preferred be we'll but So, growth volume have XX% overall also the will Merchants we full-year for

John Baugh

it, you to forma, maybe digits, will gave you picking of sort guidance of Got up well as for model said own there? then least staffed didn't grow growth as and of the at to as pro so for you single rest low combination Merchants the Preferred that the organic what get

Maureen Short

expected well. as the overall, It double-digits we're the with business The is Merchants retail in also growing POS it's but below our slightly as staffed ecommerce is staffed partners. Preferred systems and functionality, adding as their from business benefiting for portals technology, business application growing actually to well double-digits integrating grow other additional

Mitch Fadel

in model, It grew XX% the in the fourth staffed quarter John.

John Baugh

Okay, that's interesting.

to then And Okay. Merchants you taken the us that within of other of think Preferred bag occurred specifics business? coming the help changes Lease in tools leadership any there that mentioned Paul tool actions on Were Preferred about board. or side and new in your

Mitch Fadel

people, of it, people in lot lot some integration, and integration. so leave some people, through any people people, added a of Well, an some like get certainly forth

a help Marino as with we're for as a in so Glenn us at then was top that and Hamilton number was so business our that of Synchrony and retail, here said added part people release of I'd of a people joining member The joined experience payment same a that a sales retail member, we is added retail years other just thing business business lot has board the of solution board the in board well. adding of that out press Paul business, partner add executive a we recently us. lot about We he payment, lot Synchrony, just

John Baugh

you. thank luck. Good Great,

Mitch Fadel

Thanks John.

Operator

from Our comes line next Raymond question the of James. from Bobby Griffin

is open. Your line

Bobby Griffin

for and me for year my a you taking my everybody. you solid all questions, around congrats let add morning Good Thank guys. to

Mitch Fadel

Thanks Bobby.

Bobby Griffin

you Preferred, Are I of you great. So legacy want when the talk I bit to some would any are hybrid or two, a there maybe doing? virtual acceptance customers some switch to little used now guess are integrating about talk what model seeing can the kind them commentary your the staffed and of be of Lease first be they on they to

Mitch Fadel

lower labor totally the like volume There might be staffed is go the more just hybrid a to few weekend conversions stores for virtual. mostly better everybody or lower, it where in

that Bobs because saw conventional more Bell they're customers staffed, and forth and the volume you enhancements pretty some largest now six weren't the open, and slide much mentioned, the staff actually the I largest go will much efficient. Our like the same pretty so say like Rooms is furniture out and us of retailers, be City the and on technology we we are continue make to to of Value that bellwether, companies to need they're five such those that Bell,

e-com of from grow their can customers enhancements Some going on business more the the website. the

those enhancements but will there're just made So being they of staffed, say per lot volume location. a do there,

Bobby Griffin

Okay, in Maureen I you guys what missed color prepared year? Rent-A-Center on savings, operations have you on the this business, and maybe have little that's helpful remarks the savings a in give identified but additional can for your additional cost incremental the XX cost areas might the of

Maureen Short

new the serving store time over The piece technology of the vehicles will functionality to initiative in speed in is network, monthly large capital our of modern spend. customers, stores. we also Sure. We're investing and our which our streamline more savings the as increased co-workers have costs well for as our from Rent-A-Center the lower the cost optimizing number increase

the cost reducing network mainly this vehicles our the and is is So the or fleet stores. reducing in

Bobby Griffin

at you for up the for count helpful. me. the our models? lastly, a then of units And that's quick business store Can end the tune modeling us just provide Okay, across to question XX/XX/XX

Maureen Short

Preferred with ended the back business, corporate in XXX locations stores, year XXX we locations, franchise Rent-A-Center XXXX Mexico locations. the and XXX Lease Sure, U.S.

Bobby Griffin

XXXX. detail, the well, in Perfect, for best thank luck you of

Maureen Short

Thanks a Bobby. lot,

Mitch Fadel

mentioned Bobby. Maureen get to prepared the before Thanks, to her question that also in comments. had that next I'd add we

the the we and count comments heard but Bobby asking in share to number count sure prepared that. You're her people she's about store added need make

So count, by compared which guidance is used notice as that you we when and higher the consensus with being where use were right again, much numbers because a because estimates the count updated share share not right the is higher so street make in analysts so higher and EPS sure of the this to to not EPS EBITDA number profits, our lot the share the are relative count Maureen. our get XXXX you if street, is lot the than

Maureen Short

ended XX quarter diluted shares and XX.X We expecting we're at be in XXXX. outstanding million to the it

Mitch Fadel

use we about and was same was EPS out don't was, the the in then just as reminder guided Merchants so, profit. because in little besides bit we stock But based a more Preferred, shares as as EPS goes though incentives counted stock you if it employee store Bobby. Merchants what the, the of even low gave. to number be a Yes, there on came performance some too do mostly little up more the cases count, enough the the stock just higher and we on that Preferred

Bobby Griffin

best you going of that Absolutely, thank luck Mitch you. and forward. Thank for

Mitch Fadel

Thank you.

Operator

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

is open. line Your

John Rowan

guys. morning, Good

Mitch Fadel

morning, Good John.

John Rowan

give about you going was to the an I to Mitch, talk opportunity share count.

What hate we're at those are we the restrictions correctly, in to, how we buyback accelerated And to it, from; there that shows repurchase what you bracketing, remind again. just me some the me well that know covenants can functions. the comes that want my as want you covenant of million model So looked versus utilizing go are? programs? the I is how and just $XXX it Can authorization, make program the I in around deck I remind sure repurchases you where

Maureen Short

years did $XXX share that it ago. repurchase decision accelerated the board years several million we at a point, this anticipate years that was plan do the an So, I don't but several was several ago, by ago. was made authorized

believes debt capacity our of could any something that quarter repurchases our facility. We have on part as We of to share That, board XXXX. a strategy. fourth that XXXX. and guidance in capital our repurchase a allocation and that the are repurchase plenty be in open not opined in does that has for the But shares few reminder, and actually that did include share a activity

John Rowan

market you -- your program but correct? going accelerated the purchase times. into But doesn't purchase preclude opportune block from like a wouldn't or the It at anything, require

Maureen Short

a no around repurchases under the was we that several were stipulation repurchase share really share years there's ago. something accelerated that one-time at time No, that did thing this plan

has with go do shares it So strategy back to and opportunistically. buying potentially nothing our forward

John Rowan

we to in XXX balance count look remember free share that of at repurchases was million leaseback, And does out that very the -- can't quarter end right? The the it for as sale was of XXXX, -- the I this cash not in the close or we was cash Okay. issue? €XX last then the possibility can include flow this I one So correct. flow remember, to guidance, that the January that in of closed year?

Maureen Short

in of… end so quarter, the the closed by fourth was It

John Rowan

Okay.

guidance year. in that next for wouldn't be So

see some on Okay. indications too stating you website -- are conclusion. is early get rates delay and Tax the of the of refunds lease versus year. It's payout childcare pushed just a slow. refunds probably affordable IRS to know options little credits I into a draw did sure income beginning for early tax want I out bit last something tax earned are out might that doesn't little to past the which are your some of very of make delay type a March, credits the push contracts? the that season,

Mitch Fadel

we it a maybe perform in question. appear to slower be than don't doesn't is slower to year, cause good performs. issue the it like John, know the going Yes, any relative this going how appear then a we it's in -- is week quarter, but the little a customer how to last little,

here and it's So tell but can way, January. we're be don't on through our plan. as, the I works, mean, based that, it I you bit little see that going slower, issue normally February. it's I are we're remains I to wouldn't business a solid in an even and later think we on

John Rowan

Okay.

Maureen Short

a have as And and cash longer we same period. John,

other to up return. or that a And issue able to exercise, come tax people close And sign up than being ago, not against where over versus for year that's delay even not agreements us. there for two we're an then, to relative period a Black Friday. Now you is not if in

John Rowan

even like last changed? did before you it Was went where That's right. you that? extend something from XXX did year or was that the When -- it year or like you XX days maybe to

Mitch Fadel

XXX Yes. vary. back, went In that product came or the from I on to we early when XXX, XX depending XXXX, either

really into a that here is, wouldn't week that, will be second Obviously, So it this tax there, matter yes, doesn't working the we're our or It a Maureen great value or is that's well. proposition made pretty this season -- and two years under full working. point.

John Rowan

housekeeping Last question, Okay. that? use what's the correct to blended rate on

Maureen Short

around It's X%.

John Rowan

rate one more more actually housekeeping, tax And question, Okay. for the XXXX? one

Maureen Short

XX%. to The XX%, to tax XX% will around rate be this similar year

John Rowan

All much. right, very thank you

Mitch Fadel

John. Thanks,

Maureen Short

John. you, Thank

Operator

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

Your line open is

Anthony Chukumba

taking questions. for thanks and morning Good my

you question, a of and these first tires, categories fourth new handbags, the mentioned I I'm mentioned So product some specifically you there's jewelry, one, think forgetting.

Just two questions on that.

questions was the tools. Two I First, guess that. fourth on one

early in just that any, First second-off, some point, then of off, then Thanks. this and all at customer -- products? also can any there you're of in seeing skip/stolens if what sort of terms terms and and of those in on is give and acceptance you like stores in differences color market terms

Mitch Fadel

as said After they Tools, I rolled my performing and of I'll question generators rest how have been Sure, to test tools our data on Anthony. jewelry just not careful handbags nationwide. too as that think I pocket. recent we that far I'll nationwide. they're and I'll answer around tires are we competition were are the Handbags started, specifically part nationwide out your the a other test, in give test, still like be any a keep information. much did in and

Anthony Chukumba

particular your store my have And did those second your question. enough. you the reason have release Is accounts press that guess in release? you -- you because fair typically in press didn't Okay, then there you I any have

Maureen Short

going we've to between point in just at to staffed shift addition a the numbers. that decided complicates XX-K even any complexity forward potentially a virtual location within hybrid them It with and given the a the of include and quarter. Yes, XX-Q locations could of our virtual

continue will Mexico. the franchising show in Rent-A-Center We the location, staff to stores

the Going understand is the than forward, segment. a volume to comes the less business location use number really just it's rather We for to it invoice us relevant when metric lease count. preferred what doing of

Anthony Chukumba

Got it.

you. Okay. Thank

Maureen Short

Thank you, Anthony.

Mitch Fadel

Anthony. Thanks,

Operator

today from of line Caintic Our final question from Vincent Stephens. the comes

Your line is open.

Vincent Caintic

Hi, morning. Good thanks.

to furniture, a cadence for good admitted broader lift retailers so year-over-year the to year? all lease, going XX% it it that have categories? then to great course is first, midpoint; up of First I'm ramp throughout secondly, wondering, in over becoming big at XXXX there set the national a the it that on however, you a for was just national is guide And the we go accounts. already you've even of preferred certainly XXXX it from just two an furniture is of expect should XX% to questions, or kind that up retailer

Mitch Fadel

and Vincent, this into the Maureen the lift verticals other bigger as a I We've No, that let and to Preferred I don't about cadence. I'll No, furniture accounts. with big it with side. start a talking see done really get lift. see big Lease well don't

to lift your big category it another. not you're tighten think. in might other a all, another. one your the -- risk, have a verticals versus I and get into going a risk little it versus not you but biggest one more category sure to it's That's than engine if you decision and familiar, presumably just engineer tighten I'm you change be when different

Maureen Short

add public on that balance a sheet thing that, strong to national looking future company accounts have for are absolutely Just with one and got a be we've growth, fund to is we able to I that. to mean,

So retail so other retail too as we the Lease, show question some half year it will higher of do it through partners, go add is it of someone a how the the that to so growth will business should in that a portfolio be of the currently not of compound big business fairly to does first the half the growth second Preferred build throughout XXXX additional year as than we year. cadence into these about then of that similar to And stretch like Mitch with. said, your answer is size and partners large

Vincent Caintic

re-franchising. helpful. re-franchising guidance from Thank from Is very the lifts seemed more you're flattish question, efforts storage, business what for you. Rent-A-Center just Thank and that's entirely remind core just comes and EBITDA Okay, you. XXXX. kind that kind the revenue EBITDA of One of the of so, that kind re-franchising and if us wanting so, thinking on about

Mitch Fadel

the think last about year. Vincent, difference, stores Yes, re-franchised XXX I that is

It's but used It's that. a be from of the So going reasons, talking certainly were ago, a our forward, for franchising markets position just you an the think we think forward, you couple do about franchisee different our opportunistic impact not a X% remain about it don't as can that, we opportunistically see in very we're almost about big as standpoint. opportunistically if the that opportunistically a position going but store, certain and now. whatever years I our more when we re-franchise revenue better said, does in of of going it's to was strategy strategy very so of company they think part part

run negative been As re-franchise much far a much that you little I EBITDA, EBITDA revenue, hasn't bit profit but if rates there that little impacted with the going as have between of X% would you about some forward, down impact. opportunistically royalty because talked stores don't our EBITDA was that re-franchising give and X%. the up

for Rent-A-Center you're to stores because return else some the you business of stores see that that get from quartile return a do with but -- four overall, an more off EBITDA EBITDA just the selling far your you on got be than EBITDA you're segment. in It's any if somewhere you you what going the So impact revenue mostly it's but so revenue standpoint. that not cash even more at based right, impact money, given look when

Maureen Short

Right.

Vincent Caintic

Thanks helpful. very much. so Thanks. Great,

Mitch Fadel

Vincent. Thanks,

Operator

to further Mitch We turn I'll questions. the have back Fadel remarks. call no for closing

Mitch Fadel

Lisa, morning. XXXX want in will the year the Thank here we great in the for last in very and thank center. and support people, just as by XX,XXX a many, co-workers us stores out it you, XXXX There's in for work to hard entire results joining many And for chaos Thank I were and you there everybody. do deliver team, thank specifically. effort to the so field fourth the again. you, quarter all the to We this everyone glad or positive

Operator

Today's this and Thank you Ladies concludes call. participating. gentlemen, conference for

You may disconnect. now

Upbound (UPBD) 25 Feb 202019 Q4 Earnings call transcript