Rent-A-Center, Inc. Mails Definitive Proxy Materials in Connection with 2017 Annual Meeting of Stockholders
Letter to Stockholders Urges Re-Election of Board Nominees
In conjunction with the definitive proxy filing,
The following letter to stockholders highlights the
The full text of the letter is below:
PROTECT THE VALUE OF YOUR INVESTMENT
Dear Rent-A-Center Stockholder,
At Rent-A-Center’s upcoming Annual Meeting of Stockholders on
This year, your vote is especially important given that
You may receive proxy materials from
EXECUTING NEW PLAN TO IMPROVE OPERATIONS AND DRIVE STOCKHOLDER VALUE
On
Strengthening the Core U.S. Business:
- Enhancing the customer value proposition to create a clear path to ownership;
- Optimizing the product mix to better meet customer demand by shifting the concentration of higher-end, aspirational products across categories from 45% to 65%;
- Stabilizing and upgrading the workforce to improve customer relationships by increasing the mix of full-time labor and intensifying focus on co-worker development;
- Improving account management practices to lower delinquency rates by focusing on training, tools and incentives to resolve store-level execution issues; and
- Optimizing the existing physical footprint to improve underperforming stores by rightsizing the number of employees across locations, enhancing inventory visibility, moving idle inventory more quickly and testing alternative opening schedules.
Optimizing and Growing ANow:
- Enhancing the customer value proposition through shorter agreement terms, menu-based pricing and early purchase option offers to support retention;
- Optimizing key retail partnerships to deliver improved service and profitability;
- Focusing and executing on growth-enabling capabilities to optimize existing locations; and
- Enhancing decision engine and risk analytics to reduce losses and increase ownership.
Leveraging Technology to Expand into New Channels:
- Rapidly embracing digital channels as additional customer touch-points and expanding the rent-to-own value proposition to a broader group of customers;
- Expanding e-commerce offerings and mobile applications;
- Simplifying transactions and expanding customer choice through self-service kiosks and assisted selling tools; and
- Leveraging the Company’s newly-implemented point-of-sale platform.
- Core U.S. same store sales improved sequentially by 140 bps;
- Acceptance Now same stores sales improved sequentially by 120 bps;
- Core U.S. held for rent inventory declined 9.5 percent sequentially, demonstrating the Company's progress on moving the older, promotional inventory through the system faster and upgrading the inventory assortment to more aspirational product with the majority of inventory replenishment orders being better/best products across multiple product categories;
-
Consolidated adjusted EBITDA increased by
$23.4 million sequentially; -
Diluted earnings per share excluding special items improved by
$0.27 sequentially; and -
Debt was reduced by approximately
$72 million .
The Company also delivered the following improvements as of
- Reduction in sequential month delinquencies of 140 bps, to 6.1%, in the Core U.S. segment;
- Reduction in sequential month delinquencies of 40 bps, to 8.8%, in the ANOW segment; and
- Co-worker turnover of 83.7%, a 10.4 percentage points improvement versus the prior year.
Rent-A-Center’s strategic plan offers a clear path to create value for stockholders, with expectations of achieving:
- Revenue growth in the low-single digits by 2018 and the mid-single digits by 2019;
- EBITDA margin of 7.5% to 8.5% by 2018 and 9.5% to 10.5% by 2019;
-
Free cash flow between
$70 million to $90 million by 2018 and$110 million to $130 million by 2019; and -
EPS of
$1.20 to $1.40 by 2018 and$2.00 to $2.25 by 2019.
The Rent-A-Center Board is committed to holding management accountable
for successful execution of the strategic plan. Importantly, these
initiatives are rooted in a proven strategy: we are focused on improving
operations and returning to what made
YOUR VOTE IS VERY IMPORTANT |
To elect the Rent-A-Center Board of Directors’ nominees, we encourage you to vote TODAY by telephone, Internet, or by signing and dating the enclosed WHITE proxy card and returning it in the postage-paid envelope provided. |
THE BOARD UNANIMOUSLY RECOMMENDS STOCKHOLDERS SUPPORT RENT-A-CENTER ON ITS PATH TO GROWTH AND PROFITABILITY AND VOTE “FOR” ITS THREE HIGHLY-QUALIFIED NOMINEES
Your Board unanimously recommends that stockholders vote FOR
Rent-A-Center’s three highly-qualified candidates –
Mark E. Speese Chairman and CEO
|
As a founder of the Company, Mr. Speese brings leadership, unparalleled knowledge of our business and the rent-to-own industry, extensive operations experience, and a strong strategic vision for Rent-A-Center to the Board. We believe Mr. Speese’s service as our Chairman and his previous tenure as our Chief Executive Officer create a critical link between management and our Board, enabling our Board to perform its oversight function with the benefit of management’s perspectives on our business. | ||
Jeffery M. Jackson
Independent Director Audit and Risk Committee Chair
|
Mr. Jackson brings financial expertise to the Rent-A-Center Board, including through his prior experience as Chief Financial Officer of Sabre as well as his service as chairman of our Audit & Risk Committee. Mr. Jackson’s established reputation for leading teams, developing and sustaining business partnerships and identifying strategic growth opportunities provides our Board with the skills necessary to evaluate, assess and transform our business. In addition, Mr. Jackson has multiple public and private board experiences in a variety of industries that provides our Board with new perspectives. | ||
Leonard H. Roberts
Independent Director and Compensation Committee Chair
|
Mr. Roberts’ experience as a Chief Executive Officer of several multi-unit retail companies brings directly relatable experience and a unique perspective in retail marketing to our Board, as well as significant financial expertise. Mr. Roberts’ background as a board chairman brings significant corporate governance knowledge, and his experience on the compensation committee of another publicly traded company brings an understanding of compensation issues to our Compensation Committee. |
With knowledge of the business and retail industry, extensive operational and strategically oriented experience, and extensive CEO and governance experience, we believe Rent-A-Center’s nominees are well positioned and qualified to drive a turnaround of the business and achieve long-term value for our stockholders. Therefore, a vote for these nominees is a vote in the best interests of the Company and all stockholders.
1 Represents the total stockholder return from
Rent-A-Center’s (RCII) IPO on
ENGAGED CAPITAL IS SEEKING A SALE OF THE COMPANY AT THE EXPENSE OF OTHER RENT-A-CENTER STOCKHOLDERS - DO NOT VOTE USING THE BLUE PROXY CARD
We believe the election of Engaged Capital’s nominees would limit the
value creation opportunity for all
The Board regularly evaluates opportunities to drive enhanced
stockholder value and assesses them against a range of strategic
options. Our Board is well advised and aware of the industry and the
prospects available to us. We believe that now is not the right time for
a process or a potential sale of the Company as we work to execute on
our strategic plan, which we believe will deliver substantially more
value to stockholders than conducting a sale process at this time.
Importantly, while a sale now could create value for
The Board is prepared to execute its strategic plan expeditiously and
with a high degree of confidence, and believes its plan will restore
growth and profitability for the benefit of all
CHOOSE THE RIGHT PATH AND THE RIGHT BOARD FOR RENT-A-CENTER BY VOTING THE WHITE CARD
Thank you for your continued support.
The Rent-A-Center Board of Directors: |
|||||||||||||||
Mark E. Speese |
Michael J. Gade |
Jeffery M. Jackson |
|||||||||||||
J.V. Lentell |
Steven L. Pepper |
Leonard H. Roberts |
Rishi Garg |
If you have any questions, or need assistance voting your WHITE proxy card, please contact: |
Okapi Partners |
1212 Avenue of the Americas, 24th Floor |
New York, New York 10036 |
Telephone: (212) 297-0720 |
Toll-Free: (877) 259-6290 |
Email: Info@okapipartners.com |
About
A rent-to-own industry leader,
Forward-Looking Statements
This press release and the guidance above contain forward-looking
statements that involve risks and uncertainties. Such forward-looking
statements generally can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "intend," "could,"
"estimate," "should," "anticipate," "believe,"
or “confident,” or the negative thereof or variations thereon or similar
terminology. The Company believes that the expectations reflected in
such forward-looking statements are accurate. However, there can be no
assurance that such expectations will occur. The Company's actual future
performance could differ materially from such statements. Factors that
could cause or contribute to such differences include, but are not
limited to: the general strength of the economy and other economic
conditions affecting consumer preferences and spending; factors
affecting the disposable income available to the Company's current and
potential customers; changes in the unemployment rate; difficulties
encountered in improving the financial and operational performance of
the Company's business segments; our chief executive officer and chief
financial officer transitions, including our ability to effectively
operate and execute our strategies during the interim period and
difficulties or delays in identifying and attracting a permanent chief
financial officer with the required level of experience and expertise;
failure to manage the Company's store labor and other store expenses;
the Company’s ability to develop and successfully execute strategic
initiatives; disruptions, including capacity-related outages, caused by
the implementation and operation of the Company's new store information
management system, and its transition to more-readily scalable,
“cloud-based” solutions; the Company’s ability to successfully market
smartphones and related services to its customers; the Company's ability
to develop and successfully implement virtual or E-commerce
capabilities, including mobile applications; disruptions in the
Company's supply chain; limitations of, or disruptions in, the Company's
distribution network; rapid inflation or deflation in the prices of the
Company's products; the Company's ability to execute and the
effectiveness of a store consolidation, including the Company's ability
to retain the revenue from customer accounts merged into another store
location as a result of a store consolidation; the Company's available
cash flow; the Company's ability to identify and successfully market
products and services that appeal to its customer demographic; consumer
preferences and perceptions of the Company's brand; uncertainties
regarding the ability to open new locations; the Company's ability to
acquire additional stores or customer accounts on favorable terms; the
Company's ability to control costs and increase profitability; the
Company's ability to retain the revenue associated with acquired
customer accounts and enhance the performance of acquired stores; the
Company's ability to enter into new and collect on its rental or lease
purchase agreements; the passage of legislation adversely affecting the
Rent-to-Own industry; the Company's compliance with applicable statutes
or regulations governing its transactions; changes in interest rates;
adverse changes in the economic conditions of the industries, countries
or markets that the Company serves; information technology and data
security costs; the impact of any breaches in data security or other
disturbances to the Company's information technology and other networks
and the Company's ability to protect the integrity and security of
individually identifiable data of its customers and employees; changes
in the Company's stock price, the number of shares of common stock that
it may or may not repurchase, and future dividends, if any; changes in
estimates relating to self-insurance liabilities and income tax and
litigation reserves; changes in the Company's effective tax rate;
fluctuations in foreign currency exchange rates; the Company's ability
to maintain an effective system of internal controls; the resolution of
the Company's litigation; and the other risks detailed from time to time
in the Company's
Use of Non-GAAP Financial Measures
This press release refers to EBITDA (earnings before interest, taxes, depreciation and amortization), and free cash flow (EBITDA less cash taxes, interest, capital expenditures, plus stock-based compensation expense and plus (less) the net decrease (increase) in net working capital), which are non-GAAP financial measures as defined in Item 10(e) of Regulation S-K. Management believes that presentation of these non-GAAP financial measures in this press release are useful to investors in their analysis of the Company’s projected performance in future periods. This non-GAAP financial information should be considered as supplemental in nature and not as a substitute for or superior to the historical financial information prepared in accordance with GAAP. Further, these non-GAAP financial measures may differ from similar measures presented by other companies.
Please see the Company’s earnings press releases dated
Additional Information and Where to Find It
The Company, its directors, executive officers and other employees may
be deemed to be participants in the solicitation of proxies from the
Company’s stockholders in connection with the matters to be considered
at Rent-A-Center’s 2017 Annual Meeting. On
View source version on businesswire.com: http://www.businesswire.com/news/home/20170501006439/en/
Source:
Investors:
Maureen Short
Interim Chief Financial Officer
972-801-1899
maureen.short@rentacenter.com
or
Okapi
Partners LLC
Bruce H. Goldfarb / Chuck Garske / Teresa Huang
212-297-0720
or
Media:
Joele
Frank, Wilkinson Brimmer Katcher
Kelly Sullivan / Matt Gross / Aura
Reinhard
212-355-4449