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Rent-A-Center, Inc., Now Upbound Group, Inc., Reports Fourth Quarter and Full Year 2022 Results

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

 

 

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