RCII - Earnings call transcript Q1 2022

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Operator

Good day, ladies and gentlemen, and thank for standing by. Welcome to the Rent-A-Center First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session [Operator instructions].

As a reminder, this conference call is being recorded [Operator instructions]. like the I'd Mr. over time, this to conference turn to At Metrano. Brendan

Brendan Metrano

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

and have the CFO. Maureen call CEO; today Fadel, On Short, we Mitch Rent-A-Center, our from

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

Mitch Fadel

of provide the more high quarter course we'll thank the and joining our some plans call financial our the and highlights and detailed that on review on key review first with then for review I'll Maureen update call a for of results everyone. After you by followed and you, financial of company's Brendan. an Good operational for of the And progress, comments Q&A. finish a morning, Thank year. today will results to begin level our objectives with XXXX. today's then

back in the at growth developed our this execute successfully is a XXXX, company the we primary year Acima second position the strategy challenges acquisition. year with the getting objective for had to the Following in we half of last

of number and drove past implementing developed that the we action solutions. of a months, issues began identified underperformance, Over Acima’s plan

In recently a Acima. completed announced, at as and addition leadership previously we've transition

the are we're the indications start early desired in to effect, with having our our quarter financial coming adjustments with and that year ranges. above guidance of midpoint So first encouraged results our the

stores per by January. as elevated half winding the above to margin stimulus behavior. believe was customer share Acima contributed resulted Non-GAAP down labor the also with financial second a customer this first reaffirmed of While related we've year, path was changes progress quarter Higher we the midpoint a revenues down headwinds our including we've government wind have XXXX XXXX billion costs corporate on far earnings there and guidance made our impacted of of X.X%, $X.XX the we Rent-A-Center of post as $XX.X that practices to year of growing are and stimulus the X.XX guidance. for full the in incomes external of the company operational in on targets margin XXXX business well and in thus costs behavior, investments million X.X% believe $X.XX Consolidated segment negative payment X.X% programs, adjusted achieve to effects loss basis part financial the down were in revenue underwritten largely government in higher stimulus forma We $X.XX. breakout of Omicron was believe attributable Acima down EBITDA programs lag XXXX, from and negatively decline customer performance using leases Rent-A-Center with on underwriting Consolidated the just to year-over-year and assumptions contraction. that rates the Acima in the X.X%. down a range to delinquencies and in from of worsening pro diluted latter payment

also period, to year the compared the us about We and million million higher cash flexibility of prior the with that flow $XXX almost us cash $XXX in quarter our underscores our which our free providing business the of in periods in to and flow generated invest with business free debt. lower flexibility. cash strong result growth flow, In reduce provides in attributes business, significant

forma in million generally first the our of basis, segment the with January from of declined tighter underwriting, effect performance, benefited a Focusing strong quarter that the were period XX% growth GMV year prior Omicron line assumptions outbreak in stimulus. the government top trends year-over-year on guidance. GMV cycling $XXX behind seamless line first quarter on in the pro and over reflecting

In fact, our of XXXX. in a first changes the underwriting address the a broader shift latter occurred to of The Acima of XX%. positive quarter set that part is two year portion at GMV issues in growth as

we previously of activity. or payment customer and As noted, decline did in the anticipate extent not pace the

see quarter. underwriting to vintages we good in is $XXX Although, guidance Overall, we're the We implemented were with during that the December. time what and changes on early of rates when of believe through environment. Because to this above past quarter. in current macro The business, were X.X% X.X%. we're first these made a rates future payment to our yield. our declined with vintages, it segment missed the or environment. impacts peak we significant vintages call underwriting, and year-over-year behind end first of loss started Rent-A-Center the in initial lease in XX% not quarter quarter in of adjustments assumptions The hindsight the we sufficient those to improvement indicator which same rates, business address in right track adjusting from first March down source clearly sales in the off million declined the the were best comes year expect their FPM the drove Revenues FPM second take developments cycle through changes results earlier our the in to external to portfolio XXXX over another

revenues above an stack revenue in quarter we're year, with in quarter. to pressure up translates over last segment revenue the growth Adjusted about for which Importantly, E-commerce continued to X.X% the to XX.X% with products two was This also, sell. wages, cost year losses XX%. of of for now we from year. lease the in accounting and growth was XX.X% reflected cycling fuel prices even EBIT growth ended which margin the momentum XX% impressive of about the prior inflation lease contribute certain revenues X% and the quarter cost in and and portfolio

advance improving via SMS. text the that functionality or process strategy make by On continue we to and digital customers to the messages payments our launching omnichannel front, checkout our to enhancements experience with capabilities customer allows

our added available our of and expanded at and initiative [IO] also SKUs extended partnership retailers We to other thousands markets. e-commerce local platform

The outlined objectives in Looking the February place. to the in rest remain forward year. we of

optimize Acima, and to putting For underwriting, emphasis like continue future behind improvements capabilities, but more initiatives and will our this on that focus underwriting. can we long-term benefit year, also resources and loss both benefit results yield near-term to

opportunities continue with will the a high offerings other potential new and ecosystem profitability growth to We digital like also goals. consistent our develop in internal manner

solid and we the sustain environment. despite volumes we beyond commercial put lows. a value portfolio support provide compelling proposition customers grow our business, can renewal to and together For more the rates the transaction XXXX continues has the believe challenging plan The that Rent-A-Center team macro

position. an to enhancing model coupled competitive local improving e-commerce RTO our retail think commitment In the is offering our addition, with we centric

the Additionally, resilient be we've pressures. very proven in past recessionary to to

$XXX year, And it of uncertainty. EBIT guidance to Regarding million, issued of $X.XX over full changes back we even XXXX year diluted $XXX February, inconsistent much incorporate of billion, solid the adjusted progress the per of with When to guidance year, million million. outlook. our in free financial $XXX uncertainty, the because flow we the the cash so to reiterating at improvement Acima year with full are Rent-A-Center not continued given revenues $X the million in of to consolidated performance to of did environment earnings $X.X share start business and segment, $X.XX billion our $XXX of macro

with with longer provided believe given quarter of that noise changes have on the to path guidance variability and programs press a addition, and related was We in dedication and effects the second we release. in our call want plan have Relations the will I very solid entire with growth. for opportunity for us the effectively future. Web see continued the in be uncertain longer of were year sustainability I'll the efforts Maureen. navigate at in site. a of inaugural position report effort Investor to game our our government that earnings as to a their for in quarter term a success. I'm also we pleased to team and forward closing, In extent line turn will that, XXXX, believe I company on the environment, us more our stimulus production is allow will available ESG the taking of Also, our trends we And that to tremendous for step highlighted profitable In which we thank business results XXXX, placed think continue announce for back its guidance the business Acima term over have to first

Maureen Short

Mitch. you, Thank

direction key The the financial reaffirmed guidance year XXXX. of targets, XXXX in operational step half following good and progress the achieved first objectives right challenging a We on for second was made company, quarterly quarter full a targets.

rest the year. are we cautiously forward, of Looking about the optimistic

and targets. growth pressure government income strong get the are profitable have on solid there of headwinds our down to programs, path plan Although, business uncertainty from a customers’ believe stimulus financial from macroeconomic wind we back that on we achieve external of and the the

EBITDA net on The share first was the the rate diluted The EPS labor. XX.X% portfolio billion quarter growth. adjustments, mostly This sales down XX.X% reported payouts Rental increase Below a recent and prior higher programs the fees XX.X% result the fewer electing because at income. caused vintages both that the basis, to costs X.X% performance a a of prior operating basis. the decreased line of margin the for when lease effective count as period. rental with Ignoring of which and segments, merchandise X.X% of prior net underlying of revenue $X.XX in a and XX.X% We fees an period, quarter outpaced $XXX.X sales half in $XXX.X the to loss $X.XX forma second a current the year pro year-over-year. forma quarterly $XX.X down caused top to to year. the was forma revenues in government Adjusted a increased stimulus balance the basis. quarter delinquencies on First revenues the of in boosted $X.XX $XX.X $XXX basis a and and for first XXXX and discretionary Acima interest to quarter XX.X year-over-year reported year the as reduction a a the expense million result in reflect and to the $X.XX had repurchase swing effects XX.X% enter Acima’s to year on Rent-A-Center customers mainly prior pro early the in $XX.X do working and million and was decrease rental included end, million the remaining integration. $XX.X million the $X.XX period period operating was first its revenues a year-over-year. to million during is poor of our the Acima share was pro XX.X underwriting share delinquencies, this for decreased that from a prior At increase that business, the decreased the required prior fee on on EBITDA per to approximately revenues rates year Merchandise capital were due the to period. transaction in share both and higher year XX.X% revenues period, believe significantly compared provision earnings in generated year prior compared on costs dividend. GAAP of million debt to Adjusted a basis margin flow higher compared treated contraction in was compared line, quarter prior We loss higher free delinquencies and year, in of cash which items million a XXXX for revenues compared diluted year. to period. of and us per current After loss, year average authorization. compared the performance related non-GAAP to reflecting in share year our the Acima special diluted onetime million prior in through was million current compared tax on of non-GAAP company quarter we in in of $X.XX not returned adjusting in quarter per to beneficial shareholders basis compared

had revolver, paying debt times In gross of million available cash addition, $X.X $XXX vet million, $XX.X a after down million. leverage X.X $XXX balance liquidity of we of billion of and of the

a Turning to segment year-over-year XX.X% down basis. pro performance. Acima forma on GMV was

in headwinds a prior variant reduce growth which by stimulus rates effect on Although, to year. ecosystem, biggest partially income Similarly, vintages second underwriting initiatives, declined incremental customer it higher earlier The X.X% programs yield, stem that rates, increased comments normalized stock positive losses from elevated likely continued results. from the XXXX. also on active result The growth boosted performing GMV by government funded the revenues in to XXXX. due consolidated and sales in revenues leases. behind accounts. to also two-year of was the was forma payouts a Skip/stolen merchandise the losses These revenues I approximately government off an latter and XX.X%, by return our pressured for down up poor charge vintages year-over-year was approval activity GMV a the lease the merchant e-commerce compared to last offset of appears negatively decrease from XX% basis further the merchant of down stimulus XXX points Acima's of wind quarter. rates to that initiated declined the conversion the year-over-year year, Acima had Acima the poor rates half of XXXX which of adjustments we wind Omicron improve note, described The basis. pro contribute including to expected partners segment year-over-year of lowering and performance impacted factor activity basis. digital on less merchant for decline a part and the were discretionary in January. to loss driven more in leased in following On was

are portfolio. Mitch once have months in made cycle from that the As last the showing changes back noted, improve the of through strong recent half should year rates indications the the year we in vintages in underwriting loss

a lease that rates loss may XXX X.X%. were margin the delinquencies, points at you approximately XXX same-store As written to than benefiting the provision quarter average from higher portfolio year-over-year, decline margin revenue recall, declined to Rental higher revenue the a Rent-A-Center due fees related basis contraction months. to XXXX. the increase point The quarter X.X%. first is primarily sales the length key gross basis forma Acima on margin X.X% segment X.X% EBITDA vintages lease in on of finishing basis second half lease year. factors the drove with down in Adjusted last of a six and in higher pro and decreased

in merchandise However, rental revenue by than a churns offset decline sales were more revenues.

current XXX X.X%. basis year. EBITDA wage As of year-over-year in the and Adjusted noted declined to to sales XX.X% points a level early positions. due basis electing fewer was XXX losses year-over-year by Skip/stolen points negatively options loss for store merchandise increases payout normal higher rates impacted certain more earlier, margin in people and were increased

also year Turning provide to for full the quarterly providing release.s comments been comments. Mitch our with have financial earnings will My disclosed the I trends. for comments focus supplemental and year. targets Starting discussed outlook will year in information that on on full the

expected margin more new digits. portfolio. half and conservative and loss on elevated double for year to underwriting, to of be adjusted forma For to lease in Acima, and first the GMV Acima stimulus EBITDA high Pro forma second will digit delinquencies from headwinds and on assumes expected the is in double single the to of digit leases more in we continue result a XXXX performing low is and cycling comprise high XXXX digits pro originated under This expect single be of leases the will improve down basis. the revenue mid the during macro then assumptions rates a decrease over poor recent half when programs tightening of XXXX in effect low through

normalized segment the single margin in by revenues For Adjusted the costs. Rent-A-Center be range. franchising is loss mid labor are higher digit to sales to business be low and XXs EBITDA Mexico rates and similar expected will down businesses and low in generate driven lower results while modestly and increase to year-over-year, the same-store we corporate expected costs The to are single digits. XXXX, expect expected

to quarter. expected quarter from challenging year-over-year in headwinds of a first the is perspective, second same also The facing be experienced many the

million, of quarter of GMV over the $X.XXX second tight we as million comping quarter to diluted of be a around to the GMV To billion, assumptions which of stacked $XXX expect fourth growth two non-GAAP the excluding perspective, the market. be $X.XX. revenues we should line million in EPS roughly we expect to XX% billion forma $XXX year-over-year. improve think in will expected put in the on year quarter the of to half and compensation $X.XXX GMV getting in with stock similar second growth maintain first $X.XX EBITA least to quarter that year with adjusted growth is $X second to XX% relatively plan to up based of approximately back at pro that We Acima's flat underwriting are XXXX. is progressively basis,

the to improve of EBITDA sequentially should Rent-A-Center Acima expect revenue business segment to be for both down segments the for We and from margin be single double year-over-year, low digits. down the quarter. business growth first digits key the

quarter with quarter, and trends Rent-A-Center both For skewed of fourth consolidated improving the will segments. expect from revenues year, the business back we for Acima half third the quarter fourth to to the the modestly be

fourth rate. loss quarter and reflecting to earnings progressively revenues, delinquencies will better expect the be than We more skewed

XXXX Lastly, today being of Accordingly, rest macro projections current guidance reaffirming offset has the earnings softer our underlying change upside over by macro our will our past There's progress debt the free of couple continue environment essentially most target year. EBITDA. quarter the allocation assumes since to no times down of leverage towards modest to our our for guidance last months. the call. or flow that and the term make revolver the guidance first reflects economic pay evolved conditions X.X cash net priorities to in capital to lower use longer plan We of our

In shareholders, yield offers and compelling you to investors, dividend now quarterly terms over very our returning evaluate time we of of turn your Thank share call morning. the your question. $X.XX for a to I'll capital opportunistic repurchases. this for

Operator

Instructions] comment comes Jefferies. from [Operator Joseph Kyle or of Our question the from first line

Kyle Joseph

Obviously the to and weeds just through trying on lot both a Acima, macro so dig going that of kind here.

kind that of breakdown is high more of timing GMV can give reminder improve you And kind us the underwriting there is over the how think 'XX? of remainder changes, year of a of of kind of of how trends the changes? growth, terms a underwriting or macro into and give much the can we specifically of of us level the much that of so how kind about In

Mitch Fadel

GMV starting quarter. the early additional On first first in you tightening vintages And fall to and -- biggest in tightened the the and it GMV. the the certainly it last first the underwriting the in issue then quarter and started really is an issue, was year-over-year, and throughout enough we’ve when an growth, tight obviously think wasn't quarter, when tightening comes

we think the of about it, when one comping we're what of is besides over. underwriting the bigger So issues tightening

quarter is your quarter in our in year prepared XX%. to for As GMV, two XX% second over number the be first forecasted our comments, we comp is stack mentioned the on two the

a very, think year on still very you when numbers basis. it's two it about high So

in half year. As the ease latter of comps the the

that as said be maybe Maureen you larger being about then get we prepared But beyond I And the would so we to anticipate the and double-digit her comments, think stimulus going account -- underwriting, these lot. flat we'd quarter. net There's in depending last in XXXX quarter. on by expect higher We the when tighter lot we forth. tougher still year as fourth is well plans out X,XXX and growth double-digit than comps, growth after long-term, think a there. when get comps, I say active a obviously, driving merchants still the forward added first over of range tougher almost the

growth we'd seems I be, And lot like still of year said like there some said, So numbers the comps. a where them out in as just two Maureen and market. to to see tough

Kyle Joseph

are just lot up the be Rent-A-Center long-term a And where you us on a to see and everything? factors. once at give lap shaking Can of there. we that kind sense then the losses for Rent-A-Center out stimulus ascribed obviously, can macro all losses segment But you the side, of

Mitch Fadel

always we've in I three the think is range quarter. that said X.X the four normalized in to came at

little serve the higher of we And to X% in in be end X% for to they're middle but a range we'd range. that the So than the the range. expect year in range, high at that to want them of that

little XX% XXXX, two for years year, over holding XX% then and XX% that of you're So talking higher the the in what couple that A bit two what to growth you flat. the all on had they've you years. line, really off last XX portfolio year, a roughly midpoint be good the you're I'm flat, added roughly flat years the year. side it's Rent-A-Center with ended. of last basis really really where when years, coming than of but the consider maybe all talking on think This normalization, last about comp last about or we the is the in just down growth was impressive And be quarter about range a to when base pretty XX maybe a going for points year forecasted two that the --

Kyle Joseph

modeling, And from one me last just then Maureen.

or number can count some count I that remind share consistent for share is and us what us guidance, think you guidance is 'XX? you that gave for

Maureen Short

was quarter $XX.X million. in The first share count the

Kyle Joseph

for number 'XX, number, based you on share And EPS do a that's the then for have what the count? of adjusted

Maureen Short

it's XX.X the similar, for year. full pretty It's

Operator

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

Bobby Griffin

check, in line. kind portfolio want the I to mean, tightening to obviously, Mitch get Maureen, trends or first Acima of I here back in

your Just feedback rates, can curious has know from you approval I customers? purchasing dollars of approval do. focus customers been on that what

different is what So to trends a definitely used versus these environment tightening Acima. they're

of So to the through back anecdotal from customers process just this any get go line? portfolio kind you in feedback as

Mitch Fadel

When you think matter our when mean, -- happened all say XXXX, and our you're know, are tightening in approval I customers, where you It's where partners. was about 'XX start I in when rates a line it retail even historically about our you of you from. underwriting look really XXXX, talking And what Acima was. XXXX. at

being so XX% line when rates, just in comments, they are -- in and And from look historically we in the the prepared payment rates with I are where mentioned the peak March FPM first approval same always thing with missed December, in like my down those rate.

like than not So or competition things gosh, we're it's tighter retail like that, my you're hearing your that. partners from

not we're tightened in bit. this back probably a looking than environment, and years and we like But everybody's XXXX. going it's before not little think tighter I we're -- three were

Bobby Griffin

as think of side, the we least whack of has second the with the of virtual you more as in a across a it less little question. a of is portfolios bit customers out new any favorable trends on little Have everybody the into it Do actually kind always maybe was been? and dollars for into bit seen competitive this or friendly, grow little that you probably can normalization. in And like came seems competitive competitive back space, there at still as kind a every of tightened it kind the business little everybody it's bit virtual where has out got part the bit now, environment

Mitch Fadel

feel does there it to public and think tightening. listening just certainly, companies, other companies, of an I overall comments is

on reason interest is haven't as think wouldn't at widens. helps going the us we'll about So the see so seen but similar as economy and environment. haven't it spreads we're I when even won't cautiously no higher as as know, competitive yet, tightens forward. times to that though though, think them we, think we and interest up. I coming it's the the tightening as What those you yet. into some us seen us But optimistic, haven't apply we see when get with yet the we optimistic, and above these that to far rates, there's pretty seen we above tighter year funnel And least rates Like of anti-cyclical think I relating really -- and that's forth. attributes you goes said, credit we And historically

So see that -- any that’s plan although, again. forecasted like that. like in to optimistic said, we I but we're not like expecting forecasted it's we'll see are And our not either, we

Bobby Griffin

if out. then was to And that maybe, and play happen

we inflation as shifts the running So When still with economy. the start benefit, the lag nine out or rates in does pool. changes on the to really obviously you some the your float customers see How interest that long you get remains own right pushed it P&L pool start lag, see There's economy? out plays -- pretty the to and between if when six the and now, from take consumer through is spending in a to month through month resilient. going durables it rent services. But to see that potential impact tightening

Mitch Fadel

I them on you six to away. money lease. right months, think that lease but I make every to mean, you a see lease, fund start they build little him start to No, over -- a you that you'll write expect you to a nine see month

think start is about but a And forth. to six beating down, when forth. maybe crescendo very soon builds, I you months, everything and to it pushing it resilient pretty that so spending, so -- news nine the your adding much the think I GMV on it hear as and it's as on numbers starts So you you seeing you and think start

and expect below and the to that in down not inflation deal and prime That prices the -- we kind when or of CNBC morning they're gas on tightening in we certainly not get stuff, not what is every above reason shape. customer hear shape something. get the near see prime you same as the we with would Although, same the in with us, subprime that might customer and -- is

the get and going loans. below and the especially you're prime you to down you're be when subprime, near So writing in prime careful to if have

So tightening see expect it the this why see well. year would sometime we as that's normally and we to

Operator

question the of line comment Bank America. next from Jason from Haas Our or comes of

Jason Haas

on through gives gave. the all in and is see maybe of one confidence you well? appreciate the from be Acima there's it to Mexico first you as to color franchise what acceleration that But the Rent-A-Center the in acceleration the segment? So that of guidance, there back does going come a lot and you I'm the that across will and that year, or acceleration pretty imply is going the by year I half just mean, some big business curious a I acceleration

Maureen Short

to gives of needs what from simply for So what to latter XXXX make the us confidence to the through half leases them lot of the the underperforming half is the the second to half the happen improvement cycle first a from the is leases, system. getting

about will six segment. the in average improve for well as lasts The provisions months. And delinquencies, lease Acima so that rates as loss

those second So we'll we quarter by worked the system. of know that have through the most

improvements the that expect half also leases made. more will due profitable underwriting the to have We second we've

more new that will even in all leases throughout be the the -- So year and beginning second leases. this quarter of profitable we write the

And rates revenue, the when and out. through then should we our higher have lower customers be went adjustments. we'll So adjustment ran stimulus provision lower through period delinquency

got should merchant the leadership also lease help so and acquisition And team We've Acima on very that focused also productivity. improving performance.

Acima in XXX are of see growth versus then, Mitch the quarters prime rates loss then the reducing Rent-A-Center segment. segment, cost second we some improvements Acima fourth points rates in our normally the first Rent-A-Center but So the falling Rent-A-Center Acima, improvement points better the and in mentioned, the expecting for There's some performance. to both near the some not we're expecting delinquencies about but XXX quarter second There's And But like big segment. segments. second collections in Acima first in reducing basis it lease in And are may segment the half the for as main in we'll Acima are quarter between efficiencies the generally, customers improve seasonality half There much funnel. provision nearly does. by portfolio we're see the as about buckets fourth also by we half. into GMV better as expecting and to in is increase the improvement basis the and the

Mitch Fadel

about Yes, forth. to I the nothing to yet a really basis one, on there's said, XXX that's add when except do just you that, point take that number I leases so and basis, in last mean, run look to to as year the rates run just points these current math quarter basis little would Acima. losses from think want on people because or our think just big Maureen improvement that an annual Jason. through XXX at about what per and

$X our just Acima, is run you're guidance, basis, you $X even annual think a can what's talking call see high, XXX an use roughly run from -- billion as you -- and a rate. standpoint. you based a basis, it on second points XXX annual basis points if rate, if So that on that's basis quarter, revenue the business in

And the was those points So stimulus third using business mean, to year the last the diluted not but about bit. -- you still the it that's think basis normalized think were loss quarter not put XX.X. a quarter, the say before. X.X year some and there, quite was just even not first I year, XXX third you not there even the rate But a rate first and under And when is is third stimulus adds last last always you second the low in I numbers about year higher, we normalized a loss in done obviously We like driven. like $X.XX X% last X%. we -- EPS, or too, obviously year. on virtual it's when summer quarter quarter range a haven't in And said I'm lowest.

as just those put reserves get XXX those that the same to that start quickly, quickly. down basis $X just back losses the losses it take really So to up don't and you back those talking when or have numbers. way delinquency those Mareen's get about reserves points below $X.XX to snaps And have higher in you to

Jason Haas

changes differently? run but there, to Appreciate Acima. the business any follow-up be that going it. a a just and -- on business? just position you that to what about I leadership talk if mentioned there's that at question, you've to the leadership to being more As the said expect for from having tighter was any little more curious plans Could curious change other think with Maureen But I change, rationale what about was

Mitch Fadel

results it's We're that, for any besides really a there founder expect was tighter about in already person, felt as we also just some would with was we team sales it I I'll It -- people trying tech standpoint, been works many more of on for and just was growing team sustainable the years. we'll many, building. here well. think, key one to it. from -- Obviously, beginning, any company and to the part the a changes involved team one the the and not good engineer, providing that's about that read from like person, the back I sales long-term a I really being mentioned, was team time make newer few against really And the more that we it a underwriting new see a change, just as so leader as team build the forth. us, but brought now have function improvement think elevated

the going changes, So I is testing to digital don't like think business ecosystem. change, there's we're massive the still

getting profit that we the right make have to margins We sure look as mentioned. at we're --

still to it out testing we're sure very but and excited about make So it, right get thoroughly we're the become so can we of what forth. profit

to can not get so business. Jason, we that's change, Not think So I the all changing. much of aspects in better

Operator

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

Anthony Chukumba

kind I the guess it's first prior my question. to a of follow-up question,

and were pay more credit to terms tightening in the changes the card safe that of Is like about on leadership talking kind of assume the it that's you're making assume in shape. you it change in to portfolio -- with back it Is is Acima, card, obviously the at virtual With Acima. now? and getting back-burner the lease that lease stuff safe that guys

Mitch Fadel

just back-burner, to slowed I run margins. the sure underwriting, wouldn't profit make about to test long-term team We want to we've testing right the too say don't a we're little in at fast. continuing the it. fixing but bit getting place a This is sustainable year

about the can and good And test. figure at evaluate as out still still So a it to become way new for Anthony what use as best much of there that. There's I we're with it is. excited thorough back-burner the team lot wouldn't there say to what just opportunities a us leadership

call wouldn't it back-burner. I no, So

and Just prudent little a a profitability we're still more it from standpoint. about excited maybe testing

Anthony Chukumba

one follow-up. then related somewhat just And

your they're we long-term, overnight. with how lease to know the think losing you just the to like should So one it's But But own going And in-house. guys of know -- sharing account account? about something's headwind we that's should think to I happen Conn’s how -- of going potential that sort and the so not were to Finance. going about First retail American Conn’s bring partners I announced recently an just

Mitch Fadel

think going is to partners Acima happens. right, to how It's You're if happen diversified overnight almost retail it does I not But are. key XX,XXX the Anthony. the

we’ll we of guess be that any and don't those forever. will diversified. Conn’s headwind accounts. the business accounts partners very them or bigger I national or much the risk or very of that one diversified an way point large that having do partners No to have a to two a makes that we would are of forever. flip really an portfolio with that the that with two all so that we'd be to want we side any don't numbers, we But of do impact. is, some the and that are that any We three it's -- one, coin lose have two find business three thing accounts, have other impact. accounts noticeable big in Obviously, any of would is But love one And really hopefully, or

Operator

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

John Rowan

theme questions. a similar One of with thing

ago, months to six retail ago with wondering as onboard partner? the And talking the far of sales or Acima. nine not with I'm trying months you is management in change? process or a change what affects new national underwriting the As there about whether were the status partners large

Mitch Fadel

approval like the go out I wouldn't we Again, the so. still for like saying and have we think we don't don't I did, could been rates, mistakenly we're competitive. probably year. very last year. No, we Maybe six have say approval had rates highest highest last there have months

not bought anybody. sub know anyhow. are all lower not competitive, that It's so are really or what never before You our as be not we it's 'XX, not. they're Again, approval can before they Acima. approval rates we as we're But like the competition's were not XXXX last where we're competitive year, rates than

know, focused any team management national new that. still as general, approval think been focused accounts long have on in retailers on as The is as I very large you competitive. just we on, John, rates So has And cycle. our are just impact prior. it's Again, don't that a very

a than the couldn't couple get fulfill It’s the for long We're to is they very we lot it larger of news yet. integrations tougher a people, of were focused cycle. lot business their had. it's of hard like that years. any The We it going talking good focused retailers haven't on last things to more Tech pressure on they resources get a now that. to had signings to be all comps expect under maybe retailers big are and when

them. and a And no to continue emphasis we cycle that more than to expect ever. long talking be to there's to it's on retailers focused work, but of we're less So going now, tons

Operator

KeyBanc Our Markets. next Capital question or Thomas line from of comment from Brad comes the

Brad Thomas

potential a little interested partners looks? how about you more working door and just bit Can think dialog your us backdrop a on perspective the with options more maybe from follow-up financing leased you. I to more just may to with that would consumers own Want a activations trends with retail entering what in count that and you're seeing here where readily pipeline comment of retailers. need

Mitch Fadel

large obviously small pandemic with more on ago those interested or We year were spot you're think years all two that think comments. when are ones, than I first retail, a they now in and started. ago

it's of like quarter, even so a going out lot that's there. the about how, think added there's sales I active GMV the XXXX part still I And number we not underwriting, with locations a mentioned Maureen in not a in and first number Short be over first of year tighter as GMV XX%. the quarter quarter in the similar two that second to said, our in on

lot a first quarter. the adding still of locations, we're almost So around said, in like I X,XXX

So accounts going least there to be interest more more on going that from to weren't but and and seem regionals we're as bit little those add retailers adding the to not there a national to interest, continue optimistic real spread be at year does we're we're last work we them is well. able to hard to

Brad Thomas

and now you versus with try And, Mitch, the the is ability can Acima? you just is enhance that in on the the remind Acima further what predict well us, your legacy segment, you getting can accuracy decisioning? one to process about and just had to talk your you've And decisioning you're in all to done business

Mitch Fadel

on system, the staff business staff virtual partners a convert few software the the the same business, to there's Acima therefore, and is their some still to All of decisioning.

were few XX% most and they've there need them. to I'm pushing they decisioning. always in or do, December. every a a But all could tools. exactly the great to not have to obviously, still it, a retail to over. I as too in and are names. lower detectors to there, for they throw the team I'm what one different is there couple with I But that is out as could again, detectors leadership adding it. they pre-XXXX. there's line in were if rates add. working standpoint, I Even I though enough throw not few you they positive out tools smart, they they have the A hard and careful we names things team So fraud to it's missteps brand on although, I been added from didn't need. I The kinds products tools what sound adding could guy, things -- couple like they're process there tools And add they're where add wanted And a to not though were, got they philosophical numbers a a really process, of tech of Salt fraud right they line, out still our think chase of into Lake, the the come the are when to underwriting in just think all peaked the volume. well, of out we that we've approval adding FPM lot they even things, one Brad, mentioned, new think things than our back where week, when tools, they and not rates single can tools It's of well, mostly got have were the just system every say of those but convert partners But added tools, probably be and

they're world, out bit the that there. some add on, line two more we'll us in new always smarter, said, get maybe team can and add tech working I a on year goes on then to as one I'm as So end. or And obviously like the we're sure XX% an tools, the the there's because always year little product to that the about came

numbers with so So we're the with the really this underwriting what's in obviously pleased year. far happened

Brad Thomas

the just some Acima? you what lack still a stimulus the XXXX could reasonable Acima EBITDA still think margin business? squeeze number. you're And in maybe some is I How term growth that outlook of we unusual a think mid-teens sort medium of done should period after and so margins. do you longer adjusted we're in for think maybe here, more past in target, tightening. margin initiatives making term of in is on one Obviously, more the for you've get the about an outlook I If

Maureen Short

average look double-digit in the the our the around to to our we to full if substantial is in EBITDA for underperforming which back So you EBITDA the guidance, of leases guidance margin can impacted year, expect We’ll as half. front from year. the at margin see that half you margins by improvement still negatively get XX.X%

now, you as can longer our year, But would right how now, the not we so With the XX%. say quite viewing to mid to We're And Acima could change. in XX% the to giving teens. XX% rate we're to I XXXX XX% right is stand for probably closer see segment. we'll end it's guidance. that term range obviously not things

Operator

of or from Carla comment Our next the Casella question line JPMorgan. from comes

Unidentified Analyst

thanks for This is taking for and questions. Mike our on Carla,

And do get and question either ones you that. guys to of ask a little my guys quarter then more quick. bit two or in expect this down you Do Just recognize us second quarter, second from pay balance I'll guys the hopefully year-end? after you by revolver

Maureen Short

We macro this given focused uncertainty. leverage reducing the are year more just on our

the year. there's throughout of So chance pay rest a that we debt down the further

Mike Down

Are And help Acima Recognize merchandise of there. second that rental forecast, goes kind one is, to stores, of be that the can give say us directly you that context your certain inventory as that. guys purchase just on given sort on categories think in or color well? to the helpful of would business? under any touch for kind Any would with they're that to of parameters you about core sales,

Mitch Fadel

could short with PSXs stores, any the feel more the we products sure few like shelf. their in No, on stores, use we retailer don't in any in like electronics we're a

Rent-A-Center that, no. segment. with could So other And But think Blasquez he I that. get Anthony think takes than if I more runs them. PSXs lot would he Anthony a agree the

comments, our as of to you SKUs other In mentioned through partners. fact, I in extended thousands recently, if aisle, had we prepared retail site my will, Web

inventory Rent-A-Center an our been from shape. in no, really standpoint, So has good

Operator

I'd Thank in to conference additional over this like questions comments. at you. the Mitch for queue back to no turn the showing closing Mr. I'm time. any

Mitch Fadel

right a tough much. for so And on and line to pleased the of really very next it and reserves of the know and delinquency last annual report back this the we're you from having are this add we your year guidance. in you your for But to the forward reiterate to wrong, we interest you year well standpoint of everyone. fix and half everyone, losses to latter we tough we the Thank forth. happy a time in morning, to our us. And with certainly you, line start what metrics guidance, Thank And And thank numbers We was a our with look that. lot and reporting we are coming quarter. did we're know to to track. need in

Operator

a you for gentlemen, Ladies Everyone, and thank day. the you today's in wonderful This disconnect. participating may have conference. concludes now program,

Upbound (UPBD) 5 May 222022 Q1 Earnings call transcript