Upbound Group, Inc. · NASDAQ:UPBD
Upbound — Rent A Center Inc DE — Q2 2022 Earnings Presentation
19 slides from Upbound's earnings presentation, Aug 4, 2022
Slide 1: Rent-A-Center: Second Quarter 2022 Earnings Review
Rent-A- Center: Second Quarter 2022 Earnings Review
Slide 2: Disclosures
Disclosures 2 Forward-Looking Statements This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, among others, statements regarding our goals, plans and projections with respect to our operations, financial positio
Slide 3: Q2 2022 Key Themes
Q2 2022 Key Themes 3 ➢ Solid second quarter performance: Financial results at the high end or above quarterly guidance ranges, and achieved high priority objectives for the first half of the year for Acima underwriting and Rent-A- Center Business Segment portfolio value ➢ Acima risk mitigation initi
Slide 4: Financial Highlights Q2'22 Results
Financial Highlights 4 Q2’22 Results ◼ Q2 consolidated revenues of $1.1 billion, -10.3% y/y (2-yr stacked growth +11.3%) ◼ Q2 Adjusted EBITDA1 of $128.9 million, -31.1% y/y but above the high end of the quarterly guidance range ◼ Non-GAAP Diluted EPS1 of $1.15 was above the high end of the quarterly
Slide 5: Q2 2022 Acima Highlights
Q2 2022 Acima Highlights 5 Business Highlights ◼ GMV -24.2% y/y (2-yr stacked growth +19.1%) due to cycling over stimulus driven growth of 43% in the prior year, the effects of tighter underwriting, and a macro-driven decline in merchant partner sales volumes ◼ Q2 revenues of $530.2 million, -16.5%
Slide 6: Q2 2022 Rent-A-Center Highlights
Q2 2022 Rent-A-Center Highlights 6 Rent-A-Center Business 2-Year Stack Same Store SalesBusiness Highlights 1 Non-GAAP financial measure. Refer to explanations and reconciliations elsewhere in this presentation. 13.3% 0% 5% 10% 15% 20% 25% 30% Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 ◼ Q
Slide 7: 2H 2022 Segment Objectives
2H 2022 Segment Objectives 7 Acima Objectives ◼Additional enhancements to underwriting that improve our ability to generate risk-adjusted GMV and revenues that maximize dollar profits and provide a competitive advantage ◼Develop and refine existing products & solutions that can expand our near-term
Slide 8: Performance In Downturns
Performance In Downturns 8 Outperformance in Economic Downturns ◼ During the recession from approximately Q1 2008 to Q2 2009, topline trends (SSS) for the Rent-A-Center Business segment outperformed consumer durable expenditures y/y growth by an average of ~900 bps per quarter ◼ The inflection point
Slide 9: Q2 2022 Financial Highlights
Q2 2022 Financial Highlights 9 Consolidated ▪ Revenue growth -10.3% vs. last year ▪ Adjusted EBITDA1: $128.9M, -31.1% year-over-year; due to increased delinquencies and loss rates caused by pressure on customer discretionary income and higher operating expenses ▪ Adjusted EBITDA1 margin: 12.0% vs. 1
Slide 10: 2022 Guidance
2022 Guidance 10 1 Includes Rent-A-Center Business, Acima, Mexico, Franchise and Corporate segments. 2 Free Cash Flow defined as net cash provided by operating activities less capital expenditures. 3 Adjusted EBITDA, non-GAAP diluted earnings per share and free cash flow are non-GAAP measures. Becau
Slide 11: Capital Allocation Priorities
Capital Allocation Priorities 11 2022 Capital Allocation ConsiderationsLong-Term Capital Allocation Priorities ◼Quarterly dividend of $0.34 per share per quarter or $1.36 per year ◼Reduce debt towards target leverage ratio of 1.5x vs. current level of 2.4x ◼Evaluate share repurchases on an opportuni
Slide 12: Question and Answer
Question and Answer
Slide 13: Appendix
Appendix
Slide 14: Q2 2022 Financial Highlights
Q2 2022 Financial Highlights 14 1 Non-GAAP financial measure. Refer to explanations and reconciliations elsewhere in this presentation. Q2 2022 In millions, except percentages and EPS Actual % of Total Revenue Rent-A-Center Business $490 45.8% Acima $530 49.5% Franchising $34 3.2% Mexico $17 1.6% To
Slide 15: Reconciliation of Net Earnings Excluding Special Items and Non-GAAP Diluted EPS
Reconciliation of Net Earnings Excluding Special Items and Non-GAAP Diluted Earnings Per Share 15 Three Months Ended June 30, 2022 (in thousands) Gross Profit Operating Profit Earnings Before Income Taxes Tax (Benefit) Expense Net (Loss) Earnings Diluted (Loss) Earnings per Share GAAP Results $532,5
Slide 16: Reconciliation of Net Earnings and Non-GAAP Diluted EPS, Q2 2021
16 Three Months Ended June 30, 2021 (in thousands) Gross Profit Operating Profit Earnings Before Income Taxes Tax Expense Net (Loss) Earnings Diluted (Loss) Earnings per Share GAAP Results $587,472 $106,519 $86,128 $24,819 $61,309 $0.90 Plus: Special Items (Extraordinary, Unusual or Non- Recurring G
Slide 17: Reconciliation of Operating Profit to Adjusted EBITDA (Q2 2022)
Reconciliation of Operating Profit to Adjusted EBITDA (Consolidated and by Segment) 17 Three Months Ended June 30, 2022 (in thousands) Rent-A-Center Business Acima Mexico Franchising Corporate Consolidated GAAP Operating Profit (Loss) $99,108 $35,835 $1,949 $5,303 $(84,114) $58,081 Plus: Amortizatio
Slide 18: Reconciliation of Operating Profit to Adjusted EBITDA (Q2 2021)
Reconciliation of Operating Profit to Adjusted EBITDA (Consolidated and by Segment) 18 Three Months Ended June 30, 2021 (in thousands) Rent-A-Center Business Acima Mexico Franchising Corporate Consolidated GAAP Operating Profit (Loss) $126,487 $68,099 $2,420 $5,694 $(96,181) $106,519 Plus: Amortizat
Slide 19: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow 19 Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (in thousands) Amount Amount Amount Amount Net cash provided by operating activities $81,830 $114,725 $287,121 $250,518 Purchase of property asse