Upbound Group, Inc. · NASDAQ:UPBD
Upbound — Rent A Center Inc DE — Proxy Contest (May 2017)
19 slides from Upbound's proxy contest presentation, May 22, 2017
Slide 1: Supplemental Presentation
Connecting Markets East & West Supplemental Presentation STRICTLY PRIVATE AND CONFIDENTIAL May 22, 2017 © Nomura
Slide 2: Disclaimer
Disclaimer This presentation is for discussion and general informational purposes only. It does not have regard to the specific investment objective, financial situation, suitability, or the particular need of any specific person who may receive this presentation, and should not be taken as advice o
Slide 3: Contact Information
Contact Information Investor Contact: Saratoga Proxy Consulting, LLC John Ferguson, 212-257-1311 jferguson@saratogaproxy.com Media Contact: Bayfield Strategy, Inc. Riyaz Lalani, 416-907-9365 rlalani@bayfieldstrategy.com
Slide 4: RCII's Incumbent Directors Admit to Massive Value Destruction
RCII’s Incumbent Directors Admit to Massive Value Destruction RCII Investor Presentation The Board’s plan for $160 million of EBITDA improvement over three years has been preceded by $255 million of EBITDA lost under the incumbent Board’s oversight The Board’s failed oversight has driven RCII’s stoc
Slide 5: RCII's Current Results Reflect the Board's Strategic and Governance Failures
RCII’s Current Results Reflect the Board’s Strategic and Governance Failures Core U.S. Same Store Sales Core U.S. EBITDA 4% 90 80 82 1.0% 1.4% 74 80 73 73 68 0% 70 Same Store Sales EBITDA ($M) (0.2%) 60 (4%) (2.2%) (3.2%) 50 37 40 30 33 (8%) (6.7%) 30 20 (12%) (12.0%) (12.5%) (13.0%) 10 (16%) (13.9%
Slide 6: RCII Has Failed to Create Value for Stockholders Over Both a Short and Long-Term Basis
RCII Has Failed to Create Value for Stockholders Over Both a Short and Long-Term Basis 1 Year – Indexed1 3 Year – Indexed1 60 60 50 40 43% 40 30 34% 20 20 13% 10 10% 0 0 (20) (10) (20) (40) (30) (60) (40) (39)% (72)% (50) (80) Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Jan-14 May-14 Sep-14 Jan
Slide 7: Financial Risk is Increasing
Financial Risk is Increasing In Q1 2017, RCII breached certain debt covenants, requiring a waiver from its creditors that significantly limits its ability to borrow additional capital The Board was forced to reduce RCII’s dividend by 67% at the beginning of 2016. At RCII’s current leverage ratio
Slide 8: RCII's Recent Stockholder Communications are Misleading
RCII’s Recent Stockholder Communications are Misleading RCII Investor Presentation1 New stores require working capital investment and borrowing capacity is limited due to breached debt covenants RCII had to announce measures to reduce elevated skips/stolens and address ANow product flooding the Core
Slide 9: Criticisms of Engaged Capital's Plan Make No Sense
Criticisms of Engaged Capital’s Plan Make No Sense RCII Investor Presentation Engaged Capital’s May presentation shared detailed analysis of RCII’s business and the potential for value creation In addition, our slate of Board nominees includes one of the most experienced rent-to-own executives in th
Slide 10: The Board's Story Has Changed From April to May
The Board’s Story Has Changed From April to May “Rent-A-Center’s Board will continue to evaluate all opportunities to enhance stockholder value RCII Presentation and is committed to pursuing the right course of action for all stockholders.” April 2017 “The Board rejects Engaged Capital’s claim that
Slide 11: Engaged Capital Day One Governance Imperatives
Engaged Capital Day One Governance Imperatives Matter Engaged Capital Plan Form Subcommittee to Evaluate Strategic Alternatives • Formulate and value an independent turnaround plan for the Company Strategy • Initiate a comprehensive analysis of all strategic alternatives with the Company’s financial
Slide 12: Engaged Capital Day One Operational Imperatives
Engaged Capital Day One Operational Imperatives Segment Engaged Capital Plan RCII’s Plan is Reactive and Not Novel • RCII’s “plan” to improve EBITDA by $160M is a mea culpa and request to recover from self-inflicted mistakes • RCII's "quick and decisive actions" have been completely reactive to Enga
Slide 13: Engaged Capital Recommended Two of its Largest Holdings Remain Public After a Strategic Alternatives Process
Engaged Capital Recommended Two of its Largest Holdings Remain Public After a Strategic Alternatives Process Agenda: Growth below peer levels, family run, poor corporate governance Joined board in settlement that replaced / removed 8 of 12 incumbent directors Medifast Concluded private strateg
Slide 14: Nominee Jeffrey Brown Has an Exemplary Record of Value Creation
Nominee Jeffrey Brown Has an Exemplary Record of Value Creation 40% 38% Joined as lead director of reconstituted board 35% 30% Medifast Strategic alternatives process did not culminate 25% in a sale 19% Director 20% Brought in new executive leadership, returned 15% (6/15 – the company to reven
Slide 15: Nominee Mitch Fadel Has an Exemplary Record of Value Creation
Nominee Mitch Fadel Has an Exemplary Record of Value Creation 100% Refocused and streamlined U.S. Pawn 78% 80% EZCORP operations, majority of EZPW business 60% President, Significantly improved loan growth, same store U.S. Pawn revenue growth, and profitability 40% (9/15 – 20% 15% 11/16) 0% S&P
Slide 16: Engaged Capital Has an Exemplary Record of Value Creation
Engaged Capital Has an Exemplary Record of Value Creation Engaged Capital Returns1 Holding Ticker Name ROI Realized Period (Yrs) RCII’s cherry-picked OUTR Outerwall, Inc. 61.3% Realized 0.7 MED Medifast, Inc. 49.1% Unrealized 3.3 analysis of Engaged BDBD Boulder Brands, Inc. 45.8% Realized 0.7 BHE
Slide 17: Companies in Which Engaged Capital Has Secured a Board Seat Have Consistently Outperformed
Companies in Which Engaged Capital Has Secured a Board Seat Have Consistently Outperformed OUTR MED BHE MX Average Return 21.3% TIVO Average 16.6% STKL S&P 500 Return TRS Outperformance 4.8% ANF JMBA HTWR Contrary to RCII’s misleading statements, Engaged Capital has a proven track record of creating
Slide 18: Engaged Capital's Plan: Reconstitute the Board
Engaged Capital’s Plan: Reconstitute the Board Jeffrey J. Brown Mitchell E. Fadel Christopher Hetrick CEO and founding member of Brown Equity President - U.S Pawn at EZCORP As a Principal of Engaged Capital, Mr. Partners, LLC (NASDAQ: EZPW) from 2015 to 2016 Hetrick represents the largest owne
Slide 19: Contact Information
Contact Information Investor Contact: Saratoga Proxy Consulting, LLC John Ferguson, 212-257-1311 jferguson@saratogaproxy.com Media Contact: Bayfield Strategy, Inc. Riyaz Lalani, 416-907-9365 rlalani@bayfieldstrategy.com