Core Insights - Upbound Group, Inc. (UPBD) reported strong first-quarter 2025 results, with revenues and earnings exceeding the Zacks Consensus Estimate, leading to an upward revision of its 2025 guidance [1][3][13] Financial Performance - Adjusted earnings per share were $1.00, surpassing the Zacks Consensus Estimate of 94 cents, and increased from 79 cents in the same quarter last year [3] - Total revenues reached $1,176.4 million, exceeding the consensus estimate of $1,119 million, marking a 7.3% year-over-year increase driven by growth in rentals, fees, and merchandise sales [3] - Adjusted EBITDA was $126.1 million, up 15.6% year over year, with a margin increase of 70 basis points to 10.7% [4] Segment Performance - Rent-A-Center segment revenues decreased 4.9% year over year to $489 million, attributed to fewer company-owned stores and disciplined underwriting [5] - Acima segment revenues rose 13.5% year over year to $637.3 million, with GMV growth of 8.8% driven by increased retailer locations and application volume [7][9] - Brigit generated revenues of $31.9 million for February and March 2025, reflecting a 35.4% increase from the same period in 2024 [10] 2025 Outlook - The company expects 2025 revenues to be between $4.60 billion and $4.75 billion, with adjusted EBITDA projected between $510 million and $540 million [13] - For Q2 2025, revenues are anticipated to be between $1.05 billion and $1.15 billion, with adjusted EBITDA of $125 million to $135 million [14] Financial Health - As of March 31, 2025, the company had cash and cash equivalents of $107.3 million, net senior debt of $1.09 billion, and stockholders' equity of $679.2 million [12]

Financial Data and Key Metrics Changes - First quarter revenue reached nearly $1,200,000,000, a 7.3% increase year over year, driven by the strength of Asima and the addition of Bridget [16][17] - Adjusted EBITDA was $126,000,000, reflecting a 16% increase compared to Q1 2024, with adjusted EBITDA margins at 10.7%, up 70 basis points from the previous year [16][17] - Non-GAAP diluted EPS was $1, representing a 27% increase from the same quarter last year [16][17] - Free cash flow generated was $127,000,000, nearly four times larger than the previous year's first quarter result [16][17] Business Line Data and Key Metrics Changes - Asima achieved GMV growth of nearly 9% year over year, with improved lease charge-offs by 70 basis points, leading to a 170 basis point increase in adjusted EBITDA margin [11][12] - Rent A Center reported a 2% decline in same-store sales, attributed to tightened underwriting and the removal of higher loss products [13][14] - Bridget experienced mid-twenty percent growth in both subscribers and cash advances, with revenue for the full quarter up 38% year over year [15][31] Market Data and Key Metrics Changes - Asima's GMV growth was driven by a diversified lineup of merchant relationships, with the top 10 merchants representing about 30% of total GMV [12][28] - Rent A Center's revenue was down 4.9% year over year due to fewer company-owned stores, with same-store sales reflecting fewer deliveries [33] - The average tax refund was slightly ahead of the prior two years, providing a boost to consumer spending power [17][18] Company Strategy and Development Direction - The company aims to become a holistic financial platform that improves customers' financial lives, focusing on underserved populations [6][9] - Expansion plans include launching a pilot in the Mexican market for Asima, leveraging existing Rent A Center infrastructure [21][22] - Digital investments are prioritized to enhance customer experience and drive growth across segments [19][20] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic conditions present both challenges and opportunities, with a focus on maintaining customer trust and loyalty [10][18] - The company expects to see low double-digit GMV growth across the year, building on last year's 17% growth [12][44] - Management expressed confidence in achieving the revised guidance for 2025, citing strong first-quarter performance [44][47] Other Important Information - The company successfully resolved a long-standing regulatory matter with the CFPB, which had no changes to its business or financial penalties [48] - The Bridget acquisition is expected to enhance customer acquisition and mitigate losses through data collaboration [63][64] Q&A Session Summary Question: Can you provide more details on tariff exposure and price increases? - Management indicated no current price changes from suppliers, with some categories even seeing price reductions. They emphasized their ability to adjust pricing flexibly if needed [54][55][57] Question: What is the outlook for Bridget's integration and synergies? - Management confirmed good progress in integrating Bridget, with plans for marketing collaboration and data sharing to enhance customer approvals and mitigate losses [63][64] Question: Can you elaborate on the expansion of Asima in Mexico? - Management expressed excitement about the expansion, leveraging existing Rent A Center infrastructure to mitigate risks associated with entering a new market [76][78]

Core Viewpoint - Upbound Group reported quarterly earnings of $1 per share, exceeding the Zacks Consensus Estimate of $0.94 per share, and showing an increase from $0.79 per share a year ago [1] Financial Performance - The company achieved revenues of $1.18 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 5.09% and up from $1.1 billion year-over-year [3] - Upbound Group has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2][3] Stock Performance - The stock has experienced a decline of approximately 31.8% since the beginning of the year, compared to a 5.3% decline in the S&P 500 [4] - The current Zacks Rank for Upbound Group is 3 (Hold), indicating expected performance in line with the market in the near future [7] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $1.03 on revenues of $1.14 billion, and for the current fiscal year, it is $4.10 on revenues of $4.6 billion [8] - The trend of estimate revisions for Upbound Group is mixed, which may change following the recent earnings report [7] Industry Context - The Financial - Leasing Companies industry, to which Upbound Group belongs, is currently ranked in the top 38% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [9]

Financial Data and Key Metrics Changes - First quarter revenue reached nearly $1,200,000,000, a 7.3% increase year over year, driven by the strength of Asima and the addition of two months of Bridget [15][16] - Adjusted EBITDA was $126,000,000, reflecting a 16% increase compared to Q1 of 2024, with adjusted EBITDA margins rising to 10.7%, up 70 basis points from the previous year [16][17] - Non-GAAP diluted EPS was $1, representing a 27% increase from the same quarter last year [16] - Free cash flow generated was $127,000,000, nearly four times larger than the previous year's first quarter result [16][37] Business Line Data and Key Metrics Changes - Asima achieved GMV growth of nearly 9% year over year, with improved lease charge-offs by 70 basis points, leading to a 170 basis point increase in adjusted EBITDA margin [10][11] - Rent A Center reported a 2% decline in same-store sales, primarily due to tightened underwriting and the removal of higher loss products [12][13] - Bridget recorded a 38% year-over-year revenue increase on a pro forma basis, with subscriber growth of over 26% [14][31] Market Data and Key Metrics Changes - Asima's GMV growth was driven by a diversified lineup of merchant relationships, with the top 10 merchants representing about 30% of total GMV [11][28] - Rent A Center's revenue was down 4.9% year over year, attributed to fewer company-owned stores and a decline in deliveries [34] - The average tax refund was ahead of the prior two years, providing a boost to consumer spending power [17] Company Strategy and Development Direction - The company aims to become a holistic financial platform that enhances financial opportunities for underserved consumers [6][50] - Expansion plans include launching Asima in the Mexican market, leveraging existing Rent A Center infrastructure [20][22] - Digital investments are a priority, with initiatives to enhance customer experience and integrate services across segments [19][23] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic conditions present both challenges and opportunities, with a focus on maintaining customer trust and loyalty [9][18] - The company expects to see low double-digit GMV growth across the year, building on last year's 17% growth [12] - Management expressed confidence in achieving the revised guidance for 2025, citing strong first-quarter performance [45][48] Other Important Information - The company successfully resolved a long-standing regulatory matter with the CFPB, which had no impact on business operations [49] - The net leverage ratio was approximately 2.9 times, reflecting the closure of the Bridget transaction [38] Q&A Session Summary Question: Can you provide more details on tariff impacts and price increases? - Management indicated no current price increases from suppliers, with some categories even seeing price reductions [55][56] - They emphasized the ability to adjust pricing through weekly payment modifications if necessary [56][60] Question: What is the integration plan for Bridget across the business? - Management confirmed that marketing collaboration has begun, with plans for data sharing to enhance customer approvals and mitigate losses [64][65] Question: Can you elaborate on Bridget's seasonality and growth plans? - Management noted that Q1 typically has the highest margin profile, with expectations for subscriber growth in Q2 and Q3 [73][76] Question: What are the risks associated with expanding Asima into Mexico? - Management expressed confidence in the expansion due to existing Rent A Center operations in Mexico, which provide valuable market insights [77][79]

Financial Performance - Consolidated revenue reached $1.2 billion, a 7.3% year-over-year increase[17] - Net income was $24.8 million, a decrease of $2.9 million year-over-year[17] - Adjusted EBITDA increased by 15.6% year-over-year to $126.1 million[17] - Non-GAAP diluted EPS increased by $0.21 year-over-year to $1.00[17] - Net cash provided by operating activities increased by $92.3 million year-over-year to $137.7 million[17] Segment Highlights - Acima experienced an 8.8% year-over-year growth in GMV[14] - Brigit saw a 26.1% year-over-year growth in paying subscribers[14] - Rent-A-Center experienced a 2% year-over-year decrease in same-store sales and a 4.5% reduction in store count[14] Guidance - The company raised the midpoint of its full-year 2025 revenue guidance to $4.60 - $4.75 billion[39] - Full-year adjusted EBITDA guidance is $510 - $540 million[39] - Full-year non-GAAP diluted earnings per share guidance is $4.00 - $4.40[39] - Free cash flow guidance for the full year is $150 - $200 million[39]

upbound " Upbound Group, Inc. Earnings Release May 1, 2025 First Quarter 2025 Results & Key Metrics 25M $1.00 $1 176M $0.42 126M Adjusted Non-GAAP Total GAAP Net Earnings EBITDA® Revenue Diluted EPS Diluted EPS1 Strong Volume Growth at Acima and Brigit; Exceeds Q1 Targets and Raises Midpoint for Revenue, Net Cash Provided by Operating Activities of $138M Adjusted EBITDA, and Non-GAAP Diluted EPS First Quarter Consolidated Results CEO Commentary "We delivered strong results in the first quarter, which exceed ...

Company Overview - Upbound Group (UPBD) shares increased by 8.8% to close at $22.38, following a notable trading volume compared to typical sessions, despite a previous 18.2% loss over the past four weeks [1] - The company operates a virtual lease-to-own (LTO) business, which is a significant growth driver, indicating strong business model performance and rising consumer adoption [2] Financial Performance - Upbound Group is expected to report quarterly earnings of $0.94 per share, reflecting a year-over-year increase of 19% [3] - Revenue projections stand at $1.12 billion, marking a 2.2% increase from the same quarter last year [3] Market Trends - The consensus EPS estimate for Upbound Group has remained stable over the last 30 days, suggesting that stock price movements may not sustain without earnings estimate revisions [5] - The stock currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook [5] Industry Context - Upbound Group is part of the Zacks Financial - Leasing Companies industry, where another company, McGrath (MGRC), saw a 5.7% increase in its stock price, closing at $107.22, despite a -8.6% return over the past month [5] - McGrath's consensus EPS estimate has also remained unchanged at $1.02, representing a year-over-year change of +9.7%, with a Zacks Rank of 4 (Sell) [6]

Company Overview - Upbound Group (UPBD) is headquartered in Plano and operates in the Finance sector, specifically in leasing furniture and appliances with an option to buy [3] - The stock has experienced a price decline of 24.72% since the beginning of the year [3] Dividend Information - Upbound Group currently pays a dividend of $0.39 per share, resulting in a dividend yield of 7.1%, which is significantly higher than the Financial - Leasing Companies industry's yield of 4.45% and the S&P 500's yield of 1.76% [3] - The company's annualized dividend of $1.56 has increased by 4% from the previous year, with an average annual increase of 5.93% over the last five years [4] - The current payout ratio for Upbound Group is 41%, indicating that it pays out 41% of its trailing 12-month earnings per share as dividends [4] Earnings Growth Expectations - For the fiscal year 2025, the Zacks Consensus Estimate projects earnings of $4.10 per share, reflecting a year-over-year earnings growth rate of 7.05% [5] Investment Considerations - Upbound Group is considered a compelling investment opportunity due to its strong dividend yield and growth potential, despite the general challenges faced by high-yielding stocks during periods of rising interest rates [7]

Revenue Segments - Acima segment accounted for approximately 52% of consolidated revenues for the year ended December 31, 2024[35]. - Rent-A-Center segment comprised approximately 43% of consolidated revenues for the year ended December 31, 2024[36]. - The Franchising segment includes 448 stores across 29 states, generating royalties of 3.0% to 6.0% of franchisees' monthly gross revenue[39]. Store Operations - As of December 31, 2024, the company operated 1,728 company-owned stores in the United States and Puerto Rico[36]. - The company operated 132 stores in Mexico as of December 31, 2024[37]. - The company operates 21 Home Choice stores in Minnesota, 30 Get It Now stores in Wisconsin, and 18 Rent-A-Center stores in New Jersey, adapting to local regulations[64][66]. Customer Experience and Technology - The company plans to leverage data analytics to attract new customers and mitigate risk across business segments[30]. - The company aims to accelerate the shift to e-commerce and improve the omni-channel customer experience[30]. - The company utilizes a proprietary automated process for lease purchase agreement approvals, benefiting both retailers and consumers[33]. - The company emphasizes flexible lease-to-own options, allowing customers to obtain ownership through various payment plans[24]. Lease Purchase Agreements - In the Rent-A-Center segment, ownership is attained in approximately 38% of lease purchase agreements, with an average product life of about 16 months[46]. - The majority of lease purchase agreements have renewal terms that are weekly, bi-weekly, semi-monthly, or monthly, with daily monitoring of past due payments[47]. - The lease-to-own industry serves approximately 25% of the U.S. population classified as "subprime" (credit scores below 650) and 31% of consumers with incomes below $50,000[56]. Financial Performance and Trends - Revenue is moderately seasonal, with the first quarter typically generating higher merchandise sales due to federal income tax refunds[58]. - 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[79]. - The company reported a significant impact from macroeconomic trends, including wage inflation and global supply chain disruptions, resulting in reduced product availability and rising product costs[80]. Risks and Challenges - The company faces risks related to its acquisition of Brigit, including the potential inability to realize anticipated benefits and incurring substantial expenses, which could adversely affect its financial condition and results of operations[78]. - The company is subject to various legal and regulatory risks, including investigations into Acima's business practices, which could result in significant costs and operational changes[78]. - The company’s operations are affected by competitive pressures in the lease-to-own industry, which could impede its ability to maintain lease volumes and pricing[76]. - The company has significant indebtedness, which could materially affect its financial condition and operational flexibility[78]. Cybersecurity and Information Management - The company relies heavily on information systems for operations and is continuously improving its cybersecurity measures to mitigate risks[196]. - The Cybersecurity and Privacy team reports to the Chief Technology and Digital Officer, who directly reports to the CEO, ensuring high-level oversight of cybersecurity initiatives[197]. - The company has a layered cybersecurity strategy that includes identification, protection, detection, and recovery to manage risks effectively[198]. Regulatory Environment - The company is exposed to increased regulatory scrutiny and potential new regulations that could impact its virtual lease-to-own operations[99]. - The company must comply with evolving environmental regulations, which may lead to increased expenses and operational challenges[121]. - Federal and state regulatory authorities are increasingly scrutinizing the lease-to-own industry, which may result in higher compliance costs and operational changes due to new or reinterpreted regulations[148]. Acquisitions and Strategic Growth - The company completed the acquisition of Brigit on January 31, 2025, enhancing its financial health technology offerings[18]. - The recent acquisition of Brigit expands the company's strategic focus into technology-driven financial health solutions, such as earned wage access and credit building products[88]. - The company expects to realize potential revenue and cost synergies from the Brigit acquisition, but there are risks associated with achieving these synergies[192]. Employee and Operational Management - As of December 31, 2024, the company employed a total of 11,970 coworkers, with 10,110 in U.S. operations, including Puerto Rico[61]. - The company is subject to high employee turnover rates, which could increase training and retention costs, adversely affecting operations[115]. - The company must effectively manage its inventory to reflect customer demand; failure to do so could lead to significant revenue declines and lower profitability[86].

Financial Data and Key Metrics Changes - Fourth quarter revenue reached nearly $1.1 billion, a 6% increase year-over-year, primarily driven by Assima's performance [23] - Adjusted EBITDA for the fourth quarter was $123 million, reflecting a 14% year-over-year increase, with adjusted EBITDA margins at 11.4%, up 80 basis points from the previous year [23] - For the full year, revenue grew 8.2% to over $4.3 billion, marking the second highest on record for Upbound [25] - Adjusted EBITDA for the year was over $473 million, up 3.8% from the prior year, with non-GAAP diluted EPS increasing by 8% to $3.83 [26] Business Line Data and Key Metrics Changes - Assima's revenue grew over 17% for the year, ending at approximately $2.3 billion, with top-line growth driven by new customer acquisitions and productivity gains [15][28] - Rent-A-Center's revenue decreased by approximately $15 million year-over-year, primarily due to store franchising and consolidation, but adjusted EBITDA increased by over $8 million due to reduced operating expenses [56] - Assima recorded Q4 GMV growth of 15.3% year-over-year, with the highest number of applications in a quarter, up 19% year-over-year [50] Market Data and Key Metrics Changes - Assima's top ten retailers represent approximately 30% of GMV, indicating a diverse merchant roster that mitigates concentration risk [14] - Rent-A-Center's same-store sales were relatively flat in the fourth quarter, with furniture and appliances making up nearly 70% of the product mix [55] - The overall lease charge-off rate for the fourth quarter was 7.3%, slightly better than the previous year's rate of 7.5% [24] Company Strategy and Development Direction - The company aims to shift towards a digital-first platform, with Assima and Bridgion leading in virtual and mobile solutions [22] - Strategic priorities for 2025 include expanding core LTO offerings across key verticals and enhancing customer experience through technology [30][32] - The integration of Bridgion is expected to amplify growth across Rent-A-Center and Assima, leveraging new digital products to improve customer financial health [20][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience amid economic and regulatory uncertainties, highlighting the ability to adapt to changing consumer behaviors [17][18] - The outlook for 2025 anticipates continued growth for Assima, with revenue expected to rise in the high single digits to low double digits, while Rent-A-Center's revenue is projected to decline in the low single-digit range [64][66] - Management emphasized a cautious approach to underwriting, reflecting the current consumer environment and macroeconomic conditions [89] Other Important Information - Mitch Fadel announced his retirement as CEO, with Fahmi Karam appointed as the new CEO effective June 1, 2025, following a thoughtful succession planning process [8][9] - The company plans to maintain a strong dividend yield while focusing on capital allocation priorities, including reinvestment in the business and strategic M&A opportunities [60][62] Q&A Session Summary Question: Can you talk about your view of your core customer and how they are positioned heading into 2025? - Management noted that while the core customer remains under pressure, trade-down dynamics are helping to offset challenges, particularly for Assima, which is experiencing growth despite tightening [81][84] Question: What are the strategic priorities for improving margins in the Assima business? - Management highlighted that improvements in margins will come from better loss management and operational leverage, with expectations for gross profit margins to improve in 2025 [91][94] Question: How much have you tightened underwriting and what are the trends in different product categories? - Management indicated that while applications are up, approval rates have remained relatively flat, with furniture showing strength in approval rates, while other categories like electronics have seen declines [104][115]