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Upbound (UPBD) Q2 Earnings Surpass Estimates, Sales Down
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Upbound Group, Inc. (UPBD - Free Report) , earlier known as Rent-A-Center, posted results for its second-quarter 2023, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. The company’s revenues and earnings declined year over year.
Shares of this Zacks Rank #3 (Hold) company have increased 16.6% in the past six months, compared with the industry’s 2.6% rise.
Q2 in Detail
Upbound posted adjusted earnings of $1.11 a share, surpassing the Zacks Consensus Estimate of adjusted earnings of 72 cents per share. However, the bottom line dipped 3.5% from $1.15 per share earned in the year-ago quarter.
Image Source: Zacks Investment Research
Total revenues of $979.2 million came above the consensus estimate of $968 million. The metric fell 8.6% year over year, mainly due to lower rentals and fees, and merchandise sales, as well as, decline in lease portfolio value.
Adjusted EBITDA came in at $130.6 million, up 1.3% from the year-ago period’s level, owing to lower operating costs and reduced losses for the Acima business, which more than compensated the lower revenues. Adjusted EBITDA margin of 13.3% jumped 130 basis points year over year.
Segmental Performance
Revenues at the Rent-A-Center Business segment dipped 4.9% to $466.2 million due to the lower lease portfolio value year over year. Same-store sales were in line. E-commerce accounted for 26% of the quarterly revenues, compared with 23% in the prior-year period. The segment’s lease portfolio value slipped 4.7% year over year. Segment’s adjusted EBITDA margin came in at 17.9%, decreasing 330 basis points from prior year. As of Jun 30, the unit had 1,843 locations.
Revenues at the Acima segment (formerly known as the Preferred Lease segment) declined 19.3% from the prior-year quarter’s level to $464.4 million, mainly due to lower rental and fees revenues, and merchandise sales. Also, gross merchandise volume declined 5.8% due to fewer lease applications and lower average ticket. Segment’s adjusted EBITDA margin was 16.8%, compared with 10% in the year-ago period.
Franchising revenues fell 11.8% to $30.1 million, primarily due to reduced inventory purchases per store. As of Jun 30, Rent-A-Center had 438 franchise-operated locations.
Mexico segment’s revenues totaled $18.5 million, down 2.4% on a constant-currency basis. As of Jun 30, the unit had 128 company-operated locations.
Other Financial Aspects
Upbound ended the reported quarter with cash and cash equivalents of $86.8 million, net senior debt of $798.9 million and a stockholders' equity of $625.6 million.
UPBD provided cash from operating activities of $142 million and free cash flow totaled to $120.6 million during the first half.
Outlook
Management revised guidance for 2023. Based on the stronger-than-anticipated second-quarter results and the projection that Acima can sustain higher margins, the company raised 2023 financial targets.
For the year, management now anticipates consolidated revenues of $3.9-$4 billion, compared with $3.8-$4 billion projected earlier and $4.2 billion reported in 2022. Adjusted EBITDA is projected between $440 million and $465 million versus $395-$435 million anticipated earlier and $453.5 million reported last year.
Upbound envisions adjusted earnings in the range of $3.25-$3.55 per share, compared with the earlier projection of $2.70-$3.20 per share and $3.70 per share reported in 2022. The company expects free cash flow in the band of $230-$260 million for 2023.
For the third quarter, Upbound projects revenues of $0.95-$0.98 billion and adjusted earnings in the range of 70-80 cents per share. Adjusted EBITDA is expected to be $100-$110 million.
RCL has a trailing four-quarter earnings surprise of 26.4%, on average. The Zacks Consensus Estimate for RCL’s 2023 sales and earnings per share (EPS) indicates increases of 48.7% and 162.9%, respectively, from the year-ago period’s reported levels.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy), at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 17.1% and 18.4%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 9.9%, on average.
Ralph Lauren, a footwear and accessories dealer, has a Zacks Rank of 2 at present. RL has a trailing four-quarter earnings surprise of 17.4%, on average.
The Zacks Consensus Estimate for Ralph Lauren’s current financial-year sales and EPS suggests growth of 2.8% and 13.1%, respectively, from the year-ago corresponding figures.
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Upbound (UPBD) Q2 Earnings Surpass Estimates, Sales Down
Upbound Group, Inc. (UPBD - Free Report) , earlier known as Rent-A-Center, posted results for its second-quarter 2023, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. The company’s revenues and earnings declined year over year.
Shares of this Zacks Rank #3 (Hold) company have increased 16.6% in the past six months, compared with the industry’s 2.6% rise.
Q2 in Detail
Upbound posted adjusted earnings of $1.11 a share, surpassing the Zacks Consensus Estimate of adjusted earnings of 72 cents per share. However, the bottom line dipped 3.5% from $1.15 per share earned in the year-ago quarter.
Image Source: Zacks Investment Research
Total revenues of $979.2 million came above the consensus estimate of $968 million. The metric fell 8.6% year over year, mainly due to lower rentals and fees, and merchandise sales, as well as, decline in lease portfolio value.
Adjusted EBITDA came in at $130.6 million, up 1.3% from the year-ago period’s level, owing to lower operating costs and reduced losses for the Acima business, which more than compensated the lower revenues. Adjusted EBITDA margin of 13.3% jumped 130 basis points year over year.
Segmental Performance
Revenues at the Rent-A-Center Business segment dipped 4.9% to $466.2 million due to the lower lease portfolio value year over year. Same-store sales were in line. E-commerce accounted for 26% of the quarterly revenues, compared with 23% in the prior-year period. The segment’s lease portfolio value slipped 4.7% year over year. Segment’s adjusted EBITDA margin came in at 17.9%, decreasing 330 basis points from prior year. As of Jun 30, the unit had 1,843 locations.
Revenues at the Acima segment (formerly known as the Preferred Lease segment) declined 19.3% from the prior-year quarter’s level to $464.4 million, mainly due to lower rental and fees revenues, and merchandise sales. Also, gross merchandise volume declined 5.8% due to fewer lease applications and lower average ticket. Segment’s adjusted EBITDA margin was 16.8%, compared with 10% in the year-ago period.
Franchising revenues fell 11.8% to $30.1 million, primarily due to reduced inventory purchases per store. As of Jun 30, Rent-A-Center had 438 franchise-operated locations.
Mexico segment’s revenues totaled $18.5 million, down 2.4% on a constant-currency basis. As of Jun 30, the unit had 128 company-operated locations.
Other Financial Aspects
Upbound ended the reported quarter with cash and cash equivalents of $86.8 million, net senior debt of $798.9 million and a stockholders' equity of $625.6 million.
UPBD provided cash from operating activities of $142 million and free cash flow totaled to $120.6 million during the first half.
Outlook
Management revised guidance for 2023. Based on the stronger-than-anticipated second-quarter results and the projection that Acima can sustain higher margins, the company raised 2023 financial targets.
For the year, management now anticipates consolidated revenues of $3.9-$4 billion, compared with $3.8-$4 billion projected earlier and $4.2 billion reported in 2022. Adjusted EBITDA is projected between $440 million and $465 million versus $395-$435 million anticipated earlier and $453.5 million reported last year.
Upbound envisions adjusted earnings in the range of $3.25-$3.55 per share, compared with the earlier projection of $2.70-$3.20 per share and $3.70 per share reported in 2022. The company expects free cash flow in the band of $230-$260 million for 2023.
For the third quarter, Upbound projects revenues of $0.95-$0.98 billion and adjusted earnings in the range of 70-80 cents per share. Adjusted EBITDA is expected to be $100-$110 million.
Eye These Consumer Discretionary Picks
Some better-ranked companies are Royal Caribbean (RCL - Free Report) , lululemon athletica (LULU - Free Report) and Ralph Lauren (RL - Free Report) .
Royal Caribbean sports a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
RCL has a trailing four-quarter earnings surprise of 26.4%, on average. The Zacks Consensus Estimate for RCL’s 2023 sales and earnings per share (EPS) indicates increases of 48.7% and 162.9%, respectively, from the year-ago period’s reported levels.
lululemon athletica is a yoga-inspired athletic apparel company. LULU carries a Zacks Rank #2 (Buy), at present.
The Zacks Consensus Estimate for lululemon athletica’s current financial-year sales and EPS suggests growth of 17.1% and 18.4%, respectively, from the year-ago corresponding figures. LULU has a trailing four-quarter earnings surprise of 9.9%, on average.
Ralph Lauren, a footwear and accessories dealer, has a Zacks Rank of 2 at present. RL has a trailing four-quarter earnings surprise of 17.4%, on average.
The Zacks Consensus Estimate for Ralph Lauren’s current financial-year sales and EPS suggests growth of 2.8% and 13.1%, respectively, from the year-ago corresponding figures.