Upbound (US:UPBD)2024-05-02 19:30Financial Data and Key Metrics Changes - The company reported revenues of nearly $1.1 billion, with adjusted EBITDA of $109 million and non-GAAP earnings per share of $0.79, indicating a strong start to the year [40][41] - Consolidated gross margin decreased by 150 basis points year-over-year to 48.3%, with a 190 basis point decrease in the Acima segment partially offset by a 110 basis point increase in the Rent-A-Center segment [24] - The consolidated lease charge-off rate was 7.4%, a 30 basis point increase from the prior year, but decreased by 10 basis points sequentially [25] - Adjusted EBITDA margin decreased by approximately 100 basis points year-over-year to 10% [26] Business Line Data and Key Metrics Changes - Acima achieved a nearly 20% year-over-year increase in GMV for the first quarter, marking the single largest first quarter GMV recorded by Acima [13][60] - Rent-A-Center reported a same-store sales growth of 80 basis points, representing the first increase in same-store sales in eight quarters [16] - Total segment revenues for Rent-A-Center returned to growth, increasing by 20 basis points year-over-year [29] Market Data and Key Metrics Changes - The direct-to-consumer channel for Rent-A-Center represented over 26% of total revenue in the first quarter, showing growth from both year-ago and sequential periods [49] - The asset value of inventory under lease was up mid-teens year-over-year, indicating a positive trend in inventory management [28] Company Strategy and Development Direction - The company is focused on enhancing underwriting capabilities and expanding its direct-to-consumer e-commerce channels, which are expected to drive growth [3][4] - A commitment to customer centricity is emphasized, aiming to build relationships with consumers and retailers to increase market share [44][45] - The integration of Acceptance Now into Acima is nearing completion, which is expected to improve lease charge-off rates and overall performance [43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's durable business model, which is expected to succeed in various macroeconomic environments, particularly with stable employment metrics and consumer spending [9][41] - The company anticipates continued GMV growth and positive same-store sales, supported by strong execution and strategic initiatives [17][91] - Management acknowledged the impact of persistent inflation on consumer discretionary spending but remains optimistic about the company's ability to adapt and grow [41][42] Other Important Information - The company generated $33.6 million of free cash flow in the first quarter, a decrease from $95.9 million in the prior year period [27] - A quarterly dividend of $0.37 per share was distributed, an increase from $0.34 per share in the prior year [27] Q&A Session Summary Question: What would it take for the company to be more constructive on guidance going forward? - Management indicated that the current quarter's performance was in line with expectations, and they would consider revisiting guidance if margin improvements and GMV growth continue [83] Question: How does the company view the impact of trade-down on GMV growth? - Management acknowledged that while trade-down is not fully included in forecasts, they expect it to contribute positively to growth later in the year [101] Question: Can you provide insights on the approval rates and their impact on growth? - Management noted that lower approval rates are a cautious approach to underwriting, but the company still achieved significant GMV growth, indicating resilience in consumer behavior [125] Question: What is the outlook for Rent-A-Center's same-store sales? - Management expressed confidence in maintaining slightly positive same-store sales for the remainder of the year, supported by strong consumer engagement and e-commerce growth [108]