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Press Release

Rent-A-Center, Inc. Reports First Quarter 2022 Results

Total Revenues of $1.2 billion

Rent-A-Center Business Segment Lease Portfolio Value up 5.6% Year-over-Year

GAAP Loss Per Share of $0.08; Non-GAAP Diluted EPS of $0.74

Cash From Operations $205.3 million; Free Cash Flow of $188.9 million

Company Reiterates Full Year 2022 Guidance

PLANO, Texas--(BUSINESS WIRE)--May 4, 2022-- Rent-A-Center, Inc. (the "Company" or "Rent-A-Center") (NASDAQ:RCII) today announced results for the quarter ended March 31, 2022.

"With the Rent-A-Center Business segment showing good momentum, highlighted by 22% 2-year same store sales growth, and progress at Acima, with the previously announced leadership transition and recent underwriting adjustments showing improvements in risk and yield indicators, we are encouraged by our start to 2022," said Mitch Fadel, Chief Executive Officer. "Furthermore, with revenues and earnings above the mid-point of our first quarter guidance ranges, we believe the Company is on track to achieve our targets for the year," continued Mr. Fadel.

"We continue to believe the virtual lease-to-own space offers tremendous growth opportunities, and we are taking a deliberate approach to advance multiple growth initiatives as they emerge. Importantly, we think the combination of Acima's growth potential with the Rent-A-Center Business segment's stability and strong cash generation offers a highly compelling model that can create significant value over the long-term," concluded Mr. Fadel.

First Quarter Consolidated Results

  • First quarter 2022 consolidated revenues of $1.2 billion increased 11.9% year-over-year, primarily due to the acquisition of Acima Holdings, LLC (the "Acima Acquisition"), which closed on February 17, 2021. On a pro-forma1 basis, revenues decreased 5.8% due to declines in merchandise sales revenue and rental and fees revenues. Merchandise sales revenue decreased year-over-year primarily due to a lower proportion of customers using early payout options, likely due to the effects of government stimulus programs winding down. Rental and fees revenues decreased primarily due to higher provisions on delinquencies for the Acima segment related to lease vintages underwritten in late 2021 using assumptions that lagged worsening customer payment behavior following the end of government stimulus programs.
  • GAAP operating profit for the first quarter of 2022 was $11.0 million compared to $70.0 million in the prior year period. GAAP net loss for the first quarter of 2022 was $4.2 million and included $48.7 million of costs, net of tax, relating to special items described below, compared to $42.6 million of GAAP net income and $45.2 million of costs, net of tax, relating to special items in the prior year period.
  • Adjusted EBITDA in the first quarter of 2022 was $99.5 million and decreased 42.9% year-over-year on a pro-forma1 basis, primarily due to lower pro-forma revenues, higher loss rates on lease vintages underwritten in late 2021, and higher operating costs. Adjusted EBITDA margin was 8.6% in the first quarter of 2022 compared to 14.2% in the prior year period on a pro-forma1 basis, and margin contraction resulted from the same factors that negatively impacted Adjusted EBITDA.
  • GAAP loss per share for the first quarter of 2022 was $0.08 compared to diluted earnings per share of $0.64 in the prior year period. Non-GAAP diluted earnings per share, which excludes the impact of special items described below, for the first quarter of 2022 was $0.74 compared to $1.32 in the prior year period.
  • For the three months ended March 31, 2022, the Company generated $205.3 million of cash from operations, returned $21.1 million of cash to shareholders through dividends, and paid down $170 million on its revolving credit facility. The Company ended the quarter with $95.7 million of cash and cash equivalents, $1.4 billion of debt outstanding, $439 million of liquidity that included $344 million of undrawn revolving credit availability, and pro-forma1 net debt to Adjusted EBITDA ratio of 2.3 times.

First Quarter Segment Highlights

Acima Segment: First quarter 2022 revenues of $599.4 million increased 31.0% year-over-year due to the Acima Acquisition, completed on February 17, 2021. On a pro-forma1 basis, revenues decreased 8.1%, with decreases in rental and fees revenues as well as merchandise sales revenue. The decrease in rental and fees revenues is primarily attributable to an increase in provisions on delinquencies for the current quarter that reduced rental revenue. The decrease in merchandise sales revenue is attributable to a lower proportion of consumers electing early payout options in the current year compared to the prior year, likely due to the effects of government stimulus programs winding down. GMV decreased 21.2% year-over-year primarily from lower lease conversion rates, likely due to the effects of tighter lease underwriting initiated in recent months as well as the impact of government stimulus programs winding down and other macro-economic factors. On a two year basis, GMV increased 10%. Skip/stolen losses were 12.6% of revenue in the first quarter of 2022 compared to 8.6% in the prior year period on a pro-forma1 basis. On a GAAP basis, segment operating profit was $9.6 million with an operating profit margin of 1.6% in the first quarter of 2022, compared to $24.8 million and 5.4% in the prior year period. Adjusted EBITDA was $29.0 million with an Adjusted EBITDA margin of 4.8% in the first quarter of 2022, compared to $76.2 million and 11.7% in the prior year period on a pro-forma1 basis. The year-over-year decrease in Adjusted EBITDA was primarily attributable to higher delinquencies and loss rates which stemmed from a lag in recalibrating underwriting as customer payment behavior worsened in later 2021.

Rent-A-Center Business Segment: First quarter 2022 revenues of $518.5 million decreased 1.2% year-over-year on a 1.1% decrease in same store sales primarily attributable to fewer merchandise sales and early payout options in the quarter, compared to the prior year period that benefited from government stimulus programs. E-commerce accounted for 23.4% of revenue in the quarter, compared to 22.3% in the prior year period. The segment lease portfolio value increased 5.6% compared to the prior year period, and same store sales were up 22.3% on a two-year basis. Skip/stolen losses were 3.9% of revenue in the first quarter of 2022 compared to 2.7% in the prior year period. On a GAAP basis, segment operating profit in the quarter was $100.2 million with operating profit margin of 19.3%, compared to $121.3 million and 23.1% in the prior year period. Adjusted EBITDA in the quarter was $107.4 million with Adjusted EBITDA margin of 20.7%, compared to $126.2 million and 24.0% in the prior year period. The decline in segment operating profit and Adjusted EBITDA was primarily attributable to normalized loss rates compared to the prior year period that benefited from government stimulus, wage increases for certain in-store positions, and higher other operating expenses. On March 31, 2022, the Rent-A-Center Business segment had 1,852 company-operated locations.

Franchising Segment: First quarter 2022 revenues of $26.1 million decreased 34.6% year-over-year due to lower inventory purchases per store. Segment operating profit, on a GAAP basis, and Adjusted EBITDA were $4.8 million in the first quarter and decreased $0.2 million year-over-year. On March 31, 2022, there were 464 franchise-operated locations.

Mexico Segment: First quarter 2022 revenues of $15.7 million increased 8.4% year-over-year on a constant currency basis. Segment operating profit, on a GAAP basis, and Adjusted EBITDA were $2.1 million and $2.2 million, respectively. In the first quarter, GAAP operating profit increased $0.1 million year-over-year. On March 31, 2022, the Mexico business had 122 company-operated locations.

Corporate Segment: First quarter 2022 non-GAAP basis expenses increased $10.3 million year-over-year or 21.7%, reflecting the addition of Acima related costs and continued investments in our growth initiatives.

Key Operating Metrics

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.

1) 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, 2020. 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, 2020, nor are they necessarily indicative of future results of operations or metrics.

SAME STORE SALES

(Unaudited)

Table 1

 

 

Period

 

Rent-A-Center
Business

 

Mexico

Three Months Ended March 31, 2022

(1.1

)%

 

7.6

%

Three Months Ended December 31, 2021

 

10.4

%

 

8.6

%

Three Months Ended March 31, 2021

 

23.4

%

 

9.6

%

Note: Same store sale methodology - 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.

2022 Guidance

The Company is providing the following guidance for its 2022 fiscal year:

Table 2

 

 

 

2022 Guidance

 

Full Year
2022

Second Quarter
2022

Consolidated (1)

 

 

 

Revenues ($'s billion)

 

$4.450 - $4.600

$1.045 - $1.075

Adjusted EBITDA (2) ($'s million)

 

$515 - $565

$114 - $127

Non-GAAP Diluted earnings per share (2)(3)

 

$4.50 - $5.00

$0.95 - $1.10

Free cash flow (2) ($'s million)

 

$390 - $440

N/A

 

 

 

 

(1) Consolidated includes Acima, Rent-A-Center Business, Franchising, Mexico and Corporate Segments.

(2) Non-GAAP financial measure. See descriptions below in this release. 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. Adjusted EBITDA figures now exclude stock based compensation.

(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 future share repurchases.

Additional Commentary on the 2022 Outlook

  • 2022 guidance assumes the macro headwinds that affected the business in the first quarter of 2022, including supply chain disruptions, high rates of inflation, and the effect of lower levels of government stimulus relief for our core consumers, will continue at current levels throughout the year.
  • The Company has modified its definition of Adjusted EBITDA beginning with first quarter 2022 results to exclude stock-based compensation. Therefore, 2022 Adjusted EBITDA guidance excludes the impact of stock-based compensation, whereas prior period Adjusted EBITDA within the remainder of this press release includes the impact of stock-based compensation.

Webcast Information

Rent-A-Center, Inc. will host a conference call to discuss the first quarter results, guidance and other operational matters on the morning of Thursday, May 5, 2022, at 8:30 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. Residents of the United States and Canada can listen to the call by dialing (855) 642-7045. International participants can access the call by dialing (346) 294-9649.

About Rent-A-Center, Inc.

Rent-A-Center, Inc. (NASDAQ: RCII) is a leading provider of technology driven, flexible, no debt obligation leasing solutions that offer underserved consumers access to and potential ownership of high-quality durable goods that enhance the quality of life. The Company’s omnichannel model utilizes proprietary data and technology to facilitate transactions across a wide range of retail channels including its own Acima virtual lease-to-own platform, Rentacenter.com, e-commerce partner platforms, partner retail stores, and Rent-A-Center branded stores. For additional information about the Company, please visit our website Rentacenter.com or Investor.rentacenter.com.

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 2022 and future outlook, (ii) the potential effects of the pandemic of the respiratory disease caused by a novel coronavirus ("COVID-19") 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, and (vi) 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, including (i) the possibility that the anticipated benefits from the Acima Holdings acquisition may not be fully realized or may take longer to realize than expected, (ii) the possibility that costs, difficulties or disruptions related to the integration of Acima Holdings operations into the Company's other operations will be greater than expected, (iii) the Company's ability to (A) effectively adjust to changes in the composition of the Company's offerings and product mix as a result of acquiring Acima Holdings and continue to maintain the quality of existing offerings and (B) successfully introduce other new product or service offerings on a timely and cost-effective basis, and (iv) changes in the Company's future cash requirements as a result of the Acima Holdings acquisition, whether caused by unanticipated increases in capital expenditures or working capital needs, unanticipated liabilities or otherwise; (2) the Company's ability to identify potential acquisition candidates, complete acquisitions and successfully integrate acquired companies; (3) 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; (4) 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 impacts from inflation; (5) factors affecting the disposable income available to the Company's current and potential customers; (6) changes in the unemployment rate; (7) capital market conditions, including availability of funding sources for the Company; (8) changes in the Company's credit ratings; (9) difficulties encountered in improving the financial and operational performance of the Company's business segments; (10) risks associated with pricing changes and strategies being deployed in the Company's businesses; (11) the Company's ability to continue to realize benefits from its initiatives regarding cost-savings and other EBITDA enhancements, efficiencies and working capital improvements; (12) 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; (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) disruptions in the Company's supply chain; (23) limitations of, or disruptions in, the Company's distribution network; (24) rapid inflation or deflation in the prices of the Company's products and other related costs; (25) 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; (26) the Company's available cash flow and its ability to generate sufficient cash flow to continue paying dividends; (27) 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; (28) 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; (29) consumer preferences and perceptions of the Company's brands; (30) the Company's ability to retain the revenue associated with acquired customer accounts and enhance the performance of acquired stores; (31) the Company's ability to enter into new, and collect on, its rental or lease purchase agreements; (32) 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; (33) the Company's compliance with applicable statutes or regulations governing its businesses; (34) changes in interest rates; (35) changes in tariff policies; (36) adverse changes in the economic conditions of the industries, countries or markets that the Company serves; (37) information technology and data security costs; (38) the impact of any breaches in data security or other disturbances to the Company's information technology and other networks and the Company's ability to protect the integrity and security of individually identifiable data of its customers, employees and retail partners; (39) changes in estimates relating to self-insurance liabilities and income tax and litigation reserves; (40) changes in the Company's effective tax rate; (41) fluctuations in foreign currency exchange rates; (42) the Company's ability to maintain an effective system of internal controls, including in connection with the integration of Acima; (43) litigation or administrative proceedings to which the Company is or may be a party to from time to time; and (44) 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 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.

Rent-A-Center, Inc. and Subsidiaries

 

 

CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED

Table 3

Three Months Ended March 31,

(In thousands, except per share data)

2022

 

2021

Revenues

 

 

 

Store

 

 

 

Rentals and fees

$

883,047

 

 

$

745,534

 

Merchandise sales

 

232,881

 

 

 

232,793

 

Installment sales

 

17,089

 

 

 

17,773

 

Other

 

1,290

 

 

 

918

 

Total store revenues

 

1,134,307

 

 

 

997,018

 

Franchise

 

 

 

Merchandise sales

 

18,521

 

 

 

33,055

 

Royalty income and fees

 

6,894

 

 

 

6,709

 

Total revenues

 

1,159,722

 

 

 

1,036,782

 

Cost of revenues

 

 

 

Store

 

 

 

Cost of rentals and fees

 

338,633

 

 

 

247,035

 

Cost of merchandise sold

 

250,331

 

 

 

240,106

 

Cost of installment sales

 

5,921

 

 

 

6,041

 

Total cost of store revenues

 

594,885

 

 

 

493,182

 

Franchise cost of merchandise sold

 

18,742

 

 

 

33,077

 

Total cost of revenues

 

613,627

 

 

 

526,259

 

Gross profit

 

546,095

 

 

 

510,523

 

Operating expenses

 

 

 

Store expenses

 

 

 

Labor

 

166,603

 

 

 

156,707

 

Other store expenses

 

227,369

 

 

 

170,133

 

General and administrative expenses

 

56,403

 

 

 

49,125

 

Depreciation and amortization

 

14,529

 

 

 

13,393

 

Other charges

 

70,148

 

 

 

51,119

 

Total operating expenses

 

535,052

 

 

 

440,477

 

Operating profit

 

11,043

 

 

 

70,046

 

Debt refinancing charges

 

 

 

 

8,743

 

Interest expense

 

18,970

 

 

 

11,990

 

Interest income

 

(45

)

 

 

(74

)

(Loss) earnings before income taxes

 

(7,882

)

 

 

49,387

 

Income tax (benefit) expense

 

(3,645

)

 

 

6,835

 

Net (loss) earnings

$

(4,237

)

 

$

42,552

 

Basic weighted average shares

 

53,751

 

 

 

56,247

 

Basic (loss) earnings per common share

$

(0.08

)

 

$

0.76

 

Diluted weighted average shares

 

53,751

 

 

 

66,295

 

Diluted (loss) earnings per common share

$

(0.08

)

 

$

0.64

 

Rent-A-Center, Inc. and Subsidiaries

 

SELECTED BALANCE SHEETS HIGHLIGHTS - UNAUDITED

Table 4

March 31,

(In thousands)

2022

 

2021

Cash and cash equivalents

$

95,684

 

$

123,019

Receivables, net

 

121,185

 

 

115,345

Prepaid expenses and other assets

 

47,460

 

 

40,839

Rental merchandise, net

 

 

 

On rent

 

1,017,485

 

 

1,115,913

Held for rent

 

127,663

 

 

135,244

Operating lease right-of-use assets

 

299,109

 

 

297,577

Goodwill

 

289,761

 

 

311,991

Total assets

 

2,777,121

 

 

3,006,958

 

 

 

 

Operating lease liabilities

$

301,047

 

$

299,892

Senior debt, net

 

964,113

 

 

897,912

Senior notes, net

 

436,460

 

 

434,512

Total liabilities

 

2,254,063

 

 

2,264,771

Stockholders' equity

 

523,058

 

 

742,187

Rent-A-Center, Inc. and Subsidiaries

 

 

SEGMENT INFORMATION HIGHLIGHTS - UNAUDITED

Table 5

Three Months Ended March 31,

(In thousands)

2022

 

2021

Revenues

 

 

 

Rent-A-Center Business

$

518,505

 

 

$

524,866

 

Acima

 

599,377

 

 

 

457,449

 

Mexico

 

15,712

 

 

 

14,498

 

Franchising

 

26,128

 

 

 

39,969

 

Total revenues

$

1,159,722

 

 

$

1,036,782

 

 

Table 6

Three Months Ended March 31,

(In thousands)

2022

 

2021

Gross profit

 

 

 

Rent-A-Center Business

$

363,380

 

 

$

359,169

 

Acima

 

164,228

 

 

 

134,250

 

Mexico

 

11,101

 

 

 

10,212

 

Franchising

 

7,386

 

 

 

6,892

 

Total gross profit

$

546,095

 

 

$

510,523

 

 

Table 7

Three Months Ended March 31,

(In thousands)

2022

 

2021

Operating profit

 

 

 

Rent-A-Center Business

$

100,176

 

 

$

121,277

 

Acima

 

9,600

 

 

 

24,814

 

Mexico

 

2,066

 

 

 

1,954

 

Franchising

 

4,790

 

 

 

4,985

 

Total segments

 

116,632

 

 

 

153,030

 

Corporate

 

(105,589

)

 

 

(82,984

)

Total operating profit

$

11,043

 

 

$

70,046

 

 

Table 8

Three Months Ended March 31,

(In thousands)

2022

 

2021

Depreciation and amortization

 

 

 

Rent-A-Center Business

$

6,413

 

 

$

4,577

 

Acima

 

582

 

 

 

474

 

Mexico

 

149

 

 

 

120

 

Franchising

 

37

 

 

 

16

 

Total segments

 

7,181

 

 

 

5,187

 

Corporate

 

7,348

 

 

 

8,206

 

Total depreciation and amortization

$

14,529

 

 

$

13,393

 

 

Table 9

Three Months Ended March 31,

(In thousands)

2022

 

2021

Capital expenditures

 

 

 

Rent-A-Center Business

$

13,408

 

 

$

6,257

 

Acima

 

46

 

 

 

154

 

Mexico

 

222

 

 

 

76

 

Franchising

 

112

 

 

 

 

Total segments

 

13,788

 

 

 

6,487

 

Corporate

 

2,615

 

 

 

4,901

 

Total capital expenditures

$

16,403

 

 

$

11,388

 

 

Table 10

On lease at March 31,

 

Held for lease at March 31,

(In thousands)

2022

 

2021

 

2022

 

2021

Lease merchandise, net

 

 

 

 

 

 

 

Rent-A-Center Business

$

455,828

 

$

446,180

 

$

117,617

 

 

$

127,120

 

Acima

 

542,437

 

 

651,764

 

 

1,159

 

 

 

1,622

 

Mexico

 

19,220

 

 

17,969

 

 

8,887

 

 

 

6,502

 

Total lease merchandise, net

$

1,017,485

 

$

1,115,913

 

$

127,663

 

 

$

135,244

 

 

Table 11

March 31,

(In thousands)

2022

 

2021

Assets

 

 

Rent-A-Center Business

$

1,003,246

 

$

978,190

 

Acima

 

1,287,869

 

 

1,566,395

 

Mexico

 

43,243

 

 

36,076

 

Franchising

 

15,904

 

 

16,114

 

Total segments

 

2,350,262

 

 

2,596,775

 

Corporate

 

426,859

 

 

410,183

 

Total assets

$

2,777,121

 

 

$

3,006,958

 

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, 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 and (3) Free Cash Flow (net cash provided by operating activities less capital expenditures). “Special items” refers to certain gains and charges we view as extraordinary, unusual or non-recurring in nature and 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 March 31, 2022

(In thousands)

Gross
Profit

 

Operating
Profit

 

(Loss)
Earnings
Before
Income
Taxes

 

Tax (Benefit)
Expense

 

Net (Loss)
Earnings

 

Diluted
(Loss)
Earnings per
Share

GAAP Results

$

546,095

 

 

$

11,043

 

 

$

(7,882

)

 

$

(3,645

)

 

$

(4,237

)

 

$

(0.08

)

Plus: Special Items (Extraordinary, Unusual or Non-Recurring Gains or Charges)

 

 

 

 

 

 

 

 

 

 

 

Acima equity consideration vesting

 

 

 

 

36,559

 

 

 

36,559

 

 

 

10,099

 

 

 

26,460

 

 

 

0.44

 

Acima acquired assets depreciation and amortization (1)

 

(2,853

)

 

 

23,238

 

 

 

23,238

 

 

 

6,420

 

 

 

16,818

 

 

 

0.28

 

Asset disposals

 

 

 

 

4,238

 

 

 

4,238

 

 

 

1,171

 

 

 

3,067

 

 

 

0.05

 

Cost savings initiatives

 

 

 

 

2,197

 

 

 

2,197

 

 

 

607

 

 

 

1,590

 

 

 

0.03

 

Store closure costs

 

 

 

 

715

 

 

 

715

 

 

 

198

 

 

 

517

 

 

 

0.01

 

Legal settlement reserves

 

 

 

 

500

 

 

 

500

 

 

 

138

 

 

 

362

 

 

 

0.01

 

Acima transaction costs

 

 

 

 

187

 

 

 

187

 

 

 

52

 

 

 

135

 

 

 

 

Other

 

 

 

 

(339

)

 

 

(339

)

 

 

(94

)

 

 

(245

)

 

 

 

Non-GAAP Adjusted Results

$

543,242

 

 

$

78,338

 

 

$

59,413

 

 

$

14,946

 

 

$

44,467

 

 

$

0.74

 

(1)Includes amortization of approximately $22.1 million related to the total fair value of acquired intangible assets, incremental depreciation of approximately $4.0 million.

Table 13

Three Months Ended March 31, 2021

(In thousands)

Gross
Profit

 

Operating
Profit

 

Earnings
Before
Income
Taxes

 

Tax Expense

 

Net Earnings

 

Diluted
Earnings per
Share

GAAP Results

$

510,523

 

$

70,046

 

$

49,387

 

$

6,835

 

$

42,552

 

 

$

0.64

 

Plus: Special Items (Extraordinary, Unusual or Non-Recurring Gains or Charges)

 

 

 

 

 

 

 

 

 

 

 

Acima transaction costs

 

 

 

16,406

 

 

16,406

 

 

2,738

 

 

13,668

 

 

 

0.21

 

Acima equity consideration vesting

 

 

 

15,882

 

 

15,882

 

 

2,650

 

 

13,232

 

 

 

0.20

 

Acima acquired intangibles amortization

 

 

 

13,934

 

 

13,934

 

 

2,325

 

 

11,609

 

 

 

0.18

 

Acima integration costs

 

 

 

3,244

 

 

3,244

 

 

541

 

 

2,703

 

 

 

0.04

 

Acima acquired software depreciation

 

 

 

1,324

 

 

1,324

 

 

221

 

 

1,103

 

 

 

0.02

 

Store closure costs

 

 

 

329

 

 

329

 

 

55

 

 

274

 

 

 

 

Debt refinancing

 

 

 

 

 

8,743

 

 

1,459

 

 

7,284

 

 

 

0.10

 

Discrete Income Tax Items

 

 

 

 

 

 

 

4,710

 

 

(4,710

)

 

 

(0.07

)

Non-GAAP Adjusted Results

$

510,523

 

$

121,165

 

$

109,249

 

$

21,534

 

$

87,715

 

 

$

1.32

 

Reconciliation of operating profit to Adjusted EBITDA (consolidated and by segment):

Table 14

Three Months Ended March 31, 2022

(In thousands)

Rent-A-
Center

Business

 

Acima

 

Mexico

 

Franchising

 

Corporate

 

Consolidated

GAAP Operating Profit (Loss)

$

100,176

 

$

9,600

 

 

$

2,066

 

$

4,790

 

$

(105,589

)

 

$

11,043

 

Plus: Amortization, Depreciation

 

6,413

 

 

582

 

 

 

149

 

 

37

 

 

7,348

 

 

 

14,529

 

Plus: Stock-based compensation

 

 

 

 

 

 

 

 

 

 

6,630

 

 

 

6,630

 

Plus: Special Items (Extraordinary, Unusual or Non-Recurring Gains or Charges)

 

 

 

 

 

 

 

 

 

 

 

Acima equity consideration vesting

 

 

 

 

 

 

 

 

 

 

36,559

 

 

 

36,559

 

Acima acquired assets depreciation and amortization (1)

 

 

 

19,266

 

 

 

 

 

 

 

3,972

 

 

 

23,238

 

Asset disposals

 

 

 

 

 

 

 

 

 

 

4,238

 

 

 

4,238

 

Cost savings initiatives

 

116

 

 

(404

)

 

 

 

 

 

 

2,485

 

 

 

2,197

 

Store closure costs

 

715

 

 

 

 

 

 

 

 

 

 

 

 

715

 

Legal settlement reserves

 

 

 

 

 

 

 

 

 

 

500

 

 

 

500

 

Acima transaction costs

 

 

 

 

 

 

 

 

 

 

187

 

 

 

187

 

Other

 

 

 

 

 

 

 

 

 

 

(339

)

 

 

(339

)

Adjusted EBITDA

$

107,420

 

$

29,044

 

 

$

2,215

 

$

4,827

 

$

(44,009

)

 

$

99,497

 

(1)Includes amortization of approximately $22.1 million related to the total fair value of acquired intangible assets, incremental depreciation of approximately $4.0 million.

Table 15

Three Months Ended March 31, 2021

(In thousands)

Rent-A-
Center

Business

 

Acima

 

Mexico

 

Franchising

 

Corporate

 

Consolidated

GAAP Operating Profit (Loss)

$

121,277

 

$

24,814

 

$

1,954

 

$

4,985

 

$

(82,984

)

 

$

70,046

Plus: Amortization, Depreciation

 

4,577

 

 

474

 

 

120

 

 

16

 

 

8,206

 

 

 

13,393

Plus: Stock-based compensation

 

 

 

 

 

 

 

 

 

4,266

 

 

 

4,266

Plus: Special Items (Extraordinary, Unusual or Non-Recurring Gains or Charges)

 

 

 

 

 

 

 

 

 

 

 

Acima transaction costs

 

 

 

 

 

 

 

 

 

16,406

 

 

 

16,406

Acima equity consideration vesting

 

 

 

 

 

 

 

 

 

15,882

 

 

 

15,882

Acima acquired intangibles amortization

 

 

 

13,934

 

 

 

 

 

 

 

 

 

13,934

Acima integration costs

 

18

 

 

1,519

 

 

 

 

 

 

1,707

 

 

 

3,244

Acima acquired software depreciation

 

 

 

 

 

 

 

 

 

1,324

 

 

 

1,324

Store closure costs

 

327

 

 

 

 

2

 

 

 

 

 

 

 

329

Adjusted EBITDA

$

126,199

 

$

40,741

 

$

2,076

 

$

5,001

 

$

(35,193

)

 

$

138,824

Reconciliation of net cash provided by operating activities to free cash flow:

Table 16

Three Months Ended March 31,

(In thousands)

2022

 

2021

Net cash provided by operating activities

$

205,291

 

 

$

135,793

 

Purchase of property assets

 

(16,403

)

 

 

(11,388

)

Free cash flow

$

188,888

 

 

$

124,405

 

 

 

 

 

Proceeds from sale of stores

 

6

 

 

 

 

Acquisitions of businesses

 

(324

)

 

 

(1,267,903

)

Free cash flow including acquisitions and divestitures

$

188,570

 

 

$

(1,143,498

)

 

Investors:
Rent-A-Center, Inc.
Brendan Metrano
VP, Investor Relations
972-801-1280
brendan.metrano@rentacenter.com

Source: Rent-A-Center, Inc.