2019 Q2 Form 10-Q Financial Statement

#000093303619000039 Filed on August 09, 2019

View on sec.gov

Income Statement

Concept 2019 Q2 2019 Q1 2018 Q2
Revenue $655.9M $696.7M $655.7M
YoY Change 0.03% -0.19% -3.23%
Cost Of Revenue $247.9M $271.8M $231.8M
YoY Change 6.91% 4.12% -5.41%
Gross Profit $408.1M $424.9M $423.9M
YoY Change -3.73% -2.77% -2.0%
Gross Profit Margin 62.21% 60.98% 64.64%
Selling, General & Admin $340.7M $358.4M $362.8M
YoY Change -6.09% -12.99% -10.11%
% of Gross Profit 83.49% 84.36% 85.59%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $15.10M $15.69M $17.40M
YoY Change -13.22% -11.55% -6.95%
% of Gross Profit 3.7% 3.69% 4.1%
Operating Expenses $278.2M $407.5M $396.7M
YoY Change -29.87% -8.88% -8.46%
Operating Profit $129.8M $17.35M $27.15M
YoY Change 378.17% -268.93% -3210.08%
Interest Expense $10.09M $9.389M $10.81M
YoY Change -6.61% -17.35% -4.06%
% of Operating Profit 7.77% 54.12% 39.8%
Other Income/Expense, Net $0.00
YoY Change -100.0%
Pretax Income $121.7M $8.834M $16.55M
YoY Change 635.69% -141.24% -218.93%
Income Tax $27.28M $1.511M $2.794M
% Of Pretax Income 22.41% 17.1% 16.89%
Net Earnings $94.46M $49.29M $13.75M
YoY Change 586.8% -348.41% -254.65%
Net Earnings / Revenue 14.4% 7.08% 2.1%
Basic Earnings Per Share $1.74 $0.14 $0.26
Diluted Earnings Per Share $1.70 $0.13 $0.25
COMMON SHARES
Basic Shares Outstanding 54.15M shares 53.93M shares 53.45M shares
Diluted Shares Outstanding 55.71M shares 55.50M shares 54.30M shares

Balance Sheet

Concept 2019 Q2 2019 Q1 2018 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $353.1M $237.7M $116.8M
YoY Change 202.31% 192.01% 58.27%
Cash & Equivalents $353.1M $237.7M $116.8M
Short-Term Investments
Other Short-Term Assets $36.30M $39.90M $53.60M
YoY Change -32.28% -40.89% -4.96%
Inventory $739.1M $767.9M $782.3M
Prepaid Expenses
Receivables $65.70M $63.80M $69.70M
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $1.194B $1.109B $1.022B
YoY Change 16.8% 8.1% -7.13%
LONG-TERM ASSETS
Property, Plant & Equipment $197.8M $211.9M $253.9M
YoY Change -22.13% -21.5% -18.52%
Goodwill $56.82M $56.82M $56.78M
YoY Change 0.06% 0.05% 2.45%
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets $25.60M $25.60M $28.60M
YoY Change -10.49% -11.72%
Total Long-Term Assets $550.0M $572.1M $343.9M
YoY Change 59.94% 58.82% -7.48%
TOTAL ASSETS
Total Short-Term Assets $1.194B $1.109B $1.022B
Total Long-Term Assets $550.0M $572.1M $343.9M
Total Assets $1.744B $1.681B $1.366B
YoY Change 27.66% 21.28% -7.22%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $95.70M $118.9M $92.40M
YoY Change 3.57% 30.8% -18.23%
Accrued Expenses $586.1M $611.1M $311.5M
YoY Change 88.15% 85.35% -3.35%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $681.8M $730.0M $403.9M
YoY Change 68.8% 73.56% -7.21%
LONG-TERM LIABILITIES
Long-Term Debt $540.7M $540.4M $577.4M
YoY Change -6.36% -9.4% -9.17%
Other Long-Term Liabilities
YoY Change
Total Long-Term Liabilities $540.7M $540.4M $577.4M
YoY Change -6.36% -9.4% -9.17%
TOTAL LIABILITIES
Total Short-Term Liabilities $681.8M $730.0M $403.9M
Total Long-Term Liabilities $540.7M $540.4M $577.4M
Total Liabilities $1.352B $1.387B $1.098B
YoY Change 23.17% 20.66% -10.28%
SHAREHOLDERS EQUITY
Retained Earnings $905.7M $811.3M $791.3M
YoY Change 14.45% 1.74% 1.91%
Common Stock $844.8M $841.4M $836.1M
YoY Change 1.04% 0.84% 0.81%
Preferred Stock
YoY Change
Treasury Stock (at cost) $1.348B $1.348B $1.348B
YoY Change 0.0% 0.0% 0.0%
Treasury Stock Shares 56.37M shares 56.37M shares 56.37M shares
Shareholders Equity $391.9M $294.3M $268.3M
YoY Change
Total Liabilities & Shareholders Equity $1.744B $1.681B $1.366B
YoY Change 27.66% 21.28% -7.22%

Cashflow Statement

Concept 2019 Q2 2019 Q1 2018 Q2
OPERATING ACTIVITIES
Net Income $94.46M $49.29M $13.75M
YoY Change 586.8% -348.41% -254.65%
Depreciation, Depletion And Amortization $15.10M $15.69M $17.40M
YoY Change -13.22% -11.55% -6.95%
Cash From Operating Activities $109.6M $75.78M $58.40M
YoY Change 87.67% -10.3% 11.03%
INVESTING ACTIVITIES
Capital Expenditures -$2.600M $2.508M -$7.100M
YoY Change -63.38% -71.0% -60.99%
Acquisitions $0.00
YoY Change -100.0%
Other Investing Activities $6.100M $8.500M $5.000M
YoY Change 22.0% -5.56% 2400.0%
Cash From Investing Activities $3.500M $5.967M -$2.100M
YoY Change -266.67% 1495.45% -88.27%
FINANCING ACTIVITIES
Cash Dividend Paid $0.00
YoY Change
Common Stock Issuance & Retirement, Net $0.00
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 2.000M $405.0K -20.10M
YoY Change -109.95% -100.52% 2.03%
NET CHANGE
Cash From Operating Activities 109.6M $75.78M 58.40M
Cash From Investing Activities 3.500M $5.967M -2.100M
Cash From Financing Activities 2.000M $405.0K -20.10M
Net Change In Cash 115.1M $82.35M 36.20M
YoY Change 217.96% 1009.43% 141.33%
FREE CASH FLOW
Cash From Operating Activities $109.6M $75.78M $58.40M
Capital Expenditures -$2.600M $2.508M -$7.100M
Free Cash Flow $112.2M $73.27M $65.50M
YoY Change 71.3% -3.38% -7.49%

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CY2018Q2 us-gaap Stock Issued During Period Value Stock Options Exercised
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CY2018Q2 us-gaap Stock Issued During Period Value Restricted Stock Award Net Of Forfeitures
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us-gaap Net Income Loss
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rcii Depreciation Of Rental Merchandise
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us-gaap Provision For Doubtful Accounts
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us-gaap Provision For Doubtful Accounts
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us-gaap Share Based Compensation
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us-gaap Depreciation
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rcii Increase Decrease In Rental Merchandise
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rcii Franchise Merchandise Sales
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rcii Franchise Royalty Income And Fees
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CY2018Q2 rcii Rentals And Fees
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CY2018Q2 rcii Merchandise Sales
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CY2018Q2 rcii Installment Sales
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CY2018Q2 rcii Storerevenues
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CY2018Q2 rcii Franchise Merchandise Sales
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rcii Storerevenues
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rcii Franchise Merchandise Sales
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rcii Franchise Royalty Income And Fees
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CY2018Q4 us-gaap Allowance For Doubtful Accounts Receivable
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us-gaap Provision For Doubtful Accounts
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us-gaap Allowance For Doubtful Accounts Receivable Write Offs
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us-gaap Allowance For Doubtful Accounts Receivable Recoveries
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261000 USD
CY2019Q2 us-gaap Allowance For Doubtful Accounts Receivable
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CY2019Q2 us-gaap Sublease Income
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us-gaap Sublease Income
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us-gaap Lease Cost
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us-gaap Operating Lease Cost
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us-gaap Short Term Lease Cost
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us-gaap Right Of Use Asset Obtained In Exchange For Operating Lease Liability
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CY2019Q2 us-gaap Operating Lease Weighted Average Discount Rate Percent
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rcii Weightedaverageremainingleaseterm
Weightedaverageremainingleaseterm
P3Y
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61288000 USD
CY2019Q2 us-gaap Lessee Operating Lease Liability Payments Due Year Two
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CY2019Q2 us-gaap Lessee Operating Lease Liability Payments Due Year Three
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CY2019Q2 us-gaap Lessee Operating Lease Liability Payments Due Year Four
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CY2019Q2 us-gaap Lessee Operating Lease Liability Payments Due Year Five
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CY2019Q2 us-gaap Lessee Operating Lease Liability Payments Due After Year Five
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CY2019Q2 us-gaap Lessee Operating Lease Liability Payments Due
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CY2019Q2 us-gaap Lessee Operating Lease Liability Undiscounted Excess Amount
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CY2019Q2 us-gaap Operating Lease Liability
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CY2018Q4 us-gaap Operating Leases Future Minimum Payments Due In Two Years
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CY2018Q4 us-gaap Operating Leases Future Minimum Payments Due In Three Years
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CY2018Q4 us-gaap Operating Leases Future Minimum Payments Due In Four Years
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CY2018Q4 us-gaap Operating Leases Future Minimum Payments Due In Five Years
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CY2018Q4 us-gaap Operating Leases Future Minimum Payments Due Thereafter
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CY2018Q4 us-gaap Operating Leases Future Minimum Payments Due
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CY2019Q2 us-gaap Unamortized Debt Issuance Expense
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CY2018Q4 us-gaap Unamortized Debt Issuance Expense
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CY2019Q2 us-gaap Letters Of Credit Outstanding Amount
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us-gaap Line Of Credit Facility Commitment Fee Amount
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CY2018Q4 rcii Finance Charges From Refinancing
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CY2018Q4 us-gaap Debt Related Commitment Fees And Debt Issuance Costs
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CY2019Q3 us-gaap Early Repayment Of Senior Debt
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1
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CY2019Q2 rcii Amount Of Difference Between Fair Value And Carrying Value
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CY2018Q4 us-gaap Senior Notes
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CY2018Q4 rcii Amount Of Difference Between Fair Value And Carrying Value
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CY2019Q2 us-gaap Proceeds From Legal Settlements
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CY2019Q2 rcii Proceedsfrom Legal Settlement Netof Legal Fees
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rcii Writedownof Capitalized Software
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us-gaap Restructuring Costs And Asset Impairment Charges
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CY2019Q2 us-gaap Revenues
Revenues
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CY2018Q2 us-gaap Revenues
Revenues
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us-gaap Revenues
Revenues
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us-gaap Revenues
Revenues
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CY2019Q2 us-gaap Gross Profit
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CY2018Q2 us-gaap Gross Profit
GrossProfit
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us-gaap Gross Profit
GrossProfit
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us-gaap Gross Profit
GrossProfit
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CY2019Q2 us-gaap Operating Income Loss
OperatingIncomeLoss
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CY2018Q2 us-gaap Operating Income Loss
OperatingIncomeLoss
27151000 USD
us-gaap Operating Income Loss
OperatingIncomeLoss
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us-gaap Operating Income Loss
OperatingIncomeLoss
16881000 USD
CY2019Q2 rcii Depreciation Amortizationand Writedownof Intangibles
DepreciationAmortizationandWritedownofIntangibles
15121000 USD
CY2018Q2 rcii Depreciation Amortizationand Writedownof Intangibles
DepreciationAmortizationandWritedownofIntangibles
17428000 USD
rcii Depreciation Amortizationand Writedownof Intangibles
DepreciationAmortizationandWritedownofIntangibles
30894000 USD
rcii Depreciation Amortizationand Writedownof Intangibles
DepreciationAmortizationandWritedownofIntangibles
35328000 USD
CY2019Q2 us-gaap Payments To Acquire Productive Assets
PaymentsToAcquireProductiveAssets
2580000 USD
CY2018Q2 us-gaap Payments To Acquire Productive Assets
PaymentsToAcquireProductiveAssets
7046000 USD
us-gaap Payments To Acquire Productive Assets
PaymentsToAcquireProductiveAssets
5088000 USD
us-gaap Payments To Acquire Productive Assets
PaymentsToAcquireProductiveAssets
15695000 USD
CY2019Q2 rcii Rental Merchandise On Rent Net
RentalMerchandiseOnRentNet
625865000 USD
CY2018Q4 rcii Rental Merchandise On Rent Net
RentalMerchandiseOnRentNet
683808000 USD
CY2019Q2 rcii Rental Merchandise Held For Rent Net
RentalMerchandiseHeldForRentNet
113253000 USD
CY2018Q4 rcii Rental Merchandise Held For Rent Net
RentalMerchandiseHeldForRentNet
123662000 USD
CY2019Q2 us-gaap Assets
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CY2018Q4 us-gaap Assets
Assets
1396917000 USD
CY2019Q2 us-gaap Share Based Compensation
ShareBasedCompensation
2000000.0 USD
CY2018Q2 us-gaap Share Based Compensation
ShareBasedCompensation
1100000 USD
us-gaap Share Based Compensation
ShareBasedCompensation
2700000 USD
us-gaap Share Based Compensation
ShareBasedCompensation
3000000.0 USD
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ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross
255000 shares
rcii Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Performance Based Grants In Period
ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsPerformanceBasedGrantsInPeriod
278000 shares
us-gaap Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Grants In Period
ShareBasedCompensationArrangementByShareBasedPaymentAwardEquityInstrumentsOtherThanOptionsGrantsInPeriod
193000 shares
us-gaap Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions Expected Volatility Rate Minimum
ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRateMinimum
0.4828
us-gaap Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions Expected Volatility Rate Maximum
ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedVolatilityRateMaximum
0.5517
us-gaap Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions Risk Free Interest Rate Minimum
ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRateMinimum
0.0230
us-gaap Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions Risk Free Interest Rate Maximum
ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsRiskFreeInterestRateMaximum
0.0234
us-gaap Sharebased Compensation Arrangement By Sharebased Payment Award Fair Value Assumptions Expected Term1
SharebasedCompensationArrangementBySharebasedPaymentAwardFairValueAssumptionsExpectedTerm1
P3Y6M
rcii Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions Expected Term Max
ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedTermMax
P5Y9M
us-gaap Share Based Compensation Arrangements By Share Based Payment Award Options Grants In Period Weighted Average Exercise Price
ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice
20.87
us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Grants In Period Weighted Average Grant Date Fair Value
ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageGrantDateFairValue
9.33
us-gaap Loss Contingency Disclosures
LossContingencyDisclosures
<span style="font-family:inherit;font-size:10pt;font-weight:bold;">Contingencies</span><span style="font-family:inherit;font-size:10pt;font-weight:bold;"> </span><div style="line-height:120%;padding-top:8px;text-align:justify;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">From time to time, the Company, along with our subsidiaries, is party to various legal proceedings arising in the ordinary course of business. We reserve for loss contingencies that are both probable and reasonably estimable. We regularly monitor developments related to these legal proceedings, and review the adequacy of our legal reserves on a quarterly basis. We do not expect these losses to have a material impact on our condensed consolidated financial statements if and when such losses are incurred.</span></div><div style="line-height:120%;padding-top:8px;text-align:justify;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">We are subject to unclaimed property audits by states in the ordinary course of business. The property subject to review in the audit process include unclaimed wages, vendor payments and customer refunds. State escheat laws generally require entities to report and remit abandoned and unclaimed property to the state. Failure to timely report and remit the property can result in assessments that could include interest and penalties, in addition to the payment of the escheat liability itself. We routinely remit escheat payments to states in compliance with applicable escheat laws.</span></div><div style="line-height:120%;padding-top:8px;text-align:justify;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Blair v. Rent-A-Center, Inc. </span><span style="font-family:inherit;font-size:10pt;">This matter is a state-wide class action complaint originally filed on March 13, 2017 in the Federal District Court for the Northern District of California. The complaint alleges various claims, including that our cash sales and total rent to own prices exceed the pricing permitted under the Karnette Rental-Purchase Act. Following a court-ordered mediation on March 28, 2019, we reached an agreement in principle to settle this matter for a total of </span><span style="font-family:inherit;font-size:10pt;"><span>$13 million</span></span><span style="font-family:inherit;font-size:10pt;">, including attorneys’ fees. The settlement is in the documentation process and is subject to approval by the court. We have denied any liability in the settlement and agreed to the settlement in order to avoid additional expensive, time-consuming litigation. We recorded the pre-tax charge for this settlement in the first quarter of 2019.</span></div><div style="line-height:120%;padding-top:8px;text-align:justify;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Vintage Rodeo Parent, LLC, Vintage Rodeo Acquisition, Inc. and Vintage Capital Management, LLC, and B. Riley Financial, Inc. v. Rent-A-Center, Inc.</span><span style="font-family:inherit;font-size:10pt;"> As announced on April 22, 2019, we agreed to settle all litigation with Vintage Capital and B. Riley relating to our termination of the Merger Agreement. In the settlement, we received a payment of </span><span style="font-family:inherit;font-size:10pt;"><span>$92.5 million</span></span><span style="font-family:inherit;font-size:10pt;"> in cash in May 2019. The Vintage Settlement was recorded as a pre-tax gain upon receipt.</span></div><div style="line-height:120%;padding-top:8px;text-align:justify;font-size:12pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Velma Russell v. Acceptance Now.</span><span style="font-family:inherit;font-size:12pt;"> </span><span style="font-family:inherit;font-size:10pt;">This purported class action arising out of calls made by Acceptance Now to customers’ reference (s) was filed on January 29, 2019 in Massachusetts state court. Specifically, plaintiffs seek to certify a class representing any references of customers (within the state of Massachusetts) during the 4 years prior to the filing date that were contacted by Acceptance Now more frequently during a 12 month period than is permitted by Massachusetts state law. The plaintiffs are seeking injunctive relief and statutory damages of </span><span style="font-family:inherit;font-size:10pt;"><span>$25</span></span><span style="font-family:inherit;font-size:10pt;"> per reference which may be tripled to </span><span style="font-family:inherit;font-size:10pt;"><span>$75</span></span><span style="font-family:inherit;font-size:10pt;"> per reference. References are not parties to our consumer arbitration agreement. We operate </span><span style="font-family:inherit;font-size:10pt;"><span>12</span></span><span style="font-family:inherit;font-size:10pt;"> Acceptance Now locations in Massachusetts. We intend to vigorously defend these claims; however, we cannot assure you that we will be found to have no liability in this matter.</span></div><div style="line-height:120%;padding-top:8px;text-align:justify;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Federal Trade Commission civil investigative demand. </span><span style="font-family:inherit;font-size:10pt;">In April 2019, along with other rent-to-own companies, we received a civil investigative demand from the Federal Trade Commission ("FTC") seeking information regarding certain transactions involving the purchase and sale of customer lease agreements, and whether such transactions violated the FTC Act. Although we believe such transactions were in compliance with the FTC Act, this inquiry could lead to an enforcement action and/or a consent order, and substantial costs. The Company is in the process of responding to this inquiry from the FTC.</span></div>
us-gaap Litigation Settlement Amount Awarded To Other Party
LitigationSettlementAmountAwardedToOtherParty
13000000 USD
us-gaap Proceeds From Legal Settlements
ProceedsFromLegalSettlements
92500000 USD
CY2019Q2 us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
IncrementalCommonSharesAttributableToShareBasedPaymentArrangements
1553000 shares
CY2018Q2 us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
IncrementalCommonSharesAttributableToShareBasedPaymentArrangements
845000 shares
CY2018Q2 us-gaap Net Income Loss
NetIncomeLoss
13753000 USD
us-gaap Net Income Loss
NetIncomeLoss
-6090000 USD
CY2019Q2 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
54153000 shares
CY2018Q2 us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
53450000 shares
us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
54042000 shares
us-gaap Weighted Average Number Of Shares Outstanding Basic
WeightedAverageNumberOfSharesOutstandingBasic
53428000 shares
us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
IncrementalCommonSharesAttributableToShareBasedPaymentArrangements
1559000 shares
us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
IncrementalCommonSharesAttributableToShareBasedPaymentArrangements
0 shares
CY2019Q2 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
55706000 shares
CY2018Q2 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
54295000 shares
us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
55601000 shares
us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
53428000 shares
CY2019Q2 us-gaap Earnings Per Share Basic
EarningsPerShareBasic
1.74
CY2018Q2 us-gaap Earnings Per Share Basic
EarningsPerShareBasic
0.26
us-gaap Earnings Per Share Basic
EarningsPerShareBasic
1.88
us-gaap Earnings Per Share Basic
EarningsPerShareBasic
-0.11
CY2019Q2 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
1.70
CY2018Q2 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
0.25
us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
1.83
us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
-0.11

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