UPBOUND GROUP INC
For the period ended Jun 30, 2024. Filed Aug 1, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 1, 2024
UPBD$24.24-2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0000933036-24-000101
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0000933036-24-000137
Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 137 previous paragraphs and 152 current paragraphs.
87 unchanged; 48 reworded; 15 added; 2 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
Term Loan Facility Amendment. On May 28, 2024 we entered into a Third Amendment to the Term Loan Facility, effective as of May 28, 2024. The amendment effected a repricing of the applicable margin under the Term Loan Facility by reducing the applicable margin, with respect to any initial term loans, by 50 basis points from 3.25% to 2.75% and removing the credit spread adjustment that was previously included in the calculation of the adjusted Term SOFR rate for term benchmark loans.
Current report
ABL Facility Amendment. On June 7, 2024, we entered into a Second Amendment to the ABL Credit Facility, effective as of June 7, 2024. The amendment extended the maturity date for loans outstanding to June 7, 2029 (subject to certain springing maturity provisions).
Current report
nm - percent change is not meaningful for comparison
Current report
Gross Profit. Gross profit increased by $25.8 million, or 5.1%, to $532.0 million for the three months ended June 30, 2024, from $506.2 million for the three months ended June 30, 2023, primarily due to increases of $19.9 million and $4.3 million in the Acima and Rent-A-Center segments, respectively, as discussed further in the section “Segment Performance” below. Gross profit as a percentage of total revenue decreased to 49.4% for the three months ended June 30, 2024, as compared to 51.7% for the three months ended June 30, 2023.
Current report
Other Gains and Charges. Other gains and charges decreased by $2.9 million, or 10.3%, to $24.9 million for the three months ended June 30, 2024, as compared to $27.8 million for the three months ended June 30, 2023. The decrease in other gains and charges was driven primarily by a decrease of $9.3 million in stock compensation expense related to the vesting of a portion of the equity consideration issued in connection with the acquisition of Acima Holdings for the three months ended June 30, 2024, as compared to the prior year period. The decrease in other gains and charges was also due to a decrease of $3.3 million in depreciation and amortization of acquired software and intangible assets, partially offset by $5.4 million in lease impairment charges and fixed asset disposal, $1.7 million in accelerated stock compensation expense related to our letter agreement with the Company's Chief Executive Officer and $1.5 million in accelerated software depreciation for the three months ended June 30, 2024.
Current report
Operating Profit. Operating profit decreased by $3.3 million, or 4.0%, to $80.7 million for the three months ended June 30, 2024, as compared to $84.0 million for the three months ended June 30, 2023, primarily due to the increase in non-labor operating expenses, partially offset by an increase in gross profit as described above. Operating profit expressed as a percentage of total revenue was 7.5% for the three months ended June 30, 2024, compared to 8.6% for the three months ended June 30, 2023.
Current report
Six Months Ended June 30, 2024, compared to Six Months Ended June 30, 2023
Current report
Revenue. Total revenue increased by $177.3 million, or 8.9%, to $2,172.5 million for the six months ended June 30, 2024, from $1,995.2 million for the six months ended June 30, 2023. The increase was primarily due to increases of approximately $165.9 million and $9.5 million in the Acima and Rent-A-Center segments, respectively, as discussed further in the section “Segment Performance” below.
Current report
Cost of Rentals and Fees. Cost of rentals and fees for the six months ended June 30, 2024 increased by $76.9 million, or 13.1%, to $665.7 million, as compared to $588.8 million for the six months ended June 30, 2023. The increase was primarily attributable to an increase of approximately $76.1 million in the Acima segment, driven by an increase in rentals and fees revenues. Cost of rentals and fees expressed as a percentage of rentals and fees revenue increased to 37.9% for the six months ended June 30, 2024, as compared to 36.5% for the six months ended June 30, 2023.
Current report
Cost of Merchandise Sold. Cost of merchandise sold increased by $56.0 million, or 16.6%, to $392.9 million for the six months ended June 30, 2024, from $336.9 million for the six months ended June 30, 2023, primarily attributable to an increase of $55.7 million in the Acima segment, driven primarily by higher merchandise sales. The gross margin percent of merchandise sales decreased to (20.6)% for the six months ended June 30, 2024, from (17.1)% for the six months ended June 30, 2023.
Current report
Gross Profit. Gross profit increased by $48.5 million, or 4.8%, to $1,061.0 million for the six months ended June 30, 2024, from $1,012.5 million for the six months ended June 30, 2023, due primarily to increases of $34.1 million and $10.2 million in the Acima and Rent-A-Center segments, respectively as discussed further in the section “Segment Performance” below. Gross profit as a percentage of total revenue decreased to 48.8% for the six months ended June 30, 2024, as compared to 50.7% for the six months ended June 30, 2023.
Current report
Operating Labor. Operating labor increased by $5.9 million, or 1.9%, to $314.3 million for the six months ended June 30, 2024, as compared to $308.4 million for the six months ended June 30, 2023, primarily due to an increase of $3.2 million in the Rent-A-Center segment. Operating labor expressed as a percentage of total revenue excluding franchise merchandise sales and royalty income and fees was 14.8% for the six months ended June 30, 2024, as compared to 15.9% for the six months ended June 30, 2023.
Current report
Non-Labor Operating Expenses. Non-labor operating expenses increased by $39.9 million, or 10.6%, to $417.7 million for the six months ended June 30, 2024, as compared to $377.8 million for the six months ended June 30, 2023, primarily due to an increase of $32.7 million in the Acima segment, including an increase of $24.0 million in merchandise losses. Non-labor operating expenses expressed as a percentage of total revenue excluding franchise merchandise sales and royalty income and fees was 19.7% for the six months ended June 30, 2024, as compared to 19.5% for the six months ended June 30, 2023.
Current report
General and Administrative Expenses. General and administrative expenses increased by $12.2 million, or 12.6%, to $108.7 million for the six months ended June 30, 2024, as compared to $96.5 million for the six months ended June 30, 2023, primarily due to increases in overhead labor. General and administrative expenses expressed as a percentage of total revenue were 5.0% for the six months ended June 30, 2024, compared to 4.8% for the six months ended June 30, 2023.
Current report
Revenues. The increase in revenues for the three and six months ended June 30, 2024, as compared to three and six months ended June 30, 2023, were primarily due to increases in same store sales of 2.6% and 1.6%, respectively, driven by increases in rentals and fees revenues of $8.9 million and $12.5 million, respectively, primarily attributable to an increase in same store lease portfolio value.
Removed paragraphs (2)
Previous report
Gross Profit. Gross profit increased by $22.8 million, or 4.5%, to $529.1 million for the three months ended March 31, 2024, from $506.3 million for the three months ended March 31, 2023, primarily due to increases of $14.2 million and $5.9 million in the Acima and Rent-A-Center segments, respectively, as discussed further in the section “Segment Performance” below. Gross profit as a percentage of total revenue decreased to 48.3% for the three months ended March 31, 2024, as compared to 49.8% for the three months ended March 31, 2023.
Previous report
Revenues. The increase in revenue for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to an increase in same store sales of 0.8%, driven by an increase in rentals and fees revenues of $3.5 million, partially offset by decreases in merchandise sales and installment sales of $1.5 million primarily attributable to fewer customers electing early purchase options.
Reworded paragraphs (48)
Previous wording
•Grow penetration with current Acima merchants and build on our strength with small to medium size businesses while also adding new national and regional merchants to our platform and expanding our direct-to-consumer channels;
Current wording
•Grow penetration with current Acima retail partners and build on our strength with small to medium size businesses while also adding new national and regional retail partners to our platform and expanding our direct-to-consumer channels;
Previous wording
•Upgrade and integrate technology platforms to allow for a more simplified and seamless consumer experience, merchant and third-party waterfall integration and consumer transaction process and coworker efficiency;
Current wording
•Upgrade and integrate technology platforms to allow for a more simplified and seamless consumer experience, retail partner and third-party waterfall integration and consumer transaction process and coworker efficiency;
Previous wording
Dividend. On March 22, 2024, we announced that our board of directors approved a quarterly cash dividend of $0.37 per share for the second quarter of 2024. The dividend was paid on April 22, 2024 to our common stockholders of record as of the close of business on April 3, 2024.
Current wording
Dividend. On June 5, 2024, we announced that our board of directors approved a quarterly cash dividend of $0.37 per share for the third quarter of 2024. The dividend was paid on July 9, 2024 to our common stockholders of record as of the close of business on June 18, 2024.
Previous wording
Rent-A-Center E-commerce revenue. In recent years, e-commerce revenues have continued to increase as a percentage of total rentals and fees revenue in our Rent-A-Center segment. For the three months ended March 31, 2024, e-commerce revenues represented approximately 26% of total lease-to-own revenues compared to approximately 25% for the three months ended March 31, 2023. Due to recent trends in consumer shopping behaviors and expectations, we believe e-commerce solutions are an important part of our lease-to-own offering. However, we are unable to quantify the extent to which e-commerce revenues are incremental compared to what our overall revenues would have been in the absence of those e- commerce transactions. In addition, the profitability of e-commerce transactions can be impacted by different merchandise loss factors compared to traditional store-based transactions in the Rent-A-Center segment. Therefore, we are unable to determine with certainty whether the continuation of this trend toward increased e-commerce transactions will have a significant impact to our financial statements in future periods or be favorable or unfavorable to our financial results.
Current wording
Rent-A-Center E-commerce revenue. In recent years, e-commerce revenues increased as a percentage of total rentals and fees revenue in our Rent-A-Center segment. For the six months ended June 30, 2024 and 2023, e-commerce revenues represented approximately 26% of total lease-to-own revenues. Due to recent trends in consumer shopping behaviors and expectations, we believe e-commerce solutions are an important part of our lease-to-own offering. However, we are unable to quantify the extent to which e-commerce revenues are incremental compared to what our overall revenues would have been in the absence of those e-commerce transactions. In addition, the profitability of e-commerce transactions can be impacted by different merchandise loss factors compared to traditional store-based transactions in the Rent-A-Center segment. Therefore, we are unable to determine with certainty whether the continuation of this trend toward increased e-commerce transactions will have a significant impact to our financial statements in future periods or be favorable or unfavorable to our financial results.
Previous wording
The following discussion focuses on our results of operations and our liquidity and capital resources. You should read this discussion in conjunction with the condensed consolidated financial statements and notes thereto for the three months ended March 31, 2024 included in Part I, Item I of this Quarterly Report on Form 10-Q.
Current wording
The following discussion focuses on our results of operations and our liquidity and capital resources. You should read this discussion in conjunction with the condensed consolidated financial statements and notes thereto for the six months ended June 30, 2024 included in Part I, Item I of this Quarterly Report on Form 10-Q.
Previous wording
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 estimated cancellations as of the measurement date.
Current wording
Gross Merchandise Volume (“GMV”): The Company defines Gross Merchandise Volume as the retail value in U.S. dollars of merchandise acquired by the Acima segment that is leased to customers through a transaction that occurs within a defined period, net of estimated cancellations as of the measurement date.
Previous wording
Same Store Sales: 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.
Current wording
Same Store Sales: Same store sales generally represents revenue earned in Rent-A-Center 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.
Previous wording
The following briefly summarizes certain of our financial information for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.
Current wording
The following briefly summarizes certain of our financial information for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.
Previous wording
During the first three months of 2024, consolidated revenues and gross profit increased by approximately $79.9 million and $22.8 million, respectively, primarily due to an increase in the Acima segment revenues described below. Operating profit increased by approximately $96.9 million, primarily due to a decrease in Other gains and charges of $100.8 million in addition to the increase in gross profit noted above, partially offset by an increase in non-labor operating expenses of $17.1 million, and general and administrative expenses of $7.4 million.
Current wording
During the first six months of 2024, consolidated revenues and gross profit increased by approximately $177.3 million and $48.5 million, respectively, primarily due to an increase in the Acima segment revenues described below. Operating profit increased by approximately $93.5 million, primarily due to a decrease in other gains and charges of $103.7 million in addition to the increase in gross profit noted above, partially offset by an increase in non-labor operating expenses of $39.9 million, general and administrative expenses of $12.2 million and operating labor of $5.9 million.
Previous wording
The Acima segment revenues increased approximately $77.5 million for the three months ended March 31, 2024, due to increases in rentals and fees revenues and merchandise sales of $59.4 million and $18.2 million, respectively, resulting from higher GMV. Growth in GMV was primarily due to an increase in merchant locations, merchant productivity which resulted in more leases per merchant, expanding direct-to-consumer offerings, and improved conversion rates. Operating profit decreased approximately $2.0 million for the three months ended March 31, 2024, primarily due to an increase non-labor operating expenses of approximately $17.7 million, partially offset by an increase in gross profit of $14.2 million. See "Segment Performance" below for further discussion of Acima segment operating results for the three months ended March 31, 2024.
Current wording
The Acima segment revenues increased approximately $165.9 million for the six months ended June 30, 2024, due to increases in rentals and fees revenues and merchandise sales of $126.7 million and $39.2 million, respectively, resulting from higher GMV. Growth in GMV was primarily due to an increase in retail partner locations and productivity, which resulted in more leases per retail partner, and expanded direct-to-consumer offerings. Operating profit increased approximately $4.9 million for the six months ended June 30, 2024, primarily due to an increase in gross profit of $34.1 million, partially offset by an increase in non-labor operating expenses of approximately $32.7 million. See“Segment Performance” below for further discussion of Acima segment operating results for the six months ended June 30, 2024.
Previous wording
Revenues in our Rent-A-Center segment increased approximately $0.7 million for the three months ended March 31, 2024 due to an increase in same store sales of 0.8% driven by an increase in rentals and fees revenues of $3.5 million partially offset by a decrease in merchandise sales of $1.5 million. Operating profit increased approximately $5.8 million for the three months ended March 31, 2024, primarily due to an increase in gross profit of approximately $5.9 million resulting primarily from a decrease in cost of revenues of $5.2 million. See "Segment Performance" below for further discussion of Rent-A-Center segment operating results for the three months ended March 31, 2024.
Current wording
Revenues in our Rent-A-Center segment increased approximately $9.5 million for the six months ended June 30, 2024 due to an increase in same store sales of 1.6% driven by an increase in rentals and fees revenues of $12.5 million, partially offset by a decrease in merchandise sales of $1.1 million. Operating profit decreased approximately $6.1 million for the six months ended June 30, 2024, primarily due to an increase in non-labor operating expenses and other gains and charges of $6.6 million and $6.5 million, respectively, partially offset by an increase in gross profit of approximately $10.2 million. See“Segment Performance” below for further discussion of Rent-A-Center segment operating results for the six months ended June 30, 2024.
Previous wording
The Mexico segment revenues increased by 18.0% for the three months ended March 31, 2024, contributing to an increase in gross profit of 18.8%, or $2.3 million, primarily due to a 5.6% increase in same store sales driven by an increase in rentals and fees revenues of $2.9 million. Operating profit increased $0.7 million for the three months ended March 31, 2024, primarily due to an increase in gross profit described above, partially offset by an increase in operating labor costs of approximately $1.0 million. See "Segment Performance" below for further discussion of Mexico segment operating results for the three months ended March 31, 2024.
Current wording
The Mexico segment revenues increased by 15.5% for the six months ended June 30, 2024, contributing to an increase in gross profit of 16.9%, or $4.3 million, primarily due to a 7.4% increase in same store sales driven by an increase in rentals and fees revenues of $5.1 million. Operating profit increased $1.0 million for the six months ended June 30, 2024, primarily due to the increase in gross profit described above, partially offset by an increase in general and administrative expenses and operating labor costs of approximately $1.6 million and $1.4 million, respectively. See“Segment Performance” below for further discussion of Mexico segment operating results for the six months ended June 30, 2024.
Previous wording
Revenues for the Franchising segment decreased $1.5 million for the three months ended March 31, 2024, primarily due to a decrease in merchandise sales of $2.0 million, partially offset by an increase in royalty income and fees of $0.3 million. See "Segment Performance" below for further discussion of Mexico segment operating results for the three months ended March 31, 2024.
Current wording
Revenues for the Franchising segment decreased $3.7 million for the six months ended June 30, 2024, primarily due to a decrease in merchandise sales of $3.8 million. See“Segment Performance” below for further discussion of Franchising segment operating results for the six months ended June 30, 2024.
Previous wording
Cash flow from operations was $45.4 million for the three months ended March 31, 2024. As of March 31, 2024, we held $84.8 million of cash and cash equivalents and had outstanding indebtedness of $1.3 billion.
Current wording
Cash flow from operations was $60.5 million for the six months ended June 30, 2024. As of June 30, 2024, we held $82.5 million of cash and cash equivalents and had outstanding indebtedness of $1.3 billion.
Previous wording
Revenue. Total revenues increased by $79.9 million, or 7.9%, to $1,096.0 million for the three months ended March 31, 2024, from $1,016.1 million for the three months ended March 31, 2023. This increase was primarily due to an increase of approximately $77.5 million in the Acima segment, as discussed further in the section “Segment Performance” below.
Current wording
Revenue. Total revenues increased by $97.3 million, or 9.9%, to $1,076.5 million for the three months ended June 30, 2024, from $979.2 million for the three months ended June 30, 2023. This increase was primarily due to an increase of approximately $88.4 million in the Acima segment, as discussed further in the section “Segment Performance” below.
Previous wording
Cost of Rentals and Fees. Cost of rentals and fees consists primarily of depreciation of rental merchandise. Cost of rentals and fees for the three months ended March 31, 2024 increased by $30.0 million, or 10.1%, to $327.1 million as compared to $297.1 million for the three months ended March 31, 2023. The increase was primarily attributable to an increase of approximately $33.5 million in the Acima segment driven by an increase in rentals and fees revenues, partially offset by a decrease of $4.2 million in the Rent-A-Center segment. Cost of rentals and fees expressed as a percentage of rentals and fees revenue was 37.5% for the three months ended March 31, 2024, as compared to 36.8% for the three months ended March 31, 2023.
Current wording
Cost of Rentals and Fees. Cost of rentals and fees consists primarily of depreciation of rental merchandise. Cost of rentals and fees for the three months ended June 30, 2024 increased by $46.9 million, or 16.1%, to $338.6 million as compared to $291.7 million for the three months ended June 30, 2023. The increase was primarily attributable to an increase of approximately $42.6 million and $3.8 million in the Acima and Rent-A-Center segments, respectively, driven by an increase in rentals and fees revenues. Cost of rentals and fees expressed as a percentage of rentals and fees revenue was 38.2% for the three months ended June 30, 2024, as compared to 36.1% for the three months ended June 30, 2023.
Previous wording
Cost of Merchandise Sold. Cost of merchandise sold represents the net book value of rental merchandise at time of sale. Cost of merchandise sold increased by $29.3 million, or 15.9%, to $213.6 million for the three months ended March 31, 2024, from $184.3 million for the three months ended March 31, 2023, primarily attributable to an increase of $29.8 million in the Acima segment, driven primarily by higher merchandise sales. The gross margin percent of merchandise sales decreased to (18.8)% for the three months ended March 31, 2024, from (13.1)% for the three months ended March 31, 2023.
Current wording
Cost of Merchandise Sold. Cost of merchandise sold represents the net book value of rental merchandise at time of sale. Cost of merchandise sold increased by $26.7 million, or 17.5%, to $179.4 million for the three months ended June 30, 2024, from $152.7 million for the three months ended June 30, 2023, primarily attributable to an increase of $25.9 million in the Acima segment, driven primarily by higher merchandise sales. The gross margin percent of merchandise sales decreased to (22.7)% for the three months ended June 30, 2024, from (22.4)% for the three months ended June 30, 2023.
Previous wording
Operating Labor. Operating labor includes all salaries and wages paid to operational employees and district managers, together with payroll taxes and benefits. Operating labor increased by $1.6 million, or 1.1%, to $158.1 million for the three months ended March 31, 2024, as compared to $156.5 million for the three months ended March 31, 2023, primarily due to an increase of $1.0 million in the Mexico segment. Operating labor expressed as a percentage of total revenue excluding franchise merchandise sales and royalty income and fees was 14.8% for the three months ended March 31, 2024, as compared to 15.9% for the three months ended March 31, 2023.
Current wording
Operating Labor. Operating labor includes all salaries and wages paid to operational employees and district managers, together with payroll taxes and benefits. Operating labor increased by $4.3 million, or 2.8%, to $156.2 million for the three months ended June 30, 2024, as compared to $151.9 million for the three months ended June 30, 2023, primarily due to an increase of $2.6 million and $1.2 million in the Rent-A-Center and Acima segments, respectively. Operating labor expressed as a percentage of total revenue excluding franchise merchandise sales and royalty income and fees was 14.9% for the three months ended June 30, 2024, as compared to 16.0% for the three months ended June 30, 2023.
Previous wording
Non-Labor Operating Expenses. Non-labor operating expenses include LCO's, occupancy, delivery, advertising, selling, insurance, travel and other operating expenses. Non-labor operating expenses increased by $17.1 million, or 8.7%, to $213.8 million for the three months ended March 31, 2024, as compared to $196.7 million for the three months ended March 31, 2023, due to an increase of $17.7 million in the Acima Segment primarily attributable to an increase of $11.3 million in merchandise losses. Non-labor operating expenses expressed as a percentage of total revenue excluding franchise merchandise sales and royalty income and fees was 20.0% for the three months ended March 31, 2024, compared to 19.9% for the three months ended March 31, 2023.
Current wording
Non-Labor Operating Expenses. Non-labor operating expenses include LCOs, occupancy, delivery, advertising, selling, insurance, travel and other operating expenses. Non-labor operating expenses increased by $22.8 million, or 12.6%, to $203.9 million for the three months ended June 30, 2024, as compared to $181.1 million for the three months ended June 30, 2023, due to an increase of $15.0 million in the Acima segment, primarily attributable to an increase of $12.7 million in merchandise losses. Non-labor operating expenses expressed as a percentage of total revenue excluding franchise merchandise sales and royalty income and fees was 19.4% for the three months ended June 30, 2024, compared to 19.1% for the three months ended June 30, 2023.
Previous wording
General and Administrative Expenses. General and administrative expenses include all corporate overhead expenses related to our headquarters such as salaries, payroll taxes and benefits, stock-based compensation, occupancy, administrative and other expenses, as well as salaries and labor costs for our regional directors, divisional vice presidents and executive vice presidents. General and administrative expenses increased by $7.4 million, or 15.4%, to $55.1 million for the three months ended March 31, 2024, as compared to $47.7 million for the three months ended March 31, 2023, primarily due to increases in overhead labor. General and administrative expenses expressed as a percentage of total revenue were 5.0% and 4.7% for the three months ended March 31, 2024 and 2023, respectively.
Current wording
General and Administrative Expenses. General and administrative expenses include all corporate overhead expenses related to our headquarters such as salaries, payroll taxes and benefits, stock-based compensation, occupancy, administrative and other expenses, as well as salaries and labor costs for our regional directors, divisional vice presidents and executive vice presidents. General and administrative expenses increased by $4.8 million, or 9.9%, to $53.6 million for the three months ended June 30, 2024, as compared to $48.8 million for the three months ended June 30, 2023, primarily due to increases in overhead labor costs. General and administrative expenses expressed as a percentage of total revenue was 5.0% for both the three months ended June 30, 2024 and 2023.
Previous wording
Other Gains and Charges. Other gains and charges decreased by $100.8 million, or 79.0%, to $26.8 million for the three months ended March 31, 2024, as compared to $127.6 million for the three months ended March 31, 2023. The decrease in other gains and charges was driven primarily by stock compensation expense recognized for the three months ended March 31, 2023, related to restricted stock issued in connection with the Acima Holdings acquisition, including $74.8 million attributable to the acceleration of vesting provisions for former employee and Acima founder, Aaron Allred, upon his transition from Executive Vice President of Acima to an advisory role in early 2023, resulting in a decrease in stock compensation expense of $104.6 million for the three months ended March 31, 2024, as compared to the prior year period. This decrease was partially offset by $4.6 million in accelerated software depreciation for the three months ended March 31, 2024.
Current wording
Other Gains and Charges. Other gains and charges decreased by $103.7 million to $51.7 million for the six months ended June 30, 2024, as compared to $155.4 million for the six months ended June 30, 2023. The decrease in other gains and charges was driven primarily by a decrease of $113.8 million in stock compensation expense recognized for the six months ended June 30, 2023, related to restricted stock issued in connection with the Acima Holdings acquisition. The decrease in other gains and charges was also due to a decrease of $4.9 million in depreciation and amortization of acquired software and intangible assets, partially offset by $6.1 million in accelerated software depreciation and $6.0 million in lease impairment charges and fixed asset disposal for the six months ended June 30, 2024.
Previous wording
Operating Profit (Loss). Operating profit increased by $96.9 million, or 275.9%, to $61.8 million for the three months ended March 31, 2024, as compared to $(35.1) million for the three months ended March 31, 2023, primarily due to the decrease in other gains and charges and increase in gross profit, partially offset by increases in non-labor operating expenses and general and administrative expenses as described above. Operating profit expressed as a percentage of total revenue was 5.6% for the three months ended March 31, 2024, compared to (3.5)% for the three months ended March 31, 2023.
Current wording
Operating Profit. Operating profit increased by $93.5 million to $142.4 million for the six months ended June 30, 2024, as compared to $48.9 million for the six months ended June 30, 2023, primarily due to the decrease in other gains and charges and increase in gross profit, partially offset by increases in non-labor operating expenses and general and administrative expenses, as described above. Operating profit expressed as a percentage of total revenue was 6.6% for the six months ended June 30, 2024, compared to 2.5% for the six months ended June 30, 2023.
Previous wording
Income Tax Expense (Benefit). Income tax expense increased by $115.0 million to $4.9 million for the three months ended March 31, 2024, as compared to $(110.1) million for the three months ended March 31, 2023, primarily due to the increase in earnings before income taxes for the three months ended March 31, 2024 compared to the same period in 2023, and a lower effective tax rate for the three months ended March 31, 2024, primarily attributable to a lower tax impact of stock compensation expense related to stock consideration issued to the former owners of Acima Holdings compared to the prior year period, as well as a favorable adjustment related to foreign deferred tax assets.
Current wording
Income Tax Expense (benefit). Income tax expense increased by $25.1 million to $17.4 million for the six months ended June 30, 2024, as compared to $(7.7) million for the six months ended June 30, 2023, primarily due to the increase in earnings before income taxes for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, and a lower effective tax rate for the six months ended June 30, 2024, driven by a lower tax impact of stock compensation expense related to stock consideration issued to the former owners of Acima Holdings, compared to the prior year period, as well as a favorable adjustment related to foreign deferred tax assets.
Previous wording
Revenues. The increase in revenues for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, included increases in rentals and fees revenues and merchandise sales revenue of $59.4 million and $18.2 million, respectively, resulting from higher GMV. Growth in GMV was primarily due to an increase in merchant locations, merchant productivity which resulted in more leases per merchant, expanding direct-to-consumer offerings, and improved conversion rates.
Current wording
Revenues. The increase in revenues for the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, were primarily due to increases in rentals and fees revenues of $67.2 million and $126.7 million, respectively, and increases in merchandise sales revenue of $21.0 million and $39.2 million, respectively, resulting from higher GMV. Growth in GMV was primarily due to an increase in retail partner locations and productivity, which resulted in more leases per retail partner, in addition to expanded direct-to-consumer offerings.
Previous wording
Gross Profit. Gross profit increased for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, driven primarily by the increase in revenues described above. Gross profit as a percentage of segment revenues decreased to 30.2% for the three months ended March 31, 2024, compared to 32.1% for the three months ended March 31, 2023, partly due to an increase in merchandise sales resulting from a larger portfolio at the beginning of 2024 compared to 2023, in addition to the conversion of Acceptance Now locations to the Acima Holdings Lease Management platform.
Current wording
Gross Profit. Gross profit increased for the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, driven primarily by the increase in revenues described above. Gross profit as a percentage of segment revenues decreased to 32.5% and 31.3% for the three and six months ended June 30, 2024, compared to 34.4% and 33.2% for the three and six months ended June 30, 2023, primarily due to the conversion of Acceptance Now locations to the Acima platform, and an increase in merchandise sales resulting from a larger portfolio at the beginning of 2024 compared to 2023.
Previous wording
Operating Profit. Operating profit as a percentage of segment revenues decreased to 9.2% for the three months ended March 31, 2024 compared to 11.1% for the three months ended March 31, 2023. The decrease in operating profit for the three months ended March 31, 2024 is primarily due to an increase in non-labor operating expenses of approximately $17.7 million, partially offset by the increase in gross profit. Merchandise losses in our Acima locations due to LCOs, expressed as a percentage of segment revenues, were approximately 9.6% for the three months ended March 31, 2024, compared to 8.9% for the three months ended March 31, 2023. Merchandise losses in our Acima locations due to other merchandise losses, expressed as a percentage of segment revenues, were approximately 0.3% for the three months ended March 31, 2024, compared to approximately 0.2% for the three months ended March 31, 2023.
Current wording
Operating Profit. Operating profit as a percentage of segment revenues decreased to 12.7% and 10.9% for the three and six months ended June 30, 2024 compared to 13.6% and 12.3% for the three and six months ended June 30, 2023. The decrease in operating profit was primarily due to increases in non-labor operating expense of approximately $15.0 million and $32.7 million for the three and six months ended June 30, 2024, respectively, partially offset by the increases in gross profit described above. Merchandise losses in our Acima locations due to LCOs, expressed as a percentage of revenues, were approximately 9.6% for both the three and six months ended June 30, 2024, compared to 8.9% for both the three and six months ended June 30, 2023. Merchandise losses in our Acima locations due to other merchandise losses, expressed as a percentage of revenues, were negligible for the three and six months ended June 30, 2024 and 2023.
Previous wording
Gross Profit. Gross profit increased for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, driven primarily by the increase in revenues described above. Gross profit as a percentage of segment revenues was 69.5% for the three months ended March 31, 2024, as compared to 68.4% for the three months ended March 31, 2023, primarily due to mix-shift changes between lease merchandise product categories.
Current wording
Gross Profit. Gross profit increased for the three and six months ended June 30, 2024, as compared to three and six months ended June 30, 2023, driven primarily by the increase in revenues described above. Gross profit as a percentage of segment revenues was 69.6% for both the three and six months ended June 30, 2024, as compared to 70.0% and 69.2% for the three and six months ended June 30, 2023, respectively.
Previous wording
Operating Profit. Operating profit as a percentage of segment revenues was 15.4% for the three months ended March 31, 2024, compared to 14.2% for the three months ended March 31, 2023. The increase in operating margin for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily driven by the increase in gross profit described above. Merchandise losses in our Rent-A-Center lease-to-own stores due to LCOs, expressed as a percentage of Rent-A-Center lease-to-own revenues, were approximately 4.7% for the three months ended March 31, 2024, compared to 4.8% for the three months ended March 31, 2023. Other merchandise losses in our Rent-A-Center lease-to-own stores, expressed as a percentage of Rent-A-Center lease-to-own revenues, were approximately 1.1% for the three months ended March 31, 2024, compared to approximately 1.4% for the three months ended March 31, 2023. Other merchandise losses include unrepairable and missing merchandise, and loss/damage waiver claims.
Current wording
Operating Profit. Operating profit as a percentage of segment revenues was 14.1% and 14.8% for the three and six months ended June 30, 2024, respectively, compared to 16.9% and 15.5% for the three and six months ended June 30, 2023. The decrease in operating margin for the three and six months ended June 30, 2024, as compared to the three and six months ended June 30, 2023, respectively, was primarily due to store technology investments and elevated insurance costs. Merchandise losses in our Rent-A-Center lease-to-own stores due to LCOs, expressed as a percentage of Rent-A-Center lease-to-own revenues, were approximately 4.2% and 4.5% for the three and six months ended June 30, 2024, compared to 4.5% and 4.7% for the three and six months ended June 30, 2023. Merchandise losses in our Rent-A-Center lease-to-own stores due to other merchandise losses, expressed as a percentage of Rent-A-Center lease-to-own revenues, were approximately 1.6% and 1.3% for the three and six months ended June 30, 2024, respectively compared to approximately 1.4% for both of the corresponding periods in 2023. Other merchandise losses include unrepairable and missing merchandise, and loss/damage waiver claims.
Previous wording
Revenues. Revenues were positively impacted by exchange rate fluctuations of approximately $1.9 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. On a constant currency basis, revenues for the three months ended March 31, 2024 increased approximately $1.2 million, compared to the three months ended March 31, 2023.
Current wording
Revenues. Revenues were positively impacted by exchange rate fluctuations of approximately $0.7 million and $2.5 million for the three and six months ended June 30, 2024, respectively, as compared to the three and six months ended June 30, 2023. On a constant currency basis, revenues for the three and six months ended June 30, 2024 increased approximately $1.7 million and $3.1 million, respectively, compared to the three and six months ended June 30, 2023.
Previous wording
Gross Profit. Gross profit was positively impacted by exchange rate fluctuations of approximately $1.3 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. On a constant currency basis, gross profit for the three months ended March 31, 2024 increased by approximately $1.0 million as compared to the three months ended March 31, 2023. Gross profit as a percentage of segment revenues was 71.6% for the three months ended March 31, 2024, compared to 71.1% for the three months ended March 31, 2023.
Current wording
Gross Profit. Gross profit was positively impacted by exchange rate fluctuations of approximately $0.4 million and $1.8 million for the three and six months ended June 30, 2024, respectively, as compared to the three and six months ended June 30, 2023. On a constant currency basis, gross profit for the three and six months ended June 30, 2024 increased by approximately $1.6 million and $2.5 million, respectively, as compared to the three and six months ended June 30, 2023. Gross profit as a percentage of segment revenues was 71.9% and 71.7% for the three and six months ended June 30, 2024, compared to 70.7% and 70.9% for the three and six months ended June 30, 2023.
Previous wording
Operating Profit. Operating profit was positively impacted by exchange rate fluctuations of approximately $0.2 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. On a constant currency basis, operating profit for the three months ended March 31, 2024 increased by approximately $0.5 million as compared to the three months ended March 31, 2023. Operating profit as a percentage of segment revenues increased to 8.2% for the three months ended March 31, 2024, compared to 5.7% for the three months ended March 31, 2023, primarily due to lower LCOs.
Current wording
Operating Profit. Operating profit was minimally impacted by exchange rate fluctuations for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023. Operating profit was positively impacted by exchange rate fluctuations of approximately $0.2 million for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. On a constant currency basis, operating profit for the three and six months ended June 30, 2024 increased by approximately $0.3 million and $0.8 million, respectively, as compared to the three and six months ended June 30, 2023. Operating profit as a percentage of segment revenues increased to 7.5% and 7.9% for the three and six months ended June 30, 2024, respectively, compared to 7.0% and 6.4% for the three and six months ended June 30, 2023, respectively, primarily due to lower LCOs.
Previous wording
Revenues. Revenues decreased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to a decrease in merchandise purchases by franchisees of $2.0 million, partially offset by increases in royalty income and fees revenue of $0.3 million.
Current wording
Revenues. Revenues decreased for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, primarily due to decreases in merchandise purchases by franchisees of $1.8 million and $3.8 million, respectively.
Previous wording
Gross Profit. Gross profit as a percentage of segment revenues increased to 26.2% for the three months ended March 31, 2024, compared to 23.5% for the three months ended March 31, 2023, primarily due to the change in allocation of merchandise sales compared to royalty and fee revenue.
Current wording
Gross Profit. Gross profit as a percentage of segment revenues increased to 24.4% and 25.3% for the three and six months ended June 30, 2024, respectively, compared to 24.0% and 23.8% for the three and six months ended June 30, 2023, respectively, primarily due to the changes in allocation of merchandise sales compared to royalty and fee revenue.
Previous wording
Operating Profit. Operating profit as a percentage of segment revenues decreased to 11.9% for the three months ended March 31, 2024 compared to 16.0% for the three months ended March 31, 2023, primarily due to an increase in segment operating expenses of $1.8 million.
Current wording
Operating Profit. Operating profit as a percentage of segment revenues decreased to 16.2% and 14.0% for the three and six months ended June 30, 2024, respectively, compared to 16.5% and 16.2% for the three and six months ended June 30, 2023, respectively. The decrease in operating profit as a percentage of segment revenues for the three and six months ended June 30, 2024 is primarily due to the changes in allocation of merchandise sales compared to royalty and fee revenue. The decrease for the six months ended June 30, 2024 is also due to an increase in segment operating expenses of $1.8 million, compared to the six months ended June 30, 2023.
Previous wording
Overview. For the three months ended March 31, 2024, we generated $45.4 million in operating cash flow and used cash in the amount of $79.2 million for debt repayments, $21.5 million for dividends and $11.8 million for capital expenditures, partially offset by cash proceeds from indebtedness of $60.0 million. We ended the first quarter of 2024 with $84.8 million of cash and cash equivalents and outstanding indebtedness of $1.3 billion.
Current wording
Overview. For the six months ended June 30, 2024, we generated $60.5 million in operating cash flow and used cash in the amount of $160.4 million for debt repayments, $41.8 million for dividends and $26.2 million for capital expenditures, partially offset by cash proceeds from indebtedness of $165.0 million. We ended the second quarter of 2024 with $82.5 million of cash and cash equivalents and outstanding indebtedness of $1.3 billion.
Previous wording
Analysis of Cash Flow. Cash provided by operating activities decreased by $60.0 million to $45.4 million for the three months ended March 31, 2024, from $105.4 million for the three months ended March 31, 2023, primarily due to a decrease in net earnings and an increase in our inventory purchases driven by increased consumer demand.
Current wording
Analysis of Cash Flow. Cash provided by operating activities decreased by $81.5 million to $60.5 million for the six months ended June 30, 2024, from $142.0 million for the six months ended June 30, 2023, primarily due to an increase in our inventory purchases driven by increased consumer demand.
Previous wording
Cash used in investing activities increased to $11.7 million for the three months ended March 31, 2024, compared to $9.6 million for the three months ended March 31, 2023, primarily due to higher investment in store-related assets in our Rent-A-Center segment for the three months ended March 31, 2024.
Current wording
Cash used in investing activities increased to $26.1 million for the six months ended June 30, 2024, compared to $21.4 million for the six months ended June 30, 2023, primarily due to higher investment in store-related assets in our Rent-A-Center segment for the six months ended June 30, 2024.
Previous wording
Cash used in financing activities decreased to $42.8 million for the three months ended March 31, 2024, compared to $69.4 million for the three months ended March 31, 2023, primarily due to an increase in borrowings under the ABL Credit Facility of $60.0 million, partially offset by an increase in debt repayments of $37.1 million for the three months ended March 31, 2024.
Current wording
Cash used in financing activities decreased to $44.3 million for the six months ended June 30, 2024, compared to $180.0 million for the six months ended June 30, 2023, primarily due to an increase in borrowings under the ABL Credit Facility of $165.0 million, partially offset by an increase in debt repayments of $26.2 million for the six months ended June 30, 2024.
Previous wording
We utilize our ABL Credit Facility for the issuance of letters of credit, as well as to manage normal fluctuations in operational cash flow caused by the timing of cash receipts. In that regard, we may from time to time draw funds under the ABL Credit Facility for general corporate purposes. Amounts are drawn as needed due to the timing of cash flows and are generally paid down as cash is generated by our operating activities. We believe cash flow generated from operations and availability under our ABL Credit Facility will be sufficient to fund our operations during the next twelve months. At April 24, 2024, we had approximately $39.8 million in cash on hand, and $409.6 million available under our ABL Credit Facility.
Current wording
We utilize our ABL Credit Facility for the issuance of letters of credit, as well as to manage normal fluctuations in operational cash flow caused by the timing of cash receipts. In that regard, we may from time to time draw funds under the ABL Credit Facility for general corporate purposes. Amounts are drawn as needed due to the timing of cash flows and are generally paid down as cash is generated by our operating activities. We believe cash flow generated from operations and availability under our ABL Credit Facility will be sufficient to fund our operations during the next twelve months. At July 25, 2024, we had approximately $54.8 million in cash on hand, and $410.6 million available under our ABL Credit Facility.
Previous wording
Capital Expenditures. We make capital expenditures in order to maintain our existing operations, acquire new capital assets in new and acquired stores and invest in information technology. We spent $11.8 million and $9.5 million on capital expenditures during the three months ended March 31, 2024 and 2023, respectively. The increase of $2.3 million is primarily due to higher investment in store-related assets in our Rent-A-Center segment.
Current wording
Capital Expenditures. We make capital expenditures in order to maintain our existing operations, acquire new capital assets in new and acquired stores and invest in information technology. We spent $26.2 million and $21.4 million on capital expenditures during the six months ended June 30, 2024 and 2023, respectively. The increase of $4.8 million is primarily due to higher investment in store-related assets in our Rent-A-Center segment.
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Current report — wording carried from elsewhere
Same Store Lease Portfolio Value: Represents the aggregate dollar value of the expected monthly rental income associated with current active lease agreements from our e‑commerce platform and Rent-A-Center stores that were operated by us for 13 months or more at the end of any given period. The Company excludes from the same store 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 base in the 30th full month following account transfer.
Current report — wording carried from elsewhere
Income Tax Expense. Income tax expense decreased by $89.9 million to $12.5 million for the three months ended June 30, 2024, as compared to $102.4 million for the three months ended June 30, 2023, primarily due to a lower effective tax rate for the three months ended June 30, 2024, attributable to a lower tax impact of stock compensation expense related to stock consideration issued to the former owners of Acima Holdings, compared to the prior year period, as well as a favorable adjustment related to foreign deferred tax assets. Income tax expense further decreased as a result of lower earnings before income taxes for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.