The Aaron's — Aaron's Company — FY2023 Earnings Presentation
32 slides from The Aaron's's earnings presentation, Feb 26, 2024
Slide 1: Q4 and FY 2023 Earnings Results & 2024 Outlook
0 Q4 and FY 2023 Earnings Results & 2024 Outlook February 26, 2024 Exhibit 99.2
Slide 2: Special Note Regarding Forward-Looking Information
Special Note Regarding Forward-Looking Information Statements in this presentation regarding our business that are not historical facts are “forward-looking statements” that involve risks and uncertainties which could cause actual results to differ materially from those contained in the forward-look
Slide 3: CEO Comments
“In response to ongoing pressure in our key product categories at Aaron's and BrandsMart during 2023, we took strong actions to drive demand and reduce costs. In Q4, we launched a new omnichannel lease decisioning and customer acquisition program, which led to robust e-commerce growth that has conti
Slide 4: Key Themes
Key Themes 3 ▪ Delivered FY 2023 consolidated company revenues in line with the revised outlook we provided on October 23, 2023, and consolidated adjusted earnings below our outlook ▪ Aaron’s Business launched a new omnichannel lease decisioning and customer acquisition program in Q4, which led to 6
Slide 5: Q4 Highlights
4 Q4 Highlights
Slide 6: Consolidated Q4 2023 Results of Operations
Consolidated Q4 2023 Results of Operations1 5 Three Months Ended December 31, Variance ($ in Thousands, except per share) 2023 2022 $ % or bps Revenues Consolidated $ 529,479 $ 589,584 $ (60,105) (10.2) % Aaron's Business 369,195 404,262 (35,067) (8.7) % BrandsMart 164,087 187,682 (23,595) (12.6) %
Slide 7: The Aaron's Company – Consolidated Q4 Highlights
The Aaron’s Company – Consolidated Q4 Highlights1 6 Revenues Adjusted EBITDA Non-GAAP Diluted EPS Adjusted Free Cash Flow • Revenues decreased YoY primarily due to lower lease revenues and fees at the Aaron's Business and lower retail sales at BrandsMart • Adjusted EBITDA and adjusted EBITDA margin
Slide 8: Aaron's Business Q4 Highlights
Aaron’s Business Q4 Highlights 7 Revenues Adjusted EBITDA1 Lease Portfolio Size Lease Renewal Rate • Revenues decreased YoY primarily due to a smaller lease portfolio size and lower lease renewal rate; the lower lease renewal rate primarily resulted from an increasing mix of e-commerce agreements wr
Slide 9: Aaron's Business Q4 Highlights – E-commerce & GenNext Store Strategy
Aaron’s Business Q4 Highlights – E-commerce & GenNext Store Strategy 8 % of Lease Revenues 16.7% 20.6% Q4 2022 Q4 2023 +10.4% 25.1% 32.4% Q4 2022 Q4 2023 Q4 2022 Q4 2023 +60.0% 195 245 16 Q4 2022 9 Q4 2023 211 254 Opened in the Quarter Q4’23 Initial Count Q4’22 Initial Count E-commerce Highlights Ge
Slide 10: Aaron's Business Q4 Highlights – Non-Renewal Rates & Write-offs
Aaron’s Business Q4 Highlights – Non-Renewal Rates & Write-offs1 9 32+ Day Non-Renewal Rate2 Lease Merchandise Write-offs3 1. Based on open stores at the end of the respective period 2. Customers 32+ days non-renewed (i.e., customer did not make renewal payment or return product) at the end of the a
Slide 11: BrandsMart Q4 Highlights
BrandsMart Q4 Highlights 10 Revenues Gross Profit Adjusted EBITDA2 Product Mix3 • Revenues decreased YoY driven primarily by ongoing weaker customer traffic and customer trade down to lower priced products across major categories ‒ Average transaction value decreased 6.5% YoY ‒ E-commerce product sa
Slide 12: ights
ights ighl x= ~ N (=) N > if 0
Slide 13: Consolidated FY 2023 Results of Operations
Consolidated FY 2023 Results of Operations1,2 12 Year Ended December 31, Variance ($ in Thousands, except per share) 2023 2022 $ % or bps Revenues Consolidated $ 2,139,890 $ 2,249,434 $ (109,544) (4.9) % Aaron's Business 1,546,473 1,703,503 (157,030) (9.2) % BrandsMart 604,413 552,465 51,948 9.4 % G
Slide 14: The Aaron's Company – Consolidated FY 2023 Highlights
The Aaron’s Company – Consolidated FY 2023 Highlights1,2 13 Revenues Adjusted EBITDA Non-GAAP Diluted EPS Adjusted Free Cash Flow • Revenues decreased YoY primarily due to lower lease revenues and fees and lower retail and non-retail sales at the Aaron's Business, as well as lower retail sales at Br
Slide 15: Aaron's Business FY 2023 Highlights
Aaron’s Business FY 2023 Highlights 14 Revenues Adjusted EBITDA1 Lease Portfolio Size Lease Renewal Rate • Revenues decreased YoY primarily due to a smaller lease portfolio size, lower lease renewal rate, fewer exercises of early purchase options, and lower retail sales ‒ E-commerce revenues increas
Slide 16: Aaron's Business FY 2023 Highlights – E-commerce & GenNext Store Strategy
Aaron’s Business FY 2023 Highlights – E-commerce & GenNext Store Strategy 15 % of Lease Revenues 15.9% 18.7% 2022 2023 +6.6% 19.7% 29.7% 2022 2023 2022 2023 +12.1% 116 211 95 2022 43 2023 211 254 Opened in the Year 2023 Initial Count 2022 Initial Count E-commerce Highlights GenNext Store Highlights
Slide 17: BrandsMart FY 2023 Highlights
BrandsMart FY 2023 Highlights 16 Revenues Gross Profit Adjusted EBITDA2 Product Mix3 • Revenues decreased YoY driven primarily by ongoing weaker customer traffic and customer trade down to lower priced products across major categories ‒ Average transaction value decreased 7.7% YoY ‒ E-commerce produ
Slide 18: Balance Sheet and Outlook
17 Balance Sheet and Outlook
Slide 19: Balance Sheet and Shareholder Returns
$390.0 million $3.8 million (Q4)3 $21.5 million (2023)4 $194.0 million Balance Sheet and Shareholder Returns Debt (As of 12/31/23) Liquidity2 (As of 12/31/23) Shareholder Returns 18 1. Non-GAAP reconciliation of net debt is included in the Appendix 2. As of December 31, 2023, the Company had $59.0 m
Slide 20: 2024 Outlook
2024 Outlook1 19 Low High Revenues $2,055.0 million $2,155.0 million Net (Loss) Earnings $(12.0) million $0.0 million Adjusted EBITDA $105.0 million $125.0 million Diluted EPS $(0.30) $(0.05) Non-GAAP Diluted EPS $(0.10) $0.25 Cash Provided by Operating Activities $100.0 million $115.0 million Capit
Slide 21: 2024 Priorities
2024 Priorities 20 Transform the Aaron’s Business Enhance and Grow BrandsMart Optimize Cost Structure • Grow e-commerce • Expand omnichannel customer acquisition programs • Enhance lease decisioning & digital platforms • Invest in market optimization • Expand to new markets • Grow e-commerce • Inves
Slide 22: Overview of Capital Allocation Strategy
Overview of Capital Allocation Strategy 21 ▪ Invest in Aaron’s and BrandsMart Growth Initiatives ▪ Maintain Conservative Leverage Profile (1.0x – 1.5x Net Debt-to-Adjusted EBITDA) ▪ Return Capital to Shareholders through Dividends and Share Repurchases ▪ Evaluate Acquisitions on an Opportunistic Bas
Slide 23: Key Takeaways
Key Takeaways 22 • 2023 earnings challenged by demand headwinds leading to lower portfolio size to begin 2024 • Innovation through new omnichannel lease decisioning and customer acquisition program delivering strong start to 2024 • Exceeded 2023 cost savings target with additional actions in 2024 •
Slide 24: Appendix
23 Appendix
Slide 25: Company Store Count By Ownership Type
24 Company Store Count By Ownership Type Company-Operated Aaron’s Stores by Type (Unaudited) As of December 31, 2023 2022 Company-operated Aaron’s Stores1 1,019 1,034 GenNext (included in Company-Operated) 254 211 Franchisee-operated Aaron’s Stores 224 232 BrandsMart U.S.A. Stores2 11 10 Systemwide
Slide 26: Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information Non-GAAP net earnings, non-GAAP diluted earnings per share, adjusted free cash flow, net debt, EBITDA and adjusted EBITDA are supplemental measures of our performance that are not calculated in accordance with generally accepted accounting principles in the Unit
Slide 27: Reconciliation to Non-GAAP Net Earnings and Non-GAAP Earnings Per Share
26 Reconciliation to Non-GAAP Net Earnings and Non-GAAP Earnings Per Share1 (Unaudited) (Unaudited) Three Months Ended December 31, Year Ended December 31, (In Thousands, except per share amounts) 2023 2022 2023 2022 Net (Loss) Earnings $ (12,355) $ (5,854) $ 2,823 $ (5,280) Income Taxes 1,660 (3,76
Slide 28: Reconciliation to Quarterly Adjusted EBITDA by Segment
Reconciliation to Quarterly Adjusted EBITDA by Segment 27 (Unaudited) (Unaudited) Three Months Ended December 31, 2023 Three Months Ended December 31, 2022 (In Thousands) Aaron’s Business BrandsMart Unallocated Corporate Elimination1 Total Aaron’s Business BrandsMart Unallocated Corporate Eliminatio
Slide 29: Reconciliation to Twelve Months Adjusted EBITDA by Segment
Reconciliation to Twelve Months Adjusted EBITDA by Segment1 28 (Unaudited) (Unaudited) Year Ended December 31, 2023 Year Ended December 31, 2022 (In Thousands) Aaron’s Business BrandsMart Unallocated Corporate Elimination2 Total Aaron’s Business BrandsMart Unallocated Corporate Elimination2 Total Ne
Slide 30: Reconciliation to Adjusted Free Cash Flow and Net Debt
Reconciliation to Adjusted Free Cash Flow1 29 Reconciliation to Net Debt (Unaudited) (Unaudited) Three Months Ended December 31, Year Ended December 31, (In Thousands) 2023 2022 2023 2022 Cash Provided by Operating Activities $ 31,308 $ 46,561 $ 180,414 $ 170,432 Proceeds from Real Estate Transactio
Slide 31: Fiscal Year 2024 Ranges
Fiscal Year 2024 Ranges (In Thousands) Aaron’s Business BrandsMart Consolidated Total Projected Net (Loss) Earnings $(12,000) - $0 Income Taxes 0 - 4,000 Projected Earnings (Loss) Before Income Taxes 64,500 - 77,500 (9,500) - (5,500) (12,000) - 4,000 Interest Expense — — 15,000 - 16,000 Depreciation
Slide 32: The Aaron's Company, Inc.
The Aaron's Company, Inc. os - BrendsMart es, Aarons BrandsMart!* Leasing’ Woodhaven’ investor.aarons.com