Upbound (US:UPBD)2025-10-30 23:27Financial Performance - Consolidated revenues increased by approximately $257.3 million, or 7.9%, to $3.5 billion for the nine months ended September 30, 2025, compared to the same period in 2024 [165]. - Total revenues for the three months ended September 30, 2025, increased by $95.8 million, or 9.0%, to $1.164 billion, driven by the Acima and Brigit segments [175]. - Total revenue increased by $257.3 million, or 7.9%, to $3,498.6 million for the nine months ended September 30, 2025, from $3,241.3 million for the same period in 2024 [186]. - Gross profit increased by $112.9 million, or 7.2%, to $1.7 billion for the nine months ended September 30, 2025 [165]. - Operating profit decreased by approximately $46.4 million, or 21.8%, to $166.1 million for the nine months ended September 30, 2025, compared to $212.5 million for the same period in 2024 [194]. - Operating profit margin for the Rent-A-Center segment decreased to 12.2% for the three months ended September 30, 2025, down from 15.1% in the same period of 2024, due to increased other gains and charges [202]. Segment Performance - The Acima segment revenues rose by approximately $201.2 million, driven by an increase in rentals and fees revenues of $150.5 million and merchandise sales of $50.7 million, primarily due to higher GMV [166]. - Revenues for the Rent-A-Center segment decreased by 4.7% to $461.1 million for the three months ended September 30, 2025, and by 5.6% to $1.42 billion for the nine months ended September 30, 2025, primarily due to a 3.6% decline in same store sales [200]. - The Brigit segment generated revenues of $141.4 million and an operating profit of $23.9 million since its acquisition [169]. - Acima segment revenues increased by $59.1 million, or 10.4%, to $625.3 million for the three months ended September 30, 2025, compared to $566.2 million for the same period in 2024 [197]. - Brigit segment revenues reached $57.7 million for the three months ended September 30, 2025, with gross profit at $51.0 million, resulting in a gross profit margin of 88.5% [203][204]. Cash Flow and Investments - Cash flow from operations was $264.0 million for the nine months ended September 30, 2025, with cash and cash equivalents of $107.0 million and outstanding indebtedness of $1.6 billion [171]. - Operating cash flow generated was $264.0 million for the nine months ended September 30, 2025, an increase of $97.3 million from the prior year [211]. - Cash used in investing activities surged to $374.9 million for the nine months ended September 30, 2025, primarily due to the acquisition of Brigit for $275.9 million [212]. - Capital expenditures increased to $49.3 million for the nine months ended September 30, 2025, compared to $44.2 million in 2024, reflecting a 11.52% increase primarily due to higher investment in software development [216]. Debt and Financing - The company entered into a Fourth Amendment to the Term Loan Facility on August 19, 2025, extending the maturity date to August 19, 2032, and providing approximately $77 million of incremental commitments [148]. - As of October 23, 2025, the company had outstanding borrowings of $875 million under the Term Loan Facility and $239 million under the ABL Credit Facility [223][237]. - The interest rate on the Term Loan Facility was 6.88% as of October 23, 2025, while the ABL Credit Facility bore interest at 6.23% [221][237]. - The total remaining obligation for existing store lease contracts was approximately $338 million as of September 30, 2025 [226]. Operational Changes and Strategy - The company aims to leverage data analytics to attract new customers and mitigate risk across business segments [145]. - The company is focused on enhancing its competitive position through the execution of market opportunities in both traditional and virtual lease-to-own solutions [145]. - The company plans to accelerate the shift to e-commerce and improve the omni-channel customer experience at Rent-A-Center [154]. - The company is committed to retaining revenue from acquired lease-to-own customer accounts and enhancing the performance of acquired stores [144]. - Executive management changes include the appointment of Mr. Hal Khouri as Chief Financial Officer and Ms. Rebecca Wooters as Chief Growth Officer, effective November 10, 2025, and September 18, 2025, respectively [155]. Market Conditions - Macroeconomic conditions have significantly impacted business trends, including changes in consumer payment behaviors and rising product costs [150]. - A hypothetical 1.0% increase in market interest rates would result in an additional $11.1 million annualized pre-tax charge or credit to the company's financial statements [237]. - The company is currently assessing the impact of recently issued accounting standards, including ASU 2024-03 and ASU 2025-05, which will be effective in the coming years [231][232]. Merchandise Losses - Total merchandise losses for the nine months ended September 30, 2025, were $268.995 million, an increase from $260.303 million in the same period of 2024, representing a 2.65% increase [216]. - Merchandise losses in Acima locations due to LCOs were approximately 9.7% and 9.3% for the three and nine months ended September 30, 2025, respectively, compared to 9.2% and 9.5% for the same periods in 2024 [199].