Rent-A-Center, Inc. (NASDAQ:RCII) Q1 2018 Earnings Conference Call - Preliminary Transcript

May 01, 2018 • 08:30 am ET

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Rent-A-Center, Inc. (NASDAQ:RCII) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good morning and thank you for holding. Welcome to Rent-A-Center's First Quarter Earnings Conference Call. As a reminder, this conference is being recorded, Tuesday, May 1, 2018. Your speakers today are Mr. Mitch Fadel, Chief Executive Officer of Rent-A-Center, Ms. Maureen Short, Interim Chief Financial Officer, and Mr. Daniel O'Rourke, Vice President of Finance, Investor Relations and Treasury.

I would now like to turn the conference over to Mr. O'Rourke. Please go ahead, sir.

Executive
Daniel O'Rourke

Thank you, Regina. Good morning, everyone, and thank you for joining us. Our earnings release was distributed after market closed yesterday, which outlines our operational and financial results for the first quarter of 2018. All related materials are available on our website at investor.rentacenter.com.

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 from our expectations. Rent-A-Center undertakes no obligation to publicly update or revise any forward-looking statements. These factors are described in our earnings release issued yesterday as well as in the company's SEC filings.

I'd now like to turn the call over to Mitch.

Executive
Mitch Fadel

Thank you, Daniel, and good morning, everyone. Thank you for joining us. Over the past few months, the company has been diligently executing on our strategic initiatives and I am pleased to say considerable progress has been made. As I mentioned on our last call, our strategy is built around aggressively addressing a number of controllable items to drive near-term profitability and cash flow. Our value proposition enhancements are also part of our strategy to increase demand and achieve sustainable revenue improvement of both the Core stores and the AcceptanceNOW business. And the first quarter results, demonstrate the progress that's been made on both the top line and bottom line.

In the first quarter, we generated positive same-store sales across all operating segments. And achieving positive same-store sales in the quarter is a key milestone for the company and an important step toward building sustainable profitability in the segment. It was the first time since the second quarter of 2015 that the Core was positive; again, a real milestone event. This was primarily driven by our strong portfolio performance, and the Core same-store sales improved sequentially throughout the quarter growing to plus 1.6% in the Core in March.

As many of you know, the portfolio is made up of our customer agreement count multiplied by the average ticket. The rental agreement portfolio in the Core business same-stores ended the first quarter about $3.3 million ahead of last year. In our business, the portfolio balance is a leading indicator of future performance.

In a portfolio business like ours, the $3.3 million we're ahead at the end of March, at the end of first quarter, rolls forward each month through the rest of the year, assuming we hold on to that variance. So for the remaining nine months of the year, it'd translate to about $3 million a month in collected revenue or about