Rent-A-Center Inc.

morning and thank you for holding. Welcome to Rent-A-Center's second quarter earnings conference call. As a reminder, this conference is being recorded Thursday, August 5th, 2021. Your speakers for today are Mr. Mitch Fidel, Chief Executive Officer of Rent-A-Center, Maureen Short, Chief Financial Officer, Jason Hogue, Executive Vice President of ASEMA, Anthony Blasquez, Executive Vice President, Rent-A-Center Business, and Brendan Mitrano, Vice President of Investor Relations. I would now like to turn the conference over to Mr. Matrano. Please go ahead, sir.

Thank you, Jamaria. Good morning, and thank you all for joining the Rent-A-Center team to discuss our results for the second quarter of 2021. Hopefully, you've had an opportunity to review our earnings release, which was distributed after the market closed yesterday. The release and all related materials, including a link to the live webcast, are available on our website at investor.rentacenter.com. As a reminder, some of the statements provided on this call are forward-looking statements, which are subject to many factors that could cause actual results to differ materially and adversely from our expectations. These factors are described in our earnings release issued yesterday, as well as in the company's SEC filings. Brenta Center undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law. This call will also include references to non-GAAP financial measures. Please refer to our second quarter earnings release, which can be found on our website, for a description of the non-GAAP financial measures and the reconciliations to the most comparable GAAP financial measures. With that, I'll turn the call over to Mitch.

Thank you, Brendan. For starters, I'd like to introduce Brendan Matrano, who recently joined us to head Investor Relations. Brendan comes to us from Western Union, where he also headed investor relations. And prior to that, he was a sell-side analyst for over a decade. So he brings a strong understanding of equity markets and the investment community, especially in payments and fintech. So welcome, Brendan. And thank you and good morning, everyone. And thank you again for joining us this morning to discuss our second quarter results. As you've hopefully seen in our press release yesterday afternoon, our business continues to deliver outstanding results with over 20% pro forma organic top line growth, and over 200 basis points of pro forma margin expansion in the quarter. Has strong momentum heading into the second half of the year and is on the path of major transformation with the ASEMA acquisition that positions us to significantly benefit from secular changes in the market. So very exciting time for our team, our customers, retail partners, and investors. Before jumping into the quarter, let's take a minute to explore this favorable fundamental backdrop behind our story. Essentially, it boils down to our business being well positioned to benefit from some prevailing trends that seem to have a long runway, including shifts in consumer behavior, a need for more demographic inclusivity, and technological disruption. As I think we're all familiar with, today, Many aspects of consumer behavior are evolving quite rapidly, much of it enabled by technology and recently accelerated by the COVID-19 pandemic. One change that pertains to us is the adoption of all types of payment plans. It's becoming increasingly acceptable, if not preferable, to pay for goods and services with a stream of small payments rather than running up credit card balances or depleting savings. We're also benefiting from consumer preferences for seamless, flexible, and convenient experiences. Rent-A-Center's differentiated omnichannel model allows consumers to conveniently shop for, pay for, and get access to durable goods through the channel of their choice, digital, physical, or hybrid, hassle-free, without long-term debt obligations or other long-term commitments. Another trend that benefits us is growing demand for solutions that promote inclusivity rather than lock out underprivileged groups. Many traditional payment services and retailers are effectively closed off for underbanked or cash-constrained consumers, and those services that are available are often lower-quality experiences that can make people feel like second-class citizens. Our business strives to provide the financially underserved with access to top-quality products and first-class experiences. And finally, technology is transforming almost every aspect of business, especially with respect to data and analytics. And the ASEMA acquisition has given us industry-leading capabilities in those areas. When you think about our business today with ASEMA, roughly half of our business is digital. Whether that's e-commerce or virtual, half of our business is digital. An incredible transformation when you think about that over just the last two years. We think that leasing is still in its infancy as a form of consumer payment and that our omni-channel model and industry-leading technology platform provide us with a strong foundation for growth. Moreover, we are breaking new ground in the payments industry with the recent launch of our proprietary lease pay card powered by MasterCard, which revolutionizes the LTO shopping experience for durable goods for financially underserved consumers and dramatically expands the market opportunity for retailers. Jason will expand on this new product and other fintech developments in a few minutes. And given this transformation of our business, you'll hear us increasingly discuss it in the payments and fintechs context, pivoting to concepts like gross merchandise volume as we did this quarter. So now let's review the highlights and progress we made during the second quarter. Total revenue was $1.2 billion and increased approximately 75% year-over-year, which was largely driven by significant incremental gross merchandise volume, or GMV, resulting from the ASEMA acquisition. And on a pro forma basis, organic total company revenue grew 21.6%, led by the 43% organic growth in GMV for our virtual leased-owned business, that being, of course, ASEMA, as well as 10% organic revenue growth for the Rent-A-Center business. Now, we continue to get a lot of macro questions, especially on effects of stimulus payments over the past year. And as we've said in the past, we certainly have benefited from some aspects of the recent uncommon macro environment, including stimulus payments. But we believe that primary factors behind our performance include strong underlying fundamentals, technological advancements, and execution. The team has just done a fantastic job of driving transactions and portfolio growth with a range of initiatives like product offerings and procurement under challenging conditions, implementing e-commerce and marketing strategies, and adding new merchants. On top of this, our lease zone business is durable and anticyclical as it actually benefits from a tighter credit environment. You know, when the economy is booming and credit is loose, our core customers tend to lease more. During more challenging economic periods when credit tightens, we gain new customers who previously didn't need or choose to use our solutions. We do not believe the performance we've delivered as a result of the pandemic and stimulus are a story that is as good as it gets. Not at all. In fact, we believe our best results remain ahead of us. We delivered over 400 basis points of EBITDA margin expansion in the second quarter to 15.2%. benefiting from very strong profitability in the Rent-A-Center business and solid margins of a SEMA. As a company, we remain highly committed to efficiency investments in our customer relationships, and they're paying off with lower loss rates and improved collections. Adjusted earnings per share was $1.63 in the second quarter compared to pro forma earnings per share of $0.80 in the prior year. Given our strong performance year-to-date and favorable underlying fundamental trends, we increased our 2021 guidance across pretty much every key metric. In addition, considering the compelling long-term value creation potential of our company, strong financial position, and significant cash flow generation, the Board has authorized a new $250 million share repurchase program. I'm pleased to say the integration of ASEMA is well on track. And moreover, the additional insights we've gained about Acima over the past months makes us even more optimistic about the technological and strategic value of the acquisition and the tremendous long-term growth prospects for our company. With all that, I'll turn the call over to Jason to update us more specifically on the Acima business. Thanks, Mitch.