Rent-A-Center (RCII) Tops Q1 EPS by 9c

Rent-A-Center (NASDAQ: RCII) reported Q1 EPS of $0.67, $0.09 better than the analyst estimate of $0.58. Revenue for the quarter came in at $702 million versus the consensus estimate of $702.82 million.

• Consolidated Revenues of $702M, up 0.8%
• Diluted EPS $0.88; Non-GAAP Diluted EPS $0.67, up 14.6%
• Rent-A-Center Business Same Store Sales up 1.7%; Two-Year Same Store Sales up 7.5%
• Preferred Lease Revenues of $216M, up 10.0%
• Declares Dividend of $0.29 per Share

“Rent-A-Center remains committed to helping our customers navigate the financial challenges brought on by COVID-19," said Mitch Fadel, Chief Executive Officer. "We are sensitive to their needs and focused on reinforcing the qualities that have made us a trusted partner for over three decades. I could not be more proud of our store co-workers who are on the front lines and have gone above and beyond to continue to serve customers during this difficult time. They continue to keep us operating safely and deserve a tremendous amount of credit."

Mr. Fadel continued, "Total sales and earnings per share each increased during the first quarter of 2020 compared to the same period in 2019 and we are encouraged by our April performance, which reflected government stimulus and a sharp jump in e-commerce demand. Our financial condition remains strong, with ample liquidity, a conservative capital posture and a resilient model that\'s benefiting from flexibility to address near-term headwinds.”

“There will be an impact from the pandemic in the second quarter as it compares to last year, but we believe it will not be as severe as traditional retail, as we expect our revenue to decline by approximately 10 percent or less, with the potential for a lower impact on EBITDA performance, given our work to address expenses and operate with a more variable cost structure,” continued Mr. Fadel. “We expect second quarter earnings to be essentially flat compared with the second quarter of 2019 when the year-over-year interest expense savings resulting from our refinancing last year are considered.”

“While the near term will remain challenging and be impacted by events not within our control, we’re tracking to a sequential improvement in cash flow for the second quarter as compared to the first quarter and expect to achieve a healthy profit margin for 2020,” said Mr. Fadel "We intend to pay our second quarter 2020 dividend as planned and we will continue to invest in our strategic priorities with the aim of emerging from this crisis an even stronger organization. As in past periods of economic weakness, we expect trends to favor lease-to-own as primary and subprime lenders tighten credit measures. The initiatives we have enacted to enhance the customer experience and streamline costs will have long-term benefits for Rent-A-Center, and we believe we are well positioned to gain share as the market evolves," concluded Mr. Fadel.

For earnings history and earnings-related data on Rent-A-Center (RCII) click here.

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