RCII - Rent-A-Center gains 16% on topping earnings expectations

Rent-A-Center ( RCII ) +16% reported Non-GAAP EPS of $1.15, beating expectations and higher than the company guidance of $0.95-$1.10.

Revenue of $1.071B, down 10.3% Y/Y almost in-line with consensus and higher than guidance mid-point of $1.045B-$1.075B. Revenues were primarily due to lower merchandise sales revenue and rental revenues compared to the prior year period.

Segments: Acima: Revenues of $530.2M, decreased 16.5% Y/Y driven by lower rental and fees revenues and reduced merchandise sales.

Rent-A-Center: Revenues of $490.2M, decreased 3.1% Y/Y on a 3.3% decrease in same-store sales primarily attributable to a decline in merchandise sales and reduced utilization of early payout options in the quarter, which had benefited from government stimulus programs in the prior year period.

Franchising: Revenues of $34.2M decreased 9.1% Y/Y due to lower inventory purchases per store.

Mexico: Revenues of $16.7M, increased 9.4% Y/Y on a constant currency basis.

Key Operating Metrics: Q2 gross merchandise volume was for Rent-A-Car business was down 3.3%, Mexico up 7.3%.

FY22 Guidance: Revenues of $4.265B - $4.385B down from prior guidance of $4.45B-$4.6B. Consensus Revenue Estimate for 2022 is $4.47B.

Non-GAAP EPS $4.00 - $4.50 from prior outlook of $4.50-$5.00. Consensus EPS Estimates for 2022 is $4.49.

Q3 Guidance: Revenue of $1B to $1.055B vs. $1.11B consensus. Non-GAAP EPS $1.05 -$1.25 vs. $1.25 consensus.

The company expects high rates of inflation, pressures on discretionary income and the effect of lower levels of government stimulus relief for our core consumers, will continue at current levels throughout the year.

Analyst views: Raymond James analyst Bobby Griffin says 2Q earnings beat expectations and FY22 guidance cut was much less than analyst expected.

Jefferies analyst Kyle Joseph expected the guidance cut but it was less than expected.

Press Release , Conference Call

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