The Aaron's — Q3 2023 Earnings Presentation
23 slides from The Aaron's's earnings presentation, Oct 23, 2023
Slide 1: Q3 2023 Earnings Results
Q3 2023 Earnings Results October 23, 2023 0
Slide 2: Special Note Regarding Forward-Looking Information
Special Note Regarding Forward-Looking Information Statements in this presentation regarding our business that are not historical facts are “forward-looking statements” that involve risks and uncertainties which could cause actual results to differ materially from those contained in the forward-look
Slide 3: CEO Comments
CEO Comments “I am pleased that we delivered third quarter consolidated company earnings ahead of our internal expectations. The Aaron's Business segment is benefiting from our lease decisioning enhancements, which led to lower write-offs and a larger than expected lease portfolio size, despite ongo
Slide 4: Q3 2023 Key Themes
Q3 2023 Key Themes ▪ Consolidated earnings were ahead of internal expectations largely due to a larger lease portfolio size and lower write-offs at the Aaron's Business, and ongoing cost optimization ▪ Continued improvement in write-offs and 32+ day non-renewal rate, as a result of ongoing lease dec
Slide 5: Q3 Highlights
Q3 Highlights 4
Slide 6: Consolidated Q3 2023 Results of Operations
Consolidated Q3 2023 Results of Operations1 Three Months Ended September 30, Variance ($ in Thousands, except per share) 2023 2022 $ % or bps Consolidated $ 525,678 $ 593,384 $ (67,706) (11.4) % Revenues Aaron's Business 376,204 412,914 (36,710) (8.9) % BrandsMart 152,392 183,341 (30,949) (16.9) % C
Slide 7: The Aaron's Company – Consolidated Q3 Highlights
The Aaron’s Company – Consolidated Q3 Highlights1 Revenues Adjusted EBITDA Highlights • Revenues decreased YoY primarily due to -11.4% lower lease revenues and fees and lower -33.8% $593.4M $38.2M retail sales at the Aaron's Business, as well $525.7M as lower retail sales at BrandsMart $25.3M • Adju
Slide 8: Aaron's Business Q3 Highlights
Aaron’s Business Q3 Highlights Revenues Adjusted EBITDA1 Highlights • Revenues decreased YoY primarily due to -8.9% -14.2% a smaller lease portfolio size, fewer $412.9M $376.2M $42.5M exercises of early purchase options, and $36.4M lower retail sales ‒ E-commerce revenues increased 1.3% YoY, represe
Slide 9: Aaron's Business Q3 Highlights – E-commerce & GenNext Store Strategy
Aaron’s Business Q3 Highlights – E-commerce & GenNext Store Strategy E-commerce Highlights New Lease Originations1 Revenues -6.8% +1.3% Q3 2022 Q3 2023 % of Lease Q3 2022 Q3 2023 Revenues 16.2% 18.5% GenNext Store Highlights % of Revenues2 GenNext Store Count Opened in the Quarter 30.8% Q3’23 Initia
Slide 10: Aaron's Business Q3 Highlights – Non-Renewal Rates & Write-offs
Aaron’s Business Q3 Highlights – Non-Renewal Rates & Write-offs1 32+ Day Non-Renewal Rate2 Highlights 2.9% 3.0 2.7% 2.5% • 32+ day non-renewal rate decreased 2.5 30 bps YoY from Q3 2022 (2.6% vs. 2.9%) 2.4% 2.6% 2.0 2.3% 1.6% ‒ Sequential increase of 10 bps from Q2 1.5 1.6% 2023 (2.6% vs. 2.5%) prim
Slide 11: BrandsMart Q3 Highlights
BrandsMart Q3 Highlights Revenues Gross Profit Highlights -16.9% • Revenues decreased YoY driven primarily -14.9% by ongoing weaker customer traffic and $183.3M $41.0M customer trade down to lower priced $152.4M $34.9M products across major categories ‒ Average transaction value decreased 6.2% YoY Q
Slide 12: Balance Sheet and Outlook
Balance Sheet and Outlook 11
Slide 13: Balance Sheet and Shareholder Returns
Balance Sheet and Shareholder Returns Cash and Cash Debt Liquidity1 Shareholder Returns2 Equivalents (As of 9/30/23) (As of 9/30/23) (As of 9/30/23) $39.3 million $187.5 million $378.9 million $9.5 million 1. As of September 30, 2023, the Company had $39.3 million of cash and $339.6 million of avail
Slide 14: Updated 2023 Outlook
Updated 2023 Outlook1 Current Outlook2 Previous Outlook3 Low High Low High Revenues $2.12 billion $2.17 billion $2.12 billion $2.22 billion Net Earnings $14.0 million $17.5 million $16.8 million $25.5 million Adjusted EBITDA4 $140.0 million $150.0 million $140.0 million $160.0 million Diluted EPS $0
Slide 15: Appendix
Appendix 14
Slide 16: Company Store Count By Ownership Type
Company Store Count By Ownership Type (Unaudited) As of September 30, 2023 2022 Company-operated Aaron’s Stores1 1,024 1,034 GenNext (included in Company-Operated) 245 195 Franchisee-operated Aaron’s Stores 227 234 BrandsMart U.S.A. Stores2 11 10 Systemwide Stores 1,262 1,278 Company-Operated Aaron’
Slide 17: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information Non-GAAP net earnings, non-GAAP diluted earnings per share, adjusted free cash flow, net debt, EBITDA and adjusted EBITDA are supplemental measures of our performance that are not calculated in accordance with generally accepted accounting principles in the Unit
Slide 18: Reconciliation to Non-GAAP Net Earnings and Non-GAAP Earnings Per Share
Reconciliation to Non-GAAP Net Earnings and Non-GAAP Earnings Per Share (Unaudited) Three Months Ended September 30, (In Thousands, except per share amounts) 2023 2022 Net (Loss) Earnings $ (4,137) $ (15,616) Income Taxes (3,120) (4,937) (Loss) Earnings Before Income Taxes $ (7,257) $ (20,553) Acqui
Slide 19: Reconciliation to Quarterly Adjusted EBITDA by Segment
Reconciliation to Quarterly Adjusted EBITDA by Segment (Unaudited) (Unaudited) Three Months Ended Three Months Ended September 30, 2023 September 30, 2022 Aaron’s Unallocated Aaron’s Unallocated (In Thousands) BrandsMart Elimination1 Total BrandsMart Elimination1 Total Business Corporate Business Co
Slide 20: Reconciliation to Adjusted Free Cash Flow
Reconciliation to Adjusted Free Cash Flow (Unaudited) Three Months Ended September 30, (In Thousands) 2023 2022 Cash Provided by Operating Activities $ 34,742 $ 66,795 Proceeds from Real Estate Transactions — 7,537 Acquisition-Related Transaction Costs 425 1,747 Capital Expenditures (27,362) (26,008
Slide 21: Reconciliation to 2023 Current Outlook for Adjusted EBITDA
Reconciliation to 2023 Current Outlook1 for Adjusted EBITDA2 Fiscal Year 2023 Ranges (In Thousands) Aaron’s Business BrandsMart Consolidated Total Projected Net Earnings $14,000 - $17,500 Income Taxes $(6,000) - $(5,000) Projected Earnings Before Income Taxes $98,000 - $102,500 $(2,500) - $(1,000) $
Slide 22: Reconciliation to 2023 Previous Outlook for Adjusted EBITDA
Reconciliation to 2023 Previous Outlook1 for Adjusted EBITDA2 Fiscal Year 2023 Ranges (In Thousands) Aaron’s Business BrandsMart Consolidated Total Projected Net Earnings $16,800 - $25,450 Income Taxes $(800) - $550 Projected Earnings Before Income Taxes $101,000 - $110,000 $(500) - $2,500 $16,000 -
Slide 23: investor.aarons.com
The Aarons Company, Inc. lan’ : BrendsMart Wee, Aarons BrandsMart: Leasing’ Woodhaven’ investor.aarons.com