Q1 2022 PROG Holdings Inc Earnings Call
[music].
Good morning, and welcome to the Prague Holdings, Inc. First quarter 2022 financial results conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.
To ask a question you May press Star then one on your Touchtone phone to withdraw from the question queue. You May Press Star then two please note. This event is being recorded I would now like to turn the conference over to John Baugh, Vice President Investor Relations. Please go ahead.
Thank you and good morning, everyone welcome to the <unk> Holdings first quarter 2022 earnings call.
Joining me. This morning are Steve Michal Rog, Holdings', President and Chief Executive Officer, and Bryan Garner, our Chief Financial Officer.
Many of you have already seen a copy of our earnings release issued this morning, which is available on our Investor Relations website, Investor Dot Holdings Dot com.
During this call certain statements, we make will be forward looking including comments regarding our expectations related to progressive Leasing's GMT and levels of write off for the remainder of 2022, including our targeted annual write off range from progressive leasing.
And our 2022 outlook.
I want to call your attention to our safe Harbor provision for forward looking statements that can be found at the end of the earnings press release that we issued earlier this morning.
That's the safe Harbor provision identifies risks that may cause actual results to differ materially from the expectations discussed in our forward looking statements.
There are additional risks that can be found in our annual report on Form 10-K for the year ended December 31, 2021, which we encourage you to read.
Let's centers are cautioned not to place undue emphasis on forward looking statements, we make today and we undertake no obligation to update any such statements.
On todays call well be referring to certain non-GAAP financial measures, including adjusted EBITDA and non-GAAP earnings per share, which have been adjusted for certain items, which may affect the comparability of our performance with other companies.
These non-GAAP measures are detailed in the reconciliation tables included with our earnings release.
The company believes that these non-GAAP financial measures provide meaningful insight into the company's operational performance and cash flows and provides these measures to investors to help facilitate comparisons of operating results with prior periods and to assist them in understanding the company's ongoing operational performance.
I would like to turn the call over to Steve Michaels Steve.
Thank you John and good morning, everyone.
Appreciate you joining us today as we discuss our first quarter results and provide updates on some key business initiatives.
I want to begin by acknowledging some important achievements during the first quarter of 2022.
First our financial results, including lease portfolio performance were in line with our expectations. We believe we remain on track to achieve our full year outlook. We provided in our Q4 2021 earnings release, EBIT and the current macroeconomic environment.
Second we converted a number of valuable partnership opportunities that should support future period GMB, including as has been reported. The addition of a large national retailer.
Third our R&D team made great progress on Zhou and enhanced products that we expect will improve our retailer experience and create more loyalty and engagement with our customers.
Finally, we published our inaugural ESG review highlighting the great work, we do on behalf of our customers colleagues and communities.
This review can be found on our Investor Relations page.
As I mentioned, our Q1 results were in line with our internal forecast.
We believe represent the low point for EBITDA margins, and <unk> and revenue growth rates for the year, even though we expect the macro environment to remain challenging.
We have several initiatives throughout the balance of the year that we expect will increase our <unk> for the remainder of 2022.
Including co branded marketing campaigns.
A more streamlined application flow.
Additional enhancements to the customer experience.
Continued e-commerce integrations with new and existing partners.
Not only do we expect these initiatives to deliver additional GMP, but they should also deepen our relationships with existing retail partners, while differentiating our industry leading platform.
We shared on our call in late February that progressive leasing and <unk> was comping slightly negative year to date and.
In the quarter concluded as we expected, resulting in a one 1% decline in <unk> from Q1 of 2021.
We're pleased that e-commerce continued to grow faster than overall G. M D and increased 10% year over year, representing 15, 9% of our <unk> in Q1 versus 14, 3% in the prior year's quarter.
First quarter consolidated revenues declined one 5% year over year, which was in line with our expectations against the tough comp that benefited from historically high customer payment performance and elevated buyout revenue and the stimulus stated prior year period.
On a positive note we ended the quarter with a 17, 6% increase in our gross leased asset balance.
It should drive stronger revenue in the back half of the year as we move further away from Comping last year's stimulus driven elevated buyout revenue.
Our consolidated adjusted EBITDA margin was nine 1% in Q1 due to seasonally low gross margins for progressive leasing and pressure from increases in write offs and SG&A expense.
Progressive Leasing's write offs were seven 3% in what was a tough comparison to the unsustainably low to 6% level from last year's stimulus aided first quarter overall.
<unk> were relatively flat compared to the 7% Q1 result for the prepaid debit year of 2019.
Portfolio performance remains a key focus for us.
Current performance of our lease pools continues to give us confidence that write offs should be within our targeted annual range of 6% to 8% for 2022.
Since our founding we've anchored ourselves to being prudent and measured in our decisioning with an eye focused on the long game and not short term wins.
We continually make small iterative and deliberate adjustments to optimize our decisioning and we believe we have an advantage in this area due to our industry, leading models technology and experience.
I will note that we have been at or below our targeted annual write off range since 2016, regardless of macroeconomic conditions.
During the quarter. We also saw healthy progress on key product and partnership initiatives.
As I mentioned, we completed an integration with a large national E Commerce partner at the end of Q1, and we're optimistic about the new customers and JV. This partner can provide for us in the future.
We also announced an agreement with nationwide marketing group in February that provides thousands of SMB retailers access to our flexible leasing options.
Additionally, since the first of the year, we completed numerous e-commerce integrations using our enhanced plug ins.
Glenn to lay these new partnerships and integrations demonstrate our ability to convert a robust partner pipeline.
We have also worked hard over the past several quarters on new products and innovations that we expect to have significant positive impacts on our business.
We believe that these efforts will position us to accelerate our growth, while creating more engagement and loyalty from our customers.
I want to close with some context on how our business typically performs during challenging economic cycles.
The foundation of our business is strong at over the last 20 years, we have shown the ability to execute in various economic environments.
As we've shared in the past as macroeconomic pressures increase we believe our products are needed more than ever.
Our consumers are flexible payment solutions offer purchasing power when credit is lots of Vale.
For retailers, we drive incremental sales for our existing partners and offer added value and fast integration to prospective partners.
By delivering for both consumers and retailers in tough economic times, we believe we can capture an even greater share of our large underserved addressable market.
I'll now turn the call over to Brian for a more detailed look at the quarters financials.
Right.
Thanks, Steve.
As mentioned the first quarter's results are in line with our internal expectations.
We anticipate Q1 will represent our most difficult comparison for the year with comp for several key metrics, becoming more favorable in the back half year.
During the quarter <unk> was slightly negative.
Year over year, as we face the impacts forming crime and comparing against the prior year results that were driven in part by stimulus payments.
While revenue was down year over year, while remaining above pre pandemic contribution.
The normal the continued normalization of write offs to pre pandemic levels is on a trajectory and we expect will allow us to stay within our historical 6% to 8% annual range for 2022.
As these factors and the relative magnitude of beach, we're aligned with our expectations. We are reaffirming the outlook we provided in February .
I'll now turn to some specifics on the quarter, beginning with progressive leasing segment.
First of all you see is revenue was $692 9 million in the quarter compared to $708 million in the year ago period.
A two 1% decrease due to the following.
First revenue was unfavorably impacted by an increase in our accounts receivable provision, which is recorded as a direct reduction to revenue.
As you'll see in our 10-Q being filed today.
Provision increased to $88 5 million for Q1 of 2022 from $36 5 million for Q1 of 2021.
This $52 million increase in the provision reflects the portfolio of normalization we anticipated.
As we compare against last year's historical lows.
And directly impacts adjusted EBITDA, which I will speak to in a moment.
Yeah.
Second.
Revenue was pressured by a reduction in buyout revenue as fewer customers elected to exercise an early buyout option in the period.
While this dynamic creates a difficult revenue comparison to the prior year Q1, fewer buyouts contribute to a larger portfolio size exiting the quarter.
These two headwinds were almost fully offset by meaningful growth in the gross leased asset portfolio, which ended the period up 17, 6%.
Continued growth in this metric is primarily influenced by Jeffrey growth rates and lease outcomes and will be an important driver in a future period revenues.
The rest of week since Q1 gross margin was 28, 3% versus 28, 7% in Q1 of 2021.
The 40 basis point decline as a result of a higher AUR provision offsetting the reduction in early buyouts for the period.
Over the next nine months, we expect gross margins to improve from Q1 as we move further away from the elevated early buyout levels, which is typical in our seasonal profile.
SG&A for the Progressive leasing segment was $85 9 million or 12, 4% of revenues versus 72 million or 10, 2% for Q1 of 2021, an increase of $13 9 million.
This increase reflects continued investment in technology marketing and sales related costs compared to the pandemic reduced levels of SG&A in Q1 of last year.
Progressive waste. These write offs were $50 3 million and seven 3% of revenue compared to $18 6 million and two 6% of revenues in the year ago period.
As we've mentioned on previous calls our annual target for write offs of 68%.
And we expect to end the full year 2022 within that range.
Adjusted EBITDA for the Progressive leasing segment.
In the first quarter was $63 5 million compared to $116 3 million in the same period of 2021.
This decrease is primarily reflection of portfolio normalization in Q1 of 2022 compared to the historically strong portfolio performance in Q1 of 2021.
Pivoting to consolidated results.
Q1 revenue for <unk> was $710 5 million compared to $721 million in the year ago period, a one 5% decrease.
Adjusted EBITDA for Q1 was $64 6 million or nine 1% of revenues compared to $118 1 million or 16, 4% of revenues for.
For the same period last year.
We generated $98 3 million of cash from operations in Q1, which is net of the working capital required to grow our lease portfolio.
Our Q1, GAAP diluted EPS, and 49 cents and our non-GAAP EPS came in at 57 sets.
We have $600 million of gross debt and $184 million of cash at the end of the quarter, our net leverage of approximately one two times, our trailing 12 month adjusted EBITDA.
We also ended the period with $350 million of availability under our Undrawn revolving credit facility.
During the first quarter of 2022, we repurchased approximately $78 $1 million of our outstanding common stock at an average share price of $35 48 to SaaS at the quarters end, we had $482 8 million remaining under our $1 billion share repurchase program.
We continue to look for opportunities to use our strong balance sheet to execute on our capital allocation priorities.
In summary, the Q1 results and respective drivers of performance more consistent with our internal expectations.
<unk> current visibility, including our expected improvement in <unk> margin from Q1 2022 levels.
We remain optimistic about our ability to deliver on our full year outlook, which can be viewed in detail in our Q4 2021 earnings release.
I will now turn the call back over to the operator for the Q&A portion of the call operator.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw from the question queue. Please press Star then two.
The first question is from Kyle Joseph of Jefferies. Please go ahead.
Hey, good morning, guys. Thanks for taking my questions.
Third your comment regarding the new E com.
Retail partner I was hoping to get some more color on kind of the pipeline, particularly given that.
It's a much more challenging environment for retailers and we didn't we've seen over the last.
Call It two plus years.
Yes Kyle.
Good morning.
I mean, you're right certainly the as we talked about last quarter. The current conditions and kind of looking out into the next two years I would I would view as more favorable to pipeline conversion than than the period that we just we're exiting where retail sales were easy to come by as we all know so.
We continue to believe that all retailers should have a fully developed finance back and when times are tough and and return on marketing dollars are harder to come by that's when retailers start to get serious about.
Looking for tools in the tool belt that they may not have and then some of their competitors might have and so we.
We continue to have good conversations and look forward to.
To converting that pipeline that's out there as we all know we've identified the Tam is 30 $30 billion to $40 billion.
A large portion of which is not being served so.
Our.
Our hope and certainly our strategy to go out and get as much as that as we can.
In this environment.
Got it helpful. Thanks, and and I think I understand what's going on in terms of credit performance, obviously, a challenging comps inflation et cetera, but I you know I think it would be helpful. Obviously, you guys were private during the last real economic downturn, but can you give us a sense for how the business performed in.
In call it 2000 18009.
Yes, and Youre right the business was private.
Certainly none of the management team were here other than our cofounder Curt is failure.
But the dynamic that we are that we saw and I can relay back to my experience on the Aaron's side back in the great financial.
Enterprises is that you just have kind of like a transitory effect of their customers through your through the market.
There are some customers at the bottom end that get impacted by job loss or or infill.
Inflation or some other pressures on their disposable income.
And they may not be as able to make their make their payments or acquire the durable goods they need during that time period, but and even larger.
<unk> is the top of the funnel widens and customers fall into the market that might have previously had access to traditional credit.
As we talked last time from a from a.
Sequence standpoint, we usually see the tightening happening.
For the distress, having on our customer first and then it kind of moves up the spectrum and so the top of the funnel Hasnt really started to open up yet, but we're starting to hear some anecdotal news and see some some data from some of our sources of debt.
That probably will happen over the next couple of quarters and so during the GSE.
A couple of things happened to progressive grew really fast.
Portfolio performance was consistent because of that.
Profile of consumer kind of changing in the and the applicant applicant flow and as importantly, it was an inflection point for towards for progressive growth because of what we talked about earlier, which was the retailers', reaching four four other tools.
As it relates to this.
My experience of the Aaron's business during that time, our write offs were fairly consistent and and comps were very strong I would just add that it's a little noisy because we are opening a bunch of stores than in that had kind of a natural lift to comps but it.
This business is resilient and Ken.
And can perform well in all macroeconomic cycles.
Got it very helpful. Thanks, a lot for answering my questions.
Hi, Scott.
Yes.
The next question is from Bobby Griffin of Raymond James. Please go ahead.
Good morning, Thanks for taking my questions.
I guess first one I wanted to maybe dive in a little bit on the shape of the year clearly kind of the street was off a little bit on how we expected the year to shape out versus your internal expectations. So maybe just to help clean up some of the street models going forward is there anything we should keep in mind for <unk> that sticks out to you and for <unk>.
<unk> that we need to make sure we tighten up in the models, where we can get kind of the shape of the year closer to how you and the team are thinking about it Steve.
Yeah, I'll start and then Brian can chime in I mean, youre right and Bobby I know you're.
I guess, you've taken one for the team. Your Q1 was a lot closer, but but it is a it is a different.
There are some some forces that are impacting the shape of the year.
And we tried to communicate those last quarter clearly from a comp standpoint, whether.
Whether it would be the the impairment reserve on the inventory side or the AR reserve on the on the well on the AUR side, which is a contra revenue account those things are.
Are being rebuilt and comping against really really low levels from from the first half of last year. So what we would point you to is the.
The size of the of the gross lease asset balance, which is the driver of future revenue growth.
And.
Before I get too deep into it and I'll, let I'll, let Brian chime in yeah. Bobby Thanks for the question I think there's a couple of things that hit on first is just taken the shape of revenue to provide some context. There you heard my prepared remarks with kind of a.
The headwinds and tailwind in the revenue profile and what I think we expect over the course of the year.
The call back to 2021, we really started to see the normalization happened in late Q3, and Q4 in terms of buyouts start to normalize a bit.
The provision is starting to normalize a little bit so is your condos.
It becomes much easier to grow revenue from year over year perspective, when you've got that gross leased asset growing.
Hi.
So so I think that's the pathway to much stronger revenue growth in the back half of this year I think from a margin profile standpoint.
The it really hinges on our expectations around gross gross margin and what we expect there.
The year.
When we talked about it being seasonally low is pretty typical in the first quarter with higher buyout rates and we expect that to improve gross margins over the course of the year really starting to hit its stride in the back half and that's going to translate down to the better EBITDA margins. So that's how we're that's how we're shaping up the course of the year.
Obviously, a lot of a lot of a lot going on in the macro, but we but Steve that is more resilient than in.
Many different cycles and that's how we're thinking about the course of the rest of the year.
Just add Bryan Bryan nailed it but I would just add that I mean, we're not immune to the macro we want we'd like to point that out. However, we can we have some internal initiatives that I mentioned in my prepared remarks that are giving us some viewpoints into how we think we can grow GMB and it doesn't need to be massive.
Both but it needs to it needs to accelerate from here, but then as these kind of just accounting and Comping things.
Dissipate.
That's how.
So it's a mixing bowl of of some of some comping.
And as well as some internal initiatives that we think are.
We will help the back half.
Okay. So maybe two follow ups, one on the accounting and the one on the G&P aspect from the accounting standpoint is the true Oakland reserves that you've called out for the inventory side of things.
Is that pretty much done after this quarter or do they are they going to flow through and have a corresponding impact kind of into Q3 Q until we start fully lapping normalization.
And then on the G&P side any color just on did April improved versus March or like is there. Any you know is there any read to help us get confidence on GMB, an accelerant, because I believe you kind of get close to kind of the revenue guide, we probably need to have gene being what the mid to high single digits at the end of the year.
Yeah I'll start with your your question around Q2, and I'll, let Steve I'll weigh in on the <unk> item.
<unk>.
Q2 is you're right, you're you're really going to see the year over year comps get better starting with Q3 and Q4 meaningfully, but we do accept or expect to step forward into Q2 does not is not as meaningful as acceleration will see the back half a little bit will be.
A wrap the direction direction in the back half, but speak away, yes, and the other thing on the revenue side.
We're still comping against elevated buyout levels in Q2 that started to kind of trend back towards normal in the back half. So that's that's a that's another thing that we all know buyouts or not awesome for greater gross margin, but they do bring they do pull revenue forward. So from a revenue comp that will also ease in the back half.
As it relates to <unk> I guess, what I would say as the quarter Q1 played out the way that we kind of expected it to and that we signaled back in in late February we had a tough first 45 days related to what we believe was omicron.
We actually had a pretty good kind.
30 days after that.
From kind of mid February to mid March.
And then as we signaled in February .
We started comping against the very the largest of the stimulus from the pandemic period that impacted.
<unk> in the back half of March and into April and that's and we basically saw that happening. So April was impacted by that comp.
But we.
We're not going to comment on April beyond that but.
We still feel.
That we can hit roughly those that math that you did.
The year from a <unk> standpoint, but it doesn't need to be you know.
20% for the year or two to hit our targets that can be something in the in the mid to high single the high single digits.
You can make it happen.
Okay. That's helpful. I appreciate the details and I'll jump back in queue.
Thanks, Bobby.
The next question is from Anthony <unk> with loop capital. Please go ahead.
Good morning.
I don't suspect Youre going to answer this question, but I'm going to ask it anyway, who is the large e-commerce partner that you signed up.
Yeah.
Well, Anthony I'm going to surprise you. This morning, because it was already a minute.
It had been in writing, but we're back on wave here. So.
That's that was the one we were referring to.
You know, where we as you know we had been on wafer before a couple of our competitors are on their.
It's hard to it's hard to be Coy about e-commerce player when anybody can just log onto the site and see so.
We're happy to be partnering with wafer, we think it's a big opportunity and obviously they.
They do a lot of furniture sales and our customer likes to shop there.
Where.
We believe it is.
A good indication we are the largest VLT O player, but we're also the largest e-commerce player.
And so it makes sense that they would they would want to have us.
In their Arsenal and we're proud to be partnering with them.
Got it and just as my follow up so.
So you know our if I recall correctly catapult on there a siemens on there as well so how do you sort of differentiate yourself. So you get you know.
Some of the lines here or at least a decent share of the lease originations at a way for them.
Yeah, I mean, I'm not going to get too much into that that flow specifically, but I mean is it is a unique instance.
We.
We're getting we're getting some good volume there and look forward to growing it.
Got it thank you.
The next question is from Jason Haas with Bank of America. Please go ahead.
Hey, good morning, and thanks for taking my questions, it's great to hear about wafer and the other wins that you've had I'm curious if you could talk about what drove those do you think it's a function of some of your competitors I'm, having to tighten credit in this environment.
<unk> also been working on your e-commerce capabilities. So I'm curious if that was a function as well.
Well certainly our investments in technology.
We wouldn't be making them. If we didn't think it would it would turn into returns on that investment. So we're pleased with that and certainly we have improved over the last.
15 to 18 months, our E comm capabilities.
Yeah, we believe have the have a it's one of the best offerings in that regard.
Yes, certainly way fair or any other national partner is a long discussion how long tail. So.
I don't think that would have had anything to do with some of the.
Some of the actions that are being taken in the in.
In the marketplace there from competitors.
Other places whether it would be.
Lesser size smaller names in the SMB space.
Generally there's multiple players in it.
The multiple providers in those environments, and so youll see some share shift win.
When somebody when one player another pulled back on their on their Decisioning and.
It's always been our approach to be to be steady and consistent and not have volatile approval rates.
And that has served us well over time and not only consistent portfolio performance, but also in being able to partner well and to into.
Basically do what we say, we're going to do for our retail partners and we think that will help us over time.
<unk>.
That's great to hear and then.
We can see in the numbers that.
You've talked about that you are still investing SG&A dollars for growth can you just talk a little bit more about where that investment is going and when should we expect to see the benefit.
On those investments.
Yes, I mean, we talked about a bit about that in February on our Q4 call that hey, we believe this kind of.
GMB slowdown or DSO was temporary and because we believe we have nothing has changed in our view on the future and the size of the prize and the Tam.
That it wasn't prudent in this temporary slowdown stage to pull back on these investments. So we continue to invest in products, we continue to invest in technology and people.
And we think that will inure to our.
Benefit in converting this unserved Tam.
We also talked about some of our R&D measures as it relates to those other kind of fintech products that we're talking about and we are we're still within that range that we gave of what we believe that drag for 2022 will be but it should pay dividends in <unk> and 'twenty, three and beyond and so if we ever had a different.
<unk> on what we believe the growth opportunities are we would be running the SG&A differently.
But.
As I said earlier in the call we think the next two years.
Our big opportunity for us and it's more challenging retail environment. So it's not the time to be taking the foot off the gas.
Put ourselves in the best position to capture it.
That's great to hear and if I could squeeze in just one quick follow up to an earlier question I think you've talked on this call about GMB growth being in the mid to high single digits, but I remember on the last call I think there was a comment about being more in the double digits in the last seven or eight months of the year. So I'm curious if that was sort of an intentional.
Comment to lower your outlook for GMP growth or are you still expecting double digit growth in the back half.
Well I think I was referring to.
Maybe bobby's math I think earlier.
I wasn't being too precise but yes.
If you look at if you look at the I guess it really the back half will depend on what Q1 is pardon me I'm sorry in Q2 is right and so.
That comment that we made I do believe I remember the comment you're talking about Jason which was the last seven or eight months kind of.
Really.
So it's something in that in that high single digits, and then Theres a range right revenue is 4% to 8% range. So that <unk> can have a little bit of variation to be able to be in the range that we put out there for the revenue guide.
Got it that's helpful. Thanks for clarifying.
The next question is from Brad Thomas of Keybanc Capital markets. Please go ahead.
Hey, good morning, Thanks for taking all the questions.
Just a few follow ups on our end.
I'm wondering if you could just share any more insight into how youre thinking about <unk>, we talked about how important that could be in shaping up.
The rest of the year.
One question in particular would be I think seasonally we do tend to see the write offs.
<unk> from <unk> would that be something you'd be expecting to see and then again any other commentary on how to think about two Q would be appreciated.
Yeah.
I'll take that so Brian I think.
While we expect Q2 to be a step up from Q1, I think the acceleration really starts to happen in the back half.
From a margin standpoint, and from a revenue growth standpoint, so thats enough color.
I would give there from a from a write off standpoint.
You are right and you can go back to 2018 bleeding into 2019.
And kind of see sequentially up Q4 to Q1, and then Q2.
And I think that's an unreasonable ramp for us to be on I think the main the main thing for us to continue to reiterate is as well that's while that's seasonally Howard.
Reasonably could play out or we're laser focused on keeping a 6% to 8%.
On a getting.
Getting to the end of the year and look back trailing 12 months being within that range.
We're making small incremental adjustments as we go along but from Q1 to Q2, it's not unusual to see.
It may be a modest increase in write offs.
Between those two periods.
Great and then and then as we think about your underwriting.
Underwriting trends, but one of the things we've always really appreciate it about the business itself.
Short your average terms are and how quickly that can affect our results with you make a change but have you made any other adjustments that have you tightened incrementally in recent months.
Thanks.
How has your underwriting evolving.
Yeah right so.
As Brian just said, we're constantly evaluating the the the portfolio you.
You mentioned and we'd like to highlight the short duration of the portfolio. So it's a 12 month lease with the average duration of six five months.
We have made some some small editor of iterative adjustments.
And like I think I mentioned this.
Either at a conference or <unk> last quarter, but like we have.
We're constantly developing new models and like.
Our new model.
It might've been deployed that would've otherwise.
Increased <unk> and we moved the threshold such that it would just keep <unk> flat that could technically be looked at as a tightening but that we have.
Really proud of the Decisioning team and the precision that they bring to our to our risk Committee meetings.
And our ability to influence the the.
Portfolio. So yeah, I mean, it's a dynamic world out there right now we are and we have made a few minor adjustments here and there but from a materiality standpoint, our approval rates even given the.
The continued channel shift of applications.
More to online approve.
Approval rates are roughly flat to last year, but.
But where do we stand poised and we will move further depending on what we're seeing in the data.
Yeah.
Okay.
Very helpful and maybe one last one for you Steve.
Just how you think about the acquisition landscape obviously the company has a history of doing.
Strategic acquisitions like buy now pay later like.
Danny.
Uh huh.
In this world, where you know the industry is seeing some some tough trends I'm sure prices for potential acquisitions are coming down, but it's also maybe a tougher environment to navigate.
How are you thinking about the bandwidth and the <unk>.
It's not what you all have in making the acquisition.
Jamie we're always looking for those.
We've got one.
One of the reasons, we keep the balance sheet in the shape that it's it is for us to be able to take advantage of opportunities out.
Out there and we'd be looking at those over.
Over the last several years.
It seemed like things were.
So overvalued, we couldnt pull the trigger now as you mentioned, it's more difficult to kind of have confidence in.
In the future of there.
Potential targets.
The forecast and so.
It's probably more difficult to know what multiple you are paying.
So but against that backdrop, we would be.
Who we are and would be interested in looking at things, but we're gonna be very disciplined in what we might pull the trigger on.
Yeah.
Great. Thank you so much.
Thanks, Brian .
The next question is from Michael Young of Truest. Please go ahead.
Hey, Thanks for taking the question.
Wanted to start with just kind of the the tax refund season, and just any implications you're seeing related to that and how that may affect either Q2 results or how it did impact Q1 results.
Yeah tax season was a little.
For lack of a better term messy this year.
And it was modeled by the fact that last year not only in tax season, but have this really massive stimulus in mid March but it's been well reported in a number of you all have done some some reporting on it that it was the window opened early but there were delays in deploying the money the average reef.
Depending on who you read is flat.
You know plus or minus 5% compared to 2021 and that actually 2019.
So we saw the typical behaviors, we did see some.
Some upticks in our contact center volumes on certain large days of ACTH is going out but.
But I would just characterize it as a little bit of a muted tax season, but it's difficult for us to really parse that between comping against that big stimulus and what actually was specifically tax season, but I would think it's pretty much there may be some dribs and drabs, but I think it's pretty much over at this point.
Yeah.
Okay. Thanks, and wanted to just kind of follow up on the share buyback.
See some purchases this quarter our repurchases this quarter, but you know how how aggressive can you be throughout the rest of the year.
On the cash levels, and you know kind of the amount of 90 day buyout activity et cetera.
We have the cash available to be aggressive with our buyback with the stock at these prices.
Yes, I mean, we had as Brian keep me honest here about $180 million or so of cash on the balance sheet.
At the end of the quarter is probably not exactly accurate but.
One is we're yes, so we've and we've got an undrawn revolver, having said that we're going to keep the keep the balance sheet.
And that comfort level from a leverage standpoint.
So it's really a function of all.
Of that cash flow generation free cash flow generation as well as as well as leverage levels.
Obviously, we have we continue to find the shares attractive at this price.
You said continued to buy back in Q1 so.
That would be.
That would be an obvious use of some of our some of our dry powder and.
But that kind of one and a half ish area is we don't want to go much beyond that.
It may float around that but.
So that'll be a part of the calculus as to how aggressive we get.
Yes.
Okay. Thanks for that reminder, I'll step back for now thanks.
The next question is from Carla Casella of Jpmorgan. Please go ahead.
Great. Thank you that's a lot of my questions already but could.
Could you just talk about how what percentage of your customers right now are repeat and if youre seeing any kind of changes in that rate.
We normalize.
Yes. Thank you.
So over the last several years on our repeat rate.
The leases that are originated in any given period.
Have been increasingly from E&P customers, which which is great because not only are they a little derisked, but we'd like to hum.
You know nurture them back into our into our partner network.
And as we but.
But we also see over the last 567 years as you as you bring on a new national retailer you see an influx of customers that you haven't seen before which is also nice.
That brings the increase of the database and can create lifetime value. So we're in the kind of call it 50% range of repeat.
Which is up from probably mid Thirty's, just three or four years ago.
Okay, Great and then you've got some exclusive relationship.
Did you say, whether the way for Essex.
And then also how much of your DMD is coming from exclusive.
So if there has had a couple of providers. So we are not exclusive there.
I guess I would.
Point, you back to the 10-K.
I think Brian did we say, 72% of our 2021 <unk> came from our top 10.
Mid <unk> call it in.
I think all but one of our top 10 are exclusive.
Okay. That's great Okay, great. Thank you.
Thank you.
The next question.
<unk> is from Vincent <unk> of Stephens. Please go ahead.
Hey, thanks, Thanks for taking my questions.
Firstly, if you could talk about.
Kind of go over again, the pipeline engagement with your retail partners in the past the past couple of quarters. It just seemed like there was less activity.
And most of the point of sale discussion.
Had been more on buy now pay later because it sounds like this quarter, we're getting good engagement coming back against that's great. So just wondering if you could maybe.
Size the engagement I'll be back to sort of the interest levels from retailers that we were back in 2019, and how does it look when you compare you know potential new partners.
Looking to sign up as well as your engagement with your maybe existing retail partners, who are looking to expand that relationship. Thank you.
Yeah, I mean, obviously been so we're not going to talk specifics about the pipeline, but I will tell you.
Obviously, you know we.
We had a strong 2019 coming off the heels of.
Launching both best buy and Lowes and.
The conversations had.
Had accelerated I would say with some other pipeline opportunities and then we had the COVID-19 pause or whatever you want to call. It for a couple of years.
It's not going to turn on a dime, but we're but as retailers are are charged with.
Dealing with this with this macro pressures theyre going to be looking for looking for solutions and looking for tools and so that is that as a help for us from our BD standpoint and from our.
From that pipeline conversion.
I think as importantly, I mean at least in the short term as the second part of your question, which is.
The existing retailers and what are they doing.
What's their posture and we had some.
And I've talked about this on previous calls when a retailer's print, 20% comps and have supply chain issues, even if they have <unk> as a as a as an option there.
Yes believe theyre not leading into it as much and so now so we had some pressures there from even from our existing existing partners, but we're seeing some good signals in some good conversations and some good partnering with the marketing departments and the merchandising departments on.
With our with our existing retailers on <unk>.
And and cross promotions and co branded things that we think can help us.
It really offset some of the.
Some of the <unk>.
Traffic declines by becoming a bigger balance of sale within that with that in that environment. As I mentioned, we're not immune to the macro but it's not a straight read through either for us because we can we can be.
Hypothetically, a retailer might be down, 12%, but our GMP within that retailer could be flat or it might only be down 5% or.
So it's it's.
As I said, we're not immune but it's not a direct read through so those are some good conversations that are happening as well obviously, we have to have that pipeline conversion for the next 2345 years of growth, but for the near term.
Just leaning into our existing relationships is a nice lever as well.
Okay, that's really helpful.
And I guess, a follow up I mean, it does sound like you're taking market share from your retail partners.
I guess when I look at.
Kind of consensus estimates for some of the retail partners you have that are publicly traded.
Their sales volumes.
Consensus that sales volumes still down year over year through the rest of the year, but it sounds like you can get your G and be up single digits maybe.
Double digits.
So you are I mean, just to kind of put a point that you are seeing I guess your market share expand as a percent of your your retailer.
Sales volume.
Yeah, I know I know Q1.
It might not be the best read through because.
It's kind of at the tip of the spear, but I think as I think just even down 1%.
Uh huh.
Signals the strength and the diversification of the broad retail partner channels that we have.
And so.
With the things that we've got various initiatives that were already on the roadmap and maybe in some instances are even being accelerated.
We're always standing ready and Thats part of the reason why we have this investment layer, but we're saying Hey, there is project X y Z.
Let's get it done and the retailer says well, we can't get that done before holiday 'twenty two that's going to be a 23 initiative and then all of a sudden it's like Oh wait a minute we're.
We're moving some puzzle pieces are out and let's let's work on that over the summer. So it's in flight for holiday 22. Those are those are good conversations that we're having and ways for us to become more important even within existing retailers.
Okay perfect. That's super helpful. Thanks, So much.
Thanks, guys.
This concludes our question and answer session I would like to turn the conference back over to Steve Michaels for closing remarks.
Yeah. Thank you. Thank you for everyone for joining us today as we said in our prepared remarks.
Okay.
Macro is challenging we're not we don't expect it to let up anytime soon but as we sit here today in this current environment, we feel confident about.
Delivering on the outlook we provided.
Less than 60 days ago.
The environment for pipeline conversion and for.
Our model to shine is stronger now than ever and certainly thank all of the.
Prague family in Prague employees for helping us.
Deliver that value to our customers and our retail partners. We look forward to updating you again.
Here in mid July .
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.