Rent-A-Center Inc.

Good morning and thank you for holding. Welcome to Rent-a-Center's third quarter earnings conference call. As a reminder, this conference is being recorded Thursday, November 4th, 2021. I would now like to turn the conference over to Mr. Metrano. Please go ahead, sir.

Thank you all for joining the Rent-a-Center team this morning to discuss our results for the third quarter of 2021. We issued our earnings release after the market closed yesterday and hopefully you've had a chance to review it. The release and all related materials, including a link to the live webcast, are available on our website at investor.rentacenter.com. On the call today from Rent-A-Center, we have Mitch Fidel, our CEO, Jason Hogue, Executive Vice President of SEMA, Anthony Blasquez, Executive Vice President of the Rent-A-Center business segment, and Maureen Short, CFO. 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, as well as in the company's SEC filings. Rent-a-Center undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law. This call also will include references to non-GAAP financial measures. Please refer to our third quarter earnings release, which can be found on our website for description of the non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures. With that, I'll turn the call over to Mitch.

Thank you, Brendan, and good morning to all of you who have joined us today to discuss our third quarter results. We certainly appreciate your interest and are pleased to have the opportunity to update you on the developments in our company as we continue to be among the leaders in the advancement of leasing as an alternative solution for consumers in today's rapidly evolving commerce and payments landscape. You know, over my career, I can't think of another period of such innovation and disruption as we're seeing today with the range of developments, things like digital wallets and cryptocurrency and super apps and buy now, pay later, and most importantly, new lease-to-own options, which we often refer to as LTO. And with our leadership position in consumer leasing solutions, we are in a great position to benefit from this environment. Take, for example, the current proliferation of buy-now-pay-later. You know, we get asked a lot if it's a threat, but we believe it's actually the opposite. Lease-to-own is very complementary to buy-now-pay-later because we see little customer segment overlap, An LTO can drive incremental sales in the buy now, pay later waterfall. In fact, we're seeing this benefit firsthand in our business today with growing interest in our virtual LTO offering from potential merchant partners who realize they're leaving money on the table with customers that don't qualify for buy now, pay later. Similarly, consumers are seeking payment services that work for them rather than for the benefit of an established system that is perceived to take advantage of and exclude consumers. In contrast, LTO is one of the most inclusive payment options serving even unbanked consumers, and it's highly flexible, and getting approved doesn't require a hard credit inquiry that can impact credit scores. Because LTO solutions include returnable consumer durable products like furniture, appliances, and electronics, transactions typically have a higher average ticket size and longer average payment horizon than other payment solutions like Buy Now, Pay Later. So you can understand why we're really optimistic about our future following the ASEMA transaction earlier this year, which made us a leading LTO player and the only one with our span of omni-channel capabilities across our segments. The integration's going well, and we're on pace to achieve our synergy targets. On top of that, you can factor in the ASEMA ecosystem, which is targeted to be up and running early next year and we believe can revolutionize LTO, potentially doubling our addressable market to around $100 billion. As LTO continues to gain momentum, we think our scale and omni-channel capabilities provide us with a competitive advantage because processing more applications and managing more customer relationships will enable us to hone those capabilities even further. This should translate to even more consumers and merchant partners. This data and technology aspect of our business is underappreciated, and we're investing meaningfully to capitalize on it. And by mid-next year, we'll have migrated the enterprise data warehouse to a cloud-based environment. We'll be employing state-of-the-art tools like Snowflake and Databricks, which will further enhance our predictive analysis and AI machine learning capabilities. These initiatives will drive savings from data center costs and productivity gains in processing activities, and they can benefit our commercial activities by reducing time for solution launches. When you put those pieces together, strong category momentum, a favorable competitive position, and dynamic growth agenda, it should translate to compelling financial performance. We continue to believe that in 2023, the company will generate at least $6 billion of revenue in the mid-teens adjusted EBITDA margins. Factoring our strong free cash flow generation, already solid financial position, and focus on deploying capital to drive shareholder value, we believe that EPS should increase significantly over the next few years. Now, turning to the third quarter, the TMAC continued to execute very well. The store-based business advanced a number of initiatives focused on e-commerce and the in-store experience, which Anthony will update you on. At Acima, we continued adding new merchant partners, including an exclusive strategic account, P.C. Richardson, one of the largest appliance retailers in the U.S. That was a competitive win for us, and we think it demonstrates the value proposition other strategic partners will find in our differentiated capabilities. We also saw positive developments with the Acima ecosystem, and Jason will elaborate more on that shortly. Our third quarter revenue of $1.2 billion grew 66% year-over-year on a reported basis and 13% on a pro forma basis.