Total Revenue of $990 Million for Fourth
Quarter and $4.2 Billion for Full Year
GAAP Diluted EPS $0.05 for Fourth Quarter
and $0.21 for Full Year
Non-GAAP Diluted EPS $0.86 for Fourth
Quarter and $3.70 for Full Year
Full Year Cash From Operations $468 Million
and Free Cash Flow $407 Million
Announces Corporate Name Change to Upbound
Group, Inc. (UPBD)
Rent-A-Center, Inc. (the "Company" or "Rent-A-Center")
(NASDAQ:RCII), now known as Upbound Group, Inc. (the "Company" or
"Upbound") (NASDAQ:UPBD, effective February 27, 2023) today
announced results for the quarter and year ended December 31,
2022.
“We are encouraged by the Company’s fourth quarter performance
as we executed well on our top line, risk management, and
efficiency initiatives to mitigate the effects of macro-economic
headwinds, and delivered financial results that exceeded our
revised outlook,” said Mitch Fadel, Chief Executive Officer.
“Reflecting on full-year results, 2022 was a challenging
operating environment with many households adjusting their
financial priorities following the unsustainable levels of
stimulus-driven income and consumption that occurred in 2020 and
2021, while experiencing the highest inflation in decades. This
drove significant headwinds in our business throughout the year, to
which we responded with several initiatives that we believe
position the Company well going forward. Examples of recent
initiatives include improved automation, new investments to better
utilize data analytics in our underwriting processes, and several
new executive hires,” continued Mr. Fadel.
“While the external environment remains challenging and
uncertain, we believe the Company is in better standing today to
address the growing demand for flexible consumer financial
solutions. To effectively align our vision, values, and strategies,
the Company is organizing itself under a new enterprise brand and
changing its corporate name to Upbound Group, Inc., which will
trade under the ticker UPBD starting on February 27th. As we start
this next stage of the Company’s evolution, I am very optimistic
about our ability to deliver significant value for our customers,
merchant partners, employees and shareholders,” concluded Mr.
Fadel.
Corporate Name Change
- Effective February 22, 2023, Rent-A-Center, Inc. changed its
parent company name to Upbound Group, Inc. Upbound™ will function
as an enterprise brand, unifying the Company’s resources and
capabilities. The holding company will define the vision, values,
and strategies for how the operating businesses will offer
innovative and technology-driven financial solutions to address the
evolving needs and aspirations of consumers.
Key Management Changes
- Fahmi Karam joined as Chief Financial Officer, effective
October 31, 2022. Mr. Karam has over 20 years of experience in
finance and accounting, most recently as the Chief Financial
Officer of Santander Consumer USA since September 2019. Mr. Karam
previously served as Santander's Head of Pricing and Analytics, and
EVP, Strategy and Corporate Development. Prior to his roles at
Santander, Mr. Karam spent 12 years at JP Morgan Investment Bank,
and he began his career at Deloitte.
- Tyler Montrone has been appointed Executive Vice President of
Acima, effective February 20, 2023, and will lead the Acima
business segment, reporting to CEO, Mitch Fadel. Mr. Montrone is a
long-time Acima executive who most recently served as Acima's Chief
Development Officer where he was responsible for Acima's product,
engineering and underwriting functions. Aaron Allred, founder and
former Executive Vice President of Acima, will continue to work for
the Company in an advisory role.
- Sudeep Gautam joined the Company as Chief Technology and
Digital Officer, effective January 16, 2023. Mr. Gautam has over 20
years of experience in large-scale digital transformations,
including the position of Chief Digital Officer at Pratt &
Whitney and several senior executive positions at
Hewlett-Packard.
- Mike Bagull joined the Company as Senior Vice President,
Business Development and Partnerships, in August 2022. Mr. Bagull
has over 20 years of experience in business development and sales
management roles, including over 8 years at Synchrony, most
recently as Senior Vice President, Business Development and
Partnerships.
Fourth Quarter Consolidated
Results
- Fourth quarter 2022 consolidated revenues decreased 15.4%
year-over-year to $990 million, primarily due to lower rental
revenues in both the Acima and Rent-A-Center Business segments from
lower lease portfolio values compared to the prior year
period.
- GAAP operating profit for the fourth quarter of 2022 was $42.3
million and included $49.8 million of pre-tax costs relating to
special items described below, compared to $36.8 million of GAAP
operating profit and $73.5 million of pre-tax costs relating to
special items in the prior year period. The year-over-year decrease
in GAAP operating profit, excluding special items, for the fourth
quarter of 2022 was primarily due to lower consolidated revenues
and higher loss rates. GAAP operating profit margin for the fourth
quarter of 2022 was 4.3%, compared to 3.1% in the prior year
period.
- Adjusted EBITDA in the fourth quarter of 2022 decreased 15.2%
year-over-year to $110.1 million, primarily due to lower revenues
and higher loss rates for the Rent-A-Center Business segment.
Adjusted EBITDA margin of 11.1% in the fourth quarter of 2022, was
unchanged compared to the prior year period.
- GAAP diluted earnings per share for the fourth quarter of 2022
was $0.05 compared to $0.15 in the prior year period. Non-GAAP
diluted earnings per share, which excludes the impact of special
items described below, for the fourth quarter of 2022 was $0.86
compared to $1.08 in the prior year period.
Fourth Quarter Segment
Highlights
Rent-A-Center Business
Segment: As of December 31, 2022, the segment lease
portfolio value was 4.7% lower than the prior year period. Fourth
quarter 2022 revenues decreased 7.7% year-over-year to $467.4
million, primarily due to the lower lease portfolio value yielding
less rental and fee revenues. E-commerce accounted for
approximately 25% of revenue in our lease-to-own stores in the
fourth quarter, compared to approximately 24% in the prior year
period. Same-store sales decreased 8.1% year-over-year in the
fourth quarter, but were up 2.3% on a two-year stacked basis.
Skip/stolen losses were 5.8% of revenue in the fourth quarter of
2022 compared to 4.0% in the prior year period and 5.8% in the
third quarter of 2022. On a GAAP basis, segment operating profit
margin was 13.5%, compared to 18.2% in the fourth quarter of 2021.
Adjusted EBITDA margin was 14.6%, compared to 19.3% in the fourth
quarter of 2021. The year-over-year decrease in operating profit
margin and Adjusted EBITDA margin was primarily attributable to
lower revenues, and higher loss rates, partially offset by the
Company's efficiency initiatives. On December 31, 2022, the
Rent-A-Center Business segment had 1,851 company-operated
locations.
Acima Segment: Fourth
quarter 2022 Gross Merchandise Volume (GMV) decreased 23.4%
year-over-year, primarily due to lower customer traffic at merchant
partners generating fewer lease applications per store. Fourth
quarter revenues decreased 22.2% year-over-year to $476.3 million,
primarily due to a lower portfolio value yielding less rental and
fees revenues.
Skip/stolen losses were 8.9% of revenue in the fourth quarter of
2022 compared to 11.8% in the prior year period and 9.0% in the
third quarter of 2022. On a GAAP basis, segment operating profit
margin was 12.0% in the fourth quarter of 2022, compared to 5.2% in
the fourth quarter of 2021. Adjusted EBITDA margin was 15.0% in the
fourth quarter of 2022, compared to 9.6% in the fourth quarter of
2021. The increase in operating profit margin and Adjusted EBITDA
Margin from the prior year period and third quarter of 2022 was
primarily attributable to lower loss rates, driven by improvements
in underwriting.
Franchising Segment: Fourth
quarter 2022 revenues decreased 19.5% year-over-year to $30.3
million, primarily due to lower inventory purchases per store.
Segment operating profit, on a GAAP basis, and Adjusted EBITDA were
$4.0 million in the fourth quarter and decreased $0.9 million
year-over-year. On December 31, 2022, there were 447
franchise-operated locations.
Mexico Segment: Fourth
quarter 2022 revenues of $16.4 million increased 0.2%
year-over-year on a constant currency basis. Segment operating
profit, on a GAAP basis, and Adjusted EBITDA were $1.3 million and
$1.5 million, respectively. On December 31, 2022, the Mexico
business had 126 company-operated locations.
Corporate Segment: Fourth
quarter 2022 GAAP expenses of $83.1 million included $35.3 million
of pre-tax costs relating to special items described below,
decreased 10% year-over-year, compared to the prior year period
that included $46.1 million of pre-tax costs relating to special
items.
Full Year Consolidated
Results
- Full year 2022 consolidated revenues decreased 7.4%
year-over-year on a reported basis and 11.2% on a pro-forma(1)
basis to $4.2 billion, primarily due to lower lease portfolio
values for the Acima and Rent-A-Center Businesses compared to
2021.
- GAAP operating profit for the full year 2022 was $148.5 million
and included $232.4 million of pre-tax costs relating to special
items described below, compared to GAAP operating profit of $280.5
million that included $275.6 million of pre-tax costs relating to
special items in the prior year period. GAAP operating profit
margin for the full year 2022 was 3.5%, compared to 6.1% in
2021.
- Adjusted EBITDA for the full year 2022 decreased 28.2%
year-over-year on a reported basis and 32.0% on a pro-forma(1)
basis to $453.5 million, primarily due to lower revenues and higher
loss rates in the Rent-A-Center Business and Acima segments,
compared to 2021. Adjusted EBITDA margin for the full year 2022 was
10.7%, compared to 13.8% in 2021.
- GAAP diluted earnings per share for the full year 2022 was
$0.21 compared to $2.02 in 2021. Non-GAAP diluted earnings per
share, which excludes the impact of special items described below,
for the full year 2022 was $3.70 compared to $5.57 in 2021.
- For the year ended December 31, 2022, the Company returned
$154.2 million of cash to shareholders through a $1.36 annualized
dividend and share repurchases.
- For the year ended December 31, 2022, cash from operations was
$468.5 million, the value of cash and cash equivalents was $144.1
million, debt outstanding was $1.4 billion, liquidity was $540
million, including $396 million of revolving credit availability,
and the net debt to Adjusted EBITDA ratio was 2.8.
Key Metrics
Table 1
Q4
2022
Q4
2021
FY
2022
FY
2021
Metrics ($'s Millions - except per
share & store count data)
Consolidated
Revenue
990.5
1,171.4
4,245.4
4,583.5
GAAP Operating Profit
42.3
36.8
148.5
280.5
Adj. EBITDA (2)
110.1
129.9
453.5
631.5
Adj. EBITDA Margin (2)
11.1
%
11.1
%
10.7
%
13.8
%
GAAP Operating Expenses as % of Total
Revenue
45.7
%
45.4
%
45.5
%
42.6
%
GAAP Diluted EPS
0.05
0.15
0.21
2.02
Non-GAAP Diluted EPS (2)
0.86
1.08
3.70
5.57
Operating Cash Flow
56.4
66.1
468.5
392.3
Free Cash Flow (2)
44.4
49.5
407.1
329.8
Rent-A-Center Business Segment
Lease Portfolio - Monthly Value (as of
12/31) (3)
142.8
150.0
142.8
150.0
Lease Portfolio Value (Y/Y % Change - as
of 12/31) (3)
(4.7
)%
10.2
%
(4.7
)%
10.2
%
Same Store Sales (Y/Y % Change) (4)
(8.1
)%
10.4
%
(4.5
)%
15.3
%
Revenue
467.4
506.2
1,949.9
2,037.9
GAAP Operating Profit
63.2
91.9
334.5
448.9
Adj. EBITDA (2)
68.3
97.8
356.8
469.6
Adj. EBITDA Margin (2)
14.6
%
19.3
%
18.3
%
23.0
%
Skip / Stolen Loss Rate (5)
5.8
%
4.0
%
4.9
%
3.1
%
30+ Day Past Due Rate (6)
3.5
%
2.4
%
3.0
%
2.2
%
Corporate Owned Store Count (U.S. & PR
- as of 12/31)
1,851
1,846
1,851
1,846
Acima Business Segment
GMV (7)
399.5
521.3
1,584.4
2,056.5(1
)
GMV (Y/Y % Change) (7)
(23.4
)%
5.1
%
(23.0
)%
23.1%(1)
Revenue
476.3
611.9
2,110.3
2,328.1
GAAP Operating Profit
57.0
31.7
151.3
176.5
Adj. EBITDA (2)
71.7
58.6
217.3
273.1
Adj. EBITDA Margin (2)
15.0
%
9.6
%
10.3
%
11.7
%
Skip / Stolen Loss Rate (5)
8.9
%
11.8
%
10.6
%
9.6
%
60+ Day Past Due Rate (8)
13.9
%
13.2
%
14.1
%
10.8
%
(1) For full-year 2021 results, the
disclosed pro forma results and metrics in this release and the
Company's related earnings conference call represent estimated
financial results and metrics as if the acquisition of Acima had
been completed on January 1, 2021. The pro forma results and
metrics may not necessarily reflect the actual results of
operations or metrics that would have been achieved had the
acquisition been completed on January 1, 2021, nor are they
necessarily indicative of future results of operations or metrics.
Our acquisition of Acima was completed on February 17, 2021.
(2)Non-GAAP financial measure. Refer to
the explanations and reconciliations elsewhere in this release.
(3)Lease Portfolio Value: Represents the
aggregate dollar value of the expected monthly rental income
associated with current active lease agreements from our
Rent-A-Center Business stores and ecommerce platform at the end of
any given period.
(4)Same Store Sales (SSS): Same store
sales generally represents revenue earned in stores that were
operated by us for 13 months or more and are reported on a constant
currency basis as a percentage of total revenue earned in stores of
the segment during the indicated period. The Company excludes from
the same store sales base any store that receives a certain level
of customer accounts from closed stores or acquisitions. The
receiving store will be eligible for inclusion in the same store
sales base in the 30th full month following account transfer.
(5)Skip / Stolen Loss Rate: Represents
charge-offs of the depreciated value of unrecoverable on-rent
merchandise with lease-to-own customers who are past due as a
percentage of revenues
(6)30+ Days Past Due Rate: Defined as the
average number of accounts 30+ days past due as a % of total open
leases.
(7)Gross Merchandise Volume (GMV): The
Company defines Gross Merchandise Volume as the retail value in
U.S. dollars of merchandise acquired by the Company that is leased
to customers through a transaction that occurs within a defined
period, net of cancellations.
(8)60+ Days Past Due Rate: Defined as the
average number of accounts 60+ days past due as a % of total open
leases.
Full Year 2023 Guidance
The Company is providing the following guidance for its 2023
fiscal year. Because of the inherent uncertainty related to the
special items identified in the tables below, management does not
believe it is able to provide a meaningful forecast of the
comparable GAAP measures or reconciliation to any forecasted GAAP
measure without unreasonable effort. The actual amount of these
items during 2023 may have a significant impact on our future GAAP
results.
Table 2
Guidance
Full Year 2023
Consolidated (1)
Revenues ($'s billion)
$3.8 - $4.0
Adjusted EBITDA Excluding Stock Based
Compensation (2) ($'s million)
$380 - $415
Non-GAAP Diluted Earnings Per Share
(2)(3)
$2.50 - $3.00
Free Cash Flow (2) ($'s million)
$180 - $215
(1)Consolidated includes Acima,
Rent-A-Center Business, Franchising, Mexico and Corporate
Segments.
(2)Non-GAAP financial measure. See
descriptions below in this release. Adjusted EBITDA figures exclude
stock based compensation beginning with the first quarter of 2022.
Full year 2023 guidance excludes stock-based compensation of
approximately $24M.
(3)Non-GAAP diluted earnings per share
excludes the impact of incremental depreciation and amortization
related to the estimated fair value of acquired Acima assets, stock
compensation expense associated with the Acima acquisition equity
consideration subject to vesting conditions, and one-time
transaction and integration costs related to the Acima acquisition.
Guidance excludes the impact of any future share repurchases.
Webcast Information
Rent-A-Center, Inc., now Upbound Group, Inc., will host a
conference call to discuss the fourth quarter and full year
results, guidance and other operational matters on the morning of
Thursday, February 23, 2023, at 9:00 a.m. ET. For a live webcast of
the call, visit https://investor.rentacenter.com. Certain financial
and other statistical information that will be discussed during the
conference call will also be provided on the same website.
Participants can access the call by phone via this link
(registration link), where the dial-in details will be
provided.
About Rent-A-Center,
Inc.
Rent-A-Center, Inc. (NASDAQ: RCII) now known as Upbound Group,
Inc. (NASDAQ:UPBD, effective February 27, 2023), is an omni-channel
platform company committed to elevating financial opportunity for
all through innovative, inclusive, and technology-driven financial
solutions that address the evolving needs and aspirations of
consumers. The Company's customer-facing operating units include
industry-leading brands such as Rent-A-Center® and Acima® that
facilitate consumer transactions across a wide range of store-based
and digital retail channels, including over 2,400 company branded
retail units across the United States, Mexico and Puerto Rico.
Upbound Group, Inc. is headquartered in Plano, Texas.
Forward-Looking
Statements
This press release and the guidance above and the Company's
related conference call contain forward-looking statements that
involve risks and uncertainties. These statements are made under
the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. Such forward-looking statements
generally can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "intend," "could,"
"estimate," "predict," "continue," "maintain," "should,"
"anticipate," "believe," or “confident,” or the negative thereof or
variations thereon or similar terminology and including, among
others, statements concerning (i) the Company's guidance for 2023
and future outlook, (ii) the potential effects of ongoing
challenging macro-economic conditions on the Company's business
operations, financial performance, and prospects, (iii) the future
business prospects and financial performance of the Company
following the acquisition of Acima Holdings, LLC ("Acima
Holdings"), (iv) cost and revenue synergies and other benefits
expected to result from the Acima Holdings acquisition, (v) the
Company's expectations, plans and strategy relating to its capital
structure and capital allocation, including any share repurchases
under the Company's share repurchase program, (vi) opportunities
relating to the Company's parent entity name change and related
initiatives, and (vii) other statements that are not historical
facts. However, there can be no assurance that such expectations
will occur. The Company's actual future performance could differ
materially and adversely from such statements. Factors that could
cause or contribute to these differences include, but are not
limited to: (1) risks relating to the Acima Holdings acquisition,
(2) the impact of the COVID-19 pandemic and related government and
regulatory restrictions issued to combat the pandemic, including
adverse changes in such restrictions, the expiration of
governmental stimulus programs, and impacts on (i) demand for the
Company's lease-to-own products offered in the Company's operating
segments, (ii) the Company's Acima retail partners, (iii) the
Company's customers and their willingness and ability to satisfy
their lease obligations, (iv) the Company's suppliers' ability to
satisfy its merchandise needs and related supply chain disruptions,
(v) the Company's employees, including the ability to adequately
staff its operating locations, (vi) the Company's financial and
operational performance, and (vii) the Company's liquidity; (3) the
general strength of the economy and other economic conditions
affecting consumer preferences and spending, including the
availability of credit to the Company's target consumers and to
other consumers, impacts from the high level of inflation, central
bank monetary policy initiatives to address inflation concerns and
possible recession; (4) factors affecting the disposable income
available to the Company's current and potential customers; (5)
changes in the unemployment rate; (6) capital market conditions,
including availability of funding sources for the Company; (7)
changes in the Company's credit ratings; (8) difficulties
encountered in improving the financial and operational performance
of the Company's business segments; (9) risks associated with
pricing changes and strategies being deployed in the Company's
businesses; (10) the Company's ability to continue to realize
benefits from its initiatives regarding cost-savings and other
EBITDA enhancements, efficiencies and working capital improvements;
(11) the Company's ability to continue to effectively execute its
strategic initiatives, including mitigating risks associated with
any potential mergers and acquisitions, or refranchising
opportunities; (12) the Company's ability to identify potential
acquisition candidates, complete acquisitions and successfully
integrate acquired companies; (13) failure to manage the Company's
store labor and other store expenses, including merchandise losses;
(14) disruptions caused by the operation of the Company's store
information management systems or disruptions in the systems of the
Company's host retailers; (15) risks related to the Company's
virtual lease-to-own business, including the Company's ability to
continue to develop and successfully implement the necessary
technologies; (16) the Company's ability to achieve the benefits
expected from its integrated virtual and staffed retail partner
offering and to successfully grow this business segment; (17)
exposure to potential operating margin degradation due to the
higher cost of merchandise in the Company's Acima offering and
higher merchandise losses than compared to our Rent-A-Center
Business segment; (18) the Company's transition to more-readily
scalable, “cloud-based” solutions; (19) the Company's ability to
develop and successfully implement digital or E-commerce
capabilities, including mobile applications; (20) the Company's
ability to protect its proprietary intellectual property; (21) the
Company's ability or that of the Company's host retailers to
protect the integrity and security of customer, employee and host
retailer information, which may be adversely affected by hacking,
computer viruses, or similar disruptions; (22) impairment of our
goodwill or other intangible assets; (23) disruptions in the
Company's supply chain; (24) limitations of, or disruptions in, the
Company's distribution network; (25) rapid inflation or deflation
in the prices of the Company's products and other related costs;
(26) allegations of product safety and quality control issues,
including recalls; (27) the Company's ability to execute and the
effectiveness of store consolidations, including the Company's
ability to retain the revenue from customer accounts merged into
another store location as a result of a store consolidation; (28)
the Company's available cash flow and its ability to generate
sufficient cash flow to continue paying dividends; (29) increased
competition from traditional competitors, virtual lease-to-own
competitors, online retailers, Buy-Now-Pay-Later and other Fintech
companies and other competitors, including subprime lenders; (30)
the Company's ability to identify and successfully market products
and services that appeal to its current and future targeted
customer segments and to accurately estimate the size of the total
addressable market; (31) consumer preferences and perceptions of
the Company's brands; (32) the Company's ability to retain the
revenue associated with acquired customer accounts and enhance the
performance of acquired stores; (33) the Company's ability to enter
into new, and collect on, its rental or lease purchase agreements;
(34) changes in the enforcement of existing laws and regulations
and the enactment of new laws and regulations adversely affecting
the Company's business, including any legislative or regulatory
enforcement efforts that seek to re-characterize store-based or
virtual lease-to-own transactions as credit sales and to apply
consumer credit laws and regulations to the Company's business;
(35) the Company's compliance with applicable statutes or
regulations governing its businesses; (36) changes in interest
rates; (37) changes in tariff policies; (38) adverse changes in the
economic conditions of the industries, countries or markets that
the Company serves; (39) information technology and data security
costs; (40) the impact of any breaches in data security or other
disturbances to the Company's information technology and other
networks (41) changes in estimates relating to self-insurance
liabilities, and income tax and litigation reserves; (42) changes
in the Company's effective tax rate; (43) fluctuations in foreign
currency exchange rates; (44) the Company's ability to maintain an
effective system of internal controls; (45) litigation or
administrative proceedings to which the Company is or may be a
party to from time to time; and (46) the other risks detailed from
time to time in the Company's SEC reports, including but not
limited to, its Annual Report on Form 10-K for the year ended
December 31, 2021 and upcoming Annual Report on Form 10-K for the
year ended December 31, 2022, and in its subsequent Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. You are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this press release.
Except as required by law, the Company is not obligated to publicly
release any revisions to these forward-looking statements to
reflect the events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
Upbound Group, Inc. and
Subsidiaries
CONSOLIDATED STATEMENTS OF
EARNINGS - UNAUDITED
Table 3
Three Months Ended December
31,
Twelve Months Ended December
31,
(In thousands, except per share data)
2022
2021
2022
2021
Revenues
Store
Rentals and fees
$
805,649
$
929,665
$
3,375,453
$
3,522,453
Merchandise sales
134,023
183,184
675,288
829,222
Installment sales
19,973
20,593
72,328
73,585
Other
1,277
1,113
4,975
4,148
Total store revenues
960,922
1,134,555
4,128,044
4,429,408
Franchise
Merchandise sales
23,501
30,514
91,350
126,856
Royalty income and fees
6,036
6,357
25,998
27,187
Total revenues
990,459
1,171,426
4,245,392
4,583,451
Cost of revenues
Store
Cost of rentals and fees
300,154
347,902
1,268,809
1,260,434
Cost of merchandise sold
164,246
217,783
779,789
935,765
Cost of installment sales
7,168
7,071
25,547
25,637
Total cost of store revenues
471,568
572,756
2,074,145
2,221,836
Franchise cost of merchandise sold
23,532
30,412
91,715
126,603
Total cost of revenues
495,100
603,168
2,165,860
2,348,439
Gross profit
495,359
568,258
2,079,532
2,235,012
Operating expenses
Store expenses
Labor
147,590
164,774
634,341
644,763
Other store expenses
197,515
229,374
821,821
770,073
General and administrative expenses
45,197
45,426
186,470
194,894
Depreciation and amortization
12,871
14,037
53,079
54,830
Other charges
49,848
77,818
235,283
289,913
Total operating expenses
453,021
531,429
1,930,994
1,954,473
Operating profit
42,338
36,829
148,538
280,539
Debt refinancing charges
—
—
—
15,582
Interest expense
26,690
18,708
87,708
70,874
Interest income
(288
)
(73
)
(641
)
(221
)
Earnings before income taxes
15,936
18,194
61,471
194,304
Income tax expense
13,289
8,382
49,114
59,364
Net earnings
$
2,647
$
9,812
$
12,357
$
134,940
Basic weighted average shares
52,271
55,401
53,850
57,053
Basic earnings per common share
$
0.05
$
0.18
$
0.23
$
2.37
Diluted weighted average shares
56,468
64,989
58,966
66,839
Diluted earnings per common share
$
0.05
$
0.15
$
0.21
$
2.02
Upbound Group, Inc. and
Subsidiaries
SELECTED BALANCE SHEETS
HIGHLIGHTS - UNAUDITED
Table 4
December 31,
(In thousands)
2022
2021
Cash and cash equivalents
$
144,141
$
108,333
Receivables, net
111,865
126,378
Prepaid expenses and other assets
46,070
63,468
Rental merchandise, net
On rent
989,869
1,173,024
Held for rent
134,959
132,984
Operating lease right-of-use assets
302,311
291,338
Goodwill
289,750
289,750
Total assets
2,763,619
2,993,327
Operating lease liabilities
$
305,556
$
296,535
Senior debt, net
930,902
1,135,207
Senior notes, net
437,956
435,992
Total liabilities
2,238,473
2,480,051
Stockholders' equity
525,146
513,276
Upbound Group, Inc. and
Subsidiaries
SEGMENT INFORMATION HIGHLIGHTS
- UNAUDITED
Table 5
Three Months Ended December
31,
Twelve Months Ended December
31,
(In thousands)
2022
2021
2022
2021
Revenues
Rent-A-Center Business
$
467,419
$
506,163
$
1,949,864
$
2,037,849
Acima
476,326
611,915
2,110,320
2,328,089
Mexico
16,426
15,733
64,880
61,403
Franchising
30,288
37,615
120,328
156,110
Total revenues
$
990,459
$
1,171,426
$
4,245,392
$
4,583,451
Table 6
Three Months Ended December
31,
Twelve Months Ended December
31,
(In thousands)
2022
2021
2022
2021
Gross profit
Rent-A-Center Business
$
326,531
$
360,590
$
1,372,863
$
1,433,536
Acima
150,502
189,671
632,244
728,852
Mexico
11,570
10,794
45,812
43,117
Franchising
6,756
7,203
28,613
29,507
Total gross profit
$
495,359
$
568,258
$
2,079,532
$
2,235,012
Table 7
Three Months Ended December
31,
Twelve Months Ended December
31,
(In thousands)
2022
2021
2022
2021
Operating profit
Rent-A-Center Business
$
63,242
$
91,869
$
334,525
$
448,905
Acima
56,983
31,699
151,301
176,496
Mexico
1,256
1,199
6,267
7,858
Franchising
3,954
4,826
19,124
20,321
Total segments
125,435
129,593
511,217
653,580
Corporate
(83,097
)
(92,764
)
(362,679
)
(373,041
)
Total operating profit
$
42,338
$
36,829
$
148,538
$
280,539
Table 8
Three Months Ended December
31,
Twelve Months Ended December
31,
(In thousands)
2022
2021
2022
2021
Depreciation and amortization
Rent-A-Center Business
$
4,861
$
4,767
$
20,526
$
18,588
Acima
432
554
1,928
2,122
Mexico
217
142
711
511
Franchising
36
35
146
93
Total segments
5,546
5,498
23,311
21,314
Corporate
7,325
8,539
29,768
33,516
Total depreciation and amortization
$
12,871
$
14,037
$
53,079
$
54,830
Table 9
Three Months Ended December
31,
Twelve Months Ended December
31,
(In thousands)
2022
2021
2022
2021
Capital expenditures
Rent-A-Center Business
$
5,765
$
1,937
$
36,682
$
23,139
Acima
39
100
244
1,045
Mexico
371
288
1,590
1,032
Franchising
54
—
332
—
Total segments
6,229
2,325
38,848
25,216
Corporate
5,722
14,249
22,539
37,234
Total capital expenditures
$
11,951
$
16,574
$
61,387
$
62,450
Table 10
On lease at December
31,
Held for lease at December
31,
(In thousands)
2022
2021
2022
2021
Lease merchandise, net
Rent-A-Center Business
$
465,095
$
477,901
$
124,117
$
123,111
Acima
503,795
676,279
373
626
Mexico
20,979
18,844
10,469
9,247
Total lease merchandise, net
$
989,869
$
1,173,024
$
134,959
$
132,984
Table 11
December 31,
(In thousands)
2022
2021
Assets
Rent-A-Center Business
$
1,067,875
$
1,026,886
Acima
1,198,879
1,476,752
Mexico
51,225
41,669
Franchising
18,194
15,412
Total segments
2,336,173
2,560,719
Corporate
427,446
432,608
Total assets
$
2,763,619
$
2,993,327
Non-GAAP Financial
Measures
This release and the Company's related conference call contain
certain financial information determined by methods other than in
accordance with U.S. Generally Accepted Accounting Principles
(GAAP), including (1) Non-GAAP diluted earnings per share (net
earnings or loss, as adjusted for special items (as defined below),
net of taxes, divided by the number of shares of our common stock
on a fully diluted basis), (2) Adjusted EBITDA (net earnings before
interest, taxes, stock-based compensation, depreciation and
amortization, as adjusted for special items) on a consolidated and
segment basis, (3) Free Cash Flow (net cash provided by operating
activities less capital expenditures), (4) Adjusted EBITDA margin
on a consolidated and segment basis and (5) net debt to Adjusted
EBITDA ratio. “Special items” refers to certain gains and charges
we view as extraordinary, unusual or non-recurring in nature or
which we believe do not reflect our core business activities. For
the periods presented herein, these special items are described in
the quantitative reconciliation tables included below in this
release. Because of the inherent uncertainty related to the special
items, management does not believe it is able to provide a
meaningful forecast of the comparable GAAP measures or
reconciliation to any forecasted GAAP measure without unreasonable
effort.
These non-GAAP measures are additional tools intended to assist
our management in comparing our performance on a more consistent
basis for purposes of business decision-making by removing the
impact of certain items management believes do not directly reflect
our core operations. These measures are intended to assist
management in evaluating operating performance and liquidity,
comparing performance and liquidity across periods, planning and
forecasting future business operations, helping determine levels of
operating and capital investments and identifying and assessing
additional trends potentially impacting our Company that may not be
shown solely by comparisons of GAAP measures. Consolidated Adjusted
EBITDA is also used as part of our incentive compensation program
for our executive officers and others.
We believe these non-GAAP financial measures also provide
supplemental information that is useful to investors, analysts and
other external users of our consolidated financial statements in
understanding our financial results and evaluating our performance
and liquidity from period to period. However, non-GAAP financial
measures have inherent limitations and are not substitutes for or
superior to, and they should be read together with, our
consolidated financial statements prepared in accordance with GAAP.
Further, because non-GAAP financial measures are not standardized,
it may not be possible to compare such measures to the non-GAAP
financial measures presented by other companies, even if they have
the same or similar names.
Reconciliation of net earnings to net earnings excluding
special items and non-GAAP diluted earnings per share:
Table 12
Three Months Ended December
31, 2022
(In thousands)
Gross Profit
Operating Profit
Earnings Before Income
Tax
Tax Expense
Net Earnings
Diluted Earnings per
Share
GAAP Results
495,359
$
42,338
$
15,936
$
13,289
$
2,647
$
0.05
Plus: Special Items
Acima equity consideration vesting
—
31,721
31,721
1,395
30,326
0.54
Acima acquired assets depreciation and
amortization (1)
—
18,234
18,234
803
17,431
0.31
Legal settlement
—
(298
)
(298
)
(13
)
(285
)
(0.01
)
Cost savings initiatives
—
(178
)
(178
)
(8
)
(170
)
—
Legal settlement reserves
—
150
150
7
143
—
Store closure costs
—
111
111
5
106
—
Hurricane charges
—
108
108
5
103
—
Discrete income tax items
—
—
—
1,463
(1,463
)
(0.03
)
Non-GAAP Adjusted Results
$
495,359
$
92,186
$
65,784
$
16,946
$
48,838
$
0.86
(1)Includes amortization of approximately
$14.3 million related to the total fair value of acquired
intangible assets and incremental depreciation of approximately
$4.0 million.
Table 13
Three Months Ended December
31, 2021
(In thousands)
Gross Profit
Operating Profit
Earnings Before Income
Tax
Tax Expense
Net Earnings
Diluted Earnings per
Share
GAAP Results
$
568,258
$
36,829
$
18,194
$
8,382
$
9,812
$
0.15
Plus: Special Items
Acima equity consideration vesting
—
33,940
33,940
—
33,940
0.52
Acima acquired assets depreciation and
amortization (1)
(4,280
)
28,955
28,955
5,200
23,755
0.37
Legal settlement reserves
—
6,750
6,750
1,212
5,538
0.09
Acima integration costs
—
2,415
2,415
434
1,981
0.03
Hurricane charges
—
770
770
138
632
0.01
Acima transaction costs
—
344
344
62
282
—
COVID-19 testing
—
293
293
53
240
—
Store closure costs
—
71
71
12
59
—
Discrete income tax items
—
—
—
5,989
(5,989
)
(0.09
)
Non-GAAP Adjusted Results
$
563,978
$
110,367
$
91,732
$
21,482
$
70,250
$
1.08
(1)Includes amortization of approximately
$29.3 million related to the total fair value of acquired
intangible assets, incremental depreciation of approximately $4.0
million related to the fair value increase over net book value for
acquired software assets, and a depreciation credit adjustment of
approximately $(4.3) million related to a step-down of estimated
fair value below net book value for acquired lease merchandise.
Table 14
Twelve Months Ended December
31, 2022
(In thousands)
Gross Profit
Operating Profit
Earnings Before Income
Tax
Tax Expense
Net Earnings
Diluted Earnings per
Share
GAAP Results
$
2,079,532
$
148,538
$
61,471
$
49,114
$
12,357
$
0.21
Plus: Special Items
Acima equity consideration vesting
—
143,210
143,210
15,431
127,779
2.16
Acima acquired assets depreciation and
amortization (1)
(2,853
)
77,939
77,939
8,397
69,542
1.18
IT Asset disposals
—
5,808
5,808
626
5,182
0.09
Cost savings initiatives
—
1,726
1,726
186
1,540
0.03
Store closure costs
—
1,368
1,368
147
1,221
0.02
Retail partner conversion losses
—
1,169
1,169
126
1,043
0.02
State tax audit assessment reserves
—
1,165
1,165
126
1,039
0.02
Legal settlement
—
(831
)
(831
)
(90
)
(741
)
(0.01
)
Legal settlement reserves
—
650
650
70
580
0.01
Hurricane impacts
—
249
249
27
222
—
Other
—
(210
)
(210
)
(23
)
(187
)
—
Acima transaction costs
—
187
187
20
167
—
Discrete income tax items
—
—
—
1,532
(1,532
)
(0.03
)
Non-GAAP Adjusted Results
$
2,076,679
$
380,968
$
293,901
$
75,689
$
218,212
$
3.70
(1)Includes amortization of approximately
$64.9 million related to the total fair value of acquired
intangible assets, incremental depreciation of approximately $15.9
million related to the fair value increase over net book value for
acquired software assets, and a depreciation credit adjustment of
approximately $(2.9) million related to a step-down of estimated
fair value below net book value for acquired lease merchandise.
Table 15
Twelve Months Ended December
31, 2021
(In thousands)
Gross Profit
Operating Profit
Earnings Before Income
Tax
Tax Expense
Net Earnings
Diluted Earnings per
Share
GAAP Results
$
2,235,012
$
280,539
$
194,304
$
59,364
$
134,940
$
2.02
Plus: Special Items
Acima equity consideration vesting
—
127,060
127,060
—
127,060
1.90
Acima acquired assets depreciation and
amortization (1)
(14,265
)
100,694
100,694
24,241
76,453
1.14
Acima transaction costs
—
17,680
17,680
4,256
13,424
0.20
Legal settlement reserves
—
17,500
17,500
4,213
13,287
0.20
Acima integration costs
—
10,305
10,305
2,481
7,824
0.12
Hurricane impacts
—
1,424
1,424
343
1,081
0.02
Store closure costs
—
531
531
128
403
0.01
COVID-19 testing
—
293
293
71
222
—
State tax audit assessment reserves
—
161
161
39
122
—
Debt refinancing charges
—
—
15,582
3,751
11,831
0.18
Discrete income tax items
—
—
—
14,316
(14,316
)
(0.22
)
Non-GAAP Adjusted Results
$
2,220,747
$
556,187
$
485,534
$
113,203
$
372,331
$
5.57
(1)Includes amortization of approximately
$101.7 million related to the total fair value of acquired
intangible assets, incremental depreciation of approximately $13.2
million related to the fair value increase over net book value for
acquired software assets, and a depreciation credit adjustment of
approximately $(14.2) million related to a step-down of estimated
fair value below net book value for acquired lease merchandise.
Reconciliation of operating profit to Adjusted EBITDA
(consolidated and by segment):
Table 16
Three Months Ended December
31, 2022
(In thousands)
Rent-A-Center Business
Acima
Mexico
Franchising
Corporate
Consolidated
GAAP Operating Profit (Loss)
$
63,242
$
56,983
$
1,256
$
3,954
$
(83,097
)
$
42,338
Plus: Amortization, Depreciation
4,861
432
217
36
7,325
12,871
Plus: Stock-based compensation
—
—
—
—
5,016
5,016
Plus: Special Items
Acima equity consideration vesting
—
—
—
—
31,721
31,721
Acima acquired assets depreciation and
amortization (1)
—
14,262
—
—
3,972
18,234
Legal settlement
—
—
—
—
(298
)
(298
)
Cost savings initiatives
—
22
—
—
(200
)
(178
)
Legal settlement reserves
—
—
—
—
150
150
Store closure costs
111
—
—
—
—
111
Hurricane impacts
108
—
—
—
—
108
Adjusted EBITDA
$
68,322
$
71,699
$
1,473
$
3,990
$
(35,411
)
$
110,073
(1)Includes amortization of approximately
$14.3 million related to the total fair value of acquired
intangible assets and incremental depreciation of approximately
$4.0 million.
Table 17
Three Months Ended December
31, 2021
(In thousands)
Rent-A-Center Business
Acima
Mexico
Franchising
Corporate
Consolidated
GAAP Operating Profit (Loss)
$
91,869
$
31,699
$
1,199
$
4,826
$
(92,764
)
$
36,829
Plus: Amortization, Depreciation
4,767
554
142
35
8,539
14,037
Plus: Stock-based compensation
—
—
—
—
5,460
5,460
Plus: Special Items
Acima equity consideration vesting
—
—
—
—
33,940
33,940
Acima acquired assets depreciation and
amortization (1)
24,983
—
—
3,972
28,955
Legal settlement reserves
—
—
—
—
6,750
6,750
Acima integration costs
—
1,318
—
—
1,097
2,415
Hurricane impacts
770
—
—
—
—
770
Acima transaction costs
—
—
—
—
344
344
COVID-19 testing
293
—
—
—
—
293
Store closure costs
71
—
—
—
—
71
Adjusted EBITDA
$
97,770
$
58,554
$
1,341
$
4,861
$
(32,662
)
$
129,864
(1)Includes amortization of approximately
$29.3 million related to the total fair value of acquired
intangible assets, incremental depreciation of approximately $4.0
million related to the fair value increase over net book value for
acquired software assets, and a depreciation credit adjustment of
approximately $(4.3) million related to a step-down of estimated
fair value below net book value for acquired lease merchandise.
Table 18
Twelve Months Ended December
31, 2022
(In thousands)
Rent-A-Center Business
Acima
Mexico
Franchising
Corporate
Consolidated
GAAP Operating Profit (Loss)
$
334,525
$
151,301
$
6,267
$
19,124
$
(362,679
)
$
148,538
Plus: Amortization, Depreciation
20,526
1,928
711
146
29,768
53,079
Plus: Stock-based compensation
—
—
—
—
19,399
19,399
Plus: Special Items
Acima equity consideration vesting
—
—
—
—
143,210
143,210
Acima acquired assets depreciation and
amortization (1)
—
62,052
—
—
15,887
77,939
IT Asset disposals
—
—
—
—
5,808
5,808
Cost savings initiatives
118
(384
)
—
—
1,992
1,726
Store closure costs
1,368
—
—
—
—
1,368
Retail partner conversion losses
—
1,169
—
—
—
1,169
State tax audit assessment reserves
—
1,165
—
—
—
1,165
Legal settlement
—
—
—
—
(831
)
(831
)
Legal settlement reserves
—
—
—
—
650
650
Hurricane impacts
249
—
—
—
—
249
Other
—
77
—
—
(287
)
(210
)
Acima Transaction costs
—
—
—
—
187
187
Adjusted EBITDA
$
356,786
$
217,308
$
6,978
$
19,270
$
(146,896
)
$
453,446
(1)Includes amortization of approximately
$64.9 million related to the total fair value of acquired
intangible assets, incremental depreciation of approximately $15.9
million related to the fair value increase over net book value for
acquired software assets, and a depreciation credit adjustment of
approximately $(2.9) million related to a step-down of estimated
fair value below net book value for acquired lease merchandise.
Table 19
Twelve Months Ended December
31, 2021
(In thousands)
Rent-A-Center Business
Acima
Mexico
Franchising
Corporate
Consolidated
GAAP Operating Profit (Loss)
$
448,905
$
176,496
$
7,858
$
20,321
$
(373,041
)
$
280,539
Plus: Amortization, Depreciation
18,588
2,122
511
93
33,516
54,830
Plus: Stock-based compensation
—
—
—
—
20,494
20,494
Plus: Special Items
Acima equity consideration vesting
—
—
—
—
127,060
127,060
Acima acquired assets depreciation and
amortization (1)
—
87,455
—
—
13,239
100,694
Acima transaction costs
—
—
—
—
17,680
17,680
Legal settlement reserves
—
—
—
—
17,500
17,500
Acima integration costs
14
6,849
—
—
3,442
10,305
Hurricane impacts
1,276
148
—
—
—
1,424
Store closure costs
528
—
3
—
—
531
COVID-19 testing
293
—
—
—
—
293
State tax audit assessment reserves
—
—
—
—
161
161
Adjusted EBITDA
$
469,604
$
273,070
$
8,372
$
20,414
$
(139,949
)
$
631,511
(1)Includes amortization of approximately
$101.7 million related to the total fair value of acquired
intangible assets, incremental depreciation of approximately $13.2
million related to the fair value increase over net book value for
acquired software assets, and a depreciation credit adjustment of
approximately $(14.2) million related to a step-down of estimated
fair value below net book value for acquired lease merchandise.
Reconciliation of net cash provided by operating activities
to free cash flow:
Table 20
Three Months Ended December
31,
Twelve Months Ended December
31,
(In thousands)
2022
2021
2022
2021
Net cash provided by operating
activities
$
56,377
$
66,094
$
468,460
$
392,298
Purchase of property assets
(11,951
)
(16,574
)
(61,387
)
(62,450
)
Free cash flow
$
44,426
$
49,520
$
407,073
$
329,848
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230222006032/en/
Investors: Rent-A-Center, Inc. Brendan Metrano VP,
Investor Relations 972-801-1280 brendan.metrano@rentacenter.com
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