Revenue Performance - Consolidated revenues increased by approximately $177.3 million for the six months ended June 30, 2024, compared to the same period in 2023[132]. - Total revenues increased by $97.3 million, or 9.9%, to $1,076.5 million for the three months ended June 30, 2024, compared to the same period in 2023[140]. - Total revenue increased by $177.3 million, or 8.9%, to $2,172.5 million for the six months ended June 30, 2024, compared to $1,995.2 million for the same period in 2023[151]. - Acima segment revenues increased by approximately $165.9 million, attributed to a rise in rentals and fees revenues of $126.7 million and merchandise sales of $39.2 million[133]. - Revenues in the Rent-A-Center segment increased by approximately $9.5 million for the six months ended June 30, 2024, driven by a 1.6% increase in same store sales[134]. - Mexico segment revenues increased by 15.5% for the six months ended June 30, 2024, contributing to a gross profit increase of 16.9%, or $4.3 million[135]. - Revenues for the Mexico segment increased by 13.1% to $20,868,000 for the three months ended June 30, 2024, and by 15.5% to $41,435,000 for the six months ended June 30, 2024, compared to the same periods in 2023[169]. Profitability Metrics - Gross profit rose by approximately $48.5 million during the first half of 2024, primarily driven by the Acima segment's performance[132]. - Gross profit increased by $25.8 million, or 5.1%, to $532.0 million for the three months ended June 30, 2024, with a gross profit margin of 49.4%[144]. - Gross profit increased by $48.5 million, or 4.8%, to $1,061.0 million, with gross profit as a percentage of total revenue decreasing to 48.8% from 50.7%[154]. - Operating profit increased by approximately $93.5 million, mainly due to a decrease in other gains and charges of $103.7 million[132]. - Operating profit increased by $93.5 million to $142.4 million, representing 6.6% of total revenue, up from 2.5% in the prior year[159]. - Operating profit decreased by $3.3 million, or 4.0%, to $80.7 million for the three months ended June 30, 2024, with an operating profit margin of 7.5%[149]. - Operating profit for the Mexico segment increased by 20.1% to $1,559,000 for the three months ended June 30, 2024, and by 42.0% to $3,255,000 for the six months ended June 30, 2024, compared to the same periods in 2023[171]. Expenses and Costs - Non-labor operating expenses increased by $39.9 million, general and administrative expenses rose by $12.2 million, and operating labor costs increased by $5.9 million[132]. - Cost of rentals and fees rose by $76.9 million, or 13.1%, to $665.7 million, with the cost as a percentage of rentals and fees revenue increasing to 37.9% from 36.5%[152]. - Non-labor operating expenses increased by $39.9 million, or 10.6%, to $417.7 million, with expenses as a percentage of total revenue rising to 19.7% from 19.5%[156]. - General and administrative expenses rose by $12.2 million, or 12.6%, to $108.7 million, with expenses as a percentage of total revenue increasing to 5.0% from 4.8%[157]. - Operating labor increased by $4.3 million, or 2.8%, to $156.2 million for the three months ended June 30, 2024, representing 14.9% of total revenue[145]. Cash Flow and Indebtedness - Cash flow from operations was $60.5 million for the six months ended June 30, 2024, with cash and cash equivalents of $82.5 million[136]. - The company held outstanding indebtedness of $1.3 billion as of June 30, 2024[136]. - Operating cash flow generated was $60.5 million for the six months ended June 30, 2024, a decrease of $81.5 million from $142.0 million for the same period in 2023[176]. - Cash used in investing activities increased to $26.1 million for the six months ended June 30, 2024, compared to $21.4 million for the same period in 2023[177]. - The company ended the second quarter of 2024 with $82.5 million in cash and cash equivalents and outstanding indebtedness of $1.3 billion[175]. - As of July 25, 2024, the company had outstanding borrowings of $806.7 million under the Term Loan Facility and available commitments of $410.6 million under the ABL Credit Facility[187]. Market and Operational Insights - The company plans to enhance its competitive position by expanding direct-to-consumer channels and leveraging data analytics capabilities[122]. - E-commerce revenues represented approximately 26% of total lease-to-own revenues for the six months ended June 30, 2024[124]. - Revenue mix is moderately seasonal, with the first quarter generally providing higher merchandise sales due to federal income tax refunds[193]. - The company is exposed to market risk from foreign exchange rate fluctuations of the Mexican peso to the U.S. dollar[198]. Shareholder Returns - A quarterly cash dividend of $0.37 per share was approved for the third quarter of 2024, reflecting the company's commitment to returning value to shareholders[117]. Segment Performance - Franchising segment revenues decreased by $3.7 million for the six months ended June 30, 2024, primarily due to a decrease in merchandise sales[136]. - Franchising segment revenues decreased by 7.3% to $27,945,000 for the three months ended June 30, 2024, and by 6.2% to $56,246,000 for the six months ended June 30, 2024, compared to the same periods in 2023[172]. - Merchandise losses in Acima locations due to LCOs were approximately 9.6% for the six months ended June 30, 2024, compared to 8.9% for the same period in 2023[163]. - Operating profit margin for Rent-A-Center decreased to 14.8% for the six months ended June 30, 2024, down from 15.5% in the prior year, primarily due to technology investments and elevated insurance costs[168].

Financial Performance - Consolidated revenues increased by approximately $79.9 million and gross profit increased by $22.8 million for the three months ended March 31, 2024, primarily due to growth in the Acima segment [122]. - Total revenues increased by $79.9 million, or 7.9%, to $1,096.0 million for the three months ended March 31, 2024, compared to $1,016.1 million for the same period in 2023 [130]. - Gross profit increased by $22.8 million, or 4.5%, to $529.1 million for the three months ended March 31, 2024, with gross profit as a percentage of total revenue decreasing to 48.3% [134]. - Operating profit increased by approximately $96.9 million, or 275.9%, to $61.8 million for the three months ended March 31, 2024, compared to a loss of $35.1 million for the same period in 2023 [139]. - Net earnings were $27.7 million for the three months ended March 31, 2024, a decrease of $19.6 million, or 41.5%, compared to $47.3 million in the same period in 2023 [129]. Segment Performance - Acima segment revenues rose by approximately $77.5 million, driven by increases in rentals and fees revenues of $59.4 million and merchandise sales of $18.2 million, attributed to higher Gross Merchandise Volume (GMV) [123]. - The Acima segment reported revenues of $561.3 million for the three months ended March 31, 2024, an increase of $77.5 million, or 16.0%, compared to $483.8 million in 2023 [141]. - Rent-A-Center segment revenues increased by approximately $0.7 million, with same store sales growing by 0.8%, primarily due to an increase in rentals and fees revenues of $3.5 million [124]. - Rent-A-Center segment revenues were $485.8 million for the three months ended March 31, 2024, a slight increase of $0.7 million, or 0.2%, compared to $485.0 million in 2023 [144]. - Mexico segment revenues increased by 18.0%, contributing to a gross profit increase of 18.8%, or $2.3 million, driven by a 5.6% increase in same store sales [125]. - Revenues for the Mexico segment increased by 18.0% to $20,567,000 for the three months ended March 31, 2024, compared to $17,430,000 for the same period in 2023 [147]. - Gross profit for the Mexico segment was $14,716,000, representing an 18.8% increase compared to $12,391,000 for the same period in 2023 [147]. - Operating profit for the Mexico segment increased by 70.5% to $1,696,000 for the three months ended March 31, 2024, compared to $995,000 for the same period in 2023 [147]. Expenses and Cash Flow - Non-labor operating expenses increased by $17.1 million, or 8.7%, to $213.8 million for the three months ended March 31, 2024, primarily due to an increase in the Acima segment [136]. - General and administrative expenses rose by $7.4 million, or 15.4%, to $55.1 million for the three months ended March 31, 2024, compared to $47.7 million in 2023 [137]. - Operating cash flow generated was $45.4 million for the three months ended March 31, 2024, a decrease of $60.0 million from $105.4 million for the same period in 2023 [154]. - Cash flow from operations was $45.4 million for the three months ended March 31, 2024, with cash and cash equivalents totaling $84.8 million and outstanding indebtedness of $1.3 billion [127]. Dividends and Shareholder Returns - The company announced a quarterly cash dividend of $0.37 per share for the second quarter of 2024, paid on April 22, 2024 [109]. Strategic Initiatives - The company plans to leverage data analytics capabilities to attract new customers and mitigate risk across business segments [114]. - The company aims to accelerate the shift to e-commerce and improve the omni-channel customer experience to enhance brand awareness and customer loyalty [114]. - The company is focused on developing centers of excellence to support various business segments and drive efficiency and growth [114]. Market and Economic Factors - The company's revenue mix is moderately seasonal, with the first quarter generally providing higher merchandise sales due to federal income tax refunds [172]. - The company is exposed to foreign exchange rate fluctuations of the Mexican peso to the U.S. dollar, affecting the financial position and operating results of its stores in Mexico [177]. - A hypothetical 1.0% increase or decrease in market interest rates would result in an additional $8.6 million annualized pre-tax charge or credit [176]. Debt and Interest Rate Management - The company had outstanding borrowings of $808.9 million under the Term Loan Facility as of April 24, 2024 [166]. - As of March 31, 2024, the company had $450 million in Notes outstanding at a fixed interest rate of 6.375% [176]. - The company also had $808.9 million outstanding under the Term Loan Facility and $53.0 million under the ABL Credit Facility, both indexed to the Term SOFR rate [176]. - The company continuously monitors and manages interest rate risk through assessments of trends and may enter into swap contracts to mitigate this risk [175]. - The company has not entered into any interest rate swap agreements as of March 31, 2024 [176]. Accounting Standards and Compliance - The adoption of ASU 2023-09 will be required for fiscal years beginning after December 15, 2024, but is not expected to have a material impact on financial statements [173]. - The impact of other recently issued accounting standards that are not yet effective is believed to be either not applicable or immaterial upon adoption [174].

Revenue Segments - Acima segment accounted for approximately 48% of consolidated revenues for the year ended December 31, 2023[31]. - Rent-A-Center segment comprised approximately 47% of consolidated revenues for the year ended December 31, 2023[32]. - The company operates 131 stores in Mexico as of December 31, 2023[33]. - The company operates 21 Home Choice stores in Minnesota, 86 lease-to-own stores, and 14 Acima staffed locations in North Carolina as of December 31, 2023[62][63]. - Franchising segment revenues increased by $2.0 million, primarily due to an increase in merchandise sales of $3.7 million[211]. - E-commerce revenues represented approximately 26% of total lease-to-own store revenues for the year ended December 31, 2023, up from 25% in 2022[201]. - Acima segment revenues decreased approximately $179.0 million, primarily due to lower GMV and fewer customers electing early purchase options[209]. - Rent-A-Center segment revenues decreased approximately $85.7 million, with a 4.3% decrease in same store sales driven by lower rentals and fees revenues[208]. - Consolidated revenues decreased by approximately $253.0 million and gross profit decreased by $57.2 million for the year ended December 31, 2023 compared to 2022[207]. Store Operations - As of December 31, 2023, the company operated 1,839 company-owned stores in the United States and Puerto Rico[32]. - The company franchised 440 stores across 30 states as of December 31, 2023[35]. - The company leases space for its stores and support facilities, with most leases expiring between 2032 and 2034, and expects to find suitable space for new locations as needed[182]. Customer Experience and Technology - The company aims to enhance its competitive position by leveraging data analytics capabilities to attract new customers and mitigate risk[27]. - The company plans to accelerate the shift to e-commerce and improve the omni-channel customer experience[27]. - The company utilizes a proprietary automated decision engine for lease purchase agreement approvals[21]. - The company offers flexible payment options, allowing customers to pay weekly, bi-weekly, semi-monthly, or monthly[17]. - The company provides same-day or next-day delivery and installation of merchandise at no additional cost in its Rent-A-Center stores[23]. - The company is focused on developing robust virtual lease-to-own technology to enhance its retail partner business, following acquisitions that have accelerated this development[103]. Financial Performance and Challenges - The company has experienced negative trends in customer behavior since late 2021, leading to a tightening of underwriting policies and a reduction in active leases, which has decreased lease revenue and operating cash flows[81]. - The company is facing challenges due to a tight labor market contributing to wage inflation and global supply chain disruptions, resulting in reduced product availability and rising product costs[82]. - Effective cost management is crucial for profitability, as the company faces rising costs from suppliers, labor, and economic conditions, which may not be recoverable through price increases[98]. - The company has significant indebtedness, which could adversely affect its financial condition and operational flexibility[80]. - The company’s growth strategy is dependent on attracting and retaining experienced management and investing in technology capabilities, which are critical for executing future initiatives[91]. - The company may face significant tax liabilities due to the complex and evolving nature of indirect taxes applicable to its operations, particularly in the lease-to-own industry[150]. Regulatory and Legal Risks - The company’s operations are subject to various legal and regulatory risks, which could result in significant compliance costs and operational restrictions[80]. - Acima is currently facing investigations from the CFPB and state attorneys general, which may materially and adversely affect its business[132]. - The CFPB has indicated potential violations of multiple consumer protection laws, which could lead to legal actions and financial penalties against Acima[133]. - Acima's lease-to-own transactions are subject to varying state laws, with 46 states having regulations that impose significant compliance costs[140]. - The company is exposed to increased scrutiny from federal and state regulators, which could lead to higher compliance costs and operational changes[139]. - The company has incurred substantial costs related to compliance with evolving federal and state laws, which may continue to rise[140]. Competition and Market Conditions - The company faces intense competition in the lease-to-own industry, which could adversely affect lease volumes and pricing, impacting overall operating results[113]. - The Acima segment's growth may be hindered by increased competition from retail partners who may favor competitors' lease-to-own solutions[115]. - Competition in the e-commerce sector is increasing, necessitating innovation in technologies and digital solutions to maintain market share[104]. Cybersecurity and Internal Controls - There is a significant risk of cybersecurity threats, which could compromise customer and operational data, leading to potential liabilities and reputational damage[108][109]. - The company has a comprehensive cybersecurity program, with a dedicated team reporting to the Chief Executive Officer and regular assessments of cybersecurity risks[175][179]. - The company emphasizes the necessity of effective internal controls to provide reliable financial reports, as failure to do so could harm brand and operating results[110]. Debt and Financial Obligations - As of December 31, 2023, the company's total indebtedness was approximately $1.3 billion, with undrawn commitments available for borrowings of an additional $429.6 million under the ABL Credit Facility[151]. - The annual cash interest payments on the company's indebtedness are approximately $106 million, which may fluctuate depending on changes in interest rates[156]. - The company may face challenges in refinancing its indebtedness or obtaining additional financing, which could impair its financial position and operational flexibility[157]. - The company is subject to restrictive covenants that may limit its operational and financial flexibility, including restrictions on incurring additional indebtedness and paying dividends[160]. - A breach of covenants could result in an event of default, allowing debt holders to accelerate related debt, which may exceed the company's asset value[162]. Employee and Labor Considerations - As of December 31, 2023, the company employed a total of 12,970 coworkers, with 11,050 in U.S. operations, 1,340 in Mexico, and 580 at corporate facilities[58]. - The company has a history of promoting management personnel from within, enhancing operational leadership and strategic vision[49]. - The company relies heavily on retaining key employees, as their departure could materially affect business sustainability and growth[116]. - The company may face increased operating expenses due to potential liabilities arising from new labor regulations effective February 26, 2024, which could materially affect its results of operations[146]. Seasonal and Economic Factors - The first quarter of each fiscal year generally provides higher merchandise sales due to federal income tax refunds, while cash expenditures peak in the latter part of the third quarter[55]. - Seasonal fluctuations in revenue are expected, with the first quarter typically generating higher merchandise sales due to federal tax refunds[127]. - The company's business is sensitive to economic conditions, including consumer spending and payment behaviors, which are influenced by factors such as inflation and employment levels[79].

Financial Performance - Consolidated revenues and gross profit decreased by approximately $280.6 million and $74.5 million, respectively, for the nine months ended September 30, 2023 [130]. - Operating profit increased by approximately $0.8 million, primarily due to a decrease in other store expenses of $55.0 million and labor expenses of $26.3 million [130]. - Revenues in the Rent-A-Center segment decreased approximately $77.6 million, driven by a 5.2% decrease in same store sales [131]. - Same store sales decline was attributed to decreases in rentals and fees revenues of $45.1 million and merchandise sales of $25.4 million, respectively [131]. - Acima segment revenues decreased by approximately $210.6 million for the nine months ended September 30, 2023, primarily due to decreases in rentals and fees revenues and merchandise sales [132]. - Mexico segment revenues increased by 14.6% for the nine months ended September 30, 2023, contributing to a gross profit increase of 15.1% or $5.2 million [133]. - Total store revenue decreased by $281.2 million, or 8.9%, to $2,885.9 million for the nine months ended September 30, 2023, compared to $3,167.1 million for the same period in 2022 [149]. - Operating profit increased by $21.0 million, or 56.6%, to $58.1 million for the three months ended September 30, 2023, compared to $37.1 million in 2022 [147]. - Net earnings for the three months ended September 30, 2023, were $4.4 million, a significant improvement compared to a loss of $5.8 million in the same period of 2022 [142]. Cost and Expenses - Cost of rentals and fees decreased by $83.0 million, or 8.6%, to $885.7 million for the nine months ended September 30, 2023, compared to $968.7 million in 2022 [150]. - Cost of merchandise sold decreased by $122.7 million, or 19.9%, for the nine months ended September 30, 2023, compared to the same period in 2022 [150]. - Total cost of revenues decreased by $206.1 million, or 12.3%, to $1.464 billion for the nine months ended September 30, 2023 [150]. - Cost of merchandise sold decreased by $122.6 million, or 19.9%, to $492.9 million for the nine months ended September 30, 2023, from $615.5 million in 2022 [152]. - General and administrative expenses increased by $13.9 million, or 34.7%, to $53.9 million for the three months ended September 30, 2023 [145]. - General and administrative expenses increased by $9.1 million, or 6.5%, to $150.4 million for the nine months ended September 30, 2023, with expenses as a percentage of total revenue rising to 5.1% from 4.3% [156]. - Store labor decreased by $26.3 million, or 5.4%, to $460.5 million for the nine months ended September 30, 2023, with store labor as a percentage of total store revenue increasing to 16.0% from 15.4% [154]. - Other store expenses decreased by $55.0 million, or 8.8%, to $569.3 million for the nine months ended September 30, 2023, with other store expenses as a percentage of total store revenue remaining at 19.7% [155]. Cash Flow and Financing - Cash flow from operations was $219.9 million for the nine months ended September 30, 2023 [134]. - Cash provided by operating activities decreased by $192.2 million to $219.9 million for the nine months ended September 30, 2023, from $412.1 million in 2022, primarily due to an increase in inventory purchases [173]. - Cash used in financing activities decreased to $223.8 million for the nine months ended September 30, 2023, compared to $304.5 million in 2022, primarily due to a decrease in debt repayments [174]. - As of September 30, 2023, the company had outstanding borrowings of $815.5 million under the Term Loan Facility and available commitments of $485.6 million under the ABL Credit Facility [186]. - The company ended the third quarter of 2023 with $105.7 million of cash and cash equivalents and outstanding indebtedness of $1.3 billion [172]. Market and Economic Conditions - The company is facing macroeconomic challenges, including wage inflation and global supply chain disruptions, impacting product availability and costs [121]. - The company has experienced negative customer behavioral trends, including increases in delinquent payments and merchandise loss activity [120]. - Total merchandise losses for the nine months ended September 30, 2023 were $229.3 million, down from $288.8 million in 2022, with customer stolen merchandise losses at $208.4 million [178]. - The company is exposed to market risk from foreign exchange rate fluctuations of the Mexican peso to the U.S. dollar [197]. Strategic Initiatives - The company is focused on enhancing technology platforms to improve consumer experience and streamline transactions [118]. - The company aims to grow penetration with current Acima merchants and attract new merchants to its platform [118]. - Revenue mix is moderately seasonal, with the first quarter generally providing higher merchandise sales due to federal income tax refunds [193]. Tax and Obligations - Income tax expense decreased by $16.4 million to $19.4 million for the nine months ended September 30, 2023, with the effective tax rate decreasing to 76.1% from 78.7% [159]. - The company has recorded $1.4 million in uncertain tax positions as of September 30, 2023, representing a potential future cash liability [192]. - As of September 30, 2023, the total remaining obligation for existing vehicle lease contracts in Mexico was approximately $2.9 million [191]. Capital Expenditures - Capital expenditures decreased to $36.2 million for the nine months ended September 30, 2023, compared to $49.4 million in 2022, primarily due to lower investment in store-related assets [178]. - During the first nine months of 2023, the company acquired one lease-to-own store location for an aggregate purchase price of approximately $39.0 thousand [179]. Interest Rate Exposure - As of September 30, 2023, the company had $450 million in Notes outstanding at a fixed interest rate of 6.375% [196]. - The company had $815.5 million outstanding under the Term Loan Facility, with interest rates indexed to the Term SOFR rate or the prime rate [196]. - A hypothetical 1.0% increase or decrease in market interest rates would result in an additional $8.3 million annualized pre-tax charge or credit [196].

Financial Performance - Consolidated revenues decreased approximately $235.8 million for the six months ended June 30, 2023, compared to the same period in 2022[133]. - Operating profit decreased approximately $20.2 million, primarily due to a decrease in gross profit of $66.1 million driven by lower revenues[133]. - Revenues in the Rent-A-Center segment decreased approximately $57.5 million for the six months ended June 30, 2023, due to a 5.8% decrease in same store sales[134]. - Same store sales decline was driven by decreases in rentals and fees revenues of $31.4 million and merchandise sales of $22.2 million, respectively[134]. - Acima segment revenues decreased by approximately $181.3 million for the six months ended June 30, 2023, primarily due to decreases in rentals and fees revenues and merchandise sales[135]. - Total store revenue decreased by $235.3 million, or 10.8%, to $1,936.7 million for the six months ended June 30, 2023, primarily due to decreases in the Acima and Rent-A-Center segments[152]. - Gross profit decreased by $66.1 million, or 6.1%, to $1,012.5 million for the six months ended June 30, 2023, primarily due to decreases in the Rent-A-Center and Acima segments[145]. - Operating profit decreased by $20.2 million to $48.9 million for the six months ended June 30, 2023, with operating profit as a percentage of total revenue at 2.5%, down from 3.1% in 2022[161]. Cash Flow and Financial Position - Cash flow from operations was $142.0 million for the six months ended June 30, 2023, with cash and cash equivalents of $86.8 million and outstanding indebtedness of $1.3 billion[137]. - Operating cash flow for the six months ended June 30, 2023, was $142.0 million, a decrease of $145.1 million from $287.1 million in 2022, primarily due to increased inventory purchases[176]. - Cash used in investing activities decreased to $21.4 million for the six months ended June 30, 2023, from $31.3 million in 2022, mainly due to lower investment in store-related assets[177]. - Cash used in financing activities decreased to $180.0 million for the six months ended June 30, 2023, compared to $252.0 million in 2022, primarily due to higher debt repayments[178]. - The company ended the second quarter of 2023 with $86.8 million in cash and cash equivalents and outstanding indebtedness of $1.3 billion[175]. Segment Performance - Mexico segment revenues increased by 10.7% for the six months ended June 30, 2023, contributing to an increase in gross profit of 11.0%, or $2.5 million[136]. - Rent-A-Center segment revenues decreased by $23.994 million, or 4.9%, for the three months ended June 30, 2023, with a gross profit decrease of $21.807 million, or 6.3%[163]. - Acima segment revenues decreased by $65.812 million, or 12.4%, for the three months ended June 30, 2023, with gross profit decreasing by $5.394 million, or 3.3%[166]. - Mexico segment revenues increased by $1.753 million, or 10.5%, for the three months ended June 30, 2023, with gross profit increasing by $1.236 million, or 10.5%[169]. Expenses and Profitability - Cost of rentals and fees decreased by $69.8 million, or 10.6%, to $588.8 million for the six months ended June 30, 2023[153]. - Cost of merchandise sold decreased by $99.2 million, or 22.7%, to $336.9 million for the six months ended June 30, 2023[155]. - Other charges decreased by $25.9 million, or 48.2%, to $27.8 million for the three months ended June 30, 2023, compared to the previous year[149]. - Other charges increased by $31.6 million to $155.4 million for the six months ended June 30, 2023, primarily due to stock compensation expenses related to the acquisition of Acima Holdings[160]. - Store labor decreased by $22.2 million, or 6.7%, to $308.4 million for the six months ended June 30, 2023, with store labor as a percentage of total store revenue increasing to 15.9% from 15.2%[157]. - Other store expenses decreased by $48.7 million, or 11.4%, to $377.8 million for the six months ended June 30, 2023, with other store expenses as a percentage of total store revenue at 19.5% compared to 19.6% in 2022[158]. Tax and Regulatory - Income tax expense increased by $83.0 million to $102.4 million for the three months ended June 30, 2023, primarily due to the tax impact of accelerated stock compensation expense[151]. - Income tax benefit for the six months ended June 30, 2023 was $(7.7) million, compared to $15.7 million in 2022, primarily due to the tax impact of accelerated stock compensation expense[162]. Market Risks and Management - The company is exposed to market risk from foreign exchange rate fluctuations of the Mexican peso to the U.S. dollar, affecting the financial position and operating results of its stores in Mexico[200]. - A hypothetical 1.0% increase or decrease in market interest rates would result in an additional $8.3 million annualized pre-tax charge or credit to the condensed consolidated statement of operations[199]. - Monitoring and managing market risk related to interest rates is a continual process carried out by senior management[198]. - The company has not entered into any interest rate swap agreements as of June 30, 2023[199]. Strategic Initiatives - The company announced a quarterly cash dividend of $0.34 per share for the third quarter of 2023, paid on July 11, 2023[119]. - The company is focused on enhancing technology platforms to improve consumer experience and streamline transaction processes[121]. - The company aims to grow penetration with current Acima merchants and attract new merchants to its platform[121]. - The company is experiencing negative customer behavioral trends, including increases in delinquent payments and merchandise loss activity[123]. - The company has tightened its underwriting policies in response to declining revenues and increased operating expenses[123]. Accounting and Compliance - The company believes that recently issued accounting standards will not have a material impact on its consolidated financial statements upon adoption[197]. - The revenue mix is moderately seasonal, with the first quarter generally providing higher merchandise sales due to federal income tax refunds[196]. - The company recorded $1.3 million in uncertain tax positions as of June 30, 2023, representing potential future cash liabilities[195]. - As of June 30, 2023, the total remaining obligation for existing store lease contracts was approximately $345.0 million[192]. - As of June 30, 2023, the company had $450 million in Notes outstanding at a fixed interest rate of 6.375%[199]. - The company also had $815.5 million outstanding under the Term Loan Facility, with interest rates indexed to the Term SOFR rate or the prime rate[199].

Financial Performance - Consolidated revenues decreased approximately $143.7 million for the three months ended March 31, 2023, compared to the same period in 2022[124]. - Operating profit decreased approximately $46.2 million, primarily due to a decrease in gross profit of $39.8 million driven by lower revenues[124]. - Revenues in the Rent-A-Center Business segment decreased approximately $33.5 million, attributed to a 6.6% decrease in same store sales[125]. - Total revenues decreased by $143.7 million, or 12.4%, to $1,016.1 million for the three months ended March 31, 2023, compared to $1,159.7 million in 2022[130]. - Gross profit decreased by $39.8 million, or 7.3%, to $506.3 million for the three months ended March 31, 2023, with gross profit as a percentage of total revenue increasing to 49.8%[135]. - Operating profit decreased by $46.1 million to $(35.1) million for the three months ended March 31, 2023, with an operating loss margin of (3.5)%[140]. - Acima segment revenues decreased by approximately $115.5 million, or 13.0%, to $987.0 million for the three months ended March 31, 2023, compared to $1,134.3 million in the same period of 2022[131]. - Acima segment revenues decreased by 19.3% to $483.8 million for the three months ended March 31, 2023, compared to $599.4 million in 2022, primarily due to lower demand for durable goods[145]. - Operating cash flow generated was $105.4 million for Q1 2023, a decrease of $99.9 million from $205.3 million in Q1 2022, mainly due to increased inventory purchases[154]. Revenue Sources - E-commerce revenues represented approximately 25% of total lease-to-own store revenues for the three months ended March 31, 2023, up from 23% in the same period of 2022[118]. - Mexico segment revenues increased by 10.9%, contributing to a gross profit increase of 11.6%, or $1.3 million, for the three months ended March 31, 2023[127]. - Mexico segment revenues increased by 10.9% to $17.4 million in Q1 2023, driven by favorable exchange rate fluctuations[148]. - Franchising segment revenues rose by 14.0% to $29.8 million in Q1 2023, primarily due to increased merchandise purchases by franchisees[151]. Cost Management - Store labor decreased by $10.1 million, or 6.1%, to $156.5 million for the three months ended March 31, 2023, representing 15.9% of total store revenue[136]. - Cost of merchandise sold decreased by $66.0 million, or 26.4%, to $184.3 million for the three months ended March 31, 2023, with a gross margin percent of merchandise sales decreasing to (13.1)%[134]. - Other charges increased by $57.5 million, or 81.9%, to $127.6 million for the three months ended March 31, 2023, primarily due to stock compensation expenses related to the acquisition of Acima Holdings[139]. - Total merchandise losses decreased to $80.1 million in Q1 2023 from $109.6 million in Q1 2022, with customer stolen merchandise losses dropping to $72.0 million[159]. Cash and Debt Management - Cash flow from operations was $105.4 million for the three months ended March 31, 2023, with cash and cash equivalents totaling $171.7 million[128]. - The company ended Q1 2023 with $171.7 million in cash and cash equivalents and outstanding indebtedness of $1.4 billion[153]. - As of March 31, 2023, the company had outstanding borrowings of $817.6 million under the Term Loan Facility and available commitments of $397.1 million under the ABL Credit Facility[166]. - The company issued $450.0 million in senior unsecured notes with a fixed interest rate of 6.375%, due February 15, 2029, to fund part of the Acima Holdings acquisition[167]. Strategic Initiatives - The company is focused on enhancing technology platforms to improve consumer experience and streamline transaction processes[112]. - The company aims to leverage data analytics to attract new customers and mitigate risk across all business segments[112]. - The company is pursuing joint venture, partnership, or merger and acquisition opportunities to advance key initiatives[108]. Tax and Regulatory Matters - Income tax benefit for the three months ended March 31, 2023, was $110.1 million, compared to $3.6 million in 2022, primarily due to accelerated stock compensation expense[141]. - The company recorded $5.1 million in uncertain tax positions as of March 31, 2023, representing potential future cash liabilities[171]. Market and Economic Factors - Revenue mix is moderately seasonal, with the first quarter generally providing higher merchandise sales due to federal income tax refunds[172]. - A hypothetical 1.0% increase or decrease in market interest rates would result in an additional $9.2 million annualized pre-tax charge or credit to the condensed consolidated statement of operations[175]. - The company has not entered into any interest rate swap agreements as of March 31, 2023, to mitigate interest rate risk[175]. - The company is exposed to foreign exchange rate fluctuations between the Mexican peso and the U.S. dollar, affecting the financial position and operating results of its stores in Mexico[176].

Revenue Segments - The Acima segment accounted for approximately 50% of the consolidated net revenues for the year ended December 31, 2022[42]. - The Rent-A-Center Business segment comprised approximately 46% of the consolidated net revenues for the year ended December 31, 2022[43]. - The Rent-A-Center Business segment generated approximately 46% of consolidated revenues for the year ended December 31, 2022, indicating its continued importance despite the growth of the Acima segment[108]. - The Acima segment revenues decreased approximately $217.8 million, primarily due to inflationary pressures on consumer discretionary income and the wind-down of stimulus programs[220]. - Revenues in the Rent-A-Center Business segment decreased approximately $88.0 million, with a 4.5% decrease in same store sales attributed to lower demand for consumer durable goods[219]. - Franchising segment revenues decreased by $35.8 million for the twelve months ended December 31, 2022, primarily due to a decrease in inventory purchases by franchisees[222]. Store Operations - As of December 31, 2022, the company operated 1,851 company-owned stores in the United States and Puerto Rico[43]. - The company franchised 447 stores across 31 states as of December 31, 2022, generating royalties of 2.0% to 6.0% of franchisees' monthly gross revenue[46]. - As of December 31, 2022, the company operated 19 Home Choice stores in Minnesota, 86 lease-to-own stores, and 35 Acima staffed locations in North Carolina[75][76]. Customer Behavior and Trends - The company experienced negative trends in customer behavior since late 2021, attributed to the expiration of government fiscal and monetary stimulus, leading to lower payment and higher loss activity[94]. - The first quarter of each fiscal year generally sees higher merchandise sales due to customers exercising early purchase options, primarily linked to federal income tax refunds[68]. - The company implemented tighter underwriting policies in response to negative customer behavioral trends, impacting active leases and lease revenue[207]. Technology and Innovation - The company aims to enhance technology platforms to improve consumer experience and streamline transaction processes[37]. - The company is investing in new information management technology and systems to enhance operational efficiency and data management[114]. - The company has accelerated its virtual growth strategy through acquisitions and aims to expand its product verticals and e-commerce platform to enhance customer experience[101]. - The company plans to significantly expand its virtual lease-to-own offerings, which requires investment in information and technology capabilities[102]. - The company is focused on developing robust virtual lease-to-own technology to support its retail partner business growth strategy[112]. Financial Position and Debt - As of December 31, 2022, the company's total indebtedness was approximately $1.4 billion, with undrawn commitments available for borrowings of an additional $395.6 million under the ABL Credit Facility[155]. - The annual cash interest payments on the company's indebtedness are approximately $71 million, which may fluctuate depending on changes in interest rates[161]. - Approximately $950 million of the company's indebtedness was variable rate indebtedness as of December 31, 2022, with each quarter-point (0.25%) change in interest rates resulting in an additional $2.4 million annualized pretax charge or credit[168]. - The company is dependent on cash flow generated by its subsidiaries to meet obligations under the ABL Credit Facility, Term Loan Facility, and the Notes, which could be adversely affected if subsidiaries cannot pay dividends[179]. - If the company cannot make scheduled payments on its debt, it may face default, leading to severe financial consequences, including potential bankruptcy[162]. Regulatory and Legal Risks - The lease-to-own industry is facing increased scrutiny from federal and state regulatory authorities, which could lead to significant compliance costs and operational changes[141]. - Currently, 46 states and the District of Columbia have laws regulating rental purchase transactions, which require substantial compliance efforts and expose the company to regulatory actions[142]. - The regulatory environment regarding information security and data privacy is evolving, with laws like the California Consumer Privacy Act (CCPA) imposing new compliance obligations[145]. - The company is subject to various federal and state consumer protection statutes that provide remedies for violations, which could lead to disputes and regulatory scrutiny[144]. - Increased attention from regulators may result in more stringent laws and regulations that could materially affect the company's operations and financial condition[141]. Competition and Market Challenges - The company operates in a highly competitive environment, with competitors potentially having greater financial resources and aggressive pricing strategies that could impact sales and margins[121]. - The company faces significant competition from the growing e-commerce sector, which may impact its market share and profitability[113]. - Acima's business relies heavily on retail partner relationships, and increased competition could limit growth and profitability[123]. Operational Challenges - Disruptions in the supply chain have resulted in delays and increased costs, adversely impacting the company's ability to meet customer expectations and stock stores[95]. - The company must effectively manage its inventory to reflect customer demand; failure to do so could lead to significant revenue decline and lower profit margins[99]. - Collection efforts are enhanced by personal relationships between employees and customers, with a focus on recovering rental items promptly[56]. - The company faces challenges in attracting and retaining key employees, which is essential for sustaining and growing operations[124]. Miscellaneous - The company has paid quarterly cash dividends on its common stock since 2019, but there is no guarantee of future dividends due to potential restrictions from debt agreements[181]. - The corporate name changed to Upbound Group, Inc., with trading under the ticker "UPBD" beginning February 27, 2023[203]. - The company repurchased 3,536,799 shares for approximately $75.1 million under the December 2021 stock repurchase program[194].