Rent-A-Center, Inc. (NASDAQ:RCII) Q4 2014 Earnings Conference Call - Final Transcript

Feb 03, 2015 • 10:45 am ET

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Rent-A-Center, Inc. (NASDAQ:RCII) Q4 2014 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good morning, and thank you for holding. Welcome to Rent-A-Center's Fourth Quarter and Year-End 2014 Earnings Release Conference Call. At this time, all participants are in listen-only mode. Following today's presentation, we will conduct a question-and-answer session.(Operator Instructions) As a reminder, this conference is being recorded Tuesday, February 3rd, 2015.

Your speakers today are Mr. Robert Davis, Chief Executive Officer of Rent-A-Center; Mr. Mitch Fadel, President and Chief Operating Officer; Guy Constant, Executive Vice President of Finance and Chief Financial Officer; and Ms. Maureen Short, Senior Vice President of Finance, Investor Relations and Treasury.

I would now like to turn the conference over to Ms. Short. Please go ahead, ma'am.

Executive
Maureen Short

Thank you, Mike. Good morning everyone and thank you for joining us. You should have received a copy of the earnings release distributed after the market close yesterday that outlines our operational and financial results that were made in the fourth quarter. If for some reason you did not receive a copy of the release, you can download it from our website at investor.rentacenter.com.

In addition, certain financial and statistical information that will be discussed during the conference call will also be provided on the same website. Also, in accordance with SEC rules concerning non-GAAP financial measures, the reconciliation of EBITDA is provided in our earnings press release under the statement of earnings highlights.

(Forward-looking Cautionary Statements)

I'd now like to turn the conference call over to Robert.

Executive
Robert Davis

Thank you, Maureen. And good morning everyone and thank you for joining us. As you know we're here into an ambitious multi-year plan to improve the performance of our domestic RTO business. I'll be providing a high level overview of our performance and Mitch and Guy will then provide more detail on our operations and financial results. As I reflect back on my first year as CEO, I am proud of the progress we have made in many areas. But I know there is still a lot of work to do to transform our business and set the foundation for profitable long-term growth.

During the fourth quarter, we met our revenue expectations excluding accounting adjustments, core US same-store sales were close to flat and Acceptance Now continue to deliver strong consistent same-store sales growth. This resulted in total company same-store sales of approximately 5% for the quarter.

In addition, core US operating profit increased year-over-year for the first time in many quarters. However, our EPS fell short of our expectations, because our margins were not as strong as projected and our skip and stolen losses were too high.

In short, we did not achieve the desired balance between sales growth and margin improvement that we are ideally seeking through our strategies. As a result, our resolve is strengthened in the pursuit of that balance and the urgency remains high in delivering on the initiatives and result that we have promised. To that end our focus is on improving operational execution by implementing a new labor model for our core US stores, developing a