Aaron's Company Inc (AAN) 2022 Q3 法說會逐字稿

Hello, everyone, and welcome to the Aaron's Company Q3 earnings call. We will begin in 1 minute time (Operator Instructions). Thank you for your patience. Hello, everyone, and welcome to the Aaron's Company Q3 earnings call. My name is Charlie and I'll be coordinating the call today. You will have the opportunity to ask your question at the end of the presentation. (Operator Instructions) I'll now hand over to your host, Keith Hancock, Senior Director of Corporate Affairs, to begin. Keith, please go ahead.

大家好，歡迎來到亞倫公司第三季度財報電話會議。我們將在 1 分鐘後開始（操作員說明）。感謝您的耐心等待。大家好，歡迎來到亞倫公司第三季度財報電話會議。我的名字是查理，我將在今天協調電話。您將有機會在演示結束時提出您的問題。 （操作員說明）我現在請您的主持人，公司事務高級總監 Keith Hancock 開始。基思，請繼續。

Thank you, and good morning, everyone. Welcome to the Aaron's Company Third Quarter 2022 Earnings Conference Call. Joining me this morning are Douglas Lindsay, our Chief Executive Officer; Steve Olsen, our President; and Kelly Wall, our Chief Financial Officer. After our review of the third quarter, we will open the call for questions. Many of you have already seen a copy of our earnings release issued yesterday afternoon. For those of you who have not, it is available on the Investor Relations section of our website at investor.aarons.com. With our third quarter release, we are updating our reporting format. This simplified book provides an efficient and easy comparison of important metrics against previous quarters and includes additional commentary about our results. Our accompanying PowerPoint presentation, also available on the website, is also focused on results from the third quarter.

謝謝大家，大家早上好。歡迎來到亞倫公司 2022 年第三季度收益電話會議。今天早上加入我的還有我們的首席執行官 Douglas Lindsay；我們的總裁史蒂夫·奧爾森；和我們的首席財務官 Kelly Wall。在我們對第三季度進行審查之後，我們將打開提問電話。你們中的許多人已經看過我們昨天下午發布的財報副本。對於那些還沒有的人，可以在我們網站investor.aarons.com 的投資者關係部分找到它。隨著我們第三季度的發布，我們正在更新我們的報告格式。這本簡化的書提供了與前幾個季度的重要指標的有效和簡單的比較，並包括對我們結果的額外評論。我們隨附的 PowerPoint 演示文稿（也可在網站上獲取）也側重於第三季度的業績。

During today's call, certain statements we make will be forward looking, including those related to our financial performance outlook for the remainder of 2022. Please refer to our safe harbor provision for forward-looking statements that can be found at the end of our earnings release. The safe harbor provision identifies risks that may cause actual results to differ materially from the content of our forward-looking statements. Also, please see our Form 10-K for the year ended December 31, 2021, and other subsequent periodic filings with the SEC for a description of the risks related to our business that may cause actual results to differ materially from our forward-looking statements. On today's call, we will refer to certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, non-GAAP net earnings, non-GAAP EPS and free cash flow, 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 in our earnings release and the supplemental investor presentation posted on our website.

在今天的電話會議中，我們做出的某些陳述將是前瞻性的，包括與我們對 2022 年剩餘時間的財務業績展望相關的陳述。請參閱我們的安全港條款，了解可在我們的收益發布結束時找到的前瞻性陳述.安全港條款確定了可能導致實際結果與我們的前瞻性陳述內容大不相同的風險。此外，請參閱我們截至 2021 年 12 月 31 日止年度的 10-K 表格以及隨後向 SEC 提交的其他定期文件，以了解與我們的業務相關的可能導致實際結果與我們的前瞻性陳述大不相同的風險的描述.在今天的電話會議上，我們將參考某些非公認會計原則財務指標，包括 EBITDA 和調整後 EBITDA、非公認會計原則淨收益、非公認會計原則每股收益和自由現金流，這些指標已針對某些可能影響我們可比性的項目進行了調整與其他公司的表現。這些非公認會計原則措施在我們的收益發布和我們網站上發布的補充投資者介紹中包含的調節表中有詳細說明。

Now please welcome the Aaron's Company's CEO, Douglas Lindsay, to share more about our third quarter results. Douglas...

現在請歡迎 Aaron's Company 的首席執行官 Douglas Lindsay 分享更多關於我們第三季度業績的信息。道格拉斯...

Good morning, everyone, and thank you for joining us and for your interest in the Aaron's Company. Today, we're pleased to report our consolidated company results for the third quarter of 2022, which closed on September 30. This quarter, we delivered solid results for both revenues and adjusted earnings in what remains a challenging economic environment. And as a result, we are raising the midpoint of the full year 2022 guidance we provided on July 25. Within the Aaron's business segment, high inflation continues to impact our core customer. While gas prices fell during the quarter, food and housing costs remain high. Despite these headwinds, merchandise deliveries to our customers steadily improved during the quarter, resulting in revenue and earnings for the Aaron's business coming in line with our expectations.

大家早上好，感謝您加入我們並感謝您對 Aaron's Company 的關注。今天，我們很高興地報告 2022 年第三季度的合併公司業績，該業績於 9 月 30 日結束。本季度，在仍然充滿挑戰的經濟環境中，我們的收入和調整後收益都取得了穩健的業績。因此，我們提高了 7 月 25 日提供的 2022 年全年指導的中點。在 Aaron 的業務部門中，高通脹繼續影響我們的核心客戶。儘管本季度天然氣價格下跌，但食品和住房成本仍然很高。儘管存在這些不利因素，但本季度向我們客戶的商品交付穩步改善，導致 Aaron 業務的收入和收益符合我們的預期。

Our third quarter performance benefited from ongoing investments in lease decisioning and digital payment and servicing platforms as well as continued investments in our key growth strategies, including aarons.com and our GenNext Store program. These platforms give our customers increased flexibility in where and how they shop, either online or in a beautiful Aaron store. Meanwhile, we remain focused on driving efficiencies in our cost structure and leveraging our data analytics and technology platforms to drive profitability. We are also executing on our previously announced real estate repositioning and optimization program. And this quarter, initiated a new plan to further reduce expenses.

我們第三季度的業績得益於對租賃決策和數字支付和服務平台的持續投資，以及對我們關鍵增長戰略的持續投資，包括 aarons.com 和我們的 GenNext Store 計劃。這些平台為我們的客戶提供了更大的靈活性，讓他們在網上或美麗的 Aaron 商店購物的地點和方式上更加靈活。同時，我們仍然專注於提高成本結構的效率，並利用我們的數據分析和技術平台來提高盈利能力。我們還在執行我們之前宣布的房地產重新定位和優化計劃。並在本季度啟動了一項新計劃，以進一步降低開支。

Turning to BrandsMart. We continue to be pleased with this acquisition. BrandsMart USA is the low-price leader and retailer of choice for appliances and consumer electronics in the markets we serve. We believe our competitive position in both price and selection is a meaningful differentiator in attracting new and repeat customers from across the credit spectrum. In the third quarter, BrandsMart once again performed at a high level with both product sales and e-commerce channel performance, surpassing our internal expectations. Moving forward, we remain confident in BrandsMarts growth potential and optimistic about capturing the synergies announced at the time of the acquisition. In particular, we are excited to open our first new BrandsMart store in 2023.

轉向 BrandsMart。我們繼續對此次收購感到滿意。 BrandsMart USA 是我們服務的市場中電器和消費電子產品的低價領導者和首選零售商。我們相信我們在價格和選擇方面的競爭地位是吸引來自各個信用範圍的新客戶和回頭客的重要差異化因素。第三季度，BrandsMart再次在產品銷售和電商渠道表現上均保持高位，超出了我們的內部預期。展望未來，我們仍然對 BrandsMarts 的增長潛力充滿信心，並對收購時宣布的協同效應持樂觀態度。特別是，我們很高興在 2023 年開設我們的第一家新 BrandsMart 商店。

Finally, I want to thank all of our team members at both Aaron's and BrandsMart for helping us deliver positive results this quarter and for remaining focused on our key initiatives. Together with our strong balance sheet and liquidity, we believe our focus on innovation in both businesses enables us to deliver our market-leading value proposition to a large and diversified customer base, while positioning us for future growth. Before I turn the call over to our President, Steve Olsen, I want to particularly recognize the hard work and dedication of our teams in responding to Hurricane Ian. Through their efforts, we were able to ensure the safety and security of all impacted team members and to reopen our stores quickly. I will now turn the call over to Steve.

最後，我要感謝 Aaron's 和 BrandsMart 的所有團隊成員幫助我們在本季度取得積極成果，並繼續專注於我們的關鍵舉措。加上我們強大的資產負債表和流動性，我們相信我們對兩項業務創新的關注使我們能夠向龐大而多元化的客戶群提供市場領先的價值主張，同時為未來的增長做好準備。在我將電話轉給我們的總裁史蒂夫·奧爾森之前，我要特別感謝我們團隊在應對伊恩颶風方面的辛勤工作和奉獻精神。通過他們的努力，我們能夠確保所有受影響團隊成員的安全，並迅速重新開店。我現在將把電話轉給史蒂夫。

Thank you, Douglas. I second your remarks in thanking all of our team members across Aaron's, BrandsMart and Woodhaven. Your focus and commitment on customer service, continued innovation and winning in the marketplace is truly outstanding. I am proud to be a part of this team, and I look forward to working with you and growing our business.

謝謝你，道格拉斯。我贊同你的發言，感謝 Aaron's、BrandsMart 和 Woodhaven 的所有團隊成員。您對客戶服務、持續創新和贏得市場的關注和承諾確實非常出色。我很自豪能成為這個團隊的一員，我期待與您合作並發展我們的業務。

Now turning to the performance of the Aaron's Business segment. As Douglas mentioned, our customers continue to face challenges due to inflationary and other economic pressures. Despite these headwinds, the Aaron's business still delivered third quarter results in line with our expectations. As expected, we continue to see softening in our lease renewal rate, higher lease merchandise returns and increased charge-off. In the quarter, our customer lease renewal rate was 86.3% for our company-operated Aaron stores, which was down 340 basis points from the prior year quarter and below pre-pandemic averages. Kelly will discuss our lease merchandise returns and charge-off in a few minutes. We continue to respond to these challenging trends by focusing on preserving profitability through tightening our lease decisioning algorithms; leveraging our enhanced digital servicing platforms and executing our lease renewal strategies.

現在轉向亞倫業務部門的表現。正如道格拉斯所說，由於通貨膨脹和其他經濟壓力，我們的客戶繼續面臨挑戰。儘管存在這些不利因素，Aaron 的第三季度業績仍符合我們的預期。正如預期的那樣，我們繼續看到我們的租賃續約率下降，租賃商品回報率增加和沖銷增加。本季度，我們公司經營的 Aaron 商店的客戶續租率為 86.3%，比去年同期下降 340 個基點，低於大流行前的平均水平。凱利將在幾分鐘內討論我們的租賃商品退貨和沖銷。我們將繼續通過收緊租賃決策算法來保持盈利能力，從而應對這些具有挑戰性的趨勢；利用我們增強的數字服務平台並執行我們的租約更新策略。

In the quarter, customer demand was stronger than expected. We attribute this positive trend to well-executed strategies across our store and e-commerce channels. Also, our lease portfolio size for our company-operated stores ended the third quarter, slightly ahead of our internal expectations at $125.8 million, a decrease of 4.8% as compared to the prior year quarter. Shifting to our growth strategies within the Aaron's business. We were pleased to see positive sustained momentum in e-commerce and GenNext stores. These important channels contributed more than 1/3 of our total Aaron's business revenue in the third quarter.

本季度，客戶需求強於預期。我們將這一積極趨勢歸因於我們在商店和電子商務渠道中執行良好的策略。此外，截至第三季度，我們公司自營商店的租賃組合規模略高於我們內部預期的 1.258 億美元，與去年同期相比下降 4.8%。轉向我們在 Aaron 業務中的增長戰略。我們很高興看到電子商務和 GenNext 商店的積極持續勢頭。這些重要渠道貢獻了我們第三季度 Aaron 總業務收入的 1/3 以上。

E-commerce remains a key customer acquisition channel and revenue growth driver for the Aaron's business. The performance of our e-commerce channel was outstanding in the third quarter because of our dynamic digital marketing strategies, further improvements in the online shopping experience and an expanded product assortment. More and more customers are shopping with us at Aarons.com resulting in increased website traffic and higher conversion rate as compared to the prior year quarter. Due to our digital marketing strategies and the strong performance of our e-commerce team, we continue to increase the sales volume through this important channel. Recurring revenue written into the portfolio from e-commerce lease originations increased 24% compared to the prior year quarter, while total e-commerce revenues increased 11.1% year-over-year. Furthermore, the e-commerce business represents an increasingly higher percentage of our total lease revenues. In the third quarter, e-commerce represented 16% of our total lease revenues, up from 14.2% in the prior year.

電子商務仍然是 Aaron 業務的主要客戶獲取渠道和收入增長動力。由於我們動態的數字營銷策略、在線購物體驗的進一步改善和產品種類的擴大，我們的電子商務渠道在第三季度的表現非常出色。與去年同期相比，越來越多的客戶在 Aarons.com 上與我們一起購物，導致網站流量增加和轉化率更高。由於我們的數字營銷策略和我們電子商務團隊的強勁表現，我們通過這個重要渠道繼續增加銷量。來自電子商務租賃業務的經常性收入與去年同期相比增長了 24%，而電子商務總收入同比增長了 11.1%。此外，電子商務業務占我們總租賃收入的比例越來越高。第三季度，電子商務占我們總租賃收入的 16%，高於去年的 14.2%。

Now turning to our GenNext strategy, which is continuing to deliver meaningful financial results. We believe our GenNext stores and teams deliver the best customer experience in the industry through a larger, brighter and easier to navigate showrooms that offer expanded product assortment. In the quarter, we continue to see lease originations in GenNext stores opened less than 1 year, grow at a rate of more than 20% higher than our average legacy stores. These stores now account for more than 22% of revenues, up from 8.5% in the third quarter last year. I am also excited to announce that we opened our 200th GenNext store in Flint, Michigan earlier this month. In the quarter, we opened 24 GenNext stores and remain on track to open a total of 100 new GenNext locations in 2022. We are committed to this important real estate optimization strategy and plan to open additional GenNext locations in 2023.

現在轉向我們的 GenNext 戰略，該戰略將繼續帶來有意義的財務成果。我們相信，我們的 GenNext 商店和團隊通過更大、更明亮、更易於導航的展廳提供業內最佳的客戶體驗，提供更豐富的產品種類。在本季度，我們繼續看到 GenNext 門店的租賃發起成立不到 1 年，增長率比我們的平均傳統門店高出 20% 以上。這些商店現在佔收入的 22% 以上，高於去年第三季度的 8.5%。我也很高興地宣布，我們本月早些時候在密歇根州弗林特開設了第 200 家 GenNext 商店。本季度，我們開設了 24 家 GenNext 門店，並有望在 2022 年共開設 100 家新的 GenNext 門店。我們致力於這一重要的房地產優化戰略，併計劃在 2023 年開設更多的 GenNext 門店。

Now turning to BrandsMart. As Douglas mentioned, BrandsMart once again performed at a high level with overall product sales and e-commerce results exceeding our internal expectations. We believe that our strength as a value-oriented retailer will continue to attract a full spectrum of customers in this challenging economic environment. In the third quarter, BrandsMart product sales decreased by only 0.5% from the third quarter of 2021. This solid performance was primarily driven by a strong execution of our promotional events, a higher average transaction value, sustained revenue growth in appliances and strong e-commerce sales.

現在轉向 BrandsMart。正如 Douglas 所說，BrandsMart 再次表現出色，整體產品銷售和電子商務業績超出了我們的內部預期。我們相信，在這個充滿挑戰的經濟環境中，我們作為以價值為導向的零售商的實力將繼續吸引全方位的客戶。第三季度，BrandsMart 產品銷售額較 2021 年第三季度僅下降 0.5%。這一穩健的表現主要得益於我們促銷活動的強勁執行、更高的平均交易額、電器收入的持續增長以及強勁的電子商務商業銷售。

In a short time, we have made meaningful improvements to the BrandsMart e-commerce shopping experience and introduce new digital marketing strategies that are leading to significant revenue growth in this important acquisition channel. For the third quarter, e-commerce product sales were up 18% as compared to the prior year and in the quarter, represented over 9% of total sales. Our BrandsMart team continues to perform at a high level as we introduce new strategies and tactics to drive this important new business segment. Additionally, we are pleased with our progress in executing our integration and synergy initiatives related to the BrandsMart acquisition, and we are increasingly optimistic about the opportunities for future store and e-commerce growth. We look forward to opening our first new BrandsMart Store in 2023. Now I will turn the call over to Kelly to provide further details on our financial results.

在短時間內，我們對 BrandsMart 電子商務購物體驗進行了有意義的改進，並引入了新的數字營銷策略，從而在這一重要的收購渠道中實現了顯著的收入增長。第三季度，電子商務產品銷售額同比增長 18%，在該季度佔總銷售額的 9% 以上。隨著我們引入新的戰略和策略來推動這一重要的新業務領域，我們的 BrandsMart 團隊繼續保持高水平的表現。此外，我們對我們在執行與收購 BrandsMart 相關的整合和協同計劃方面取得的進展感到高興，我們對未來商店和電子商務增長的機會越來越樂觀。我們期待在 2023 年開設第一家新的 BrandsMart 商店。現在我將把電話轉給凱利，以提供有關我們財務業績的更多詳細信息。

Thanks, Steve. Consolidated revenues were $593.4 million in the third quarter of 2022 compared with $452.2 million in the prior year quarter, an increase of 31.2%. This year-over-year increase was primarily due to the BrandsMart acquisition, which was offset by lower revenues at the Aaron's business. Consolidated operating expenses for the quarter were higher than in the third quarter of 2021, primarily due to the impact of the BrandsMart acquisition on personnel expenses and other operating expenses, and an increase the provision for lease merchandise write-offs. The increase to personnel expenses were partially offset by lower performance-based personnel expenses at the Aaron's stores and our corporate functions.

謝謝，史蒂夫。 2022 年第三季度的合併收入為 5.934 億美元，而去年同期為 4.522 億美元，增長 31.2%。這一同比增長主要是由於對 BrandsMart 的收購，這被 Aaron 業務的收入下降所抵消。本季度合併營業費用高於 2021 年第三季度，主要是由於收購 BrandsMart 對人員費用和其他營業費用的影響，以及租賃商品沖銷準備金的增加。人事費用的增加部分被亞倫商店和我們公司職能部門基於績效的人事費用減少所抵消。

Other operating expenses increased $17.6 million in the quarter as compared to the prior year period. Consistent with the second quarter of this year, this year-over-year increase is primarily the result of the acquisition of BrandsMart and higher occupancy, shipping and handling and other miscellaneous expenses at the Aaron's business, which was partially offset by lower advertising costs at the Aaron's business and a gain related to the sale-leaseback transactions initiated during the quarter. Consolidated operating expenses were also higher year-over-year due to increased restructuring expenses and a goodwill impairment charge of $12.9 million recorded in the quarter. The need for an interim goodwill impairment test for the company was triggered by the decline in the company's stock price and market capitalization during the period. We engaged the assistance of a third-party valuation firm to perform the interim goodwill impairment test. This included an assessment of the Aaron's business and BrandsMart reporting units, fair values relative to their carrying values. The fair values were derived using a combination of income and market approaches and the company determined that the Aaron's business goodwill was fully impaired. There was no goodwill impairment charge related to the BrandsMart reporting unit.

與去年同期相比，本季度其他運營費用增加了 1760 萬美元。與今年第二季度一致，這一同比增長主要是由於收購 BrandsMart 以及 Aaron 業務的更高的入住率、運輸和處理以及其他雜項費用，這部分被較低的廣告成本所抵消Aaron 的業務以及與本季度發起的售後租回交易相關的收益。由於重組費用增加和本季度記錄的商譽減值費用為 1290 萬美元，合併運營費用也同比增加。公司需要進行中期商譽減值測試的原因是本期公司股價和市值下降。我們聘請第三方估值公司協助進行中期商譽減值測試。這包括對 Aaron 的業務和 BrandsMart 報告單位的評估，以及相對於其賬面價值的公允價值。公允價值是結合收入和市場方法得出的，公司確定 Aaron 的商業商譽已完全減值。沒有與 BrandsMart 報告單位相關的商譽減值費用。

During the third quarter of 2022, restructuring expenses increased primarily related to operating lease right-of-use asset and fixed asset impairments and severance costs related to our real estate repositioning and optimization restructuring program and a new operational efficiency and optimization program that the company initiated in the recent quarter. This new program is intended to strengthen operational efficiencies and optimize the company's overall cost. We believe that both of these restructuring programs will continue to support our long-term strategic goals while reducing our overall expenses.

2022年第三季度，重組費用增加主要與我們的房地產重新定位和優化重組計劃以及公司發起的新的運營效率和優化計劃相關的經營租賃使用權資產和固定資產減值和遣散費有關在最近一個季度。這項新計劃旨在提高運營效率並優化公司的整體成本。我們相信，這兩項重組計劃將繼續支持我們的長期戰略目標，同時降低我們的整體開支。

Consolidated adjusted EBITDA was $35.2 million in the third quarter of 2022 compared with $53.6 million for the same period last year. The decline in adjusted EBITDA was primarily due to a decline in adjusted EBITDA at the Aaron's business, offset by the contribution of BrandsMart. As a percentage of total revenues, adjusted EBITDA was 5.9% compared to 11.9% in the prior year quarter. On a non-GAAP basis, diluted earnings were $0.31 per share compared with non-GAAP diluted earnings per share of $0.83 in the same quarter in 2021. Adjusted free cash flow was $50.1 million in the third quarter of 2022, an increase of $40.6 million when compared to the same period in the prior year. This increase was primarily due to higher cash provided by operations, which was largely due to lower inventory purchases that align with current demand trends and incremental proceeds related to sale-leaseback transactions initiated during the quarter, partially offset by higher capital expenditures in the current quarter.

2022 年第三季度合併調整後 EBITDA 為 3520 萬美元，而去年同期為 5360 萬美元。調整後 EBITDA 的下降主要是由於 Aaron 業務的調整後 EBITDA 下降，被 BrandsMart 的貢獻所抵消。作為總收入的百分比，調整後的 EBITDA 為 5.9%，而去年同期為 11.9%。按非公認會計原則計算，攤薄後每股收益為 0.31 美元，而 2021 年同一季度非公認會計原則攤薄後每股收益為 0.83 美元。2022 年第三季度調整後的自由現金流為 5010 萬美元，增加了 4060 萬美元與上年同期相比。這一增長主要是由於運營提供的現金增加，這主要是由於與當前需求趨勢一致的庫存採購減少以及與本季度發起的售後租回交易相關的增量收益，部分被本季度較高的資本支出所抵消.

At the end of the third quarter, the company had a cash balance of $37.8 million and total debt of $274 million. This represents a $45.9 million reduction to our net debt balance from the end of the second quarter. Total liquidity, including availability under our revolving credit facility, was $310.6 million on September 30. During the quarter, we paid a quarterly cash dividend of $11.25 per share, returning $3.5 million to shareholders. We did not repurchase any shares in the quarter.

截至第三季度末，該公司的現金餘額為 3780 萬美元，總債務為 2.74 億美元。這意味著我們從第二季度末的淨債務餘額減少了 4590 萬美元。 9 月 30 日，包括循環信貸額度在內的總流動性為 3.106 億美元。在本季度，我們支付了每股 11.25 美元的季度現金股息，向股東返還了 350 萬美元。我們在本季度沒有回購任何股票。

Turning to the business segments. As a reminder, the Aaron's Business segment includes the company-operated Aaron's stores, the aarons.com e-commerce platform, Aaron's franchise operations, BrandsMart Leasing and Woodhaven, our furniture manufacturing operations. The BrandsMart segment includes our 10 BrandsMart U.S.A. retail stores and the brandsmartusa.com platform. The 2 business segments are not burdened by unallocated corporate expenses, which include, but are not limited to, equity-based compensation, restructuring, separation and acquisition-related costs, interest expense, goodwill impairment charges and certain other corporate functions. At the Aaron's business, total revenues decreased 8.7% in the quarter to $412.9 million primarily due to the lower lease revenues, which were attributed to a lower lease portfolio size during the quarter and a corresponding decline in customer payment activity that Steve discussed earlier. Same-store revenues were consistent with our expectations, declining 7.7% compared to an increase of 4.6% for the prior year's quarter.

轉向業務部門。提醒一下，Aaron's 業務部門包括公司經營的 Aaron's 商店、aarons.com 電子商務平台、Aaron's 特許經營業務、BrandsMart Leasing 和 Woodhaven，我們的家具製造業務。 BrandsMart 部門包括我們的 10 BrandsMart 美國零售店和brandsmartusa.com 平台。兩個業務分部沒有未分配的公司費用負擔，包括但不限於股權補償、重組、分離和收購相關成本、利息費用、商譽減值費用和某些其他公司職能。在 Aaron 的業務中，本季度總收入下降 8.7% 至 4.129 億美元，主要是由於租賃收入下降，這歸因於本季度租賃組合規模較小以及史蒂夫早些時候討論的客戶支付活動相應下降。同店收入與我們的預期一致，下降了 7.7%，而去年同期則增長了 4.6%。

Gross profit was $257 million, a decline of 9.7% as compared to the prior year quarter. The decline in gross profit was primarily driven by lower lease renewal rates and lower new lease originations as well as higher inventory purchase cost as compared to the prior year quarter. Operating expenses at the Aaron's business decreased $1 million in the quarter as compared to the prior year period due to lower performance-based compensation and other operating expenses, partially offset by a higher provision for lease merchandise write-offs. The provision for lease merchandise write-offs as a percentage of lease revenues and fees for the third quarter was 7.5% compared to 4.9% in the prior year period. This increase in the provision expense is in line with our expectations for the quarter and was primarily due to a higher frequency of charged-off lease agreements and an increase in the average net book value of the lease merchandise that was charged off. Additionally, the increase in write-off percentage was impacted by the lower lease revenues in the quarter. Similar to the second quarter of this year, we believe that charge-off were impacted by the quarter's high inflationary environment, and we expect this trend to continue into the fourth quarter.

毛利潤為 2.57 億美元，與去年同期相比下降 9.7%。毛利下降的主要原因是與去年同期相比，租賃續訂率降低、新租賃發起減少以及庫存採購成本增加。由於基於績效的薪酬和其他運營費用較低，本季度 Aaron 業務的運營費用比去年同期減少了 100 萬美元，部分被較高的租賃商品沖銷準備金所抵消。第三季度租賃商品沖銷佔租賃收入和費用的百分比為 7.5%，而去年同期為 4.9%。撥備費用的增加符合我們對本季度的預期，主要是由於核銷租賃協議的頻率更高以及被核銷的租賃商品的平均賬面淨值增加。此外，沖銷百分比的增加受到本季度租賃收入下降的影響。與今年第二季度類似，我們認為沖銷受到該季度高通脹環境的影響，我們預計這一趨勢將持續到第四季度。

Adjusted EBITDA for the Aaron's business was $42.5 million in the quarter compared with $66.8 million for the same period in 2021 due primarily to a decrease in gross profit and a higher provision for lease merchandise write-offs, partially offset by lower personnel costs. As a percentage of total revenues, adjusted EBITDA was 10.3% compared to 14.8% last year. At BrandsMart, retail sales in the third quarter of 2022 were $183.3 million, which is approximately 1.1% lower than the same quarter of the prior year. Gross profit was $41 million or 22.4% of retail sales and adjusted EBITDA for BrandsMart was $6.6 million for the quarter. Adjusted EBITDA margin was 3.6%.

本季度 Aaron 業務的調整後 EBITDA 為 4250 萬美元，而 2021 年同期為 6680 萬美元，這主要是由於毛利潤下降和租賃商品沖銷準備金增加，部分被人員成本下降所抵消。作為總收入的百分比，調整後的 EBITDA 為 10.3%，而去年為 14.8%。 BrandsMart 2022 年第三季度的零售額為 1.833 億美元，比上年同期下降約 1.1%。本季度，BrandsMart 的毛利潤為 4100 萬美元，佔零售銷售額的 22.4%，調整後的 EBITDA 為 660 萬美元。調整後的 EBITDA 利潤率為 3.6%。

Finally, please note that we have revised the full year 2022 outlook that was provided in our second quarter earnings release. We have raised the midpoint of our outlook for consolidated revenues, earnings and adjusted free cash flow. Our revised outlook continues to reflect our expectation that the current high inflationary environment will continue to adversely impact customer demand, including average ticket size in both businesses, lease portfolio size, lease renewal rates, the provision for lease merchandise write-offs and other segment level and corporate expenses. With that, I will now turn the call over to the operator, who will assist with your questions.

最後，請注意，我們已經修改了第二季度財報中提供的 2022 年全年展望。我們提高了合併收入、收益和調整後自由現金流展望的中點。我們修訂後的前景繼續反映我們的預期，即當前的高通脹環境將繼續對客戶需求產生不利影響，包括兩項業務的平均票務規模、租賃組合規模、租賃續約率、租賃商品核銷準備金和其他分部水平和公司費用。有了這個，我現在將把電話轉給接線員，接線員將協助您解決問題。

Thank you. (Operator Instructions) Our first question comes from Anthony Chukumba of Loop Capital Markets.

謝謝你。 （操作員說明）我們的第一個問題來自 Loop Capital Markets 的 Anthony Chukumba。

I guess my first question is on the rollout of the lease solution to BrandsMart stores. If you could just give us an update on how that's going?

我想我的第一個問題是關於 BrandsMart 商店的租賃解決方案的推出。如果你能告訴我們最新情況如何？

Anthony, it's Douglas. I mean as we mentioned on the last call, we got that up and running in May of this year. And so it's in all stores, and it went according to plans. We're really happy with that. We've been able to continue to increase our portfolio size as we've -- as we're gaining penetration in those stores. I would say the uptake in terms of customers to that product is where we thought it would be, and we're continuing to optimize and build out the infrastructure around it. I think when we communicated at the time of our acquisition deal, -- it's going to be about a 3-year process to begin building that portfolio and it still won't be at full run rate by year 3 in those 10 stores. And so we're happy with the progress we're making, and we're continuing to optimize it.

安東尼，是道格拉斯。我的意思是，正如我們在上次電話會議中提到的那樣，我們在今年 5 月啟動並運行了它。所以它在所有商店裡，它按計劃進行。我們對此感到非常高興。隨著我們在這些商店中的滲透，我們已經能夠繼續增加我們的投資組合規模。我想說的是，客戶對該產品的接受程度是我們認為的，我們將繼續優化和構建圍繞它的基礎設施。我認為，當我們在收購交易時進行溝通時，開始構建該產品組合將需要大約 3 年的時間，而且到第 3 年這 10 家商店仍不會全面運行。所以我們對我們正在取得的進展感到滿意，並且我們正在繼續優化它。

Got it. That's helpful. And then you mentioned in the Aaron's business that merchandise delivery steadily improved and customer demand was stronger than you expected. I guess my question, are you seeing any sort of credit trade down? In other words, are you seeing any indications that subprime credit is tightening at all and maybe you're getting the benefit from that, like you've seen in prior economic downturns?

知道了。這很有幫助。然後您在亞倫的業務中提到，商品交付穩步改善，客戶需求比您預期的要強。我想我的問題是，您是否看到任何形式的信用交易下降？換句話說，您是否看到任何跡象表明次級信貸正在收緊，並且您可能正在從中受益，就像您在之前的經濟衰退中看到的那樣？

So far, we have not seen any sign of a trade down. It's tough to gauge. We do believe if default rates increased in the credit stack above us and credit gets restricted it will benefit the lease-to-own market. But we're not seeing anything in particular right now. We do monitor external sources on that to look for tightening and we're also looking at our internal data to identify if we're experiencing any higher credit scores entering our space or if we're seeing credit scores in the mid-range or lower range of our space increasing proportionately. And that would tell us that there's a trade down happening. But we've got all eyes on it. But to date, we have not seen it. But when we do, it will appear in the form of new customers, disproportionately growing in our space.

到目前為止，我們還沒有看到任何交易下跌的跡象。很難衡量。我們確實相信，如果我們上方信貸堆棧中的違約率增加並且信貸受到限制，它將有利於自有租賃市場。但我們現在沒有看到任何特別的東西。我們確實監控外部來源以尋找收緊，我們也在查看我們的內部數據，以確定我們是否正在經歷任何更高的信用評分進入我們的空間，或者我們是否看到中檔或更低的信用評分我們的空間範圍按比例增加。這將告訴我們，交易正在發生。但我們所有人都在關注它。但迄今為止，我們還沒有看到它。但是當我們這樣做時，它會以新客戶的形式出現，在我們的空間中不成比例地增長。

Our next question comes from Kyle Joseph of Jefferies.

我們的下一個問題來自 Jefferies 的 Kyle Joseph。

I appreciate the new format on the press release. So looking at that, we see the lease renewal rate and what that's done year-over-year. Can you give us -- can you remind us where the lease renewal rate is versus kind of the long-term historical average? That's the first question. And then second question, you guys talked a lot about centralized underwriting, but talk about sort of any tweaks or changes you're making on the underwriting front.

我很欣賞新聞稿中的新格式。因此，從這一點來看，我們看到了租約續訂率以及每年的情況。你能給我們 - 你能提醒我們租賃續訂率與長期歷史平均水平的對比嗎？這是第一個問題。然後是第二個問題，你們談論了很多關於集中承保的話題，但談到了你們在承保方面所做的任何調整或改變。

I'll take the renewal rate one. So as you probably recall, just looking at our numbers, pre-pandemic, our renewal rates were between, call it, 87% and 89%. During the stimulus aided period, those rose to about 88% to 91%. We really saw that begin to happen in the latter part of '21 and going into '22. I'm sorry, latter part of '20 going into '21. We then began to see normalization during '21. And what we're experiencing now is renewal rates that are down lower than that, lower than pre-pandemic by 100 basis points or so. We believe this is just a correction in the market. We're seeing the air kind of come out with the bubble of stimulus. As you recall, we mentioned pre-pandemic that we believed that the centralized decisioning would create renewal rates were about 100 basis points above our pre-pandemic levels. We continue to believe as things normalize over time, the decisioning will benefit us, but we continue to monitor it. The subprime customer continues to be under pressure with inflation, gas, housing and food prices, and we don't have a crystal ball as to when that will subside, but we do believe our decisioning is working.

我將採用續訂率一。因此，您可能還記得，僅查看我們的數據，在大流行前，我們的續訂率介於 87% 和 89% 之間。在刺激援助期間，這一比例上升至約 88% 至 91%。我們真的看到這種情況開始發生在 21 年後期並進入 22 年。對不起，20 年下半年到 21 年。然後我們開始在 21 年看到正常化。而我們現在正在經歷的是續訂率低於此值，比大流行前低 100 個基點左右。我們認為這只是市場的修正。我們看到空氣中出現了刺激的泡沫。您還記得，我們提到大流行前，我們認為集中決策將使續訂率比大流行前水平高出約 100 個基點。我們繼續相信，隨著時間的推移，事情會正常化，我們的決定將使我們受益，但我們會繼續對其進行監控。次貸客戶繼續承受通貨膨脹、汽油、住房和食品價格的壓力，我們不知道何時會消退，但我們相信我們的決定是有效的。

We've been able to tighten decisioning here over the last year by several hundred basis points, and we believe that's benefiting us as well. So we're really happy with the investments we've made in decisioning and we think over time, renewal rates will normalize.

在過去的一年裡，我們已經能夠將這裡的決策收緊數百個基點，我們相信這也有利於我們。因此，我們對我們在決策方面所做的投資感到非常滿意，我們認為隨著時間的推移，續訂率將會正常化。

And Kyle, it's Kelly. Just to add 1 or 2 other points here, right. You may recall that on the last call, when we were talking about outlook for 2022, we had anticipated that in the back half of the year, our lease renewal rates would be between 100 and 150 basis points lower than the pre-pandemic level. So what we were expecting in Q3 played out exactly in line with what we were forecasting and then the updated or revised outlook that the release that we put out yesterday reflects kind of that continued expectation that we're going to be down below pre-pandemic levels as we finish the year here.

還有凱爾，是凱利。只是在這裡添加1或2個其他點，對。您可能還記得，在上次電話會議上，當我們談論 2022 年的前景時，我們曾預計，在今年下半年，我們的續租率將比大流行前的水平低 100 至 150 個基點。因此，我們在第三季度的預期與我們的預測完全一致，然後我們昨天發布的更新或修訂的前景反映了我們將低於大流行前的持續預期我們在這裡結束這一年時的水平。

The last comment I would make on lease decisioning is we expect to have the lease decisioning tightened for the near term, and that's reflected in both our demand assumptions for our outlook and in our renewal rate assumptions.

我對租賃決策的最後評論是，我們預計短期內將收緊租賃決策，這反映在我們對前景的需求假設和續訂率假設中。

Got it. And then one follow-up for me on BrandsMart. Obviously, sales have been very resilient there. But as you walk through kind of the macro environment, I know you guys are growing ticket size and e-com, but kind of your expectations for the gross profit, which has actually been fairly resilient there too as well.

知道了。然後是我在 BrandsMart 上的一項後續行動。顯然，那裡的銷售非常有彈性。但是當你經歷某種宏觀環境時，我知道你們正在增加門票規模和電子商務，但你對毛利潤的期望，實際上在那裡也相當有彈性。

Yes. I'd say that our expectations for gross profit margin, Kyle, is really largely unchanged, maybe tightening a little bit from our initial expectations by a little bit, I mean, kind of call it 50 to 100 basis points, right, as we're seeing some tightening of average ticket size as well as just promotional activity that we're expecting through the back part of the year. So again, no material change in kind of the view of that business as we're going forward here, at least in the near term.

是的。我想說的是，我們對毛利率的預期，凱爾，實際上基本上沒有變化，可能會比我們最初的預期稍微收緊一點，我的意思是，可以稱之為 50 到 100 個基點，對，因為我們'看到平均門票規模有所收緊，以及我們預計到今年下半年的促銷活動。再說一次，至少在短期內，我們在此向前發展時對該業務的看法沒有實質性變化。

Our next question comes from Scot Ciccarelli of Truist Securities.

我們的下一個問題來自 Truist Securities 的 Scot Ciccarelli。

I guess I have a follow-up question on the comment that you aren't seeing any trade down activity. Douglas, what metrics are you guys looking at to inform that view? Like is there anything else outside of just customer credit scores that you're looking at? Or is that the primary kind of data point that you're focused on?

我想我對您沒有看到任何降價活動的評論有一個後續問題。道格拉斯，你們正在尋找哪些指標來告知這種觀點？除了您正在查看的客戶信用評分之外，還有其他東西嗎？或者這是您關注的主要數據點？

We're looking across channels. We fly our customers as new previous or existing customers. And so we stratify those customers by scores. They come -- our proprietary scores they come in, which is an amalgamation of lot of data, as you might imagine, in our models. But we're constantly looking for different profiles of customers coming in, and we're also looking at external data. We do have BrandsMart as a retailer that's another data point that allows us to see what's happening in the cash register and whether there's changes in the credit stack above us there, and we monitor that as well. So there's really 2 sets of internal data that we're looking at. And while I would sort of characterize the market right now as volatile. We see peaks and valleys in terms of customers coming in and out of our space. I mean nothing sustained at this moment.

我們正在尋找跨渠道。我們將客戶作為新的舊客戶或現有客戶飛行。因此，我們按分數對這些客戶進行分層。他們來了——他們進來了我們的專有分數，正如您可能想像的那樣，這是我們模型中大量數據的融合。但我們一直在尋找不同的客戶資料，我們也在查看外部數據。我們確實有 BrandsMart 作為零售商，這是另一個數據點，可以讓我們查看收銀機中發生的情況以及我們上方的信用堆棧是否有變化，我們也會對其進行監控。所以我們正在研究兩組內部數據。雖然我將目前的市場描述為不穩定的。我們看到進出我們空間的客戶的高峰和低谷。我的意思是此刻沒有任何持續。

Got it. Okay. And what do you think changes that? Like what would cause us to kind of revisit the type of experience you had back in kind of like '08, '09 where you actually had people kind of coming into the top of the funnel, if you will.

知道了。好的。您認為會發生什麼變化？就像是什麼讓我們重新審視你在 08 和 09 年的那種體驗，如果你願意的話，你實際上讓人們進入了漏斗的頂端。

Scot, it's Kelly. Listen, I'd say our view is that it's kind of a function of time, right? I mean if you go back and look at what happened in that '08, '09, 2010 period, we didn't see it happen over a quarter, right? It happened over a series of quarters where we started to benefit from it. I mean, again, some of the external data that we're looking at are average outstanding balances on credit cards. Average savings rate in households kind of stratified based on credit type or score. And so as we look at that, what we're seeing is that certainly availability of credit to the consumer is tightening, right? The faults are starting to tick up in the consumer space, right, above us, which is a trend similar to what we saw in the prior period. But again, that played out over a series of months and really kind of 2 or 3 quarters before it led to it the business. So that's what we're watching. It's to be seen

斯科特，是凱利。聽著，我想說我們的觀點是它是時間的函數，對吧？我的意思是，如果你回頭看看 08 年、09 年、2010 年期間發生的事情，我們沒有看到它發生超過四分之一，對吧？它發生在我們開始從中受益的一系列季度中。我的意思是，我們正在查看的一些外部數據是信用卡的平均未結餘額。家庭的平均儲蓄率根據信用類型或分數進行分層。因此，當我們看到這一點時，我們看到的是，消費者的信貸供應肯定在收緊，對吧？消費者領域的缺陷開始出現，就在我們上方，這與我們在前一時期看到的趨勢相似。但同樣，這持續了幾個月，實際上是 2 或 3 個季度，然後才促成了這項業務。這就是我們正在關注的。有待觀察

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（技術難度）

plays out exactly

準確地發揮作用

(technical difficulty)

（技術難度）

recall the last recession was a liquidity-driven recession. This one -- it's a different dynamic, but we're starting to see it play out in kind of similar macro trends and results in terms of impact on the consumer, tightening liquidity and then what we're believing will play out ultimately into additional needs for payment options.

回想上一次衰退是流動性驅動的衰退。這是一種不同的動態，但我們開始看到它在類似的宏觀趨勢中發揮作用，並在對消費者的影響、流動性收緊以及我們認為最終會在其他方面發揮作用付款方式的需求。

I think that's exactly right. Go ahead.

我認為這是完全正確的。前進。

No, I was going to say that's very helpful. As sidebar, I don't want to cut you off, sorry, Douglas.

不，我想說這很有幫助。作為邊欄，我不想打斷你，對不起，道格拉斯。

Yes. I was just going to say, '08 and '09 was a bank led recession with significant tightening very quickly. Things have changed since that time. And I think the tightening will happen if it does more gradually this time. There was also -- the dynamics are different here. There was a significant pull forward in demand through the pandemic that did not proceed the financial crisis at that time. So there's 2 things going on in the demand side and on the sort of what's going on with the consumer side. I would also note unemployment was a lot higher than and inflation is a lot hotter now. And while it's abated slightly, it hasn't abated that much. So we continue to monitor all those things. There's a lot of macroeconomic variables going on right now.

是的。我只是想說，08 年和 09 年是由銀行主導的衰退，緊縮非常迅速。從那時起，情況發生了變化。而且我認為，如果這次收緊的步伐更加緩慢，就會發生收緊。還有——這裡的動態是不同的。在當時並沒有引發金融危機的大流行中，需求出現了顯著增長。因此，需求方面和消費者方面發生了兩件事。我還要指出，失業率比現在高得多，而且通貨膨脹現在要高得多。雖然它略有減弱，但並沒有減弱那麼多。所以我們繼續監控所有這些事情。現在有很多宏觀經濟變量正在發生。

Yes. Very helpful. And then the last one, you guys have obviously had a pretty big increase sequentially in terms of your write-off provision. Do you think provisions have peaked? Or are we looking at kind of like moving to even higher levels just kind of given the macro environment?

是的。非常有幫助。然後最後一個，你們的核銷準備金顯然有相當大的連續增長。您認為供應是否達到頂峰？或者，考慮到宏觀環境，我們是否正在考慮進入更高的水平？

Yes. Scot, it's Kelly. So our view on write-offs for this year are unchanged from the last update that we had. At that time, we were anticipating that within the the year somewhere between 6% and 7% of lease revenues on write-offs (inaudible). And that continues to be what we're seeing right now. I think what I'd point out is, one, write-offs for the third quarter were right in line with what we were expecting. So proud of the team to deliver on that, right, and what's been a very, very challenging payment environment, right? But the second thing I want to point out is that in a typical year, the third quarter is our highest quarter for write-offs. And then you tend to see about a 25 to 50 basis point improvement as you go from Q3 into Q4. That's looking at kind of pre-pandemic averages.

是的。斯科特，是凱利。因此，我們對今年核銷的看法與我們上次的更新沒有變化。那時，我們預計在一年內將有 6% 到 7% 的租賃收入用於核銷（聽不清）。這仍然是我們現在所看到的。我想我要指出的是，第三季度的核銷符合我們的預期。為團隊能夠實現這一目標而感到自豪，對，什麼是一個非常非常具有挑戰性的支付環境，對吧？但我要指出的第二件事是，在典型的一年中，第三季度是我們核銷最高的季度。然後，從第三季度到第四季度，您往往會看到大約 25 到 50 個基點的改善。那是看大流行前的平均值。

Listen, we're not anticipating things will get materially worse. We're actually expecting that we see performance in Q4 relative to Q3 in line with those pre-pandemic trends. But obviously, we're paying close attention to that as inflation data continues to come out, and we're watching the performance of the customer going into the holiday season. So hopefully, that gives you a little bit more color kind of building upon what we had shared last quarter.

聽著，我們並不認為事情會變得更糟。實際上，我們預計第四季度相對於第三季度的表現與大流行前的趨勢一致。但顯然，隨著通脹數據的不斷出爐，我們正在密切關注這一點，並且我們正在關注客戶進入假日季節的表現。所以希望這能讓你在我們上個季度分享的內容的基礎上多一點色彩。

Our next question comes from Bobby Griffin of Raymond James.

我們的下一個問題來自 Raymond James 的 Bobby Griffin。

Kelly, I guess this is a 2-part question here, but can you maybe expand a little bit on the restructuring program? Is that kind of a multiyear program? And will some of those savings flow into the bottom line? Or is that just really to help offset kind of other inflationary pressures we see basically across retail today? And then kind of the second part of this question is, with the portfolio being smaller, what levers do you have in the business to kind of pull on the cost side as we enter 2023? Because I know a smaller portfolio can drive deleverage in other parts of the business when we think about tuning up our models for 2023.

凱利，我想這是一個由兩部分組成的問題，但你能不能稍微擴展一下重組計劃？這是一個多年計劃嗎？這些節省中的一部分會流入利潤嗎？或者這真的只是為了幫助抵消我們今天基本上在零售業看到的其他通脹壓力？然後這個問題的第二部分是，隨著投資組合的縮小，當我們進入 2023 年時，您在業務中有哪些槓桿可以拉動成本方面？因為我知道，當我們考慮調整 2023 年的模型時，較小的投資組合可以推動業務其他部分的去槓桿化。

Yes, thanks for the question. So in regard to our new program, we're at the early innings of kind of focus on that. So I do expect it's going to kind of last over a few quarters here and into next year, but we're currently kind of sizing the duration of it. What I would point out is the areas that we're going to be focused on is underperforming stores, right, that aren't part of our broader GenNext strategy that we may be consolidating to drive some efficiencies, focusing on our operational model, some potential tweaks we can make there to pull costs out of stores. The continued focus on centralizing as much of the activity that takes place in the stores into our corporate functions as well as just kind of overall cost across the organization. So it's multifaceted, right. We've got teams internally, and we're partnering with folks externally to assist us with it. And I would expect as we head into the next quarter, we'll be in a position, Bobby, to provide more specific guidance around kind of size and duration at that point in time. But to answer your specific question, this is not a 1-quarter exercise. It's something that we anticipate is going to go forward over the next few quarters.

是的，謝謝你的提問。因此，關於我們的新計劃，我們正處於關注這一點的早期階段。所以我確實預計它會持續幾個季度到明年，但我們目前正在調整它的持續時間。我要指出的是，我們將關注的領域是表現不佳的商店，對，這不是我們更廣泛的 GenNext 戰略的一部分，我們可能會整合以提高一些效率，專注於我們的運營模式，一些我們可以在那裡進行潛在的調整，以降低商店的成本。繼續關注將商店中發生的盡可能多的活動集中到我們的公司職能中，以及整個組織的總體成本。所以它是多方面的，對。我們內部有團隊，我們正在與外部人員合作以協助我們。我希望在我們進入下一個季度時，鮑比，我們將能夠在那個時間點就規模和持續時間提供更具體的指導。但要回答您的具體問題，這不是一個季度的練習。我們預計這將在接下來的幾個季度中取得進展。

Yes. Bobby, I'll take the second part of your question. I mean in terms of cost efficiencies, obviously, our margin flow through on the portfolio side and renewal rate is what it is. But we believe as the portfolio size shrinks and even stabilize there's opportunity to take cost out of the business. We've been doing that through store consolidation and through modernization of our platforms. E-comm is a significant differentiator for us. Our e-commerce business grew in sales 24%. We got higher conversion there. We believe a better customer experience, and that creates efficiency and takes labor out of our stores. We're also investing, as you know, continually in decisioning in servicing technology. 80% of our customers are paying us outside of the stores now, and that allows for more efficient store opportunity. They can be more productive and it takes labor out of the stores. And we continue to find ways to be more efficient there through centralization of a lot of activities, including delivery and the whole service process. So we continue to work on that. We have multiple things in test, and we're optimistic about continuing to optimize the cost structure.

是的。 Bobby，我會回答你問題的第二部分。我的意思是就成本效率而言，顯然，我們在投資組合方面的利潤流動和續訂率就是這樣。但我們相信，隨著投資組合規模的縮小甚至穩定，就有機會從業務中降低成本。我們一直在通過商店整合和平台現代化來做到這一點。電子商務對我們來說是一個重要的差異化因素。我們的電子商務業務銷售額增長了 24%。我們在那裡獲得了更高的轉化率。我們相信更好的客戶體驗，這會創造效率並減少我們商店的勞動力。如您所知，我們還在不斷投資於服務技術的決策。現在，我們 80% 的客戶在商店外向我們付款，這為我們提供了更高效的商店機會。他們可以提高生產力，並且可以將勞動力從商店中解放出來。我們繼續通過集中許多活動（包括交付和整個服務流程）來尋找提高效率的方法。所以我們繼續努力。我們有很多東西在測試中，我們對繼續優化成本結構持樂觀態度。

The last thing I'd say is on supply chain. We continue to look at our supply chain. So as our store-based shrinks we look at our fulfillment centers, we look at our trucks on the road, et cetera, and we're continuing to find more ways to take cost out there. And the last thing, our biggest expense is pay, paying our stores and our variable pay structure does flex up and down during these times. And so we've got a great pay structure for all of our team members in our stores, but it does move up and down with the state of the business.

我要說的最後一件事是關於供應鏈。我們繼續關注我們的供應鏈。因此，隨著我們以商店為基礎的規模縮小，我們關注我們的履行中心，我們關注我們在路上的卡車等等，我們正在繼續尋找更多的方式來降低成本。最後一件事，我們最大的支出是工資，支付我們的商店和我們的可變薪酬結構在這些時期確實會上下波動。因此，我們為我們商店的所有團隊成員制定了一個很好的薪酬結構，但它確實會隨著業務狀況而上下波動。

Okay. That's very helpful. I appreciate that. And maybe just a follow-up -- a follow-up on Scot's question before me. When you look at the different tranches that you've been writing like you guys have tightened a few times here this year, when you look at some of the newer tranches of leases that have reflected the updated credit conditions and your updated decisioning, are you starting to see signs that lease merchandise or renewal rates is stabling? And I guess maybe is first payment rates, first missed payment rates coming down? Or just anything inside kind of the newer leases that would give hope that maybe we're at a peak here of the impact on the consumer? Or is it still probably too early to call that corner?

好的。這很有幫助。我很感激。也許只是一個後續行動——對我面前的 Scot 問題的後續行動。當你看到你一直在寫的不同部分時，就像你們今年在這裡收緊了幾次一樣，當你看到一些反映了更新的信用條件和更新的決策的更新的租賃部分時，你是開始看到租賃商品或續訂率穩定的跡象？我想也許是首次付款率，首次錯過付款率下降？或者只是新租約中的任何東西，它們會給我們帶來希望，也許我們正處於對消費者影響的頂峰？或者現在打電話給那個角落可能還為時過早？

Yes. I think it's too early to call that corner, Bobby. We continued to see softening into the third quarter, but it was as expected. Our outlook that we gave on July 25, had weakening in both renewal rates and write-offs, higher write-offs through the course of the year, and those are coming in right in line with our expectation. And our fourth quarter, our guide for the rest of the year implies about the same level as we're seeing now. So we're not making a forecast for 2023. We'll update you on future calls on that. Okay. I appreciate all the details.

是的。我認為現在打電話給那個角落還為時過早，鮑比。我們繼續看到第三季度的疲軟，但正如預期的那樣。我們在 7 月 25 日給出的展望顯示，續訂率和核銷都在減弱，全年核銷增加，這些都符合我們的預期。我們的第四季度，我們對今年剩餘時間的指導意味著與我們現在看到的水平大致相同。因此，我們不會對 2023 年進行預測。我們會在未來的電話會議上向您更新。好的。我很欣賞所有的細節。

I appreciate all the details. Best of luck here.

我很欣賞所有的細節。在這裡祝你好運。

Our next question comes from Jason Haas of Bank of America.

我們的下一個問題來自美國銀行的 Jason Haas。

I'm curious to hear more about what drove the improvement in BrandsMart. I think on the last call, you had said that I believe July was running in line with down 7% that you did in Q2. So I'm curious what drove that improvement in August and September? And what are you seeing now as we go into October here?

我很想知道是什麼推動了 BrandsMart 的進步。我認為在上次電話會議上，您曾說過我相信 7 月份的跌幅與您在第二季度的 7% 一致。所以我很好奇是什麼推動了 8 月和 9 月的改善？當我們進入十月時，您現在看到了什麼？

Jason, this is Steve. Thanks for the question. So as July proceeded, we absolutely started to see some improved results. August went positive as a result of some great work around our promotional events leading up to the holiday in September as well as strong performance in appliances and e-commerce. Those trends continued into September and then saw a little softening in the back half of September, maybe some around the hurricane. And then as we look into October, some of the trends we're seeing, we're definitely seeing a little softening in average transaction value. A lot of that coming through in consumer electronics, the average selling price dipping in TVs and computers and things like that. So we're excited about our holiday season, excited about the marketing plans we have in place, excited about the strong performance of our e-commerce business down at BrandsMart and we'll see how the customer reacts, but we think our plans are right and the team is ready for the customer to shop during the holiday.

傑森，這是史蒂夫。謝謝你的問題。因此，隨著 7 月的進行，我們絕對開始看到一些改進的結果。由於我們在 9 月假期前的促銷活動方面做了一些出色的工作，以及電器和電子商務方面的強勁表現，8 月的表現很樂觀。這些趨勢一直持續到 9 月，然後在 9 月下半月略有減弱，可能是在颶風期間。然後當我們展望 10 月份時，我們看到的一些趨勢，我們肯定會看到平均交易價值略有下降。其中很大一部分來自消費電子產品，電視和電腦的平均售價下降等等。所以我們對我們的假期感到興奮，對我們制定的營銷計劃感到興奮，對我們在 BrandsMart 的電子商務業務的強勁表現感到興奮，我們將看看客戶的反應，但我們認為我們的計劃是是的，團隊已準備好讓客戶在假期購物。

Yes. I think the sign that the average transaction value is down at BrandsMart. That's another indicator. We think the consumer has not yet turned yet. So we continue to see the consumer looking for value, both at Aaron's and at BrandsMart, and they're seeking it out and their price shopping across competitors. And we believe our promotional strategy, our value prop is well aligned with that, particularly on the retail side is the near prime and prime consumer who we don't see at Aaron's is looking or seeking out value in other places. And BrandsMart is a destination, big-box, high-volume destination for value-type appliances, electronics, another home, and we're super excited about that value prop, given this economic environment.

是的。我認為 BrandsMart 的平均交易價值下降的跡象。那是另一個指標。我們認為消費者還沒有轉向。因此，我們繼續看到消費者在尋找價值，無論是在 Aaron's 還是在 BrandsMart，他們都在尋找價值，並在競爭對手中尋找價格。而且我們相信我們的促銷策略，我們的價值支柱與此非常吻合，特別是在零售方面，我們在 Aaron's 沒有看到的近乎主要和主要消費者正在其他地方尋找或尋找價值。 BrandsMart 是價值型電器、電子產品、另一個家的目的地、大盒子、高容量目的地，鑑於這種經濟環境，我們對這種價值支柱感到非常興奮。

Great. And then as a follow-up question maybe for Kelly, on the interest expense for 4Q, I'm getting -- it seems to imply based on the press release, maybe like $6 million or $7 million of interest expense. Is that right for 4Q? And then is that the right -- if I did the math right there, is that the right like quarterly run rate to use as we think into future quarters next year?

偉大的。然後作為凱利的後續問題，關於第四季度的利息支出，我得到了——這似乎暗示著根據新聞稿，可能是 600 萬美元或 700 萬美元的利息支出。適合4Q嗎？然後是正確的 - 如果我在那裡進行了數學計算，那麼像我們認為明年未來幾個季度那樣使用的季度運行率是正確的嗎？

Yes. I'd say that, that looks a bit high to me, Jason, as I think about the fourth quarter, right? I mean, just -- I want to make sure that you're using the right rates, right, that we -- for our debt in Q3, the average rate on our credit facility was just over 4%. It's a variable rate facility (inaudible) are spread. Also I think we're expecting to average between, call it, 5.25% and 6.25% on an annual basis as we end the year here. So if you use those numbers, that should help you kind of tighten up that estimate that you're getting on the interest expense.

是的。我會這麼說，傑森，當我想到第四節時，這對我來說有點高，對吧？我的意思是，只是 - 我想確保您使用正確的利率，對，我們 - 對於我們在第三季度的債務，我們的信貸工具的平均利率剛剛超過 4%。這是一個可變利率設施（聽不清）正在傳播。此外，我認為我們預計在今年結束時每年平均在 5.25% 和 6.25% 之間。因此，如果您使用這些數字，那應該可以幫助您加強對利息支出的估計。

Okay. Got it. I think maybe my numbers are a little off. If I could squeeze one last in. I was just curious about the spread between sales and comps for Aaron's. It looks like for 3Q, the sales growth wasn't as -- wasn't down as much as comps. But then it looks like what's implied for 4Q as we'll see sales growth lower than what's implied for comps. So I'm just curious if you could talk about the dynamic there. I know it can swing around based on when you close stores and transfer over those leases. So any color on how to think about that would be helpful.

好的。知道了。我想也許我的數字有點偏。如果我能擠最後一個。我只是對 Aaron's 的銷售額和補償之間的差額感到好奇。看起來對於第三季度，銷售增長沒有 - 沒有下降那麼多。但隨後它看起來像第 4 季度所暗示的那樣，因為我們將看到銷售增長低於對 comps 所暗示的。所以我很好奇你能不能談談那裡的動態。我知道它可以根據您關閉商店並轉移這些租約的時間來調整。因此，任何關於如何思考的顏色都會有所幫助。

Yes. Jason, I may be misinterpreting what you're saying, but are you asking about sales relative to same-store revenues that comes on? Okay. Yes. So our sales at Aaron's while they were down, but improving sequentially during the quarter are only one contributor to our lease portfolio size. So we sell into our lease portfolio, and we have leases churn out of our lease portfolio. We ended the portfolio down 4.8% at the end of the quarter. And so that's going to -- that's our starting point for revenue. And then we further have to collect on the portfolio, and we were down roughly 350 basis points on collections. So the 4 down, which you have to really average in the quarter down in portfolio size and then the degradation and renewal rate is really what's driving the minus 7.7%. -- and same-store revenues. That is a different concept than when we talk about sales in the Aaron's business, which is how much did we put into the portfolio in the quarter. So that will continue to be a differentiator as we talk about Aaron's same-store revenue, which has achieved revenue in the portfolio year-over-year versus the BrandsMart comps year-over-year in terms of product sales, which is really our retail sales time.

是的。傑森，我可能誤解了你的意思，但你問的是與同店收入相關的銷售額嗎？好的。是的。因此，我們在 Aaron's 的銷售額雖然下降，但在本季度環比增長只是我們租賃組合規模的一個因素。因此，我們出售我們的租賃組合，並且我們的租賃組合中產生了租賃。在本季度末，我們的投資組合下跌了 4.8%。所以這將是我們收入的起點。然後我們必須進一步收集投資組合，我們的收款下降了大約 350 個基點。所以 4 下降，你必須在本季度真正平均投資組合規模下降，然後降級和更新率才是推動負 7.7% 的真正原因。 ——以及同店收入。這與我們談論 Aaron 業務中的銷售額時是一個不同的概念，即我們在本季度投入了多少投資組合。因此，當我們談論 Aaron 的同店收入時，這將繼續成為一個差異化因素，在產品銷售方面，與 BrandsMart 的產品銷售相比，該產品組合的收入與去年同期相比實現了收入，這實際上是我們的零售銷售時間。

Yes. Two other things I would add there, Jason. One, when you're looking at the segment level lease revenue and fees for the Aaron's business, that does include BrandsMart leasing, whereas our same-store sales comp number does not. So I believe that sales lease revenues and fees were down 7.3% in the quarter versus a down 7.5% comp, right? So the addition of the BrandsMart leasing revenues while small, help there. The other thing is our same-store sales comp set does not include all of our stores. And some of these stores that are excluded would include GenNext stores, which are performing materially better than our legacy stores. So that's another thing that is contributing to the difference in the numbers there.

是的。傑森，我還要補充兩件事。第一，當您查看 Aaron 業務的細分級別租賃收入和費用時，其中確實包括 BrandsMart 租賃，而我們的同店銷售收入不包括在內。所以我相信銷售租賃收入和費用在本季度下降了 7.3%，而同期下降了 7.5%，對吧？因此，BrandsMart 的租賃收入雖然很小，但也有所幫助。另一件事是我們的同店銷售組合不包括我們所有的商店。其中一些被排除在外的商店將包括 GenNext 商店，它們的表現明顯優於我們的傳統商店。所以這是導致那里數字差異的另一件事。

Thank you. (Operator Instructions) We have a follow-up from Anthony Chukumba of Loop Capital Markets.

謝謝你。 （操作員說明）我們有來自 Loop Capital Markets 的 Anthony Chukumba 的跟進。

Just wanted an update in terms of how you're thinking about capital allocation. Obviously, you took on some debt to do the BrandsMart deal, but you're going to generate solid free cash flow and obviously, your valuation is just super depressed. So just love an update on that.

只是想了解一下您對資本配置的看法。顯然，你為完成 BrandsMart 的交易而承擔了一些債務，但你將產生穩定的自由現金流，而且很明顯，你的估值非常低迷。所以只是喜歡更新。

Thanks for the question. So our capital allocation priorities are unchanged, right, as we've moved through the year here. You may recall that on kind of the last call and discussions for the quarter, right? What's changed is that we do have debt on the balance sheet. So as we think about our capital allocation priorities, first and foremost, we're going to continue to invest in the business to support our strategic initiatives and drive earnings growth. Second, we're focused on reducing our debt balances, right, and staying in line with our target debt levels there. Third, opportunistic M&A as things come up, which is less of the focus right now, but it's part of our strategy. And then fourth, returning capital to shareholders. So obviously, having returned $3.5 million to shareholders through dividends in the prior quarter that's something that continues to be important to us. I would remind you, I think you know this right, we do have $136 million remaining on the share repurchase authorization that our Board granted to us. That's something that we're looking at each quarter as well as I want to highlight that in the third quarter, we did reduce net debt, $46 million, which is in line with that second point in our capital allocation priorities.

謝謝你的問題。因此，我們的資本分配優先事項沒有改變，對，因為我們已經在這裡度過了這一年。您可能還記得在本季度的最後一次電話會議和討論中，對吧？改變的是我們的資產負債表上確實有債務。因此，當我們考慮我們的資本配置優先事項時，首先，我們將繼續投資於業務，以支持我們的戰略計劃並推動盈利增長。其次，我們專注於減少我們的債務餘額，正確的，並保持與我們在那裡的目標債務水平一致。第三，隨著事情的發展，機會主義的併購，現在不是重點，但它是我們戰略的一部分。第四，向股東返還資本。很明顯，在上一季度通過股息向股東返還了 350 萬美元，這對我們來說仍然很重要。我想提醒你，我想你知道這一點，我們的董事會授予我們的股票回購授權確實有 1.36 億美元。這是我們每個季度都在關注的事情，我想強調的是，在第三季度，我們確實減少了 4600 萬美元的淨債務，這符合我們資本配置優先事項的第二點。

We currently have no further questions. So I'll hand back over to Douglas Lindsay for any closing remarks.

我們目前沒有其他問題。因此，我將交回 Douglas Lindsay 的任何結束語。

Thank you, operator. We appreciate everyone who's joined us today. Although we continue navigating a challenging economic environment, our team members remain focused on delivering exceptional value and service to our customers and innovating our business every day. We're continuing to benefit from investments we've made in lease decisioning and digital payment and servicing platforms, and we continue to invest in growth at both Aaron's and BrandsMart through our e-commerce and new store programs, and we're very excited about that. Thank you again for being with us today, and we'll talk to you soon.

謝謝你，接線員。我們感謝今天加入我們的每一個人。儘管我們繼續在充滿挑戰的經濟環境中航行，但我們的團隊成員仍然專注於為我們的客戶提供卓越的價值和服務，並每天都在創新我們的業務。我們繼續從我們在租賃決策和數字支付和服務平台方面的投資中受益，我們繼續通過我們的電子商務和新商店計劃投資於 Aaron's 和 BrandsMart 的增長，我們非常興奮關於那個。再次感謝您今天與我們在一起，我們會盡快與您聯繫。

Ladies and gentlemen, this concludes today's call. You may now disconnect your lines.

女士們，先生們，今天的電話會議到此結束。您現在可以斷開線路。