Rent-A-Center Inc.

call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your host, Brandon Metrano, Vice President of Investor Relations. Please go ahead.

Good morning, and thank you all for joining the Rent Decentralized team to discuss our results for the fourth quarter of 2021. We issued our earnings release 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.renacenter.com. On the call today from Rena Center, we have Mitch Fidel, our CEO, Jason Hogue, Executive Vice President of SEMA, Anthony Blaskas, Executive Vice President of the Rena Center business segment, and Maureen Short, CFO. As a reminder, some of the statements provided on this call are forward-looking statements. which is 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 the 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 fourth quarter earnings release, which can be found on our website or 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. Good morning, everyone, and thank you for joining the call today to review our fourth quarter results and our plans for 2022. 2021 was an important and transformational year for the company. We completed the largest acquisition in our history. which has greatly enhanced our commercial and technology capabilities, growth opportunities, and potential for value creation. We also generated strong financial results with revenues of about $4.6 billion, up 17% on a pro forma basis on solid organic growth from both the Rent-A-Center business segment and the ASEMA business that we acquired last February. Non-GAAP EPS was $5.57, up from $3.53 in 2020, and we also paid out a healthy dividend of approximately $1.24 per share. From an operational standpoint, we made great progress on numerous initiatives that should position the company better for the future. Within the Rent-A-Center segment, we made great strides in our e-commerce business, which increased to 23% of revenue in 2021 from 13% just two years ago. We executed initiatives to lower delinquency and loss rates, including centralized decisioning, increased autopay penetration, and digital payment capabilities. We also added new products and sourcing capabilities to drive incremental transaction growth. At Asema, we continued to grow the merchant base, including new relationships with strategic partners like PC Richard & Son and Whirlpool. We consolidated collection operations and completed the conversion of most of our preferred lease locations which contributed to achieving the 2021 synergy target of at least $25 million. We also launched our proprietary digital ecosystem test that leverages the SEMA scale and technology, including a direct-to-consumer model, which we believe could be a significant competitive advantage in growth vehicles long into the future. The more challenging aspects of the year primarily stem from operating in a dynamic macro environment that resulted from the lingering effects of the pandemic. This caused dramatic swings in customer behavior, especially around delinquencies and early payouts and renewal rates. For the first half of the year, the macro environment was a tailwind, with government relief programs pushing expenditures on consumer durables and favorable payment behavior to levels that were above historical averages. In the latter portion of the year, the macro environment shifted to a headwind. Government pandemic relief programs that had supported high rates of consumer spending ended, And in addition, supply chain disruptions and a significant uptick in inflation diminished consumers' ability to access and afford products. We had anticipated some effect from the end of pandemic relief and implemented new tactics for decisioning and collections. However, we underestimated the speed and the magnitude of the changes in delinquencies and loss rates, especially for SEMA. The combined effect of those factors had a large impact in the fourth quarter, which generated adjusted EBITDA on EPS below the expectations applied in our most recent annual guidance for 2021. Maureen will expand on our fourth quarter results and our 2022 outlook in a few minutes. Over the past few years, we've built a foundation for the company's growth strategy to evolve into a leasing and payment solutions platform. We returned the legacy RTO operations to a resilient, profitable, and strong cash flow generation business. In 2021, we took a major step and expanding our digital growth engine by acquiring a SEMA and then launching the digital ecosystem test. So today we have a compelling formula for value creation. Strong current profitability and cash flow plus the potential for robust top-line growth and incremental earnings power. From a strategic standpoint, we now have the right pieces with the leading omni-channel business in LTO, one of the top virtual LTO franchises in the space, and proprietary direct-to-consumer business that we believe could provide a competitive advantage. While we are well positioned to move forward with a growth strategy and agenda that we've previously outlined in our long-term plans, it's unclear if the external environment will allow us to generate the desired results in returns on our investments this year. When you factor in the effect of ongoing macro headwinds and the material pull forward of consumer durable spending that occurred over the past 20 months, we think our core customers' ability to access and afford durable goods may be limited in 2022, especially in the first half of the year. So, rather than push forward with significant investments and growth initiatives in an unfavorable environment, we are taking a more measured approach to execute in areas where we can influence outcomes and still enhance our position for long-term growth. For example, at ASEMA, where delinquencies and losses have exceeded historical averages, the near-term plan is to focus on underwriting for yield and loss improvements, including shifting technology resources to that effort, which should also benefit our future underwriting. When the environment becomes more conducive for growth, we'll be prepared to pivot and ramp up investments in our growth initiatives, taking advantage of our strong cash flow generation. Now, regarding our 2022 financial performance, we expect to generate revenue for the year of $4 billion, $450 million to $4.6 billion. adjusted EBITDA of $515 to $565 million, which excludes stock-based compensation of approximately $25 million, fully diluted adjusted earnings per share of $450 to $5, and $390 to $440 million of free cash flow. While this revised outlook impacts the three-year targets we announced last year, I think it does demonstrate our resiliency and ability to generate solid financial results in more challenging business environments. Along those lines, given the extent to which late 2021 results and 2022 projections have been negatively affected by changes in the external environment, we will not reach our $6 billion revenue target by 2023. If you recall in the third quarter call, we discussed potentially hosting an investor day sometime towards the end of the first quarter. We think it's important to host an in-person event to most effectively communicate our story. So given the ongoing challenges for in-person events due to COVID variants, we've decided to push out the investor day until later this year. In closing, I want to thank the entire team for their continued effort and dedication. It's been quite a journey over the past few years, and I've been impressed with the progress we've made and the tremendous opportunity I see in the future. With that, I'll turn the call over to Jason to update us on the Acema business.