Core Insights - Upbound Group (UPBD) reported quarterly earnings of $1.05 per share, exceeding the Zacks Consensus Estimate of $1.01 per share, and up from $0.81 per share a year ago [1] - The company achieved revenues of $1.08 billion for the quarter, surpassing the Zacks Consensus Estimate by 2.16% and increasing from $1.02 billion year-over-year [3] Earnings Performance - The earnings surprise for the quarter was 3.96%, following a previous quarter where the company also exceeded expectations with earnings of $0.95 per share against an estimate of $0.89 [2] - Over the last four quarters, Upbound Group has consistently surpassed consensus EPS estimates [2] Future Outlook - The company's stock performance will largely depend on management's commentary during the earnings call and the sustainability of the recent earnings figures [4] - Current consensus EPS estimate for the upcoming quarter is $1 on revenues of $1.12 billion, and for the current fiscal year, it is $4.41 on revenues of $4.47 billion [8] Industry Context - Upbound Group operates within the Zacks Financial - Leasing Companies industry, which is currently ranked in the top 36% of over 250 Zacks industries [9] - The industry’s performance can significantly influence the stock's performance, with historical data indicating that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [9]

Compensation and Benefits - The Executive's annual base salary is set at $1,100,000, with the potential for annual reviews and increases by the Board[8]. - The Executive is eligible for an annual cash bonus targeted at 150% of the base salary, payable no later than March 15 of the following year[9]. - The Executive may receive annual equity-based awards with a target grant date fair value of 450% of the base salary, amounting to $4,950,000 for 2025[10]. - In the event of termination without Cause or for Good Reason, the Executive is entitled to two times the salary and bonus, payable in equal monthly installments over 24 months[26]. - If terminated due to Disability or death, the Executive or beneficiary will receive accrued compensation and a pro-rata bonus[28]. - The Company will cover legal fees for Executive or Executive's beneficiary if the Company fails to comply with obligations after a Change in Control[64]. - The Company will pay for Benefit Continuation Coverage for up to 24 months following termination if COBRA is elected[79]. - The Pro Rata Bonus is calculated based on the number of days worked in the year of termination[82]. Employment Terms - The Executive's employment will commence on June 1, 2025, and will continue until terminated as per the agreement[5]. - The Executive's employment is at-will and can be terminated by either party at any time[36]. - A general release agreement must be executed by the Executive to receive severance payments or benefits[38]. - The Company agrees to reimburse the Executive for all reasonable expenses incurred during cooperation following termination of employment[35]. Role and Responsibilities - The Executive will serve as the Chief Executive Officer and report directly to the Board of Directors[6]. - The Executive's place of employment will be at the Company's principal office in Plano, Texas, with reasonable business travel as needed[13]. - The Company will reimburse the Executive for reasonable business expenses incurred during the performance of duties[12]. Confidentiality and Non-Compete - Confidential Information includes non-public financial forecasts, historical financial data, and other business information disclosed to the Executive[39]. - The Executive is prohibited from holding a 5% or greater equity interest in a Competitive Enterprise for two years post-termination[46]. - The definition of "Competitive Enterprise" includes any entity engaged in the rent-to-own or lease-to-own business[47]. - The Executive is restricted from soliciting clients or employees for two years after termination[49]. - The Company is entitled to injunctive relief in case of breach of confidentiality or non-compete clauses[53]. - The Executive's entitlement to payments ceases if there is a breach of specified sections[55]. Legal and Compliance - The Agreement is governed by the laws of the State of Texas, and any disputes will be subject to arbitration[65]. - Payments under the Agreement are intended to comply with Section 409A of the Internal Revenue Code to avoid tax penalties[67]. - If Executive is a "specified employee," payments may be delayed for six months after separation from service[68]. - The Agreement supersedes all prior agreements related to the subject matter, except for specific agreements mentioned[74]. - The Agreement may be executed in counterparts, and electronic signatures are considered original[84]. Miscellaneous - The Company must provide written notice for any communications related to this Agreement[60]. - The Company may assign the Agreement to any of its Affiliates or successors without Executive's consent[61]. - Executive's beneficiary can be designated in a written beneficiary designation filed with the Company[62].

Core Insights - Upbound Group (UPBD) is expected to report quarterly earnings of $1.01 per share, a 24.7% increase year-over-year, with revenues projected at $1.06 billion, reflecting a 3.8% increase compared to the same period last year [1] - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analysts' projections [1] Revenue Projections - Analysts estimate 'Revenues- Franchise- Royalty income and fees' to reach $6.23 million, marking a 7.7% increase from the prior-year quarter [4] - 'Revenues- Franchise- Merchandise sales' is projected at $21.24 million, indicating a decline of 16% year-over-year [4] - Total 'Revenues- Store revenues' are expected to be $1.02 billion, reflecting a 3.8% increase from the previous year [5] - 'Revenues- Store revenues- Installment sales' is anticipated to be $14.10 million, suggesting a decrease of 23.5% year-over-year [5] - 'Revenues- Store revenues- Merchandise sales' is projected at $151.27 million, indicating a 19.6% increase year-over-year [6] - 'Revenues- Store revenues- Rentals and fees' is expected to reach $845.12 million, reflecting a slight increase of 0.5% from the prior-year quarter [6] Market Performance - Over the past month, Upbound Group shares have recorded a return of -0.3%, while the Zacks S&P 500 composite has increased by 4.7% [6] - Upbound Group holds a Zacks Rank 3 (Hold), suggesting that its performance is likely to align with the overall market in the upcoming period [6]

Group 1 - Upbound Group, Inc. (NASDAQ: UPBD) has decades of operational experience in the United States, demonstrating a well-tested business model with positive net income and free cash flow over the years [1] - The analyst expresses a preference for value investments, typically targeting companies trading at close to 10x earnings and offering dividend yields [1] - The focus of research is primarily on small-cap and mid-cap companies from the United States, Canada, South America, the UK, France, and Germany [1]

Core Insights - Upbound Group, Inc. (UPBD) reported third-quarter 2024 results that exceeded Zacks Consensus Estimates for both revenue and earnings, leading to an 8% increase in share price [1][3][11] Financial Performance - Adjusted earnings were 95 cents per share, surpassing the consensus estimate of 89 cents, and increased from 79 cents in the same quarter last year [3] - Total revenues reached $1,068.9 million, exceeding the consensus estimate of $1,047 million, marking a 9.2% year-over-year growth driven by rental and fee revenues, as well as merchandise sales [3][12] - Adjusted EBITDA was $116.9 million, up 10.3% year over year, with an adjusted EBITDA margin of 10.9%, reflecting a 10 basis point increase from the previous year [4] Segment Performance - Rent-A-Center segment revenues increased 1.1% year over year to $458.7 million, with same-store sales rising 2.6% [5][6] - Acima segment revenues rose 19.1% year over year to $566.2 million, driven by growth in rentals, fees, and merchandise sales [7][8] - The Mexico segment reported revenues of $19 million, up 7.3% on a constant-currency basis [9] 2024 Guidance - The company raised its 2024 revenue guidance to $4.20-$4.30 billion from the previous $4.10-$4.30 billion, with adjusted EBITDA expected between $470 million and $480 million [12][13] - Adjusted earnings for 2024 are projected to be $3.75-$3.90 per share, an increase from the previous estimate of $3.65-$4 [13]

Financial Data and Key Metrics Changes - The company's Q3 2024 revenue was nearly $1.1 billion, with adjusted EBITDA of approximately $117 million and non-GAAP earnings per share of $0.95, aligning with guidance and slightly above street consensus estimates [8][56] - Consolidated revenue increased by 9.2% year-over-year, with Acima up 19.1% and Rent-A-Center up 1.1% [56] - Consolidated gross margin decreased by 300 basis points year-over-year to 47.8% [58] - The consolidated lease charge-off rate was 7.4%, a 40 basis point increase from the prior year [59] Business Line Data and Key Metrics Changes - Acima's revenue grew by 19% year-over-year, with GMV growth of 13% [9][64] - Rent-A-Center achieved a same-store sales growth of 2.6% year-over-year, with total segment revenues increasing by 1.1% [24][70] - Acima's adjusted EBITDA margin decreased to 13.3%, down approximately 200 basis points year-over-year [67] - Rent-A-Center's adjusted EBITDA margin increased by 130 basis points year-over-year to 16.3% [73] Market Data and Key Metrics Changes - Acima's active merchant locations increased by approximately 10% year-over-year, contributing to GMV growth [64] - Rent-A-Center's e-commerce activity represented over 26% of revenue in Q3, up from approximately 25% in the prior year [25] Company Strategy and Development Direction - The company is focusing on customer retention and streamlining leasing processes for returning customers [30] - Acima is expanding its marketplace capabilities and adding new retail partnerships to enhance growth [31][34] - Rent-A-Center is leveraging technology and partnerships, including a collaboration with Google to enhance customer experience [46][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year guidance despite a challenging consumer environment [12][29] - The company anticipates a stable macro backdrop and expects to achieve revenue in the range of $4.2 billion to $4.3 billion for the full year [76] - Management noted that trade-down activity is expected to continue impacting gross margins in the near term but will benefit loss rates in the long run [81] Other Important Information - The company completed a franchise sale of 55 stores in the New York City metro area, which is expected to be EBITDA accretive [39][41] - The company ended Q3 with a net leverage ratio of approximately 2.6x and liquidity approaching $600 million [87] Q&A Session Summary Question: Acima's trade down activity and its impact on gross margins - Management indicated that trade down activity typically comes at a lower margin but allows for maintaining GMV and being selective in underwriting [92][93] Question: Managing Rent-A-Center with higher loss content but improved profitability - Management acknowledged the balance between losses and EBITDA margins, expressing comfort with current margins and the ability to tighten decisioning as needed [98][100] Question: Acima segment EBITDA flow through and timing - Management noted that some gross margin pressure is timing-related, with expectations for normalization in 2025 [109][110]

Revenue Growth - Consolidated revenues increased by approximately $267.0 million for the nine months ended September 30, 2024, compared to the same period in 2023[69]. - Total revenue increased by $267.0 million, or 9.0%, to $3,241.3 million for the nine months ended September 30, 2024, compared to $2,974.3 million for the same period in 2023[75]. - Total revenues increased by $89.8 million, or 9.2%, to $1,068.9 million for the three months ended September 30, 2024, compared to $979.1 million for the same period in 2023[73]. - Revenues for the three months ended September 30, 2024, increased by $5.1 million (1.1%) to $458.7 million compared to the same period in 2023, driven by higher rentals and fees revenues of $67.3 million[80]. Segment Performance - Acima segment revenues increased by approximately $256.9 million, attributed to higher rentals and fees revenues of $193.9 million and merchandise sales of $62.6 million[69]. - Revenues in the Rent-A-Center segment increased approximately $14.6 million for the nine months ended September 30, 2024, driven by a 1.9% increase in same store sales[70]. - The Mexico segment revenues increased by 8.9% for the nine months ended September 30, 2024, contributing to a gross profit increase of 10.2%, or $4.0 million[70]. - Acima segment revenues increased by $90.967 million, or 19.1%, to $566.183 million for the three months ended September 30, 2024, compared to $475.216 million for the same period in 2023[77]. - Revenues in the Mexico segment decreased by $612,000 (-3.1%) to $19.0 million for the three months ended September 30, 2024, while revenues for the nine months increased by $4.9 million (8.9%) to $60.5 million[81]. - Revenues in the Franchising segment decreased by $5.7 million (-18.6%) to $24.9 million for the three months ended September 30, 2024, primarily due to decreases in merchandise purchases by franchisees[83]. Profitability - Gross profit rose by approximately $62.5 million during the same period, primarily driven by the Acima segment's performance[69]. - Operating profit increased by approximately $105.5 million, mainly due to a decrease in other gains and charges of $104.5 million[69]. - Operating profit for the three months ended September 30, 2024, was $70.1 million, an increase of 20.7% compared to $58.1 million for the same period in 2023[72]. - Net earnings for the three months ended September 30, 2024, were $30.9 million, a significant increase of 607.3% compared to $4.4 million for the same period in 2023[72]. - Gross profit increased by $62.5 million, or 4.1%, to $1,572.1 million for the nine months ended September 30, 2024, with gross profit as a percentage of total revenue decreasing to 48.5% from 50.8%[76]. - Operating profit increased by $105.5 million to $212.5 million for the nine months ended September 30, 2024, with operating profit as a percentage of total revenue rising to 6.6% from 3.6%[76]. Expenses and Costs - Cost of rentals and fees increased by $45.6 million, or 15.4%, to $342.4 million for the three months ended September 30, 2024[73]. - Cost of merchandise sold increased by $36.0 million, or 23.0%, to $191.9 million for the three months ended September 30, 2024[73]. - Cost of rentals and fees increased by $122.4 million, or 13.8%, to $1,008.1 million for the nine months ended September 30, 2024, with the cost expressed as a percentage of rentals and fees revenue increasing to 38.2%[76]. - Non-labor operating expenses increased by $44.5 million, or 7.8%, to $613.8 million for the nine months ended September 30, 2024, with expenses as a percentage of total revenue decreasing to 19.4% from 19.7%[76]. - General and administrative expenses increased by $9.8 million, or 6.5%, to $160.2 million for the nine months ended September 30, 2024, with expenses as a percentage of total revenue at 4.9%[76]. - Lease charge-offs increased to $78.966 million for the three months ended September 30, 2024, compared to $68.925 million for the same period in 2023, representing a 15.4% increase[85]. - Total merchandise losses rose to $86.373 million for the three months ended September 30, 2024, compared to $75.278 million for the same period in 2023, marking a 14.6% increase[85]. Cash Flow and Financial Position - Cash flow from operations was $166.7 million for the nine months ended September 30, 2024[70]. - The company held $85.1 million of cash and cash equivalents and had outstanding indebtedness of $1.3 billion as of September 30, 2024[70]. - The company generated $166.7 million in operating cash flow for the nine months ended September 30, 2024, while using $291.6 million for debt repayments[84]. - The company ended the third quarter of 2024 with $85.1 million in cash and cash equivalents and outstanding indebtedness of $1.3 billion[84]. - Cash provided by operating activities decreased by $53.2 million to $166.7 million for the nine months ended September 30, 2024, from $219.9 million for the same period in 2023, primarily due to increased inventory purchases[86]. - Capital expenditures increased to $44.2 million for the nine months ended September 30, 2024, compared to $36.2 million for the same period in 2023, reflecting an increase of $8.0 million[86]. - The company had approximately $53.1 million in cash on hand and $474.4 million available under the ABL Credit Facility as of October 24, 2024[86]. - Outstanding borrowings under the Term Loan Facility amounted to $804.5 million as of October 24, 2024, with an interest rate indexed to the Term SOFR rate[88]. - A hypothetical 1.0% increase in market interest rates would result in an additional $8.0 million annualized pre-tax charge to the company's financial statements[91]. - The company recorded $0.5 million in uncertain tax positions as of September 30, 2024, indicating potential future cash liabilities[88]. - The company anticipates that cash flow generated from operations and availability under the ABL Credit Facility will be sufficient to fund operations during the next twelve months[86]. Strategic Initiatives - The company aims to enhance its competitive position by leveraging data analytics to attract new customers and mitigate risks across business segments[62]. - The company plans to accelerate the shift to e-commerce and improve the omni-channel customer experience at Rent-A-Center[62]. - The company is focused on expanding its direct-to-consumer channels and building partnerships with new national and regional third-party retailers[62]. - The company opened 3 new locations during the nine-month period ended September 30, 2024, bringing total locations to 2,320[87].

Financial Performance - Consolidated revenue for Q3 2024 was $1,068.9 million, representing a 9.2% year-over-year increase[5] - Adjusted EBITDA for Q3 2024 was $116.9 million, up 10.3% year-over-year, with an adjusted EBITDA margin of 10.9%[10] - Net income for Q3 2024 reached $30.9 million, an increase of $26.5 million compared to the previous year[5] - Acima's GMV grew by 13.0% year-over-year in Q3 2024, with revenues of $566.2 million, reflecting a 19.1% increase year-over-year[11] - Rent-A-Center reported revenue of $458.7 million in Q3 2024, a 1.1% year-over-year increase, with same-store sales up 2.6%[14] - Year-over-year revenue growth was reported at both Acima and Rent-A-Center (RAC), with Acima experiencing four consecutive quarters of double-digit GMV growth[19] - Total revenue for the three months ended September 30, 2024, was $1,068.9 million, an increase from $877.8 million in the same period last year, representing a growth of 21.8%[29] Cost and Expenses - Total cost of revenues was $392.2 million, up from $315.8 million, reflecting an increase of 24.2%[28] - Operating expenses totaled $110.0 million, compared to $101.3 million, marking an increase of 6.8%[28] - Total cost of revenues was $557.8 million, compared to $315.8 million in the previous year, indicating an increase of 76.6%[29] - Operating expenses totaled $412.9 million, up from $253.5 million, which is a rise of 62.9% year-over-year[29] - Non-labor operating expenses were $196.0 million, an increase from $122.9 million, representing a growth of 59.4%[29] Cash Flow and Debt Management - The company reduced debt by $81 million in Q3 2024 and ended the quarter with an undrawn ABL revolver[6] - Net cash provided by operating activities was $106.2 million, an increase of $28.2 million compared to Q3 2023[6] - The net leverage ratio decreased to 2.6x at the end of Q3 2024, down from 2.8x at the end of Q2 2024, with net debt reduced to $1.2 billion[18] - Free cash flow for the nine months ended September 30, 2024, was $88.3 million, compared to $63.2 million for the same period in 2023[27] Strategic Initiatives - Full year 2024 guidance indicates strong performance, positioning the company to meet its targets[6] - Strategic priorities for 2024 include expanding market share and enhancing digital capabilities to improve customer experience[9] - The company anticipates continued growth in revenue driven by new product launches and market expansion strategies[28] - The company is focusing on market expansion and new product development to drive future growth[29] Shareholder Returns - The company distributed a quarterly dividend of $0.37 per share, amounting to an annualized total of $1.48[18] - Total liquidity exceeded $550 million, supporting strategic priorities including growth initiatives and opportunistic buybacks[18] Performance Metrics - Lease charge-offs for Acima were 9.2%, improving by 20 basis points year-over-year and 40 basis points sequentially[11] - The company reported a 90 basis points year-over-year improvement in RAC's net earnings margin and a 130 basis points improvement in EBITDA margin[19] - Adjusted diluted earnings per share guidance for FY 2024 is projected to be between $3.75 and $3.90, an increase from the previous guidance of $3.65 to $3.90[16] - Merchandise sales reached $123.3 million, compared to $26.7 million, showing a significant increase of 362.5%[28] - Installment sales were $14.4 million, up from $13.4 million, reflecting a growth of 7.5%[28] - Rentals and fees contributed $442.5 million, up from $417.3 million, indicating a growth of 6.0% year-over-year[28] - Franchise and royalty fees amounted to $5.9 million, consistent with the previous year, showing no growth[28]

After a rocky start to the month that led to a global market rout, two major inflation data seemed to have steadied the ship as the broader equity markets inched closer to all-time highs reached in mid-July. While the producer price index (a measure of wholesale prices) was up 0.1% last month, the consumer price index (a broad-based measure of prices for goods and services) increased 0.2%. This put the 12-month inflation rate at 2.9% — the lowest since March 2021. While the data gave an uncertain market som ...

Upbound Group (UPBD) closed the last trading session at $31.75, gaining 6.9% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $40.43 indicates a 27.3% upside potential. The average comprises seven short-term price targets ranging from a low of $31 to a high of $45, with a standard deviation of $5.09. While the lowest estimate indicates a decline of 2.4% from the current price level, ...