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].
RENT-A-CENTER(RCII) - 2024 Q1 - Quarterly Report