Rent-A-Center, Inc. Reports Fourth Quarter and Full Year 2021 Results
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Rent-A-Center, Inc. Reports Fourth Quarter and Full Year 2021 Results

  • Total Revenues of $1.2 billion, up 10.5% Pro Forma1 for the Fourth Quarter
  • Acima Segment GMV of over $520 million, up 5% Pro Forma for the Fourth Quarter
  • Rent-A-Center Business Segment Same-Store-Sales up 10.4% for the Fourth Quarter
  • Fourth Quarter Diluted EPS of $0.15; Non-GAAP Diluted EPS of $1.08
  • Full Year GAAP Diluted EPS of $2.02; Non-GAAP Diluted EPS of $5.57

PLANO, Texas - (BUSINESS WIRE) - February 23, 2022 - Rent-A-Center, Inc. (the "Company" or "Rent-A-Center") (NASDAQ:RCII) today announced results for the quarter and year ended December 31, 2021.

"2021 was a dynamic year for the Company with significant progress and some challenges. We generated revenues of $4.6 billion, which grew 17.3% on a pro-forma basis, and non-GAAP EPS of $5.57, driven by strong organic growth for both the Rent-A-Center Business segment and the Acima business that we acquired in February of 2021,” said Mitch Fadel, Chief Executive Officer.

“In the fourth quarter, the combined effect of significantly reduced government pandemic relief, decades-high rates of inflation, and supply chain disruptions impacted our target customers’ ability to access and afford durable goods, which negatively impacted our results. We anticipate these external headwinds will continue for the foreseeable future, resulting in year-over-year declines in revenue and earnings for 2022, on a pro forma basis, while free cash flow should increase for the year," continued Mr. Fadel.

"Looking forward to a normal post-pandemic environment, our mission to provide flexible leasing solutions for the financially underserved will be even more important as consumers adjust their spending choices to a less stimulative economic setting. Moreover, with the Acima acquisition and the Acima digital ecosystem test we launched in August, we are transforming into a leading consumer Fintech platform business, with omni-channel capabilities." concluded Mr. Fadel.

Fourth Quarter Consolidated Results

  • Fourth quarter 2021 consolidated revenues of $1.2 billion increased 63.5% year-over-year, primarily due to the acquisition of Acima Holdings, LLC (the "Acima Acquisition"), which closed in the first quarter of 2021, and strong growth in the Rent-A-Center Business. On a pro-forma1 basis, revenues grew 10.5%, led by organic growth in the Acima and Rent-A-Center Business segments.
  • GAAP operating profit for the fourth quarter of 2021 was $36.8 million compared to $54.6 million in the prior year period. GAAP net income for the fourth quarter of 2021 was $9.8 million and included $60.4 million of costs, net of tax, relating to special items described below, compared to $56.3 million of GAAP net income and $1.1 million of costs, net of tax, relating to special items in the prior year period.
  • Adjusted EBITDA in the fourth quarter of 2021 was $124.4 million and decreased 22.4% year-over-year on a pro-forma basis1, primarily due to an increase in delinquency and loss rates compared to the prior year period that benefited from government programs and stimulus payments. Adjusted EBITDA margin was 10.6% in the fourth quarter of 2021 compared to 15.1% in the prior year period on a pro-forma1 basis, also primarily due to the effects of higher delinquency and loss rates, supply chain disruptions and rising inflation rates.
  • GAAP earnings per share for the fourth quarter of 2021 was $0.15 compared to $1.00 in the prior year period. Non-GAAP earnings per share, which exclude the impact of special items described below, for the fourth quarter of 2021 was $1.08 compared to $1.03 in the prior year period.
  • For the year ended December 31, 2021, the Company generated $392.3 million of cash from operations, and ended the fourth quarter of 2021 with $108.3 million of cash and cash equivalents, $1.6 billion of debt outstanding, $280.9 million of liquidity, including $172.6 million of undrawn revolving credit availability, and a pro-forma net debt to Adjusted EBITDA ratio of 2.3 times.
  • During the fourth quarter of 2021, the Company returned $388.4 million of cash to shareholders through a combination of $18.3 million in dividends and $370.1 million in share repurchases. For the year ended December 31, 2021, the Company returned $461.6 million of cash to shareholders.

Fourth Quarter Segment Highlights

Acima Segment: Fourth quarter 2021 revenues of $611.9 million increased 204.3% year-over-year due to the Acima Acquisition, completed in the first quarter of 2021. On a pro-forma1 basis, revenues increased 12.3%, and GMV increased 5% year-over-year, with growth in merchant partners and lease applications partially offset by the effects of tighter lease underwriting, supply chain disruptions on merchant partners, and headwinds on consumer discretionary income from elevated rates of inflation and the wind down of government pandemic financial relief. Revenue was also negatively impacted by higher projected delinquency rates based on recent payment activity. Skip/stolen losses were 11.8% of revenue in the fourth quarter of 2021 compared to 10.8% in the prior year period on a pro-forma basis. On a GAAP basis, segment operating profit was $31.7 million with an operating profit margin of 5.2% in the fourth quarter of 2021, compared to $17.3 million and 8.6% in the prior year period. Adjusted EBITDA was $58.6 million with an Adjusted EBITDA margin of 9.6% in the fourth quarter of 2021, compared to $81.6 million and 15.0% in the prior year period on a pro-forma1 basis. The year-over-year decline in Adjusted EBITDA was primarily attributable to higher delinquency and loss rates, which the Company believes largely stemmed from the effect of the wind down of government pandemic relief and elevated rates of inflation on customer discretionary income.

Rent-A-Center Business Segment: Fourth quarter 2021 revenues of $506.2 million increased 9.0% year-over-year, primarily due to a 10.4% increase in same store sales, including 17.9% growth in e-commerce sales and strong lease portfolio performance, partially offset by the impact of refranchising approximately 100 stores in California in the fourth quarter of 2020. Skip/stolen losses were 4.0% of revenue in the fourth quarter of 2021 compared to 2.6% in the prior year period. On a GAAP basis, segment operating profit was $91.9 million with an operating profit margin of 18.2% in the fourth quarter of 2021, compared to $80.4 million and 17.3% in the prior year period. Adjusted EBITDA was $97.8 million with an Adjusted EBITDA margin of 19.3% in the fourth quarter of 2021, compared to $102.9 million and 22.2% in the prior year period. The decline in segment operating profit and Adjusted EBITDA was primarily attributable to higher loss rates that the Company believes stemmed from the wind down of government pandemic relief, and higher labor expense due to wage inflation that more than offset revenue growth. On December 31, 2021, the Rent-A-Center Business segment had 1,846 company-operated locations.

Franchising Segment: Fourth quarter 2021 revenues of $37.6 million increased 2.1% year-over-year due to higher store count as a result of the Company refranchising approximately 100 California stores during 2020 and partially offset by lower inventory purchases per store. Segment operating profit, on a GAAP basis, and Adjusted EBITDA were $4.9 million in the fourth quarter and increased $0.9 million year-over-year. On December 31, 2021, there were 466 franchise-operated locations.

Mexico Segment: Fourth quarter 2021 revenues of $15.7 million increased 9.9% year-over-year on a constant currency basis. Segment operating profit, on a GAAP basis, and Adjusted EBITDA were $1.2 million and $1.3 million, respectively. In the fourth quarter, GAAP operating profit decreased $0.9 million year-over-year. On December 31, 2021, the Mexico business had 123 company-operated locations.

Corporate Segment: Fourth quarter 2021 non-GAAP basis expenses increased $7.9 million year-over-year or 20.7%, reflecting our addition of Acima related costs and investments we have been making in talent and technology to support our growth initiatives.

Key Operating Metrics

Gross Merchandise Volume (GMV): The Company defines Gross Merchandise Volume as the retail value in U.S. dollars of merchandise acquired by the Company that is leased to customers through a transaction that occurs within a defined period, net of cancellations.

1) The disclosed pro forma results and metrics in this release and the Company's related earnings conference call represent estimated financial results and metrics as if the acquisition of Acima had been completed on January 1, 2020. The pro forma results and metrics may not necessarily reflect the actual results of operations or metrics that would have been achieved had the acquisition been completed on January 1, 2020, nor are they necessarily indicative of future results of operations or metrics.

SAME STORE SALES

(Unaudited)

Table 1

 

 

 

Period

 

Rent-A-Center Business

 

 

Mexico

 

Three Months Ended December 31, 2021 (1)

 

10.4 %

 

 

8.6 %

 

Three Months Ended September 30, 2021 (1)

 

12.3 %

 

 

15.3 %

 

Three Months Ended December 31, 2020 (1)

 

13.7 %

 

 

10.5 %

 

Note: Same store sale methodology - Same store sales generally represents revenue earned in stores that were operated by us for 13 months or more and are reported on a constant currency basis as a percentage of total revenue earned in stores of the segment during the indicated period. The Company excludes from the same store sales base any store that receives a certain level of customer accounts from closed stores or acquisitions. The receiving store will be eligible for inclusion in the same store sales base in the 30th full month following account transfer.

(1) Due to the COVID-19 pandemic and related temporary store closures, all 32 stores in Puerto Rico were excluded starting in March 2020 and will remain excluded for 18 months.

Full Year 2022 Guidance

The Company is providing the following guidance for its 2022 fiscal year:

 

Table 2

 

 

 

 

2022 Guidance

 

Full Year 2022

First Quarter 2022

 

Consolidated (1)

 

 

 

 

Revenues ($'s billion)

 

$4.450 - $4.600

$1.125 - $1.155

 

Adjusted EBITDA (2) ($'s million)

 

$515 - $565

$85 - $100

 

Non-GAAP Diluted earnings per share (2)(3)

 

$4.50 - $5.00

$0.65 - $0.80

 

Free cash flow (2) ($'s million)

 

$390 - $440

N/A

 

 

 

 

 

(1) Consolidated includes Acima, Rent-A-Center Business, Franchising, Mexico and Corporate Segments.

(2) Non-GAAP financial measure. See descriptions below in this release. Because of the inherent uncertainty related to the special items identified in the tables below, management does not believe it is able to provide a meaningful forecast of the comparable GAAP measures or reconciliation to any forecasted GAAP measure without unreasonable effort. Adjusted EBITDA figures now exclude stock based compensation.

(3) Non-GAAP diluted earnings per share excludes the impact of incremental depreciation and amortization related to the estimated fair value of acquired Acima assets, stock compensation expense associated with the Acima Acquisition equity consideration subject to vesting conditions, and one-time transaction and integration costs related to the Acima Acquisition. Guidance excludes the impact of future share repurchases.

Additional Commentary on the 2022 Outlook

2022 guidance assumes the macro headwinds that affected the business in late 2021, including supply chain disruptions, high rates of inflation, and the effect of lower levels of government support for our core consumers, will continue throughout the year.

The Company has modified its definition of Adjusted EBITDA beginning with first quarter 2022 results to exclude stock-based compensation. Therefore, 2022 Adjusted EBITDA guidance excludes the impact of stock-based compensation, whereas prior period Adjusted EBITDA within the remainder of this press release includes the impact of stock-based compensation.

Webcast Information

Rent-A-Center, Inc. will host a conference call to discuss the fourth quarter results, guidance and other operational matters on the morning of Thursday, February 24, 2022, at 9:30 a.m. ET. Certain financial and other statistical information that will be discussed during the conference call will also be provided on the same website.

       

Rent-A-Center, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED

       

Table 3

Three Months Ended December 31,

 

Twelve Months Ended December 31,

(In thousands, except per share data)

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenues

 

 

 

 

 

 

 

Store

 

 

 

 

 

 

 

Rentals and fees

$

929,665

 

 

$

580,781

 

 

$

3,522,453

 

 

$

2,263,091

 

Merchandise sales

 

183,184

 

 

 

78,024

 

 

 

829,222

 

 

 

378,717

 

Installment sales

 

20,593

 

 

 

19,530

 

 

 

73,585

 

 

 

68,500

 

Other

 

1,113

 

 

 

1,504

 

 

 

4,148

 

 

 

3,845

 

Total store revenues

 

1,134,555

 

 

 

679,839

 

 

 

4,429,408

 

 

 

2,714,153

 

Franchise

 

 

 

 

 

 

 

Merchandise sales

 

30,514

 

 

 

30,470

 

 

 

126,856

 

 

 

80,023

 

Royalty income and fees

 

6,357

 

 

 

6,182

 

 

 

27,187

 

 

 

20,015

 

Total revenues

 

1,171,426

 

 

 

716,491

 

 

 

4,583,451

 

 

 

2,814,191

 

Cost of revenues

 

 

 

 

 

 

 

Store

 

 

 

 

 

 

 

Cost of rentals and fees

 

347,902

 

 

 

166,006

 

 

 

1,260,434

 

 

 

655,612

 

Cost of merchandise sold

 

217,783

 

 

 

85,288

 

 

 

935,765

 

 

 

382,182

 

Cost of installment sales

 

7,071

 

 

 

7,281

 

 

 

25,637

 

 

 

24,111

 

Total cost of store revenues

 

572,756

 

 

 

258,575

 

 

 

2,221,836

 

 

 

1,061,905

 

Franchise cost of merchandise sold

 

30,412

 

 

 

30,502

 

 

 

126,603

 

 

 

80,134

 

Total cost of revenues

 

603,168

 

 

 

289,077

 

 

 

2,348,439

 

 

 

1,142,039

 

Gross profit

 

568,258

 

 

 

427,414

 

 

 

2,235,012

 

 

 

1,672,152

 

Operating expenses

 

 

 

 

 

 

 

Store expenses

 

 

 

 

 

 

 

Labor

 

164,774

 

 

 

144,909

 

 

 

644,763

 

 

 

579,125

 

Other store expenses

 

229,374

 

 

 

146,078

 

 

 

770,073

 

 

 

609,370

 

General and administrative expenses

 

45,426

 

 

 

39,414

 

 

 

194,894

 

 

 

153,108

 

Depreciation and amortization

 

14,037

 

 

 

13,587

 

 

 

54,830

 

 

 

56,658

 

Other charges

 

77,818

 

 

 

28,787

 

 

 

289,913

 

 

 

36,555

 

Total operating expenses

 

531,429

 

 

 

372,775

 

 

 

1,954,473

 

 

 

1,434,816

 

Operating profit

 

36,829

 

 

 

54,639

 

 

 

280,539

 

 

 

237,336

 

Debt refinancing charges

 

 

 

 

 

 

 

15,582

 

 

 

 

Interest expense

 

18,708

 

 

 

3,367

 

 

 

70,874

 

 

 

15,325

 

Interest income

 

(73

)

 

 

(207

)

 

 

(221

)

 

 

(768

)

Earnings before income taxes

 

18,194

 

 

 

51,479

 

 

 

194,304

 

 

 

222,779

 

Income tax expense

 

8,382

 

 

 

(4,821

)

 

 

59,364

 

 

 

14,664

 

Net earnings

$

9,812

 

 

$

56,300

 

 

$

134,940

 

 

$

208,115

 

Basic weighted average shares

 

55,401

 

 

 

54,190

 

 

 

57,053

 

 

 

54,187

 

Basic earnings per common share

$

0.18

 

 

$

1.04

 

 

$

2.37

 

 

$

3.84

 

Diluted weighted average shares

 

64,989

 

 

 

56,028

 

 

 

66,839

 

 

 

55,754

 

Diluted earnings per common share

$

0.15

 

 

$

1.00

 

 

$

2.02

 

 

$

3.73

 

     

Rent-A-Center, Inc. and Subsidiaries

SELECTED BALANCE SHEETS HIGHLIGHTS - UNAUDITED

     

Table 4

December 31,

 

(In thousands)

 

2021

 

 

2020

 

Cash and cash equivalents

$

108,333

 

$

159,449

 

Receivables, net

 

129,166

 

 

90,003

 

Prepaid expenses and other assets

 

63,468

 

 

50,006

 

Rental merchandise, net

 

 

 

 

On rent

 

1,173,024

 

 

762,886

 

Held for rent

 

132,984

 

 

146,266

 

Operating lease right-of-use assets

 

291,338

 

 

283,422

 

Goodwill

 

286,962

 

 

70,217

 

Total assets

 

2,993,327

 

 

1,750,980

 

 

 

 

 

 

Operating lease liabilities

$

296,535

 

$

285,354

 

Senior debt, net

 

1,135,207

 

 

190,490

 

Senior notes, net

 

435,992

 

 

 

Total liabilities

 

2,480,051

 

 

1,158,900

 

Stockholders' equity

 

513,276

 

 

592,080

 

         

Rent-A-Center, Inc. and Subsidiaries

SEGMENT INFORMATION HIGHLIGHTS - UNAUDITED

         

Table 5

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

(In thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues

 

 

 

 

 

 

 

 

Rent-A-Center Business

$

506,163

 

$

464,261

 

$

2,037,849

 

$

1,852,641

 

Acima

 

611,915

 

 

201,122

 

 

2,328,089

 

 

810,151

 

Mexico

 

15,733

 

 

14,267

 

 

61,403

 

 

50,583

 

Franchising

 

37,615

 

 

36,841

 

 

156,110

 

 

100,816

 

Total revenues

$

1,171,426

 

$

716,491

 

$

4,583,451

 

$

2,814,191

 

Table 6

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

(In thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Gross profit

 

 

 

 

 

 

 

 

Rent-A-Center Business

$

360,590

 

$

328,348

 

$

1,433,536

 

$

1,294,695

 

Acima

 

189,671

 

 

82,677

 

 

728,852

 

 

321,110

 

Mexico

 

10,794

 

 

10,050

 

 

43,117

 

 

35,665

 

Franchising

 

7,203

 

 

6,339

 

 

29,507

 

 

20,682

 

Total gross profit

$

568,258

 

$

427,414

 

$

2,235,012

 

$

1,672,152

 

Table 7

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

(In thousands)

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

Operating profit

 

 

 

 

 

 

 

 

Rent-A-Center Business

$

91,869

 

 

$

80,354

 

 

$

448,905

 

 

$

333,379

 

 

Acima

 

31,699

 

 

 

17,319

 

 

 

176,496

 

 

 

57,847

 

 

Mexico

 

1,199

 

 

 

2,055

 

 

 

7,858

 

 

 

5,798

 

 

Franchising

 

4,826

 

 

 

3,876

 

 

 

20,321

 

 

 

12,570

 

 

Total segments

 

129,593

 

 

 

103,604

 

 

 

653,580

 

 

 

409,594

 

 

Corporate

 

(92,764

)

 

 

(48,965

)

 

 

(373,041

)

 

 

(172,258

)

 

Total operating profit

$

36,829

 

 

$

54,639

 

 

$

280,539

 

 

$

237,336

 

 

Table 8

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

(In thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Depreciation and amortization

 

 

 

 

 

 

 

 

Rent-A-Center Business

$

4,767

 

$

5,153

 

$

18,588

 

$

19,912

 

Acima

 

554

 

 

524

 

 

2,122

 

 

2,066

 

Mexico

 

142

 

 

121

 

 

511

 

 

413

 

Franchising

 

35

 

 

12

 

 

93

 

 

40

 

Total segments

 

5,498

 

 

5,810

 

 

21,314

 

 

22,431

 

Corporate

 

8,539

 

 

7,777

 

 

33,516

 

 

34,227

 

Total depreciation and amortization

$

14,037

 

$

13,587

 

$

54,830

 

$

56,658

 

Table 9

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

(In thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Capital expenditures

 

 

 

 

 

 

 

 

Rent-A-Center Business

$

1,937

 

$

4,664

 

$

23,139

 

$

14,869

 

Acima

 

100

 

 

55

 

 

1,045

 

 

161

 

Mexico

 

288

 

 

187

 

 

1,032

 

 

392

 

Total segments

 

2,325

 

 

4,906

 

 

25,216

 

 

15,422

 

Corporate

 

14,249

 

 

7,082

 

 

37,234

 

 

19,123

 

Total capital expenditures

$

16,574

 

$

11,988

 

$

62,450

 

$

34,545

 

Table 10

On lease at December 31,

 

Held for lease at December 31,

 

(In thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Lease merchandise, net

 

 

 

 

 

 

 

 

Rent-A-Center Business

$

477,901

 

$

444,945

 

$

123,111

 

$

136,219

 

Acima

 

676,279

 

 

299,660

 

 

626

 

 

2,228

 

Mexico

 

18,844

 

 

18,281

 

 

9,247

 

 

7,819

 

Total lease merchandise, net

$

1,173,024

 

$

762,886

 

$

132,984

 

$

146,266

 

Table 11

December 31,

 

(In thousands)

 

2021

 

 

2020

 

Assets

 

 

 

 

Rent-A-Center Business

$

1,026,886

 

$

999,252

 

Acima

 

1,476,752

 

 

389,650

 

Mexico

 

41,669

 

 

42,278

 

Franchising

 

15,412

 

 

14,729

 

Total segments

 

2,560,719

 

 

1,445,909

 

Corporate

 

432,608

 

 

305,071

 

Total assets

$

2,993,327

 

$

1,750,980

 

Non-GAAP Financial Measures

This release and the Company's related conference call contain certain financial information determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles (GAAP), including (1) Non-GAAP diluted earnings per share (net earnings, as adjusted for special items (as defined below), net of taxes, divided by the number of shares of our common stock on a fully diluted basis), (2) Adjusted EBITDA (net earnings before interest, taxes, depreciation and amortization, as adjusted for special items) on a consolidated and segment basis and (3) Free Cash Flow (net cash provided by operating activities less capital expenditures). “Special items” refers to certain gains and charges we view as extraordinary, unusual or non-recurring in nature and which we believe do not reflect our core business activities. For the periods presented herein, these special items are described in the quantitative reconciliation tables included below in this release. Because of the inherent uncertainty related to the special items, management does not believe it is able to provide a meaningful forecast of the comparable GAAP measures or reconciliation to any forecasted GAAP measure without unreasonable effort.

These non-GAAP measures are additional tools intended to assist our management in comparing our performance on a more consistent basis for purposes of business decision-making by removing the impact of certain items management believes do not directly reflect our core operations. These measures are intended to assist management in evaluating operating performance and liquidity, comparing performance and liquidity across periods, planning and forecasting future business operations, helping determine levels of operating and capital investments and identifying and assessing additional trends potentially impacting our Company that may not be shown solely by comparisons of GAAP measures. Consolidated Adjusted EBITDA is also used as part of our incentive compensation program for our executive officers and others.

We believe these non-GAAP financial measures also provide supplemental information that is useful to investors, analysts and other external users of our consolidated financial statements in understanding our financial results and evaluating our performance and liquidity from period to period. However, non-GAAP financial measures have inherent limitations and are not substitutes for or superior to, and they should be read together with, our consolidated financial statements prepared in accordance with GAAP. Further, because non-GAAP financial measures are not standardized, it may not be possible to compare such measures to the non-GAAP financial measures presented by other companies, even if they have the same or similar names.

Reconciliation of net earnings to net earnings excluding special items and non-GAAP diluted earnings per share:

Table 12

Three Months Ended December 31, 2021

(In thousands)

Gross Profit

 

Operating Profit

 

Earnings Before Income Taxes

 

Tax Expense

 

Net Earnings

 

Diluted Earnings per Share

GAAP Results

 

568,258

 

 

$

36,829

 

$

18,194

 

$

8,382

 

$

9,812

 

 

$

0.15

 

Plus: Special Items (Extraordinary, Unusual or Non-Recurring Gains or Charges)

 

 

 

 

 

 

 

 

 

 

 

Acima equity consideration vesting

 

 

 

 

33,940

 

 

33,940

 

 

 

 

33,940

 

 

 

0.52

 

Acima acquired assets depreciation and amortization (1)

 

(4,280

)

 

 

28,955

 

 

28,955

 

 

5,200

 

 

23,755

 

 

 

0.37

 

Legal settlement reserves

 

 

 

 

6,750

 

 

6,750

 

 

1,212

 

 

5,538

 

 

 

0.09

 

Acima integration costs

 

 

 

 

2,415

 

 

2,415

 

 

434

 

 

1,981

 

 

 

0.03

 

Hurricane charges

 

 

 

 

770

 

 

770

 

 

138

 

 

632

 

 

 

0.01

 

Acima transaction costs

 

 

 

 

344

 

 

344

 

 

62

 

 

282

 

 

 

 

COVID-19 testing

 

 

 

 

293

 

 

293

 

 

53

 

 

240

 

 

 

 

Store closure costs

 

 

 

 

71

 

 

71

 

 

12

 

 

59

 

 

 

 

Discrete income tax items

 

 

 

 

 

 

 

 

5,989

 

 

(5,989

)

 

 

(0.09

)

Non-GAAP Adjusted Results

$

563,978

 

 

$

110,367

 

$

91,732

 

$

21,482

 

$

70,250

 

 

$

1.08

 

(1)Includes amortization of approximately $29.3 million related to the total fair value of acquired intangible assets, incremental depreciation of approximately $4.0 million related to the fair value increase over net book value for acquired software assets, and a depreciation credit adjustment of approximately $(4.3) million related to a step-down of estimated fair value below net book value for acquired lease merchandise.

Table 13

Three Months Ended December 31, 2020

(In thousands)

Gross Profit

 

Operating Profit

 

Earnings Before Income Taxes

 

Tax Expense

 

Net Earnings

 

Diluted Earnings per Share

GAAP Results

$

427,414

 

$

54,639

 

 

$

51,479

 

 

$

(4,821

)

 

$

56,300

 

 

$

1.00

 

Plus: Special Items (Extraordinary, Unusual or Non-Recurring Gains or Charges)

 

 

 

 

 

 

 

 

 

 

 

California refranchise store sale

 

 

 

16,600

 

 

 

16,600

 

 

 

4,573

 

 

 

12,027

 

 

 

0.21

 

Acima transaction Costs

 

 

 

6,400

 

 

 

6,400

 

 

 

1,763

 

 

 

4,637

 

 

 

0.08

 

Legal settlement reserves

 

 

 

3,500

 

 

 

3,500

 

 

 

964

 

 

 

2,536

 

 

 

0.05

 

Asset disposals

 

 

 

1,279

 

 

 

1,279

 

 

 

352

 

 

 

927

 

 

 

0.02

 

Store closure costs

 

 

 

412

 

 

 

412

 

 

 

113

 

 

 

299

 

 

 

0.01

 

State tax audit assessment reserves

 

 

 

400

 

 

 

400

 

 

 

110

 

 

 

290

 

 

 

0.01

 

COVID-19 impacts

 

 

 

334

 

 

 

334

 

 

 

92

 

 

 

242

 

 

 

 

Cost savings initiatives

 

 

 

(277

)

 

 

(277

)

 

 

(76

)

 

 

(201

)

 

 

 

Nationwide protest impacts

 

 

 

139

 

 

 

139

 

 

 

38

 

 

 

101

 

 

 

 

Discrete tax items

 

 

 

 

 

 

 

 

 

19,724

 

 

 

(19,724

)

 

 

(0.35

)

Non-GAAP Adjusted Results

$

427,414

 

$

83,426

 

 

$

80,266

 

 

$

22,832

 

 

$

57,434

 

 

$

1.03

 

Table 14

Twelve Months Ended December 31, 2021

(In thousands)

Gross Profit

 

Operating Profit

 

Earnings Before Income Taxes

 

Tax Expense

 

Net Earnings

 

Diluted Earnings per Share

GAAP Results

$

2,235,012

 

 

$

280,539

 

$

194,304

 

$

59,364

 

$

134,940

 

 

$

2.02

 

Plus: Special Items (Extraordinary, Unusual or Non-Recurring Gains or Charges)

 

 

 

 

 

 

 

 

 

 

 

Acima equity consideration vesting

 

 

 

 

127,060

 

 

127,060

 

 

 

 

127,060

 

 

 

1.90

 

Acima acquired assets depreciation and amortization (1)

 

(14,265

)

 

 

100,694

 

 

100,694

 

 

24,241

 

 

76,453

 

 

 

1.14

 

Acima transaction costs

 

 

 

 

17,680

 

 

17,680

 

 

4,256

 

 

13,424

 

 

 

0.20

 

Legal settlement reserves

 

 

 

 

17,500

 

 

17,500

 

 

4,213

 

 

13,287

 

 

 

0.20

 

Acima integration costs

 

 

 

 

10,305

 

 

10,305

 

 

2,481

 

 

7,824

 

 

 

0.12

 

Hurricane impacts

 

 

 

 

1,424

 

 

1,424

 

 

343

 

 

1,081

 

 

 

0.02

 

Store closure costs

 

 

 

 

531

 

 

531

 

 

128

 

 

403

 

 

 

0.01

 

COVID-19 testing

 

 

 

 

293

 

 

293

 

 

71

 

 

222

 

 

 

 

State tax audit assessment reserves

 

 

 

 

161

 

 

161

 

 

39

 

 

122

 

 

 

 

Debt refinancing charges

 

 

 

 

 

 

15,582

 

 

3,751

 

 

11,831

 

 

 

0.18

 

Discrete income tax items

 

 

 

 

 

 

 

 

14,316

 

 

(14,316

)

 

 

(0.22

)

Non-GAAP Adjusted Results

$

2,220,747

 

 

$

556,187

 

$

485,534

 

$

113,203

 

$

372,331

 

 

$

5.57

 

(1)Includes amortization of approximately $101.7 million related to the total fair value of acquired intangible assets, incremental depreciation of approximately $13.2 million related to the fair value increase over net book value for acquired software assets, and a depreciation credit adjustment of approximately $(14.2) million related to a step-down of estimated fair value below net book value for acquired lease merchandise.

Table 15

Twelve Months Ended December 31, 2020

(In thousands)

Gross Profit

 

Operating Profit

 

Earnings Before Income Taxes

 

Tax Expense

 

Net Earnings

 

Diluted Earnings per Share

GAAP Results

$

1,672,152

 

$

237,336

 

 

$

222,779

 

 

$

14,664

 

 

$

208,115

 

 

$

3.73

 

Plus: Special Items (Extraordinary, Unusual or Non-Recurring Gains or Charges)

 

 

 

 

 

 

 

 

 

 

 

California refranchise store sale

 

 

 

16,600

 

 

 

16,600

 

 

 

4,430

 

 

 

12,170

 

 

 

0.22

 

Legal settlement reserves

 

 

 

7,900

 

 

 

7,900

 

 

 

2,108

 

 

 

5,792

 

 

 

0.10

 

Acima transaction costs

 

 

 

6,400

 

 

 

6,400

 

 

 

1,708

 

 

 

4,692

 

 

 

0.08

 

Legal settlement

 

 

 

(2,800

)

 

 

(2,800

)

 

 

(747

)

 

 

(2,053

)

 

 

(0.04

)

Store closure costs

 

 

 

2,089

 

 

 

2,089

 

 

 

557

 

 

 

1,532

 

 

 

0.03

 

Asset disposals

 

 

 

1,804

 

 

 

1,804

 

 

 

481

 

 

 

1,323

 

 

 

0.02

 

Cost savings initiatives

 

 

 

1,583

 

 

 

1,583

 

 

 

422

 

 

 

1,161

 

 

 

0.02

 

State tax audit assessment reserves

 

 

 

1,225

 

 

 

1,225

 

 

 

327

 

 

 

898

 

 

 

0.02

 

COVID-19 impacts

 

 

 

1,153

 

 

 

1,153

 

 

 

308

 

 

 

845

 

 

 

0.02

 

Nationwide protest impacts

 

 

 

942

 

 

 

942

 

 

 

251

 

 

 

691

 

 

 

0.01

 

Insurance reimbursed proceeds

 

 

 

(341

)

 

 

(341

)

 

 

(91

)

 

 

(250

)

 

 

 

Discrete income tax items

 

 

 

 

 

 

 

 

 

37,986

 

 

 

(37,986

)

 

 

(0.68

)

Non-GAAP Adjusted Results

$

1,672,152

 

$

273,891

 

 

$

259,334

 

 

$

62,404

 

 

$

196,930

 

 

$

3.53

 

Reconciliation of operating profit to Adjusted EBITDA (consolidated and by segment):

Table 16

Three Months Ended December 31, 2021

(In thousands)

Rent-A-Center Business

 

Acima

 

Mexico

 

Franchising

 

Corporate

 

Consolidated

GAAP Operating Profit (Loss)

$

91,869

 

$

31,699

 

$

1,199

 

$

4,826

 

$

(92,764

)

 

$

36,829

Plus: Amortization, Depreciation

 

4,767

 

 

554

 

 

142

 

 

35

 

 

8,539

 

 

 

14,037

Plus: Special Items (Extraordinary, Unusual or Non-Recurring Gains or Charges)

 

 

 

 

 

 

 

 

 

 

 

Acima equity consideration vesting

 

 

 

 

 

 

 

 

 

33,940

 

 

 

33,940

Acima acquired assets depreciation and amortization (1)

 

 

 

24,983

 

 

 

 

 

 

3,972

 

 

 

28,955

Legal settlement reserves

 

 

 

 

 

 

 

 

 

6,750

 

 

 

6,750

Acima integration costs

 

 

 

1,318

 

 

 

 

 

 

1,097

 

 

 

2,415

Hurricane impacts

 

770

 

 

 

 

 

 

 

 

 

 

 

770

Acima transaction costs

 

 

 

 

 

 

 

 

 

344

 

 

 

344

COVID-19 testing

 

293

 

 

 

 

 

 

 

 

 

 

 

293

Store closure costs

 

71

 

 

 

 

 

 

 

 

 

 

 

71

Adjusted EBITDA

$

97,770

 

$

58,554

 

$

1,341

 

$

4,861

 

$

(38,122

)

 

$

124,404

(1)Includes amortization of approximately $29.3 million related to the total fair value of acquired intangible assets, incremental depreciation of approximately $4.0 million related to the fair value increase over net book value for acquired software assets, and a depreciation credit adjustment of approximately $(4.3) million related to a step-down of estimated fair value below net book value for acquired lease merchandise.

Table 17

Three Months Ended December 31, 2020

(In thousands)

Rent-A-Center Business

 

Acima

 

Mexico

 

Franchising

 

Corporate

 

Consolidated

GAAP Operating Profit (Loss)

$

80,354

 

 

$

17,319

 

$

2,055

 

$

3,876

 

$

(48,965

)

 

$

54,639

 

Plus: Amortization, Depreciation

 

5,153

 

 

 

524

 

 

121

 

 

12

 

 

7,777

 

 

 

13,587

 

Plus: Special Items (Extraordinary, Unusual or Non-Recurring Gains or Charges)

 

 

 

 

 

 

 

 

 

 

 

California refranchise store sale

 

16,600

 

 

 

 

 

 

 

 

 

 

 

 

16,600

 

Acima transaction Costs

 

 

 

 

 

 

 

 

 

 

6,400

 

 

 

6,400

 

Legal settlement reserves

 

 

 

 

 

 

 

 

 

 

3,500

 

 

 

3,500

 

Asset disposals

 

6

 

 

 

4

 

 

 

 

 

 

1,269

 

 

 

1,279

 

Store closure costs

 

389

 

 

 

 

 

23

 

 

 

 

 

 

 

412

 

State tax audit assessment reserves

 

 

 

 

400

 

 

 

 

 

 

 

 

 

400

 

COVID-19 impacts

 

284

 

 

 

 

 

 

 

 

 

50

 

 

 

334

 

Cost savings initiatives

 

(8

)

 

 

37

 

 

 

 

 

 

(306

)

 

 

(277

)

Nationwide protest impacts

 

139

 

 

 

 

 

 

 

 

 

 

 

 

139

 

Adjusted EBITDA

$

102,917

 

 

$

18,284

 

$

2,199

 

$

3,888

 

$

(30,275

)

 

$

97,013

 

Table 18

Twelve Months Ended December 31, 2021

(In thousands)

Rent-A-Center Business

 

Acima

 

Mexico

 

Franchising

 

Corporate

 

Consolidated

GAAP Operating Profit (Loss)

$

448,905

 

$

176,496

 

$

7,858

 

$

20,321

 

$

(373,041

)

 

$

280,539

Plus: Amortization, Depreciation

 

18,588

 

 

2,122

 

 

511

 

 

93

 

 

33,516

 

 

 

54,830

Plus: Special Items (Extraordinary, Unusual or Non-Recurring Gains or Charges)

 

 

 

 

 

 

 

 

 

 

 

Acima equity consideration vesting

 

 

 

 

 

 

 

 

 

127,060

 

 

 

127,060

Acima acquired assets depreciation and amortization (1)

 

 

 

87,455

 

 

 

 

 

 

13,239

 

 

 

100,694

Acima transaction costs

 

 

 

 

 

 

 

 

 

17,680

 

 

 

17,680

Legal settlement reserves

 

 

 

 

 

 

 

 

 

17,500

 

 

 

17,500

Acima integration costs

 

14

 

 

6,849

 

 

 

 

 

 

3,442

 

 

 

10,305

Hurricane impacts

 

1,276

 

 

148

 

 

 

 

 

 

 

 

 

1,424

Store closure costs

 

528

 

 

 

 

3

 

 

 

 

 

 

 

531

COVID-19 testing

 

293

 

 

 

 

 

 

 

 

 

 

 

293

State tax audit assessment reserves

 

 

 

 

 

 

 

 

 

161

 

 

 

161

Adjusted EBITDA

$

469,604

 

$

273,070

 

$

8,372

 

$

20,414

 

$

(160,443

)

 

$

611,017

(1)Includes amortization of approximately $101.7 million related to the total fair value of acquired intangible assets, incremental depreciation of approximately $13.2 million related to the fair value increase over net book value for acquired software assets, and a depreciation credit adjustment of approximately $(14.2) million related to a step-down of estimated fair value below net book value for acquired lease merchandise.

Table 19

Twelve Months Ended December 31, 2020

(In thousands)

Rent-A-Center Business

 

Preferred Lease

 

Mexico

 

Franchising

 

Corporate

 

Consolidated

GAAP Operating Profit (Loss)

$

333,379

 

 

$

57,847

 

$

5,798

 

$

12,570

 

$

(172,258

)

 

$

237,336

 

Plus: Amortization, Depreciation

 

19,912

 

 

 

2,066

 

 

413

 

 

40

 

 

34,227

 

 

 

56,658

 

Plus: Special Items (Extraordinary, Unusual or Non-Recurring Gains or Charges)

 

 

 

 

 

 

 

 

 

 

 

California refranchise store sale

 

16,600

 

 

 

 

 

 

 

 

 

 

 

 

16,600

 

Legal settlement reserves

 

 

 

 

 

 

 

 

 

 

7,900

 

 

 

7,900

 

Acima transaction costs

 

 

 

 

 

 

 

 

 

 

6,400

 

 

 

6,400

 

Legal settlement

 

 

 

 

 

 

 

 

 

 

(2,800

)

 

 

(2,800

)

Store closure costs

 

2,052

 

 

 

 

 

37

 

 

 

 

 

 

 

2,089

 

Asset disposals

 

531

 

 

 

4

 

 

 

 

 

 

1,269

 

 

 

1,804

 

Cost savings initiatives

 

577

 

 

 

193

 

 

 

 

 

 

813

 

 

 

1,583

 

State tax audit assessment reserves

 

261

 

 

 

400

 

 

 

 

 

 

564

 

 

 

1,225

 

COVID-19 impacts

 

883

 

 

 

115

 

 

 

 

 

 

155

 

 

 

1,153

 

Nationwide protest impacts

 

942

 

 

 

 

 

 

 

 

 

 

 

 

942

 

Insurance reimbursement proceeds

 

(341

)

 

 

 

 

 

 

 

 

 

 

 

(341

)

Adjusted EBITDA

$

374,796

 

 

$

60,625

 

$

6,248

 

$

12,610

 

$

(123,730

)

 

$

330,549

 

Reconciliation of net cash provided by (used in) operating activities to free cash flow:

Table 20

Three Months Ended December 31,

 

Twelve Months Ended December 31,

(In thousands)

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Net cash provided by (used in) operating activities

$

66,094

 

 

$

(59,724

)

 

$

392,298

 

 

$

236,502

 

Purchase of property assets

 

(16,574

)

 

 

(11,988

)

 

 

(62,450

)

 

 

(34,545

)

Hurricane insurance recovery proceeds

 

 

 

 

 

 

 

 

 

 

158

 

Free cash flow

$

49,520

 

 

$

(71,712

)

 

$

329,848

 

 

$

202,115

 

 

 

 

 

 

 

 

 

Proceeds from sale of stores

 

1

 

 

 

14,281

 

 

 

4

 

 

 

14,477

 

Acquisitions of businesses

 

14

 

 

 

 

 

 

(1,273,528

)

 

 

(700

)

Free cash flow including acquisitions and divestitures

$

49,535

 

 

$

(57,431

)

 

$

(943,676

)

 

$

215,892

 

SOURCE Rent-A-Center, Inc.

###

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