RCII - Earnings call transcript Q4 2021

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Operator

Thank you for standing by and welcome to the Q4 2021 Rent-A-Center Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session [Operator instructions] Please be advised, that today's conference is being recorded. [Operator instructions] I would now like to hand the conference over to your host, Brendan Metrano, Vice President of Investor Relations. Please go ahead.

Brendan Metrano

you results joining of for thank to Rent-A-Center XXXX. and our discuss the morning, all the for team Good fourth quarter We market release earnings yesterday. issued after our closed the the materials, at website a related on investor.rentacenter.com. all and are available release link The to live webcasts our including

Hogg, Executive and call Jason Vice the Business from Segment; President Short, our today of CFO. President the we have of Vice On Fadel, Acima; Maureen Mitch Rent-A-Center, CEO; Executive Anthony Blasquez, Rent-A-Center

law. this to publicly call some subject our of the filings. and described on earnings as undertakes statements, website, most non-GAAP our refer call and are the which that This statements comparable As in obligation also required adversely will factors turn quarter forward-looking Please reconciliations a or measures. are SEC release that, the Mitch. financial be GAAP fourth are Rent-A-Center on I'll no provided well as earnings can forward-looking over to references could update reminder, statements, measures. call of any With to cause to the non-GAAP differ from a which description factors revise in many as These to found except company's financial to by our measures to actual financial expectations. results materially include for release, our the

Mitch Fadel

opportunities, call our for enhanced for joining technology largest the Thank our results for and value plans commercial completed has you, history, the everyone Brendan. transformational our potential today growth which greatly was XXXX XXXX. acquisition to review creation. the an morning, We you capabilities, for and thank quarter and important company. and year in our Good fourth and

share. the $X.X XX% February. financial healthy we Business for EPS forma company revenues Rent-A-Center and $X.XX dividend acquired that numerous was that of also a billion the both last Segment organic standpoint, made great solid also a progress generated future. out pro results growth on XXXX paid the per of better and From $X.XX up the business with from an We Acima from up strong basis approximately initiatives we position $X.XX operational on Non-GAAP on should about in

business, Within great XX% loss increased XX% the digital initiatives ago. and in autopay We to our decisioning, revenue of just e-commerce Rent-A-Center we to from increased lower XXXX and two strides centralized which in rates, made years segment, penetration payment capabilities. executed including delinquency

transaction & synergy partners the collection including also to We new preferred of capabilities Son growth. of Richard products our to complete continued base, added contributed to the the which XXXX incremental lease locations, like million. at Whirlpool. Acima, P.C. merchant We achieving and target $XX and most strategic conversion with relationships least grow we and sourcing consolidated drive of At new operations

technology, dramatic swings a year resulted caused test that operating lingering more effects a a competitive and in of pandemic. consumer digital the ecosystem customer early growth's our especially direct launched The also that Acima's future. advantage scale payouts could We aspects of behavior, be which model, dynamic to proprietary vehicle rates. including significant and the delinquencies from into leverages and in the long macro stem around we challenging the in primarily renewal believe from This environment

had Government behavior decisioning the and consumer's relief of effect products. new implemented pandemic ability supported for to historical afford pandemic In ended year, consumer had relief end on consumer half inflation government We latter For above rates and were anticipated chain a averages. levels supplies headwind. addition, of expenditures macro programs a durables significant the in year, first macro the uptick of in environment relief tactics that to higher with shifted disruptions from a pushing and access some portion spending and the the the of and payment collections. programs, diminished was tailwind to that the environment favorable

generated in in our a rates, which and the for expand the results the the below applied most of magnitude impact and delinquencies quarter EBITDA few our a fourth those However, loss had large factors and XXXX XXXX the EPS recent and and especially expectations guidance our we in adjusted outlook in combined for fourth speed quarter, on underestimated will changes annual effect Acima. Maureen of minutes. The

into built major flow a in RTO operations platform. generation few forward returned a digital company's payment by resilient, launching and acquiring engine ecosystem a past test. solutions strong we to strategy the In XXXX, a digital the and foundation cash business. our years, growth then for to step took We we've the leasing Over the legacy growth and evolve Acima profitable expanding

a LTO space to So LTO the flow of the top could one for in have and strategic the believe power. virtual we competitive a a profitability business formula pieces we value cash Omni for and today From business advantage. current and potential creation, now have compelling line strong proprietary and right the the we franchises learnings that leading a top incremental provide with robust direct consumer channel plus standpoint, growth

our the the plans, ability especially occurred think While pull move the previously effect XX external of four ongoing environment forward forward year. we this When in durable us past that consumer allow material first goods months, of it's access over in customer's to be unclear desired durable half that results positioned core the a agenda with of a to in the macro may our to XXXX, you the spending headlands well in growth and limited we've on and returns outlined year. in are long investments term factor will if in our we strategy generate and the

and push enhance growth. growth initiatives influence for taking approach outcomes where significant and are areas in we So investments more rather position in still forward unfavorable we execute than to an environment, long with our measured a can term

shifting that yield effort, plan term future on to growth technology of up our averages, for flow at near initiatives, For benefit we'll losses have focus conducive including example, to Acima pivot environment should is strong underwriting. advantage the cash underwriting the also delinquencies our becomes and resources in to improvements, and which loss growth, generation. where investments historical taking exceeded prepared for When more be ramp and our

Now and financial target have for $X.XXX revised results to in generate which million impacts million, demonstrate generate free year, expect challenging fully alluded approximately late billion solid the year the and regarding XXXX we million outlook the lines, billion. our to to we $XXX million this Well, adjusted $X.XX cash XXXX. ability $X to our to to $XXX results stock-based three business changes last revenue it by of EBITDA affected compensation of revenue announced year to share $XXX resiliency flow. extent targets $XXX earnings does financial of negatively Along $X by $X.X the of external billion, and more $XX those million, we performance, Adjusted projections of for been reach in I which environments. alignment, will XXXX XXXX to think our not given excludes

We recall towards in the third important quarter we the most quarter. effectively our story. an you to Day communicate an host to the If call, first in-person event sometime of hosting it's discussed end think potentially Investor

quite the Day It's team and and been the for due the been in and events in-person out In for to I we've continued I on dedication. this year. With progress with push Jason call a the updates the want turn to later a that, COVID opportunity few I've their the business. years, effort tremendous decided Acima past impressed until journey see the over future. to entire challenges I'll made ongoing the closing, given Investor variants, to over we've So thank

Jason Hogg

Thanks us. was your XXXX Mitch. a transformative year comments. Echoing for

the business. leap in of company and Acima virtual LTO essentially the doubled With the we acquisition, a our took big forward size

the company would durable XX.X% of the delinquencies and addressable Acima external growth, year of goods occurred on opportunities environment Those impacted billion and made customer without revenues We expansion quarter The payment established Today, and year, losses. open to solid behavior. rates In the portion negatively growth to a market and that proprietary GMV the fourth XX% EBITDA and the spending could as adjusting the adjusted two effectively good believe GMV pro in quarter, results for external better collections course mitigate delinquency those with even digital and the improves. XXXX. double grew capacity. ecosystem the latter we underwriting been margin XX% to a on almost external segment the the basis started $XXX impacted factors Over in lease the negatively third integrating that Segment we loss rates. launched forma of was deteriorating in that our future test environment significant progress foundation have businesses for has and disruptive in our consumer XXXX. back

despite tightening. enough keep it of December, and November despite through worsened now January, delinquencies we get tightening, headwinds losses see, customer can macroeconomic to tightened we additional Attempting to with deterioration external declining further. the in line, accelerated fast not trends the ahead and as changes payment However, behaviour. the the in in Bottom up was

fraud payments augmentative origination. to of continue prevention first implemented we've augmentative our Early missed a addition, as fraud to further to grow additional technologies. new as measures In are losses continues prevent encouraging. implement trends e-com will And portion we

forma performance of way year while the make quarter as in lease these However, number earnings in higher to the still will a on grew booked to have to the capacity, prior performance we mobile XX%, primary to By largely roughly reach driven been year that it product open from from over XXX risk Fourth objective. take activated downloads one due for improvement approximately losses their points testing increases up Initial to a to loss capacity, leases will changes half merchant this are were to and have basis, basis show P&L locations. and a a encouraging. underwriting, the skip/stolen X% ecosystem GMV the over better still our pace year declined third rates. lease pro month, double and margin lifecycle. through activated million EBITDA open believe higher XXXX. million app increased the grew year primarily we in on On and forma understanding a points adjusted the call. by the X.X% with XXX approximately is Optimizing revenues results downloads end the pro basis We midyear delinquencies basis XX.X% with expect quarter

targeted previous activation methodically to continue on will with Acima we customers. operate So

planned the are just out. Importantly, ecosystem noticed we in the paying have Acima they can schedule It's much scale ecosystem how marketplace card to card. together more how building is a the and have also we to issued having aspects was very The proprietary the a year. launch play to running our exciting to with of XXXX. pieces us and is piloted beginning larger see X,XXX MasterCard time lease approached business. cards strategic in and December on with leveraged work Merchants platform generate some haven't all The for and physical forward volume coming driving about look this more learn to and and up the momentum been still

expect of growth will XXXX. As XXXX half we the we appropriate generate Mitch fourth returns that in quarter Based the XXXX, the this learned on headwinds to much is highlighted, environment. heavy of from investments that second of through unlikely think we macro GMV persist it impacted what in

can lot over up tremendous So a effort will are closing, improve, to Anthony and more and product the to we behavior a and wait to envisioned. lead accomplished with previously a like ramp disruptive we can't team XXXX. the I'd call past measured back plan the to we execution see consumer to I over I'll believe development entire In what when now. we foundation products be be the of in scale. team the for and for the what we environment in our reflecting ready business. accomplish than And year, dynamic a and And while the take XXXX. track, on the initiatives congratulate launch turn approach

Anthony Blasquez

Rent-A-Center up to was XXth Thank of revenue for a exceptional our that core proposition business provide growth to you, grew year straight Jason. the and our and represents model. quarter This consumers. store with XXXX We value lease growth same of is demonstrated the XX.X% year we business an sales the finishing sales long XX% stability strong same store the XX.X%. portfolio of the testament the

will driver we earlier, omnichannel primary business capabilities. year the to As our and continue Mitch strong had noted our growth e-commerce as enhance another be

and grow even have who identified XXXX's clearly half we've expansion more is business. our growing compliment year EBITDA operations and margin also increased favorable results, work financial since store areas XXXX. continued our the XXX while in Execution begun than certainly a in Additionally, process our basis over to offerings of first key more benefited through factor portfolio. the points year, was XX% continuous Perhaps but performance, and to new managed eCommerce from for the a invest team obstacles our we the compelling we sound COVID environment. was of

portfolio labor within store years higher Jay increased over to same growth two over believe costs, flat of margin needs discussed losses payment was will of the store manage same year for Jay, both tailwinds needed declined especially staffing year, wage past started to moderate and custom been factors year range. E-Commerce with and and had XX.X% basis environment. were accounted upper normalized grew to were impressive activity year the XX% costs the with with expectations, almost due than XX% and on our and rates of of results Mitch the X%, a Mitch lower fourth noted As those below quarter growth still we part more revenue Adjusted expenses. loss and points expectations, revenue including to growth longer and that quarter. the XXX labor revenue much on XX.X% X% other we and XX.X%. in within sales XXX the larger of to it term labor earlier, EBITDA in year-over-year stacked Skip keep store to latter around up points a two and the average Per stolen overall EBITDA revenue due side basis expect and collections affecting for but X% the basis investments our more year, a year

XXXX, omnichannel our focused on to around capabilities. are Moving top priorities business enhancing

our Our customers. goal is to deliver a for more experience seamless

us. choose to with However they shop

several that underway are significant at have We driving customer aimed directly retention. and initiatives sales

process, shopping to our customers marketing product increased working improvements offerings strategies. and the expanded growth create our through a better checkout enhance are experience to We and personalization for in and sales e-commerce online

easier, payments, also strategies working improving are and customer's towards our We personalized journeys. to communication retention strategies making implementing better enhance

XXXX grow existing communities. these efforts our would thank to work the call that they've put exceptional we initiatives will expect like Maureen. levels our of We portfolio Rent-A-Center forward With year team XXXX. embedded within the along great to to advantage remaining look key in our I'll for deliver solid over maintaining I to other with while too an another in and also the beyond turn

Maureen Short

margin The rates year XX.X% for in adjusted large delinquency was in primarily decline loss of basis revenues EBITDA and forma billion quarter over reported year-over-year pro compared decreased a a pro Fourth basis. to on swing on and the the EBITDA XX.X% and reported predominantly a XX.X% XX.X% in increased quarter, Anthony. you, fourth XX.X% two Thank in margin period. of to attributable end basis. a year the XX.X% year between periods, business. forma prior the Acima $X.X basis adjusted on on Pro Adjusted was $XXX the million increased forma EBITDA

we of $X.XX XX.X% rate interest basis on was second $XX contributed setting prior to contraction year the behavior the experienced quarter. the year in noted tax onetime quarter million was had free economic our he and Acima included payment fourth to shareholders the reflecting XXXX, customers higher store throughout prior company Rent-A-Center million effective million half XXXX $X.X this other believe related worsened million As the the We our fourth $XX.X remaining the a which of is debt during to the EPS and EPS year, and period to of integration. end, more fourth transaction items result $XXX quarterly the the period, a fourth in and line quarter acquisition. to At $X to authorization. current repurchases. compared underlying in Acima diluted generated million flow compared customer the of $X.XX costs include reflect The the for expense special Below share compared business, compared approximately prior in the the $X.XX share the challenging prior $X.XX labor believe was dividend expenses on adjusting through $XXX business. a in the year not repurchase earlier, million and quarter the factors was After returned share net Other was non-GAAP change that financing the period his million that of margin in do in performance $XXX in to GAAP XX.X% we quarter cash from $XX.X count in of and non-GAAP the

In addition, available X.X $XXX.X $XXX of approximately of $X.X leverage million, of and we gross balance a million. debt times billion, had liquidity cash of

outlook consolidated for our key the Mitch to XXXX. Turning discussed metrics.

my additional the provide and a quarter. details some I'll So view comments first focus on on

moving exclude note think of EBITDA, performance the business is that approach First forward, consistent the adjusted stock-based we of better for compensation the XXXX we of and peers. calculation which the reflects underlying will from and with

have business EBITDA digit low key higher loss labor and XXXX store be For expect will the higher to should wage in sales mid-XXXX twenties same the down Adjusted low Rent-A-Center be with being margin revenues the in range. resulting increases. rates segment, costs drivers mid-single the and from we

expect Acima, new grow to and add locations continue can e-commerce. we to merchant For

initiatives underwriting revenues. high expected delinquencies on GMV. reflecting mid in double we volume digit higher expected Adjusted decline margin higher expected a tighter to deleverage, After digit modest factoring EBITDA in low loss However, until volume be the the margin negatively to year, expect to digits, mid-single rates. contraction macro in higher in is headwinds single full a to in and rates delinquency decline effect translating the impact underwriting later and are

EPS Corporate to costs the diluted $XXX Acima investments XXXX. year been increase year XX% share and to We digits taxes. assumes net share expense of growth rate million does capital synergies to being non-GAAP approximately are support repurchases. our have expect million offsetting with million, Free similar lower an a XXXX the be initiatives. and is higher to talent to $XX will fully in we integration average we cash Shifting investments, technology million Mexico generate $XX.X back is by due over tax businesses and making results, consolidative expected and of between effective XXXX of interest expected mid-single for not which assume up guidance working XX%. to offset results count to financial any $XXX cash and

priority continues business the capital funding enhancing top Regarding be value growth. investing allocation, in to and our appropriately

run our CapEx return help capital we executing pay through opportunistic of dividends of shareholders to For satisfying a on X% drive share a little XXXX, down and use debt will investment repurchases. expect over initiatives will needs, After revenues flow to we to our cash with profitable and emphasis growth. combination

financial uncertainty, our share based priorities, will repurchases a committed of remain be total sound growth level that balancing long on We allocation shareholder objectives. return risk supports to the Given and value year structure approach this creation. and strategy our term capital for

second back may not the assuming We a the debt we that are also gets how to its to a through expect headwinds year, of far to impacted EBITDA setting XXXX. macro and variable quarter the The the current uncertainty, fourth over normalized will biggest and normal times. low quarter environment so the continue continued business back the run for the net but is rate core X.X have we target in the half path impacts our first have The of environment external through second the to longer U quarter. the term consumers. post pandemic negatively the given The persist

provide additional have in quarter, the ongoing some the Given we details. headwinds to decided first

excluding cents. For to $X.XX turn now by call to $X.XXX expect $XX $XXX approximately diluted your detailed of of We'll million this non-GAAP post over our stock-based Revenues the morning. time segment $X billion. quarter, website. to for income and Adjusted EBITDA for questions. EPS to million following. $X.XX compensation Thank you statements I'll the your first of we of billion million the $X.XXX

Operator

Chukumba Markets. Capital first Loop [Operator from comes question instructions] with Anthony Your

Your question, please.

Anthony Chukumba

why question expectations just, morning. to Good the pretty myth well, pre-announce? the terms have guess is underperformance almost months guess what The the I were your my first and wouldn't ago. I'm didn't quarter you a had is imagine ended taking that in question. I two first as obviously this you time good Thanks can't visibility ago. my I level of of quite pretty for some significant question

Mitch Fadel

question going visibility got months Anthony, speak clearer not two we morning. ago, is Yeah. I'm why printed preannounce. as But the so as have of good We chose didn't January to didn't to not and legal six and visibility the obviously to weeks. got preannounce. the we obviously over great forth last clear P&L

were first the course As out coming XXXX also. it got of guidance time with clearer, we for

is, we So had something a we where wanted by started four we're to like for the make our guidance, time about week And it. we talking that. then feel XXXX sure before a the away knew or guidance

why. that's So

Anthony Chukumba

performance, These And seems of similar right. more fall affected a macro quarter, enough. pointed down, just such seems as right. well. extent, tough of pretty I the tale wouldn't know, a I had why some and not second fell the margin headwinds don't is divergence, the understand just, question, my kind like to and I good wheels just seemed Acima understand, just it two Rent-A-Center Acima like don't customer, you right. affecting focusing on like down a that particularly that it's Comp to Rent-A-Center trying a business given I'm like, why as Fair then comparison. customer of it seems off. EBITDA quarter the like significantly I'm XX% year-over-year fourth seems customer, but cities, it like, it it the I business

a from perspective. to just performance in the reconcile the the seems profitability to I'm between because significant two, delta, difference a trying there be pretty So particularly

Mitch Fadel

Yeah. think Rent-A-Center mentioned and low I Anthony our, of low the our expectations. it the still is end of Good question, Anthony, end

primarily enough different between a of center But for the the just kicking and and them but at on think local stress some the help Rent-A-Center XXXX into enough about underwriting and is doing the in versus collections So off. really I test tighten call on we one is fast of was worth our that to businesses Jason stores street our talking with back something the last was Rent-A-Center, fourth and lot Acima there, third mentioned deep collections, Rent-A-Center that's two end synergies collection difference of biggest we quarter. Acima where quarter saw call didn't with in it's collections. we

the the So, a environment, the Acima you side, fast X,XXX ugly, let's is tightening a does. don't it's difference like not what more of really X,XXX they changing when without payment account or because X,XXX say its worth doors collectors going just underwrite underwriting for to lot standpoint, the macro taking on underwrite, it have poorly rear into stores period a if or time enough had Rent-A-Center from so of knocking on

Anthony Chukumba

No, really Thanks helpful. for Okay. my taking that's question.

Mitch Fadel

Anthony. Thanks,

Operator

with Kyle comes Jefferies. next from Our question Joseph

is Your open. line

Kyle Joseph

Hey, of to my this and taking Acima is the changes, point? at us what but morning. the for the long the Follow a at on at Python recent good Acima expect Thanks get can point duration up underwriting this would to take kind and questions. how portfolio for through sense for give we you pig

Mitch Fadel

Maureen. ahead, Go

Maureen Short

Sure.

leases duration good much, This six So activity approximately within is eight Maureen. The as average cash months takes the how same the depending to portfolio. Kyle. morning, of on Acima place is

cycle. more year of be the alluded need to expect the So some the under call, on leases as half given the the performing of life those we time front to work pressure through we

under should underwriting rates, half not delinquencies saw have half the that front loss macro we're of to pressure the the changes have we where improvements in the but expect and because do been with is in going it the being making underwriting that given changes back drastic environment that to we So be

Mitch Fadel

on, and than really see more quarter, so the Kyle where And the a in give year is is, to so obviously, quarter guidance half the the improves quarter of goes specific year, the first quarter more issue, in it first wanted first on to the our people going saying a because lot We oh, that to going half's underwriting, if okay. predicting better expertise the as in necessarily to to when far half, the are to predict this when predicting better. future macro we're it's it's extrapolate you not but primarily the goes get Like this more but in we be but say, think out first it of Not to because but and because environment our as so the how is rest point guidance because second the that's that's first of macro second, we're because upside of And the half. and the don't underwriting. why that can improve year us the Then you better. primarily first it certainly for that's second environment.

Kyle Joseph

had give the you credit economy the on whether Understood the term customers and sort -- recognize stimulus of this sense you're inflation long to seen in we've and ultimately heel those the you I I macro relatively and credit I've then in it's macro your for seeing of on when But, has been out your more been unprecedented highest the you're times up as but followed on space, changes of follow kind the as to this, to improve the time, over from expect can what would seeing sense from and Yeah. for your the for kind any typically of more. payments then consumer that, been at us the as they've consumer rely and you you the facing decades. tighten company this challenged, me point demand and a more is, a well? row environment hate have of record challenged as result availability of a defensive come space kind of above

Mitch Fadel

period hit bigger from low, all or swing an what the least on a there's you all-time it's customer recession, there. from, and do yeah, level, right call you're consumer Kyle, recessionary plenty times, this spending think to we're our adjustment time we I with not an at the went always Sure. seen than yet, certainly So, past level household always flip probably calling that the income but, normal, when, right? you it, had but it an not see and of I've times, the

the is, customer that months, we later, then, but and see own of people in see in a you credit to getting our stress the thing transaction. two and more, more three this first six The so, months, I it stress pushed than lot how ever customer above months predict start into you to tightening know before, our don't lease

far so normal. that's So,

road, We've The us help expect sorry, of the and or to customer above somewhere is credit I'm the not, first would I on the you availability. the see stress credit us our above down thing us. collections tightening that tightening of

We yet would it have this gets tougher seen but of I tougher not inflation. with expect kind and tougher and as it

we would point. a be that expect to So at some tailwind

Kyle Joseph

Helpful. it. my much very for Got answering questions. thanks

Operator

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

Your Thomas, Mr. Brad, line please, is open. your question

Mitch Fadel

Brad. I unmute don't Maybe know.

Operator

Please check next? to Brad. that. I move Sir, Yes. the may

Mitch Fadel

Please? Yes.

Operator

The next question comes with Please go Janney. from ahead John Rowan

John Rowan

curious, morning. trying whether in a inflation past, -- number I'm to not characterized rental changed. Is good your you've frankly, I'm headwind? your to bad the Good changes inflation's understand, just business? tailwind for for a business. the what's as a Mitch or from good or there where, for

Mitch Fadel

think think not be this it has in in I past been past. And it the has or it think in I case. been will the

the side just outta thing of our funnel. and It'll more credit zone. It's and inflation help the that to of call the I lose down happening should again. inflation end of period. what timing. the happens Kyle push customers on But one some might matter we I in the of talking -- you push that in a us yet business get you think do stress because out side subprime thing in happens as first will customer tightens it's the the the of of an see happen funnel a us. was core is tailwind don't know and other credit what because above the one about more is we're think just really and somewhere not of road. the above that I I things be as first them financing lease I believe adjustment tightening when, expensive will

John Rowan

running are there to turning then high. losses And Okay. Acima, obviously

You are Or above there, prevention. trying levels. lot fraud normalization. there's not delinquencies really that just pre-COVID talked whether about in losses parse to seeing I'm if given losses or Acima you're credit fraud a of out

Mitch Fadel

Jay It the Yeah. there. going But I'll credit two about things it. think And let normalization. I I'll start. on different is talk there's

to credit the more it call more, And I a then and It's have that's and the fraud what wouldn't as about growing even is fraud the more fraud than dropped little do really you e-com tools. and you need business has fraud normalization. we're you we more fact, speaking side, which tougher more In on do, e-com been, pre-pandemic the e-commerce, we're got levels. more tools tools on

don't So, that. Jay, add there's to I if to know anything

Jason Hogg

is mentioned mostly type was No, fraud tighten, we're losses. think they further ability focus fraud that But trends in any engineering integrate to ahead that's on of about place, in addition speaking in I directly to effective continuing what minimizing macroeconomic space malicious bringing are of payment the about use and to get to very and technology made that in my or are act upfront I moves he Mitch taking new happens right. from things as was actually that our what friendly we those technologies talking a spot that underwriting, in at January comments, we when call our shifting and the

before ecosystem. the can out, we behavior into So the suss let people that we

John Rowan

no is there's the delta relatively XQ share versus purchases, it's share that So there going correct? assumption a mean the share diluted that December. for And count actually that with average last the of just housekeeping, And that kind $XX.X Okay. big I million, count share assumption into for said Maureen, the that was also you count question for for XXXX, $XX.X? is think me, the does

Maureen Short

correct. that's Yes,

John Rowan

Okay. Thank you.

Maureen Short

in the first $XX.X quarter, Yeah. for but year. $XX.X full the

Mitch Fadel

Yeah. The year you of averaging share you low purchases, up just the start in John, XXXX, the right then you but end you're new when for the started quarter and number, the year, fourth when

John Rowan

share the repurchases just sure roughly throughout year. $XX.X wanted make Correct. I a for year to without flattish it's that the basically

make that an was you. want to Just, correct. endpoint I'm the were Thank sure good. at we starting

Mitch Fadel

Thanks, John.

Operator

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

Your please. question,

Jason Haas

for morning. questions. thanks Hi, good And my taking

wanted you I mid-single declines I outlook XXXX. expecting it Acima I'm into through digit caught I for right, the So dig said think curious, you're to GMV the if segment.

some you to of is pandemic is much that starting that during how tightening are starting curious I'm forwards the up to customers, see self-inflicted and due or own demand to So there? your pulled guess, ease maybe I

Mitch Fadel

Yeah, is at good I the new to change And and clear, and and volumes. good in are year of so at you've that, and meeting coming got PO underwriting are, addition still merchant levers it opening to are applications majority doors in in vast would our say approval the volumes we're of because the targets. the key the be application rates

us who you So with being it's selective approve. more about regard more to

that controlling And other also look when is to The that in it that it could it. conversion the mechanism stems also you something drive the potentially a lease that we assign from of that controlled underwriting, open capacity consumer. is components line we have rates, it because to is at

primary have. two So levers these we are that

Jason Hogg

new good whenever when when application can right. sort any in to is volume when which precipitous The us is, us there's GBV to merchants, things or up it we things -- GBV approve, things more it's not news of improve, that drive to approve. drop-off means

Mitch Fadel

And how decisions completely outlook grow want in looking to being with think now opportunistic mode. making that our macroeconomic reactive proactively to that is the have versus regard we this I way we ability Right. to would the control then environment be describe a business the I the at and is and

Jason Haas

then I pushed their there are to and not Thank sure weaker what out of that to as some or customer show extent that's Omicron more happening question, to guess, you. driver, I'm conversations retailers And a see if with if maybe to conversely retailers at I'm as now all helpful. That's that it. the a sure are chain at as conversions of use sales like more. I'm now, follow they're curious looking those least financing starting supply needs your the Got what some

Mitch Fadel

far people was been out might well have being they That employees necessarily And as not certainly talking gotten supply employees. home about or shutdowns fourth many year, it issues, but better so about quarter. and cases this lot had you're in from at many of we're staying for chain no week so and and customers so certainly Omicron time January, in with conversations certainly shut people affected so down many a whether the a there a the in

probably January got worse fact, variance In spread. because in they of how fast that

it that. So was just about most of

Of pretty gone, course not certainly that's fast as well. coming rescinded but

So about about for Jason, current our already accelerate. retailers have, when need we is your now point our expect it's the and talk LTO it's of certainly that lot we you a it to ones, supply chain -- to with but about, don't something

accounts, marketplace As expect larger than business Jason get strategic we from some build we'd seeing us open asking own that anticipate, people as a have even working and pipeline the they to and also he mentioned ecosystem, the build doors things in there team on about faster their websites and we the for a the past. wondering, it. retailers, tougher mentioned But

I a be mentioned, But very of as that's retailers a ourselves still underwriting. net I the comps outlook, we're So are, needing that good. is as as owned have going think that we far least but, hundreds the The on GMV tougher to us. with retailers Jason think going basis, doors month controlling tailwind adding general, a to be for in

Jason Hogg

strategic leased our and draw bit can our Acima importantly, Yep. without integrations, regard option illustrates purchases I to want what's prospective make that, consumers when around. But also the a to large partners. comments, look provide national more retailers us to is own the what those that metrics, Completely gives larger because conversations agree, I power evolves at at actually formal and happening marketplace ecosystem, our and partners sort pipeline, is the which to little my it is center that you most the add would only the of to to account thing with clarity of this

of we able a those level notional discussion, are being to provide instead metrics into So actually customer discussions.

seeing there. So positive traction we're

Mitch Fadel

business, I be real guess the broken. I'd way, Aci -- it's it clear, like I guess one, we on think Jason, the Acima this on sum it's to not up just

than last As double think the XX% I'd If there. and better having but certainly We rates there's macro XX%, the is better it's, for XX%, It's it business. The in, say, we was a This underwrite. love long-term. digit it's We've XX% double it's there. year acquisition given about think the the environment has growth future. still still XX%, broken that's with, the business digit to still for we've us than us, in we reasons, still us talked spoken past and coming. capabilities about great not

billion not we up outlet. expect -- because it's, in long-term. far of far as it it, it's and, as to in that tight course the we does growth just long-term but the future. in as looks, in GMV it's -- it but future as end is not of So, XXXX? XXXX, still where our Absolutely. it's we as XXXX, fact, in broken but our see it but No, don't Yes, still affect it pushes in would revenue revenue, our \out commented, $X does things future we Is not,

Operator

Raymond Your Griffin question with James next from comes Bobby

Bobby Griffin

that in digit to some aggressive grow question the issue and every just, then just five, get somebody Thanks the [indiscernible] on the understand this industry seems you X, anybody months want is Bobby. seems is, quickly, and down double versus way, the -- over opportunities, time And in GMV, to virtual come more on So first right have Jason, guess loss there's, us, And is writing. at growth back [indiscernible] X, point we I that an this it after my super business, industry. I and just morning, not we questions, is, large go aggressive right? talk grow follow-up for it GMV Good into I XX more the X, like trying and like XX% every bite if just strategy a goes we get just more, taking it's to time always time it not so because you get industry ratios, about there's but road. guys, Lease-to-Own

Jason Hogg

Yeah, point. Bobby, that's a, that's fair a

really was it fact, them in side Although, rate, on it Acima I you smaller a over mean, well whatever on But never was the eight they're Acima way. XX% growth mean, the or bought when we before of of XX% compounded years year, happened whatever over I course compound grown a this a more basis. it's in

and term. hate from it and, an earlier, they somebody extra too, are, these so standpoint think hate use forth and are much I I'll I had unprecedented the I versus but months over last XX having the inflationary it So so times now. hate and, said and money, but,

been a to do we've really has without I is time history the able se in I So think it that this. think, first we've, this This before this, happened.

last not get So to sideways like it's in on than end XX% and future higher five I go numbers at did of it the collections year. can we the have, the think

So, you're other right. hand nothing grow There's XX on for XX% you mean, you're, years I year either. the wrong if the a next

think little we do talking I but environment gets you higher we than can, can it the the numbers were a the I, better, blown-up. accelerate So about when collections without

Mitch Fadel

product singular traditional store. the LTO thing have market Yeah. other add within sort is suite. diversified And only was the market then that, now of would And we I a a based

us greater is You how that percent and now is how growing. a talking playing hear about e-com

we're of the ecosystem. coming out with about hear the You that test phase

enables we do proactive kind start And, well before. control shifting calibrate us bit of as model that's approach a approach, and them that to options to that what a so a more our have where little is performing we than to of in. accelerate different And areas to in are

Bobby Griffin

-- second that it lapse things that. I some we facing, question me to knew we that like kind verse were And all guess of I the, mean, we and coming. laps knew had for Okay. the tough different stimulus is, these of was knew we

XQ revision XXX have when talked today, or we the formal we and ago kind building multiple did blocks XQ. didn't we about two So have we, here we of pretty days days big a and times about ago, verses guidance, while when XX XXXX after spoke

rate question, so and at customer from when first different is the or here kind as assuming are part the aspect February degradation and think and of taking using as conservative the changed XXXX January and what second the aggressively going you has part end a that forward? the further, performances then your of So you guidance, we the and of about end

Jason Hogg

just our -- our standpoint. XXXX, Excuse the when to our -- about below XXXX, loss the we in was a out it to numbers on, because that we never as had Acima we normalize. but way we we to would environment macro knew than were fall before, we standpoint guidance the, Bobby, you're the stair stepped a especially going as we, XXXX in think I a Yeah, business what right, know forecasting, we going me, was normalized had see talked go actually That levels actually normal from standpoint. actually standpoint to didn't is or from that from on normal. collection or side from worse back collection They a didn't

a and, didn't tighten below faster. soft like lot for we XXXX levels the we a I didn't that, for had reasons was landing. more anticipated said, went than the sure. We for, a underwriting we So We correct have of real,

Jason Hogg

this We the level normal. -- below think this didn't, we didn't from inflation to -- didn't tough pretty so we got we call it we to of it we land was properly, but bad do, normal. didn't get but didn't inflationary standpoint, going We

of a set underwriting's year, good six our a it numbers, to you But normal. or, the back, us going those do when maybe year. like as it back not that us Now get of to the much get sets kind if as part

Operator

next with line Your Brad comes open. question KeyBank your from Thomas

Brad Thomas

me hear now can Hi,

Jason Hogg

We can. Brad. Hi,

Brad Thomas

don't, couldn't in I'm. here. right. get I for that I I'm about off-mute. sorry myself earlier. squeezing Thanks All me

just following trending Acima. and that the XQ, at up thinking could skip a how been trends stolens you have couple Where, just, into metric where moved trending we've on as the through about the I if So year? questions, are

Maureen Short

some leases in to So that first will seen quarter, continue we've And well of what in the system. first weeks in quarter. the lower of the in quarter. that the and to through the in in then the the the fourth further have QX quarter, trends changes really QX few level saw see we QX, first anticipate to and similar underwriting cycled second through already expect the we'll And performing we

this back the the lease levels. to get in expect of year, in rates the and Longer-term own customers we but year given shock adjustment be with business normalized to and environment half through, six there's our So, more to still us customers an for X%, of towards virtual that both the to went underwriting. be period that the for the that the our kind going

believe economics did in And Acima term, the including we dip again, normalized rates. business, it long of the but levels, below loss so the still

Jason Hogg

prepared got leases far I'd first we to higher I seeing Jason in trends and payment Well, as start a run I still recently. here missed expect when the tightening but got be underwriting tightened, have first about through, range, the the six is we're that's numbers numbers the Maureen's missed been to few Maureen. comment, add add encouraging did, the, to so mean, this encouraging have the very to we And think the the that. weeks. to some last But best long we're the the to in his we've on still of year. news older as mentioned it meet the, that as first we've will speaking eight losses seeing the, mentioned, with we, we the, good payment the very the half of year numbers Jason I'd term,

leases on early month got some, were Yeah. January. the there. great indicator It's future the trends of good some So in a that performance of written we've

business. were yes, So I spoke the blend entire that the of rates to the

Brad Thomas

course, and, Great. through adjust not portfolio, so duration tremendously long see you something quickly. quickly flip and Obviously, can of

are to, rates the should the about the And, to down how and revenue step relative approval we they from just have tightening, EMV the what right impact about now? rate how As changed think think changes? much lower tightening we growth

Jason Hogg

it to what negative get it's rates what's competitive our mid-single-digit approval want on certainly our driving guidance be a we is too the think so but, the, and I in what's the don't standpoint, to that's, from are Yeah, specific this forth GMV year.

then versus Right? they're the it's and two up that's, a payments the and, built drop tougher the the of when and because minus spread combination at, things, built tough at, you well. year. the, I, comps into what's to Of that's, mid-single-digit mid-single-digits. at way in tightening tougher negative, there, our have the of, front those revenue GMV comps course, Maureen five think plus digit the and of the, but tightening as you guidance single our what's end you, in the, mid commented into XX, that, comps the the and plus So the put are say become high half

slightly on And, the if worse the the you than are to again, some but might So what approval how have, you the, payment approve you rate customer the conversion. either, beginning little It's tough the, the you revenue; mentioned based that that if also give the on this, particular the this Brad, you again, a much, less have they're year you high a offered tightening, for, accounts payment I environment? you mid-single-digit pressure on a a and, term's older or GMV, mid up, rate, the, get at rate revenue, are of so of the if terms sense. but think it's did just the counts, what the, means which that Jay little plus as goes on tougher either and counts, much underwriting approval not little some the the then approval tighter, wasn't get person be

wouldn't but to wouldn't and do what's in them it's because give speak really it did story, what dropped to we've And even then and copping the so if for? we to over guidance. approval. built the then, our what do how really, you just that, approval going and approve So we're forth, that's, much whole the rates, we then,

Brad Thomas

profitability of, just that you capital in the Last free and normalized of of helpful. portfolio for underlying a dynamics that's of shrink think what me million the million $XXX generation be thinking presumably a you just cash-flow as the, one will $XXX about number here? can declining? cash-flow kind how just, business have to much with about cash-flow help like or headwind free from would me, benefit we revenue Yeah, or guidance about think this the Just of year working

Maureen Short

working the There we the Sure. slowdown pretty in this business. support the and that plan benefit GMV sizable year given from lower to capital, a inventory is purchases and

driver last had So that course, grew higher years of as, cash We is a the seen growth key a as negative free of significantly. of couple year-over-year. capital working we

of benefit this as so to as far will other And significant shift a components working capital.

EBITDA rest working $XX CapEx to to capital, based to taxes our and excluding will the million be you be compensation. interest through then expect We it call million. as besides Cash $XX benefits $XX the $XX stock to would flow around be

Jason Hogg

And cash-flow what was in growth a speaking, XXXX, the free year you which roughly though, was have…

Maureen Short

free cash-flow ish... was That XXX

Jason Hogg

Okay.

year you growth working So for, in a and from tailwind free a year XXX a XXX to got capitals where cash-flow standpoint, Brad. in XXX a

a you too, kind doesn't a gives range, that it? range a So of long-term

Brad Thomas

one for of That's, positive Absolutely. very the, business attributes that's the helpful. And sure. to

Jason Hogg

Yeah. Yeah. Absolutely.

Operator

Vincent Your Caintic comes with next question Stephens from

Vincent Caintic

back and business. been Hey and on the foot questions my we have through of thanks. go yet, you but the my XXXX, we XX,XXX pandemic gone Most still when all gave your for business time Thanks to answered last hadn't and The question. back of view to three weren't taking early asked step in year issues. the outlook wanting the these

sort point. seeming now that we're and from of So from, normalize to

when can $X maybe the, you're think about two achieve the the you had because tough It underwriting business, could XXXX. from talk in the different a you to I be looking So be what of the or over three XXXX if about would next tightening year three understand previously outlook you reiteration versus think years. revenues billion. might to you you

normalized XXXX just the hopefully vision back of see XXXX in achievable? portfolio when about of year could your can Thank out, if margins near-term time the, So outlook, is a a we're affect that and still but in, maybe we the that laid or with then, you environment medium-term those the EBITDA revenues then business. talk size. three in kinds of you that when you. yeah, are But, So that the XXXX, about think you those

Jason Hogg

moved not an And, coming we with right we make achieve good that XXXX, in going can a think is XXXX Vincent, of for your Absolutely. do to of out the right size question. number level revenue. but billion the to XXXX $X don't one portfolio don't difficult year, know little to that XXXX? a exactly Does right XXXX, I Whether predict. certainly certain predict it's it's mean that still I achievable. timing's it's Well, but or now. if it's it's want

it's be we Let more moved a couple what achievable, maybe certainly it's achievable. like I on when EBITDA or from this, business, I us and off, to aspects a as doesn't heck XXXX, said, tough twenties get is stable. lot. months a And the be whatever, still comps really, it some in revenue years stimulus predict predict slight all a that, a, and swing doesn't, a flat on whether to low income see out. it's but that a have little a to of margin. heck then, happens, going which it's payouts into be, of but It's and don't We center want under the drop still pretty especially good. environment one come still sales side, year Like it's is the a really term two -- because in even XX% maybe in then long year to able side, the moved tough or a, pretty of business, growth last XXXX. quarters slightly probably of of over to last standpoint, just we'll a re just was darn what, certainly believe whether XX the With the revenue

we the the larger adding year it's partners, larger retail for monthly, we pipeline through other already, stable built think or they but Acima, we we said as, real as I will we're Acima that think mean, XXXX that'll strategic we're retailer business. still it business last And a the a there. even accounts that's for like since year adding, into So avenues, the XXXX go over retailer team, the improve this as is we've bought look a semen perspective. built we better get from

$X a bit. XX I XX months, a be don't or achieve it said, it's It's there like and but has, be So just, still if at that's it'll that that million this, the it's months margins. outlook able know hasn't year EBITDA our I but still to long-term changed it slid, number's mid-teen it, will mid-teen,

Vincent Caintic

prior but where higher Thank there of kind perfect. Okay, back And guys, getting not that you phone, be back buying the And think the lease just are profitability. year might guess referencing normal then concerns I of you different then what maybe, the of guys kind to normalize from think are not time competing Is or different to from the of might, three that you. we're needs versus kinds today. anything these we be competitors, focused guess, I and Is of still this not of also but normalize point? some profit, about you, else on this inflation. here? not, Thank talking other maybe is. some of we anything some have still there else consumers later needs pay to you. do might

Jason Hogg

us. probably many on them. that retailers still so turndowns other will, big later, think blow the by starts credit mentioned would see I a inflation, up say as than credit us not are now one Vincent, help more to doesn't they the that'll on, impact help spectrum pay and will that No, I with you as us what that's their

think later a credit to the buy now that's pay As now they underwriting, tougher we've, retailers didn't to affect which buy few that's numbers retailers to, only and only, as proven Hey, their cause were getting think anyhow, XX%, tighten help that'll of as collections you're their gets help our recently, We're we've XX% But this? much read score. to which, I it, on based or us proven going are. not now with pay as avenues. happened their what them going, business out us about later, whatever other you

impact it tailwind of mentioned it's So the yeah, than more but and the I you it's think really customer. the headwind, a a the, inflation that's, on on

Vincent Caintic

helpful. Okay, great. very That's much. very, very Thanks

Jason Hogg

Thanks Vincent.

Operator

session. I and for back ladies Mitch our gentlemen, final you, remarks. Thank will his Fadel to concludes pass it Q&A this

Mitch Fadel

good are, of our It's it. you business understand of we're retail the some long-term there. work. larger get adding potential. some It's We hasn't a disappointed make joining and, at the us excited on numbers keep month, long the hard strategic disappointing, based working write the, but and about the, term, though Like XXXX that ready We, partners job controlling morning. still extremely for UN broken. got to environment, the We're those XXXX, our a of consumer. great when lot changed. every profile can more the of and that long-term And outlook for the numbers to collections when the do you environment the so keep are everyone control risk we we've when and things not the leases back of and turns, view accounts our, we We're we're, sure thank we're Thank we're and, new operator. disappointing. and the things underwriting some this our just flow, them. Keep got on this cash Even to at working on

So here possibly best just a lot Thank can. we'll everyone. we working the of and good you results things and and, and, keep deliver embedded

Operator

for And we gentlemen, now today's and disconnect. with participation. may you that, conclude your Thank And program. you

Upbound (UPBD) 24 Feb 222021 Q4 Earnings call transcript