Rent-A-Center Provides First Quarter 2018 Business Updates
April 09 2018 - 9:00AM
Business Wire
Announces positive same store sales growth in the Core U.S.
business and increases annual free cash flow guidance for
2018
Rent-A-Center, Inc. (the "Company") (NASDAQ/NGS: RCII) today
announced positive same store sales growth in the Core U.S.
business for the first quarter of 2018 and increases annual free
cash flow guidance for 2018.
Operational Improvement
Preliminary same store sales growth in the Core U.S. segment for
the first quarter of 2018 increased 0.3 percent over the same
period a year ago, with March 2018 increasing at 1.6 percent. The
continued sequential improvement within the first quarter was
primarily driven by better collections due to lower promotional
activity and a higher portfolio balance versus last year driven
largely by an increase in the average ticket per customer.
Acceptance Now same store sales grew 3.3 percent in the first
quarter compared to first quarter 2017.
“Our value proposition changes being implemented in the Core
U.S. business are already starting to make an impact, even in their
early stages. Specifically, the targeted pricing approach with less
promotional dollars being used in the Core is already providing
better revenue results,” stated Mitch Fadel, Chief Executive
Officer of Rent-A-Center. “Within Acceptance Now, we rolled out a
new value proposition in the quarter and are already experiencing a
higher ticket while maintaining lower delinquency rates. We are
continuing to make refinements to the program and are experiencing
recent increases in demand, as well.”
In addition, the cost savings and working capital initiatives
instituted by the Company earlier this year are exceeding
management’s expectations. Since the end of 2017, the Company has
reduced debt by over $75 million due to the stronger topline and
improved performance, primarily due to the initiatives. The Company
currently has approximately $175 million in revolving credit
availability, taking into account the $50 million reserve necessary
given the Company’s current fixed charge coverage ratio. The
Company has $20 million currently drawn on its revolving credit
facility.
Based on the improved portfolio performance, and the cost
savings and working capital initiatives exceeding management’s plan
in the first quarter, the Company is raising its full year free
cash flow guidance from at least $130 million to at least $170
million.
First Quarter 2018 Earnings Release and Conference Call
Details
The Company expects to release its full first quarter 2018
financial results on Monday, April 30, 2018, after the market
closes. At 8:30am ET on Tuesday, May 1, 2018, the
Company will host a conference call to discuss the results. A live
audio of the conference call will be available on the company’s
investor relations website
at http://investor.rentacenter.com.
Strategic & Financial Alternatives Update
The Company’s board of directors and its advisors are actively
engaged with bidders interested in acquiring the Company and expect
to reach a determination during the second quarter of 2018. The
Company does not intend to make any additional comments regarding
these discussions or any potential transaction unless and until a
formal agreement has been reached or the Company’s board of
directors has approved a definitive course of action with respect
to its ongoing financial and strategic alternatives review.
About Rent-A-Center, Inc.
A rent-to-own industry leader, Plano, Texas-based,
Rent-A-Center, Inc., is focused on improving the quality of life
for its customers by providing them the opportunity to obtain
ownership of high-quality, durable products such as consumer
electronics, appliances, computers, furniture and accessories,
under flexible rental purchase agreements with no long-term
obligation. The Company owns and operates approximately 2,400
stores in the United States, Mexico, Canada and Puerto Rico, and
approximately 1,200 Acceptance Now kiosk locations in the United
States and Puerto Rico. Rent-A-Center Franchising International,
Inc., a wholly owned subsidiary of the Company, is a national
franchiser of approximately 225 rent-to-own stores operating under
the trade names of "Rent-A-Center", "ColorTyme", and "RimTyme". For
additional information about the Company, please visit our website
at www.rentacenter.com.
Forward Looking Statements
This press release and the guidance above contain
forward-looking statements that involve risks and uncertainties.
Such forward-looking statements generally can be identified by the
use of forward-looking terminology such as "may," "will," "expect,"
"intend," "could," "estimate," "should,"
anticipate," "believe," or "confident," or the negative
thereof or variations thereon or similar terminology. The Company
believes that the expectations reflected in such forward-looking
statements are accurate. However, there can be no assurance that
such expectations will occur. The Company's actual future
performance could differ materially from such statements. Factors
that could cause or contribute to such differences include, but are
not limited to: the general strength of the economy and other
economic conditions affecting consumer preferences and spending;
factors affecting the disposable income available to the Company's
current and potential customers; changes in the unemployment rate;
uncertainties concerning the outcome, impact, effects and results
of the Company’s exploration of its strategic and financial
alternatives; difficulties encountered in improving the financial
and operational performance of the Company's business segments; the
Company’s ability to refinance its senior credit facility expiring
in early 2019 on favorable terms, if at all; risks associated with
pricing changes and strategies being deployed in the Company’s
businesses; the Company’s ability to realize any benefits from its
initiatives regarding cost-savings and other EBITDA enhancements,
efficiencies and working capital improvements; the Company's chief
executive officer transition, including the Company's ability to
effectively operate and execute its strategies during the interim
period; the Company's ability to execute its franchise strategy;
failure to manage the Company's store labor and other store
expenses; the Company’s ability to develop and successfully execute
strategic initiatives; disruptions caused by the operation of the
Company's store information management system; the Company’s
transition to more-readily scalable, “cloud-based” solutions; the
Company's ability to develop and successfully implement digital or
E-commerce capabilities, including mobile applications; disruptions
in the Company's supply chain; limitations of, or disruptions in,
the Company's distribution network; rapid inflation or deflation in
the prices of the Company's products; the Company's ability to
execute and the effectiveness of a store consolidation, including
the Company's ability to retain the revenue from customer accounts
merged into another store location as a result of a store
consolidation; the Company's available cash flow; the Company's
ability to identify and successfully market products and services
that appeal to its customer demographic; consumer preferences and
perceptions of the Company's brand; the Company's ability to
control costs and increase profitability; the Company's ability to
retain the revenue associated with acquired customer accounts and
enhance the performance of acquired stores; the Company's ability
to enter into new and collect on its rental or lease purchase
agreements; the passage of legislation adversely affecting the
Rent-to-Own industry; the Company's compliance with applicable
statutes or regulations governing its transactions; changes in
interest rates; adverse changes in the economic conditions of the
industries, countries or markets that the Company serves;
information technology and data security costs; 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 and employees; changes in the Company's stock
price, the number of shares of common stock that it may or may not
repurchase, and the Company’s dividend policy and any changes
thereto, if any; changes in estimates relating to self-insurance
liabilities and income tax and litigation reserves; changes in the
Company's effective tax rate; fluctuations in foreign currency
exchange rates; the Company's ability to maintain an effective
system of internal controls; the resolution of the Company's
litigation; and 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,
2017. 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20180409005417/en/
Rent-A-Center, Inc.Maureen Short, 972-801-1899Interim Chief
Financial Officermaureen.short@rentacenter.com
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