Press release·02/25/2025 23:47:37

Financial Performance Overview

Upbound Group, Inc. reported strong financial results for the year ended December 31, 2024, with consolidated revenues increasing by $328.2 million, or 8.2%, to $4,320.6 million. This growth was primarily driven by a $330.1 million increase in the Acima segment, which includes the company’s virtual and staffed business models.

Gross profit increased by $58.1 million, or 2.9%, to $2,080.4 million. However, gross profit as a percentage of total revenue decreased to 48.1% in 2024 from 50.7% in 2023, due to a shift in revenue mix. Operating profit increased significantly by $128.7 million, or 79.1%, to $291.6 million, primarily due to decreases in other gains and charges and labor operating expenses, partially offset by increases in non-labor operating and general and administrative expenses.

Net earnings for the year were $123.5 million, compared to a net loss of $5.2 million in 2023. The effective tax rate decreased to 30.5% in 2024 from 109.8% in 2023, primarily due to a lower tax impact of stock compensation expense.

Segment Performance

The Acima segment, which includes the company’s virtual and staffed business models, was the primary driver of the overall revenue growth. Acima segment revenues increased by $330.1 million, or 17.1%, to $2,261.4 million, primarily due to increases in rentals and fees revenue and merchandise sales. Gross profit for the Acima segment increased by $58.2 million, or 9.0%, while operating profit increased by $20.1 million, or 8.5%.

The Rent-A-Center segment, which represents the company’s company-owned stores and e-commerce platform, saw revenues decrease slightly by $0.7 million to $1,863.4 million. Gross profit decreased by $5.2 million, or 0.4%, while operating profit increased by $6.9 million, or 2.5%, primarily due to decreases in non-labor operating and labor expenses.

The Mexico segment reported a 5.5% increase in revenues to $78.7 million, contributing to a 6.7% increase in gross profit to $56.4 million. Operating profit for the Mexico segment was relatively flat, decreasing by 0.8%.

The Franchising segment saw a 4.4% decrease in revenues to $117.0 million, primarily due to a decline in merchandise sales. Gross profit increased by 5.6%, while operating profit decreased by 2.0%.

Liquidity and Capital Resources

Upbound Group generated $104.7 million in operating cash flow during 2024, a decrease of $95.6 million from 2023, primarily due to increased inventory purchases. The company used $323.8 million for debt repayments, $82.3 million for dividends, and $56.3 million for capital expenditures, while receiving $320.0 million in proceeds from new indebtedness and $18.7 million from the sale of property assets.

As of December 31, 2024, Upbound Group held $60.9 million in cash and cash equivalents and had $1.3 billion in outstanding indebtedness. The company’s primary sources of liquidity are cash flow from operations and availability under its $550 million asset-based revolving credit facility, which had $94.5 million in available commitments as of February 18, 2025, net of letters of credit.

Outlook and Risks

Upbound Group has experienced significant changes in business and operational trends in recent years due to macroeconomic conditions, including changes in consumer demand, payment behaviors, labor market conditions, interest rates, and global supply chain disruptions. While the lease-to-own industry has historically been resilient, the full impact of these macroeconomic trends on the company’s future performance is uncertain.

The company’s e-commerce revenues have increased as a percentage of total revenues in the Rent-A-Center segment, reaching approximately 26% in 2024 and 2023. However, the company is unable to quantify the extent to which these e-commerce transactions are incremental to its overall revenues or the impact on profitability compared to traditional store-based transactions.

Key Risks and Uncertainties

• Continued volatility in macroeconomic conditions, including consumer spending and payment behaviors, which could have a material adverse impact on the company’s financial performance.
• Uncertainty around the extent to which e-commerce revenues are incremental and the impact on profitability compared to traditional store-based transactions.
• Potential for increased merchandise losses and other operating expenses in the Acima segment.
• Ability to maintain and grow the Rent-A-Center and Mexico store bases and e-commerce platforms.
• Successful integration and performance of acquired businesses, such as Brigit.
• Ability to attract and retain key executive and management talent.

Conclusion

Upbound Group delivered strong financial results in 2024, driven by growth in the Acima segment. However, the company faces ongoing macroeconomic uncertainties and risks related to its e-commerce operations, merchandise losses, and successful execution of its strategic initiatives. Maintaining operational efficiency, managing costs, and adapting to changing consumer behaviors will be critical to the company’s future performance.