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Q3 2010 Earnings Call
October 26, 2010 10:45 a.m. ET
David Carpenter - VP, IR
Mark Speese - CEO
Mitch Fadel - President & COO
Robert Davis - CFO
Previous Statements by RCII
» Rent-A-Center, Inc. Q2 2010 Earnings Call Transcript
» Rent-A-Center, Inc. Q1 2010 Earnings Call Transcript
» Rent-A-Center Inc. Q4 2008 Earnings Call Transcript
» Rent-A-Center, Inc. Q2 2008 Earnings Call Transcript
Your speakers today are Mr. Mark Speese, Chairman and Chief Executive Officer of Rent-A-Center; Mitch Fadel, President and Chief Operating Officer; Mr. Robert Davis, Chief Financial Officer; and Mr. David Carpenter, Vice President of Investor Relations.
I would now like to turn the conference over to Mr. Carpenter. Please go ahead, sir.
Thank you, Shan. Good morning everyone and thank you for joining us. You should have received a copy of the earnings release, distributed after the market closed yesterday that outlines our operational and financial results that were made in the third quarter.
If for some reason you did not receive a copy of the release, you can download it from our website at investor.rentacenter.com. In addition, certain financial and statistical information that will be discussed during the conference call will also be provided on the same website.
Also in accordance with SEC rules concerning non-GAAP financial measures, the reconciliation of EBITDA is provided in our earnings press release under the statement of earnings highlight.
Finally, I must remind you that some of the statements made in this call, such as forecasts, growth in revenues, earnings, operating margins, cash flow and profitability and other business or trend information are forward-looking statements. These matters are, of course, subject to many factors that could cause actual results to differ materially from our expectations reflected in the forward-looking statements.
These factors are described in the earnings release issued yesterday as well as our most recent quarterly report on Form 10-Q for the quarter ended June 30th, 2010. Rent-A-Center undertakes no obligation to publicly update or revise any forward-looking statements.
And now I would like to turn the conference call over to Mark. Mark?
Well thank you David and good morning everyone and thank you for joining us this morning. I must say I am quite pleased not only with our recent results but also how we are positioned as we go into the fourth quarter and as we prepare for 2011.
As you read in the earnings release the company had another strong quarter as both our revenues and earnings exceeded our expectations. We are also pleased to have returned value to our shareholders both with the repurchase of 1.9 billion shares of our common stock as well as the declaration of our second quarterly dividend.
The demand for our products and services remained strong during the quarter. Our total deliveries continued to outperform the comparable period in 2009 and our returns were lower than the previous year as well.
At the same time we continue our work in controlling costs and have improved our operating profit margin by 80 basis points from a year ago. Robert will expand on that and provide some additional financial metrics in a few moments but sufficed to say we are quite pleased with those results.
Also provided in the press release is our 2011 financial guidance for which we are optimistic, the revenue guidance at the mid-point of the range equates to approximately 4% growth while the EPS at the mid-point equates to 6%.
Now as you know we have an investor day scheduled to be held on Wednesday November 10 in New York City where we will spend considerable time sharing with you our detailed plans of our growth initiatives, including financial projections and assumptions of the various initiatives as well as our capital allocation policy and means of returning and enhancing shareholder value.
With regard to the different business initiatives, first let me say how exited I am with the grand opening of our first store in Mexico two weeks go in Reynosa. As you know we have spent the better part of this year working on and preparing to enter this new and exiting market and while we are in the early stages, we are very exited about what we are seeing and the feedback we are getting from customers and prospects alike.
We expect to open another three our four stores before year end and as noted in the release, we expect to open between 25 and 75 stores next year in Mexico. We also anticipate adding another 10 to 20 stores in Canada next year as well and of course the stores that are scheduled to open in the U.S. market.
The RAC Acceptance business, this is the key auction site of the retailers. We continue to expand quickly and perform well there also. We ended the quarter with 151 locations, expect to end the year with approximately 220 and expect to add an additional 100 to 150 locations next year and while our financial service business continues to perform well, having grown both revenues and profits in the quarter, in light of our available growth initiatives, we are evaluating strategic alternatives with respect to that business.
We have a number of exiting opportunities and we're weighing the value of each of those. Again, we'll go into greater detail during our investor day in two weeks in New York City. For those of you that will not be able to attend in person, we will provide a video webcast and a link will be provided on our Investor Relations website for that.