Rent-A-Center (RCII) Tops Q3 EPS by 8c, Revenues Beat; Raises FY20 Outlook

Rent-A-Center (NASDAQ: RCII) reported Q3 EPS of $1.04, $0.08 better than the analyst estimate of $0.96. Revenue for the quarter came in at $712 million versus the consensus estimate of $702.76 million.

• Increases Full Year Guidance; Consolidated Revenues of $712M, up 9.6%
• Diluted EPS $1.15; Non-GAAP Diluted EPS $1.04, up 120.9%
• Rent-A-Center Business Same Store Sales up 12.9%; e-Commerce sales up 71%
• Preferred Lease Invoice Volume up 34.4%

“We’re very pleased with our third quarter performance,” said Mitch Fadel, Chief Executive Officer. “The changes we’ve made to support customers during this crisis have prioritized safety while further positioning the business for long-term growth, and our value proposition has never been more relevant."

"Preferred Lease invoice volume accelerated in the quarter as the team onboarded new partners and achieved broader diversification across product categories. In the Rent-A-Center segment EBITDA growth and profitability were the strongest we've seen in years, driven by continued growth in e-commerce."

"Demand for home-related goods remains strong and we continue to see positive trends without the benefit of further stimulus. We've increased our full year guidance for 2020 and believe we're on track to close the year with healthy lease portfolios and favorable underlying trends in our virtual and omni-channel businesses."

“We’re particularly excited about the progress we're making on digital,” continued Mr. Fadel. “It’s been a watershed year for digital as social distancing confirmed the strategy we were already pursuing to serve customers. Given our experience in 2020, we believe we can further harness digital to increase both overall consumer demand and our share of lease to own."

"We've launched a broad digital initiative behind our Preferred Lease brand and we’re focused on accelerating growth as we accelerate our mobile and web strategy with new talent and digital expertise."

"We're also making additional investments in digital at Rent-A-Center. E-commerce is profitable and largely incremental for Rent-A-Center, and we believe there are significant opportunities to broaden our target customer demographic and drive customer retention.”

"We have ample capital to support our strategy and believe we're well positioned to invest in high return projects that we believe drive profitable growth and enhance long-term shareholder returns," Mr. Fadel concluded.

GUIDANCE:

Rent-A-Center sees FY2020 EPS of $3.35-$3.50, versus the consensus of $3.28. Rent-A-Center sees FY2020 revenue of $2.795-2.825 billion, versus the consensus of $2.8 billion.

2020 Guidance (1) The Company is increasing full year 2020 guidance which now also reflects the refranchising of 99 California Rent-A-Center locations.

Consolidated

• Revenues of $2.795 to $2.825 billion
• Adjusted EBITDA of $308 to $323 million (2)
• Non-GAAP diluted earnings per share of $3.35 to $3.50 (2)
• Free cash flow of $200 to $215 million (2)

Preferred Lease Segment

• Revenues of $812 to $822 million
• Adjusted EBITDA of $66 to $71 million(2)

Rent-A-Center Business Segment

• Revenues of $1.825 to $1.840 billion
• Adjusted EBITDA of $352 to $362 million(2)

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

You May Also Be Interested In

• Bristol-Myers Squibb (BMY) stock slips despite earnings beat
• Unilever PLC (UL) Q1 Revenue Misses Estimates
• CEMEX, S.A.B. de C.V. (CX) Tops Q1 EPS by 5c