Upbound Group, Inc. · NASDAQ:UPBD
Upbound — Rent A Center Inc DE — Q4 2020 Earnings Presentation
23 slides from Upbound's earnings presentation, Feb 25, 2021
Slide 1: Rent-A-Center: Fourth Quarter 2020 Earnings Review
Rent-A-Center: Fourth Quarter 2020 Earnings Review
Slide 2: Important Notices
IMPORTANT NOTICES 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 p
Slide 3: 2020 Full Year Review
3 2020 FULL YEAR REVIEW Acquired Acima for $1.65bn1 in February 2021, materially accelerating Rent-A-Center’s expectations for growth, with accretion to commence this FY 2021 2020 Consolidated revenues of $2,814 million, up 5.4% versus 2019 2020 Adjusted EBITDA1 of $331 million increased 30% o
Slide 4: Long Term Strategic and Financial Goals for Rent-A-Center Consolidated Business
4 LONG TERM STRATEGIC AND FINANCIAL GOALS FOR RENT-A-CENTER CONSOLIDATED BUSINESS 1 ACHIEVE CONSOLIDATED REVENUE AT $6 BILLION BY 2023 (A 50% INCREASE, PRO FORMA FOR THE ACIMA ACQUISITION), DRIVEN BY APPROXIMATELY 25% ANNUAL GROWTH AT ACIMA 2 INCREASE CONSOLIDATED ADJ. EBITDA MARGINS TO MID-TEENS BY
Slide 5: Acima at a Glance
5 ACIMA AT A GLANCE 1 Adjusted EBITDA is a non-GAAP measure; Adjusted earnings before interest, taxes, depreciation and amortization (Adj. EBITDA), includes all G&A expenses and stock based compensation (SBC) and excludes items not deemed by management to reflect core business activities Strategic r
Slide 6: Acima Rapidly Accelerates Our Financial Objectives
11.8% 13.8% Mid- Teens 2020 2023E 1 Adjusted EBITDA is a non-GAAP measure; See appendix for a reconciliation to the most comparable GAAP measure; Adjusted earnings before interest, taxes, depreciation and amortization (Adj. EBITDA), includes all G&A expenses and stock based compensation and excludes
Slide 7: Two Industry Leading Platforms, One LTO Vision
7 TWO INDUSTRY LEADING PLATFORMS, ONE LTO VISION ~2,400 Retail stores1 Key brands Key retail partners ~19,000 3rd party retail stores ~15% Sales from e-Commerce Foundational LTO Program Seamless LTO across mobile, web & store Proprietary platform to facilitate e-commerce 20-25% Sales from e-commerce
Slide 8: Priorities for Acima
8 PRIORITIES FOR ACIMA Integration planning Financial targets (includes Preferred Lease) Integrate Preferred Lease and Acima Preferred Lease business will migrate into Acima Combined business will be referred to as the Acima segment Acima’s Salt Lake City office will support the operations o
Slide 9: Accelerated Growth Through a Proprietary Digital Platform
9 Seamless LTO across mobile, web & store Proprietary platform to facilitate e-commerce Superior tech platform delivers excellent experience for customer and merchant + = Frictionless front-end virtual retail shopping experience Low-friction third-party LTO program driven by technology Cutting edge
Slide 10: The LTO Market Is Growing Rapidly as Retailers Adopt and Expand Access
10 THE LTO MARKET IS GROWING RAPIDLY AS RETAILERS CONTINUE TO ADOPT AND EXPAND ACCESS TO LTO OPTIONS AT THE POINT OF SALE Source: Management estimates, Experian New verticals Expansion into broader merchant verticals at the POS E-commerce / marketplace Provide virtual LTO solutions available in bric
Slide 11: Rent-A-Center Business: Driving Sustainable, Profitable Growth
11 RENT-A-CENTER BUSINESS: DRIVING SUSTAINABLE, PROFITABLE GROWTH Long-Term Growth Strategies Financial targets Increase omni-channel sales while leveraging existing store infrastructure Accelerate e-commerce growth via enhancements to platform Leverage Acima decision engine; expand digital payme
Slide 12: Evolving the Rent-A-Center Model via Digital
12 EVOLVING THE RENT-A-CENTER MODEL VIA DIGITAL Rent-A-Center Business e-commerce share of total revenues 1 Rent-A-Center Business % of revenue from digital payments 1 12% 12% 14% 15% 17% 20% 21% 22% >30% Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Target 20% 23% 25% 28% 36% 41% 46% 49% >50% Q1'
Slide 13: Q4 2020 Financial Highlights
13 Q4 2020 FINANCIAL HIGHLIGHTS Consolidated Revenue Growth: +7.3% versus last year Adjusted EBITDA of $97M, higher by 52.2 percent versus last year Non-GAAP Diluted EPS of $1.03, higher by 77.2 percent versus last year Preferred Lease Invoice Volume Growth: Approximately 25% versus last yea
Slide 14: 2021 Guidance
14 2021 GUIDANCE Annual Guidance Consolidated 1,2 Low High Revenues ($bn) $4.305 $4.455 Adjusted EBITDA ($mm) 4 $570 $620 % revenues 13.2% 13.9% Diluted Non-GAAP EPS 4 $5.00 $5.55 Free Cash Flow ($mm) 3,4 $145 $195 Acima Segment (includes Preferred Lease) 1 Revenues ($bn) $2.290 $2.390 Adjusted EBIT
Slide 15: 2021 Free Cash Flow Walk
15 2021 FREE CASH FLOW WALK Annual Walk Consolidated ($mm)1 Low High Midpoint Adj. EBITDA2 $595 Less: Cash taxes (40) (30) Less: Interest expense (75) (70) Less: Capex (70) (65) Plus: Change in working capital (280) (255) Plus: Stock based compensation 15 20 Free Cash Flow $145 $195 1 Includes Rent-
Slide 16: Acima Acquisition: Debt Structure
16 DEBT STRUCTURE AS OF CLOSING ($ mm) Rate $550mm Asset Based Loan 2 $165 200 bps + L Term Loan B 2 875 400 bps + L 1 Unsecured Senior Notes 2 450 6.375% Total debt $1,490 Net Debt to Adjusted EBITDA 2.4x 1 TLB Libor has a 75 bps floor 2 ABL due Feb. 2026, TLB due Feb. 2028, Senior Unsecured Notes
Slide 17: Balance Sheet & Capital Allocation Priorities
17 BALANCE SHEET & CAPITAL ALLOCATION PRIORITIES Investing in working capital to fuel organic growth of the largely untapped virtual LTO business#1 Reducing net leverage to <2.0x within 18 months, with a long term leverage target of 1.5x, while maintaining robust liquidity #2 Driving total sharehold
Slide 18: Appendix
Appendix
Slide 19: Q4 2020 Financial Highlights
19 Q4 2020 FINANCIAL HIGHLIGHTS 1 Non-GAAP financial measure. Refer to explanations and reconciliations elsewhere in this presentation. Q4 2020 In millions, except percentages and EPS Actual % of Total Revenue Rent-A-Center Business $464 64.8% Preferred Lease $201 28.1% Franchising $37 5.1% Mexico $
Slide 20: Reconciliation of Net Earnings Per Share to Non-GAAP Diluted EPS
20 RECONCILIATION OF NET EARNINGS PER SHARE TO NON-GAAP DILUTED EARNINGS PER SHARE 1 Refer to slides 21 and 22 for additional details (in thousands, except per share data) Amount Per Share Amount Per Share Amount Per Share Amount Per Share Net Earnings 56,300$ 1.00$ 40,491$ 0.72$ 208,115$ 3.73$ 173,
Slide 21: Reconciliation of Operating Profit to Adjusted EBITDA (Q4)
21 RECONCILIATION OF OPERATING PROFIT TO ADJUSTED EBITDA (CONSOLIDATED AND BY SEGMENT) (in thousands) Rent-A- Center Business Preferred Lease Mexico Franchising Corporate Consolidated GAAP Operating Profit (Loss) 80,354$ 17,319$ 2,055$ 3,876$ (48,965)$ 54,639$ Plus: Amortization, Depreciation 5,153
Slide 22: Reconciliation of Operating Profit to Adjusted EBITDA (Full Year)
22 RECONCILIATION OF OPERATING PROFIT TO ADJUSTED EBITDA (CONSOLIDATED AND BY SEGMENT) (in thousands) Rent-A-Center Business Preferred Lease Mexico Franchising Corporate Consolidated GAAP Operating Profit (Loss) 333,379$ 57,847$ 5,798$ 12,570$ (172,258)$ 237,336$ Plus: Amortization, Depreciation 19,
Slide 23: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
23 RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITES TO FREE CASH FLOW 2019 2019 (in thousands) Amount Amount Amount Amount Net cash provided by operating activities (59,724)$ (12,713)$ 236,502$ 215,416$ Purchase of property assets (11,988) (9,147) (34,545) (21,157) Hurricane insurance reco