Aaron's Company Inc
NYSE:AAN
Earnings Call Analysis
Summary
Q3-2023
The company surpassed earnings, bucking the trend of consumer demand challenges with a larger-than-expected lease portfolio at $116.4 million and an improved nonrenewal rate. Aaron's business exceeded revenue targets, though deliveries fell by 4.5%. Revenues from aarons.com increased yet witnessed a 6.8% decline in e-commerce recurring revenue. Enhanced lease decisioning models rolled out, promising higher approval rates and customer experience improvements. Third-quarter consolidated revenues were at $525.7 million, a decrease from $593.4 million the previous year, while adjusted EBITDA fell to $25.3 million from $38.2 million. Earnings per share on a non-GAAP basis decreased to $0.01 from $0.31. The company returned capital to shareholders, with $3.9 million in dividends and $5.7 million in stock repurchases, and lowered 2023 revenue outlook to between $2.12 billion - $2.17 billion, EBITDA expectations to $140 million - $150 million, while projecting non-GAAP EPS of $1 to $1.20.
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Good morning, everyone, and thank you for joining us today with The Aaron Company Third Quarter 2023 Earnings Conference Call. We will be getting underway in a moment or two while we allow a few more participants to connect. [Operator Instructions]. Welcome to The Aaron Company Third Quarter 2023 Results Call. Thank you for your patience all your underway. My name is Ellen, and I'll be your moderator for today's call. [Operator Instructions].
I would now like to pass the conference over to our host, Mark Levy, Vice President of Finance and Investor Relations to begin. Mark, please go ahead, whenever you're ready.
Thank you, and good morning, everyone. Welcome to our third quarter 2023 earnings conference call. Joining me today are Aaron's Chief Executive Officer, Douglas Lindsay; President, Steve Olsen, and Chief Financial Officer, Kelly Wall. After our prepared remarks, we will open the call for questions.
Yesterday, after the market closed, we posted our earnings release on the Investor Relations section of our website at investor.aarons.com. We also posted a slide presentation that provides additional information about our third quarter results and full year 2023 outlook. During today's call, certain statements we make may be forward looking including those related to our outlook for this year. For more information, including important cautionary notes about these forward-looking statements, please refer to the safe harbor provision that can be found at the end of the 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, 2022, and other 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, in the earnings release and in the supplemental investor presentation, we will refer to certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, non-GAAP net earnings, non-GAAP EPS, adjusted free cash flow and net debt, 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. With that, I will now turn the call over to our CEO, Douglas Lindsay.
Thanks, Mark, and good morning, everyone. Thank you for joining us today and for your interest in the Aaron's Company. Before we discuss the results of the third quarter, I would like to mention some exciting leadership announcements. On September 13, we announced the appointment of Wali Bacdayan and Kris Malkoski to our Board of Directors, effective October 1st. Wali and Kris have a wealth of knowledge and experience, and I know they will be great additions to our Board. Also on September 13, we announced the appointment of Russ Falkenstein, to Chief Operating Officer of Lease-to-Own. Russ joined the company in 2016 and has served in a number of senior leadership roles. In his new role, he will oversee all Lease-to-Own operations at Aaron's and BrandsMart Leasing.
I'm also very excited to announce that we held a grand opening celebration for our new BrandsMart Store in Augusta, Georgia on October 21st. This is the first new store we've opened since we acquired the company in April of last year. We are delighted to bring the BrandsMart experience to the Augusta community and we look forward to delivering exceptional value and service to our customers in this new market. Now turning to the results of the third quarter. I'm pleased to report that we delivered consolidated earnings that exceeded our internal expectations. We benefited from the lease decisioning enhancements in the Aaron's business and continued progress on our cost optimization initiatives at both Aaron's and BrandsMart. We achieved these results despite ongoing challenges in customer demand for the big ticket and discretionary products we carry. In the Aaron's business, we ended the quarter with revenues and earnings above internal expectations primarily due to a larger-than-expected lease portfolio size, combined with lower write-offs. We also made great progress in our market optimization initiatives including adding more GenNext stores and expanding our hub and showroom program while continuing to grow our e-commerce channel. As we look to the fourth quarter of this year and enter 2024, we expect the challenging demand trends to persist. In this environment, we remain focused on growing our market share through delivering a best-in-class customer experience, including flexible payment options, low prices and a broad product selection. We are also excited about the next evolution of our lease decisioning model, which we believe will enhance the customer experience and lead to higher approval rates. Steve will share more details about this initiative in a minute.
I'm pleased with the progress we're making on our Aaron's multiyear strategic plan, and I remain encouraged about our ongoing transformation and the investments we're making to drive future growth. Now turning to BrandsMart. We remain confident in BrandsMart's compelling value proposition and our long-term strategic growth opportunities including expanding into new markets and growing our e-commerce channel. Although demand is challenging, we remain focused on optimizing profitability through enhanced cost controls and strategic procurement and pricing actions. While doing this, we are also continuing to enhance our capabilities in merchandising, marketing and technology to position the business for long-term growth. Now I'll turn the call over to Steve to provide more details about both Aaron's and BrandsMart.
Thanks, Douglas, and good morning, everyone. The Aaron's business delivered revenues for the third quarter that exceeded our internal expectations despite the ongoing challenges in customer demand. Lease merchandise deliveries were down 4.5% year-over-year. This is an improvement over last quarter of approximately 580 basis points. The year-over-year change was largely due to fewer lease applications in the quarter, actions we took to tighten lease decisioning in prior quarters and approximately 3% fewer company-operated stores as compared to the beginning of the prior year quarter. In addition, we continue to see pressure on our average ticket as customers trade down to lower-priced items across all major categories. Our lease portfolio ended the quarter with a value of $116.4 million. This was 7.5% lower than the prior year quarter, but larger than we expected due to fewer lease agreements turning out of the portfolio. Now moving to our key lease renewal metrics. The lease renewal rate for the quarter was 86.2% for all company-operated Aaron's stores. This rate was down approximately 10 basis points year-over-year. Our 32-plus day nonrenewal rate was 2.6% at the end of the third quarter. This was an improvement of 30 basis points year-over-year. This also reflects a sequential increase of 10 basis points from the prior quarter, primarily due to normal seasonal trends. We are pleased with enhancements to our lease decision model, which we believe continue to contribute to improvements in our write-offs. Write-offs as a percentage of lease revenues was 6.1%, which is an improvement of 140 basis points versus the prior year quarter. Now turning to our important strategic growth initiatives for the Aaron's business. Our GenNext store strategy continues to deliver meaningful financial performance through the transformation of our in-store customer experience and operating model. In the quarter, we opened 15 GenNext stores, bringing the year-to-date total to 34 stores and 245 company-operated GenNext stores since launching the program. At the end of the quarter, these stores accounted for over 30% of our lease revenues in retail sales. That compares to just over 22% in the prior year quarter. In addition, we are pleased with our progress in executing the new hub and showroom program. We now have 111 showrooms in the chain and are achieving the expected cost savings. As we continue to evolve our GenNext strategy, I'm excited to report that we are now opening Aaron's stores in new markets. This includes 3 GenNext stores and 1 showroom opened in new markets so far this year. Now turning to the Aaron's e-commerce channel. We continue to focus on improving our digital marketing strategies, enhancing the online shopping experience and expanding the assortment with over 10,400 products on aarons.com. In the third quarter, revenues generated from leases initiated on aarons.com increased 1.3% year-over-year and now represents 18.5% of total lease revenues as compared to 16.2% in the prior year quarter. Recurring revenue written into the portfolio from e-commerce decreased 6.8% compared to the prior year quarter. We believe the decrease resulted from tighter lease decisioning in prior quarters and lower average ticket. We continue to see growth in our new weekly payment option, both in stores and on aarons.com. As a reminder, we rolled out this option in stores in Q3 of last year and on aarons.com last quarter. We are excited to provide enhanced flexibility to our customers through our new weekly payment options, and we believe our compelling lease rates will help us gain market share over time. In addition, we are excited about enhancements to our lease decisioning model rolled out earlier this month. Customers are now able to shop across all of our channels by submitting just one lease application, and we now approve all customers through a consistent lease decision model. We believe these enhancements will streamline the customer experience, lead to higher approval rates and improved conversion of lease applications. Now turning to BrandsMart. We are very excited about the recent opening of our first new store in Augusta, Georgia. This store showcases our new brand image in a more modern store layout. I want to extend my thanks to all of our team members who worked tirelessly to launch this new store. I am proud of what we achieved, and I look forward to serving customers in this new market. Turning to our third quarter performance. As Douglas mentioned, we continue to operate in a challenging customer demand environment. As a result, BrandsMart's comparable sales were down 17% year-over-year. This was a result of ongoing weaker customer traffic and customer trade down to lower-priced products, primarily in major appliances, TVs and computers. As we work to attract new BrandsMart customers, we continue to invest in our e-commerce channel and digital marketing strategies. Consistent with overall sales performance, we experienced pressure in our e-commerce channel. E-commerce product sales represented 8.9% of total product sales, down from 9.3% in the prior year quarter. We continue to focus on optimizing profitability of the business. For the third quarter, our product gross margin improved by approximately 80 basis points as compared to the prior year quarter. This was a result of direct procurement savings and strategic pricing actions. As we move into the holiday season and look ahead into 2024, we remain focused on achieving transaction synergies and positioning the business for future growth. Now I'll turn the call over to Kelly to provide further details on our financial performance.
Thanks, Steve. We filed our Form 10-Q earnings release and investor presentation yesterday after the market closed, and these documents can be found on our Investor Relations website. Please refer to these documents for additional detail regarding our financial performance and outlook for the consolidated company and the 2 business segments. Also, unless stated otherwise, any comparisons I make to prior periods will be on a year-over-year basis. Consolidated revenues for the third quarter of 2023 were $525.7 million, compared with $593.4 million. This year-over-year decrease is primarily due to the expected lower lease revenue and fees and retail sales at The Aaron's business and lower retail sales at BrandsMart. Consolidated adjusted EBITDA was $25.3 million compared with $38.2 million. This year-over-year decrease is primarily due to the lower revenues at both business segments, partially offset by lower personnel costs at both business segments and lower write-offs at The Aaron's business. As a percentage of total revenues, adjusted EBITDA was 4.8% compared to 6.4%. On a non-GAAP basis, earnings per share were $0.01 compared to earnings of $0.31. Adjusted free cash flow was $7.8 million, a decrease of $42.3 million. This decrease was driven by lower cash provided by operations and having generated $7.5 million of proceeds from real estate transactions in the prior year quarter. On a year-to-date basis, adjusted free cash flow was $86.4 million, an increase of $18.5 million. This increase is largely driven by higher cash provided by operations as we have executed on our cost optimization initiatives and managed merchandise inventory levels at both businesses to reflect the soft demand environment. During the quarter, we continued to return capital to shareholders, paying $3.9 million in dividends and repurchasing about $5.7 million of the company's common stock. In addition, we ended the third quarter with $39.3 million of cash and $187.5 million of debt. Our net debt balance at the end of the quarter was $148.1 million, and our net debt to adjusted EBITDA leverage ratio ended the quarter at 1x. Turning to our updated outlook. In the third quarter earnings release, we provided an update to our full year 2023 outlook. This updated outlook reflects our expectation that total revenues for the consolidated company will be between $2.12 billion and $2.17 billion. We have updated revenues to incorporate our consolidated results in the first 3 quarters of 2023 and to also reflect expected lower product sales at BrandsMart for the year as compared to our prior outlook. We have narrowed the range of our outlook for adjusted EBITDA and non-GAAP EPS for the consolidated company. We expect adjusted EBITDA to be between $140 million and $150 million. We expect non-GAAP EPS to be between $1 and $1.20. The lower midpoint for both reflects that we no longer expect to close a planned sale leaseback transaction for a group of Aaron's stores by the end of the year. The revised outlook also includes the continued lower demand we are experiencing at BrandsMart. And finally, we have lowered our adjusted free cash flow outlook, which is also impacted by the timing of the sale leaseback. And with that, I will now turn the call over to the operator for Q&A.
Thank you. [Operator Instructions] Our first question today comes from the Kyle Joseph from Jefferies. Kyle, your line is now open, please go ahead whenever you're ready.
Just starting on the Rev headwinds at, call it, either business. I just want to see if you're seeing any sort of strength in certain verticals, ongoing weakness in others? Trying to get a sense if consumer electronics are showing any signs of life, given that they probably have the shortest product cycle?
Kyle, it's Douglas. I think we said at The Aaron's business, our deliveries were down about 4.5%. Of that, 4.5%, about half was really decisioning related and lower store count and the other half was demand. So in The Aaron's business, while we're seeing fewer applicants, we're also seeing a higher conversion rate. I'm really proud of what the team has done there to convert customers, and we're seeing a bit more strength in the customer there, albeit a down cycle. We're also seeing customers choosing lower price points across most major categories, especially in television and that's consistent with BrandsMart as well. We're really seeing our customers generally looking for deals in both businesses, and you'll see us be promotional during the holiday periods, which we have been, but we're seeing that driving more of our demand and this demand cycle. I'll let Steve talk specifically about categories to your second part of your question.
I'll talk first about the Aaron's business. So they definitely saw some growth in some categories. So on the appliance side, growth in laundry and ranges and on the furniture side, upholstery and have a flat business in mattresses. So definitely some growth areas. On the declining side, up against some pretty surging demand last year in gaming and then continued pressure in TV, computers and bedroom. So on the BrandsMart side, the best-performing category, which is still a slight negative is small appliances and HomeGoods, followed by audio and video and security and the categories that are most under pressure being appliances, TVs and computers. So to answer your question on consumer electronics, seen some improvement that being slight mid-single-digit negatives in audio, in video and security, but TVs continue to be under pressure. And the only really growth area we've seen in TVs, as Douglas referenced, is really in that opening price point. So seeing some improvement in the opening price points in CE, but just not enough to offset the overall demand.
Got you. And then tied to that, shifting over to credit. Obviously, you saw a good decline year-over-year in write-offs, but just give us an update on the kind of the health of the underlying consumer. I mean, obviously, light demand and there's a number of factors driving that. But in terms of credit, it seems like they're relatively sound, but just kind of an update on the health of your underlying consumer.
Yes. I mean we're -- I think the consumer has been pretty resilient. I mean we noted that despite having fewer applicants and the fact that we're approving less by several hundred basis points year-over-year, we're really controlling our renewals process. So 30-day nonrenewed was down 30 basis points year-over-year. Write-offs were down 140 basis points. And so we're really encouraged by that. In terms of what we're seeing with the actual consumer, while we are seeing fewer lease applications, we're starting to see signs of a slightly higher income and better credit quality customer coming into both Aaron's and BrandsMart leasing. And so that's encouraging. As we said before, we have the benefit of owning BrandsMart and seeing what is coming in through the full credit order fall. As I think we've mentioned, 30% of our BrandsMart sales are financed through our private label credit card. And this quarter, we're beginning to see lower approval rates from the higher tier lenders above us, which should benefit BrandsMart Leasing over time. Now on the Aaron's business, we're not necessarily seeing a pickup in application volume, but we are seeing a slight mix shift to higher income, higher credit consumers. And again, we continue to believe if there is a trade down that's coupled with an increase in general demand, whether that be through a replacement cycle or otherwise, that will be a tailwind for the business and the cost transformation initiatives and the modernization of our competitive positioning will benefit us.
Our next question comes from Bobby Griffin from Raymond James.
I guess, first for me, I guess, on The Aaron's side of the business, just curious kind of what you kind of think for 4Q and what's implied in the lease portfolio? It looks like we are making progress on it. It's declining, but declining a little bit less. Do you think we've kind of hit the bottom now in the lease portfolio size where 4Q, we're used to kind of think in 4Q, how they usually see sequential expansion here in the portfolio? Do you think that's still a possibility this year given some of the demand pressures?
Yes, Bobby, it's Kelly. Thanks for the question. So I think what we've said on prior calls is that with the kind of continued pressure on demand and the corresponding revenue written into the portfolio through the course of this year, we are expecting that year-over-year. We're going to end 2023 with a lower lease portfolio size. As we think about Q4 specifically, which you asked about, you're right. Normally, we would see an increase going from Q3 to Q4. And we do expect that again this year. Again, it's to be seen as we go through November and December, just how much of a bounce back we get. But based upon the comps that we saw last year and then what we're seeing year-to-date, we would expect an increase sequentially. One thing I do want to remind you, though, as we go into 2024, and Steve and Douglas both talked about this, and we've talked about this the last few quarters, is that kind of the overall, in the lease portfolio, what we've seen quarter-to-quarter is lower demand than what we had been anticipating, and that trend has continued. And we've been able to offset that though with less churn out of the portfolio. So again, we've talked about improvement in the write-offs. That's helped with the portfolio. We've also seen customers paying out their leases earlier or less often, right, than the early payouts are less frequent than what they've been in the past. And so as a result, again, churn is lower while demand written in is also lower. And then that benefit has been slightly better performance in lease portfolio size than what we'd expected quarter-to-quarter. As we move into next year, right, the impact that has is as we do start to see demand normalize, which we'd expect at some point where we start to see the benefit of the trade down that Douglas talked about. The benefiting revenue and earnings from that will lag. So as demand has continued to be soft -- is pushing out kind of that growth in the top line and bottom line that we would have been expecting earlier in the year as we go into next year. So hopefully that gives you some color on both Q4 and some insight as to how we're starting to think about next year, which, again, will provide you a lot more detail on 2024 on our next earnings call.
Okay. Yes. And that's helpful. And just to take that maybe one step further to make sure I'm capturing it. It probably sets up for the first half of next year from an EVA perspective, see some type of year-over-year pressure. Is that the correct read through from your comments?
That's correct.
Okay. Yes, that's helpful, yes. Because I don't -- I don't know if the [ Street ] models necessarily have that captured, I guess are captured correctly. I guess the next question I had is just on BrandsMart. And is this more on the implied 4Q revenue performance versus the year-to-date trends? It does imply from a year-over-year decline. The decline lessens a lot. I know we got one new store. So is that just the difference? Or is there some view on the promotional side of things? Or just maybe walk me through kind of the assumptions in the 4Q implied revenue guidance for BrandsMart.
So Bobby, you're right. We did open the Augusta store. The grand opening was this past weekend. And so there will be contribution in Q4 relative to last year. Also, we are -- we're kind of comping over a weak Q4 last year as well. And so while our view on the quarter does incorporate kind of the demand trends we've seen year-to-date, I think the 2 positives are comping over a weaker comp and then the addition of Augusta. Yes.
Bobby, this is Steve. In addition, we've invested more in the holiday season from a marketing perspective, both on the direct response side and digital marketing side with a real focus of really driving that value proposition, that low-price position down at BrandsMart. We're excited about our promotional offers that we have coming into the holiday season. And as Kelly mentioned, we think we have the right plans to move this business forward.
Okay. I appreciate that. And I guess lastly for me, you guys now, I think, have owned the business for 6 full quarters or at least reported 6 full quarters. Just -- any new learnings on how you think about the long-term margin potential as I think the last time we talked a little bit about it was on the 4Q call. But just now going through the cycle, what do you think about the long-term margin potential of the BrandsMart business?
Yes. Bobby, first, I'd say the macroeconomic environment is really challenging right now for retailers who sell appliances, furniture and electronics. So I'm really proud of Steve and team's performance. We strongly believe in the brand's most compelling value proposition and our right to win over the long term. We feel like the synergies are compelling. We've got a great customer base with great core markets and significant growth potential in terms of units. Our 4-wall economics are very compelling over our fixed cost structure. And so that's really exciting for us. As you know, we grand open in Augusta. And while we're going through a downturn right now, we believe over long term in the BrandsMart profitability, we are not putting out any kind of revised EBITDA or profitability forecast. We should do that as we give outlook for 2024 and beyond.
Okay. I appreciate the details, best of luck here in the holiday quarter.
Our next question comes from Scot Ciccarelli from Truist Securities.
This is Joe on for Scot. I just had a quick question on the sale leaseback timing you mentioned. Is that due to any changes in the interest or cap rate environment? Or is that something you're pushing off longer term for strategic reasons?
Yes, Joe, it's Kelly. I mean as I think you're probably aware, right, we've, over the last several years, completed sales leaseback transactions as well as the sale of real estate with stores we have closed. We think that as we think about our overall kind of capital allocation strategy, our view is that we're not in the business on real estate and that it's -- we want to monetize those assets and then put that capital to work within the business or return it to shareholders. As we are ending this year, you're correct. I think the environment is not as positive, right, as we end the year as it has been in prior quarters where we've completed the transaction. So as we think about ending the year, the thought was to just be more prudent in terms of our expectations on timing as it relates to completing that transaction and thought it best not to include it in this year's earnings.
Got it. That makes sense. And then just shifting gears a little bit. Just wanted to ask about the seasonal dynamics at play as we think about the write-offs from 3Q to 4Q. If you could just give any color on those?
Yes, absolutely. So typically, right, what you'd see is Q3 would be the kind of our weakest quarter from a write-off perspective. We did end Q3 of this year at 6.1%. We've mentioned a pretty nice improvement in the same quarter over last year. I think as we move into the fourth quarter of this year, we might not see the same seasonal improvement that we have in prior periods. We might -- it will be kind of close, whether it's kind of just above or just below. But one of the dynamics that's impacting that is we talked -- Douglas talked and Steve talked about enhancements that we're making to our lease decisioning. And with that, we are expecting an increase in applications through our e-com channel. And so with the growth in e-comm as a percentage of the total portfolio, we've talked in the past about how those customers that come through that channel tend to have a higher kind of write-off profile. And so we would expect to see that kind of materialize, right, as we move through the quarter and into kind of the first quarter of next year.
Got it. And then just one last question. Just talking about the trade downs sort of trade in dynamics. Can you guys talk about the higher credit quality customers coming in, where you think they're coming from? And if it's from above your funnel or customers coming in from other peer LTOs?
Yes. I think we've said before, we've sort of have expected with credit tightening that there's been this trade across going on from peers as everybody in the space has been tightening. We are seeing, as I said, slightly higher income and slightly higher credit scores. The only data we have on that, we don't know where they were before us, but we do have data at BrandsMart, and we are seeing tightening within the waterfall at BrandsMart. So that would indicate to me a BrandsMart as a proxy for other retail tightening that may be occurring.
[Operator Instructions] Our next question comes from Jason Haas from Bank of America.
So you mentioned that you've seen stronger demand for the weekly payment options. Is that a function of the macro environment? Does that signal that the consumer is under pressure and they're looking more for that weekly payment option? And if things were to improve in the macro environment, do you think you would see that reverse and consumers go back to looking for that monthly payment?
Jason, it's Steve. Great question. I'll start off by saying we're definitely pleased with: one, the progress we're making with it and how customers are responding to our new weekly payment options, which now give them weekly, biweekly and monthly payment frequencies depending on their needs. We're seeing obviously more weekly customers -- more customers taking our weekly payment option, both in store and our e-commerce channel. But still, it's a small portion of our overall mix of deliveries. We think weekly really gives us the chance to demonstrate our competitive lease rates on a weekly basis across all of our major categories. So while we're pleased with it, we're getting good feedback from our customers, tough to really say what happens in the future. We just see it as another way to give our customers more flexibility to really set up a payment that meets their needs.
Yes, Jason. Our goal is to offer payments and whatever frequency the customer wants to pay, whether it be weekly, biweekly, assuming monthly or monthly. And we do believe that our weekly price points are very compelling relative to what our consumer may get in other places. And so we're leaning in on our opening price points. We think our weekly opening price points are super compelling. So we're excited about it, and we're excited about growing that part of the business.
Great. And then switching over to BrandsMart. Can you just talk about how you're thinking about store openings going forward? Is the plan about one store per year? Or is it high? Can you just remind me what the expectations were and when the next one will open?
Jason, it's Kelly. So we've stated consistently over the last several quarters that we'd expect to open 1 to 2 stores a year. Obviously, we opened the 1 in Augusta this year, and we'd expect to open 1 to 2 next year. We've not provided an update on kind of the exact timing of that next store. So I think it's safe to assume at this point that it's not going to be in Q1. So that first store earlier -- for next year earlier, so it would come -- would be kind of Q2, late in Q2, potentially into Q3.
Thank you, Jason. We currently have no further questions registered. So I would like to hand back to Douglas Lindsay for any closing remarks.
Thank you, operator. We appreciate everyone who's joined us today. I want to thank our team members and franchisees for their relentless focus on delivering exceptional value and service to our customers each day. We believe that our continued focus on innovation and our ongoing strategic investments will enhance our distinct competitive advantages and grow our market share, both Aaron's and BrandsMart. Thank you again for joining us today, and we'll talk to you soon.
That concludes The Aaron's company conference call. Thank you very much for your participation.