Aarons Holdings Company, Inc.

Good morning. My name is Brandon, and I will be your conference coordinator. At this time, I would like to welcome everyone to the Ahrens Holdings Company third quarter 2020 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. I will now turn the conference over to Mr. Michael Dickerson, Vice President of Corporate Communications and Investor Relations of Ahrens Holdings. You may begin your conference.

Thank you and good morning, everyone. Welcome to the Aaron's Holdings Third Quarter 2020 Earnings Conference Call. Joining me this morning are John Robinson, Aaron's Holdings President and Chief Executive Officer, Steve Michaels, Chief Executive Officer of Progressive Leasing, Douglas Lindsay, Chief Executive Officer of the Aaron's Business, and Kelly Wall, Aaron's Holdings Interim Chief Financial Officer. Many of you have already seen a copy of our earnings release issued this morning. For those of you that have not, it is available on the investor relations section of our website at investor.ehrens.com. During this call, certain statements we make will be forward-looking. I want to call your attention to our safe harbor provision for forward-looking statements that can be found at the end of our earnings release. The safe harbor provision identifies risks that may cause actual results to differ materially from the content of our forward-looking statements. Also, please see our Form 10-K for the year ended December 31, 2019, and other periodic filings with the SEC for a description of the risks related to our business that may cause the actual results to differ materially from our forward-looking statements. Listeners are cautioned not to place undue emphasis on forward-looking statements, and we undertake no obligation to update any such statements. On today's call, we will be referring to certain non-GAAP financial measures. including EBITDA and adjusted EBITDA, non-GAAP net earnings, and non-GAAP EPS, which have been adjusted for certain items which may affect the comparability of our performance with other companies. These non-GAAP measures are detailed in the reconciliation tables included with our earnings release. The company believes that these non-GAAP financial measures provide meaningful insight into the company's operational performance and cash flows, and provides these measures to investors to help facilitate comparisons of operating results with prior periods and to assist them in understanding the company's ongoing operational performance. With that, Alan, I'll turn the call over to John Robinson.

Thanks, Mike, and thank you all for joining us today. Third quarter performance was outstanding across our businesses, especially in the face of a very difficult operating environment. Consolidated revenues of $1.52 billion was the highest third-quarter revenue we have ever reported. Adjusted EBITDA and non-GAAP earnings per share of $178.3 million and $1.80, respectively, were also record quarterly results. While we believe that strong customer payment activity has been aided by the COVID-related government stimulus, our businesses' recurring revenue models continue to demonstrate their strength in this period of economic volatility. I've never been prouder of the teams at each of our businesses. Our team members at Progressive Leasing, the Aaron's Business, Vive, and Woodhaven have demonstrated extraordinary commitment, resilience, resourcefulness, and compassion throughout 2020. Since the onset of the pandemic, we have taken significant actions to protect our team members and customers while maintaining business continuity, managing expenses, and driving portfolio performance. It is a dynamic environment, and our leadership has risen to the occasion. I would like to express my sincere gratitude to all our team members for your commitment to serving our customers during this difficult time. In just a minute, Steve and Douglas will take you through their respective businesses' financial performance. But before that, let me update you on the status of our SPIN transaction. The team, led by our Interim Chief Financial Officer, Kelly Wall, has made tremendous progress thus far. On October 16th, we completed the holding company legal structure change. Our Form 10 has been through a couple of rounds with the SEC, and we expect the document to go effective sometime over the next few weeks. In short, we expect to complete the transaction by the end of the fourth quarter or perhaps sooner. I expect that between the time the Form 10 gets effective and when issue trading begins, each business will hold a webcast with investors to discuss each of their business's standalone strategies. The anticipated business separation will be the culmination of a successful six-year period highlighted by tremendous growth at Progressive Leasing and transformation at the Ahrens business. Over this period, consolidated revenues have grown at a high single-digit compound annual growth rate with adjusted EBITDA and non-GAAP EPS growing at low double digits and high teens, respectively. Progressive Leasing has performed exceptionally well since Ahrens acquired it in 2014. growing annual revenue more than four times to approximately $2.5 billion with attractive and growing profitability. The Progressive team executed the strategy of growing invoice volume with existing and new retail partners, improving the customer experience through continuous product development, building a deep bench of talent, and developing the business processes and controls to stand alone as a public company. I can't thank the Progressive leasing team enough including Ryan Woodley, Blake Wakefield, Kurt Doman, Brian Garner, Marvin Fentress, Ben Hawksworth, Ryan Ray, Tanner Barney, Trevor Thatcher, Nate Rowe, Curtis Hilton, Michelle Parker, and many more for your tremendous contributions to progressive success. On the Aaron's side of the business, I'm equally proud of the progress that has been made to transform the business into a digitally enabled omni-channel lease-to-own retailer. The Aaron's business team, led by Douglas Lindsay, and including Steve Olson, Ryan Malone, Rob O'Connell, Russ Falkenstein, Corey Vogelsonger, Tommy Meek, Manjush Varghese, and John Traynor have done tremendous work overhauling strategy and many of the key functional areas of the business, all the while maintaining strong profitability. The fact that the Aarons business is once again well positioned for success as a standalone company is a direct result of their efforts, their teams, and many others. We appreciate shareholders standing by us during this transformation, and I believe the best is yet to come. Following this separation, I look forward to serving as chairman of the Aarons business. Since 2014, we have continued Aarons' history of rewarding our shareholders by returning nearly $400 million of capital in the form of dividends and share repurchases, reducing our net debt position by more than $700 million, and growing our market capitalization by approximately $2 billion. We believe separating these businesses at this time is another example of actions taken by the Aarons board and management to maximize value for customers, team members, and shareholders. As I mentioned earlier, the management teams from Progressive and the Aarons business are preparing to share their strategies with investors prior to the completion of the spin. We believe Progressive has the strategy, management team, and scale to continue capturing the large, unserved virtual lease-to-own market with its profitable and capital-light business model. The Aarons business, having been significantly transformed over the past five years, is well positioned to continue consolidating and repositioning its store footprint, which, coupled with the Aarons.com e-commerce platform, is expected to provide a foundation for future earnings growth and strong free cash flow. In conclusion, it's an exciting time for our company due to our recent performance. but more importantly because of the future opportunity for both businesses. I'll now turn the call over to Steve Michaels to provide more detail on Progressive's third quarter performance.