Rent-A-Center, Inc. (NASDAQ:RCII) Q3 2018 Earnings Conference Call - Final Transcript

Dec 20, 2018 • 08:30 am ET

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Rent-A-Center, Inc. (NASDAQ:RCII) Q3 2018 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 2019 Financial Forecast Conference Call. As a reminder, this conference is being recorded, Thursday, December 20, 2018.

Your speakers today are Mr. Mitch Fadel, Chief Executive Officer of Rent-A-Center; Maureen Short, Chief Financial Officer; and 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, Jack. Good morning, everyone, and thank you for joining us. Please note, we'll be voicing over a presentation that is available at investor.rentacenter.com and can be found on the homepage under the Investor Information section.

As a reminder, some of the statements 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 the Company's SEC filings.

I would now like to turn the call over to Mitch.

Executive
Mitch Fadel

Thanks, Daniel, and good morning, everyone. Thanks for joining us. Well, we'll get to our financial and operational performance in just a second. I want to first address our termination of the merger agreement with an affiliate of Vintage Capital that was announced this past Tuesday. As we stated in our press release, given the current financial and operational performance of the Company, the board determined not to exercise its right to extend the merger agreement with Vintage Capital and, instead, elected to terminate the agreement. We did so because we believe that was in the best interest of our shareholders.

In addition to terminating the merger agreement, the Company asserted its formal right to the $126.5 million reverse breakup fee owed under the merger agreement. We believe our rights are clear, our action terminating the merger agreement is valid and that we are in compliance with our obligation under the merger agreement.

We disagree with the position taken by Vintage Capital in its letter on an intent to enforce our right.

I would now like to focus on our performance, which has what led the board to determine it was in the best interest of our shareholders to terminate the merger agreement. So we ask that you keep your questions focused on our financial performance when we conclude our presentation.

So for those of you -- as Daniel mentioned, for those of you that can follow along with the presentation posted to our Investor Relations website, if you can turn to Page two, we'll do a quick walk-through of the materials. When I returned to Rent-A-Center back in January of this year, we built a plan focused on three key pillars. First, we needed to optimize the cost structure. The second pillar, as you can see on that page, was to have additional enhancement to the value proposition needed to drive customer growth and improve our return on investment. And finally, the last pillar was to execute refranchising.

We recognized