Aaron's, Inc. (NYSE:AAN) Q1 2018 Earnings Conference Call - Preliminary Transcript
Apr 26, 2018 • 08:30 am ET
The next question will be from Budd Bugatch of Raymond James. Please go ahead.
Good morning. Thank you for taking my question. Congratulations on the revenue growth.--I guess --thank you. I'd like to concentrate on the expense growth. You talk about new initiatives. Can you give us a little bit more color in each of the segments about those initiatives? Are they people related? Are they facility related or both, or can you maybe give us a little bit of a distinction as to which segment might have grown faster? I think the --like $67 million worth of growth and 18%, almost 19% year-over-year growth.
Hey, Budd. This is Steve. I'll start and just a reminder, we'll be filing a 10-Q this afternoon right at 4:00. But in that there's a chart or a table, I should say, that does show that $60 million increase in OpEx and roughly just shy of about $28 million of that is the increase year-over-year in bad debt and write-offs on the Progressive side that Ryan pointed out was really off of a low base in 2017.
About $90 million is in personnel cost, which is split about 50-50 between the Progressive business and the Aaron's business. And then there's some other categories that take up or that make up the remaining roughly $10 million. And so, just with that as a backdrop, those are the drivers or the categories of the growth, the $60 million growth in OpEx for the business. And then, I'll let Douglas talk specifically about investments and business transformation.Yeah. So, on the Aaron's side of the business, we've been investing beginning of the third quarter last year and what we're calling business transformation and that's got many tentacles to it, but one of the biggest pieces of the investment are analytics and merchandising teams, and we believe we're seeing the return on that in which you're seeing in our revenue side of the business and our comp guidance.
So, we're really happy about that. There's a lot of details behind that, but these guys are driving ticket and also driving some of the trend in the right direction on customer traffic. We also launched in April 10th our new e-comm site and that took a lot of upfront investment as far as technology and people and brining in the right resources to do that. So, we're super optimistic about that. That business has been growing and accelerating the pace of growth into the first quarter.
And then lastly, we're testing a lot of other traffic driving concepts and operating efficiency concepts. Many of those are in their infancy, including some investment in call centers and including investment in in-store technology, and all of those things we're testing and learning from. Some of the early tests are positive and we're trying to replicate the result of those, and we'll update you more on those in the future quarters.
Ryan, anything on Progressive?
(Technical Difficulty) Yeah. Sure. Third question, because we did