| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
| (State or other jurisdiction of incorporation or organization) | (I. R. S. Employer Identification No.) | ||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
| ☒ | Accelerated Filer | ☐ | |||||||||||||||||||||
| Non-Accelerated Filer | ☐ | Smaller Reporting Company | |||||||||||||||||||||
| Emerging Growth Company | |||||||||||||||||||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | |||||||||||||||||||||||
| Title of Each Class | Shares Outstanding as of April 22, 2022 | |||||||
| Common Stock, $0.50 Par Value | ||||||||
| Item 3. Defaults Upon Senior Securities | |||||
| Item 4. Mine Safety Disclosures | |||||
| Item 5. Other Information | |||||
| (Unaudited) | |||||||||||
| March 31, 2022 | December 31, 2021 | ||||||||||
| (In Thousands, Except Share Data) | |||||||||||
| ASSETS: | |||||||||||
| Cash and Cash Equivalents | $ | $ | |||||||||
Accounts Receivable (net of allowances of $ | |||||||||||
Lease Merchandise (net of accumulated depreciation and allowances of $ | |||||||||||
| Property, Plant and Equipment, Net | |||||||||||
| Operating Lease Right-of-Use Assets | |||||||||||
| Goodwill | |||||||||||
| Other Intangibles, Net | |||||||||||
| Income Tax Receivable | |||||||||||
| Prepaid Expenses and Other Assets | |||||||||||
| Total Assets | $ | $ | |||||||||
| LIABILITIES & SHAREHOLDERS’ EQUITY: | |||||||||||
| Accounts Payable and Accrued Expenses | $ | $ | |||||||||
| Deferred Income Taxes Payable | |||||||||||
| Customer Deposits and Advance Payments | |||||||||||
| Operating Lease Liabilities | |||||||||||
| Debt | |||||||||||
| Total Liabilities | |||||||||||
| Commitments and Contingencies (Note 4) | |||||||||||
| SHAREHOLDERS' EQUITY: | |||||||||||
Common Stock, Par Value $ | |||||||||||
| Additional Paid-in Capital | |||||||||||
| Retained Earnings | |||||||||||
| Accumulated Other Comprehensive Loss | ( | ( | |||||||||
| Less: Treasury Shares at Cost | |||||||||||
| ( | ( | ||||||||||
| Total Shareholders’ Equity | |||||||||||
| Total Liabilities & Shareholders’ Equity | $ | $ | |||||||||
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| (In Thousands, Except Per Share Data) | |||||||||||
| REVENUES: | |||||||||||
| Lease and Retail Revenues | $ | $ | |||||||||
| Non-Retail Sales | |||||||||||
| Franchise Royalties and Other Revenues | |||||||||||
| COSTS OF REVENUES: | |||||||||||
| Cost of Lease and Retail Revenues | |||||||||||
| Non-Retail Cost of Sales | |||||||||||
| GROSS PROFIT | |||||||||||
| OPERATING EXPENSES | |||||||||||
| Personnel Costs | |||||||||||
| Other Operating Expenses, Net | |||||||||||
| Provision for Lease Merchandise Write-Offs | |||||||||||
| Restructuring Expenses, Net | |||||||||||
| Separation Costs | |||||||||||
| Acquisition-Related Costs | |||||||||||
| OPERATING PROFIT | |||||||||||
| Interest Expense | ( | ( | |||||||||
| Other Non-Operating (Expense) Income, Net | ( | ||||||||||
| EARNINGS BEFORE INCOME TAXES | |||||||||||
| INCOME TAX EXPENSE | |||||||||||
| NET EARNINGS | $ | $ | |||||||||
| EARNINGS PER SHARE | $ | $ | |||||||||
| EARNINGS PER SHARE ASSUMING DILUTION | $ | $ | |||||||||
| Three Months Ended March 31, | |||||||||||
| (In Thousands) | 2022 | 2021 | |||||||||
| Net Earnings | $ | $ | |||||||||
| Other Comprehensive Income: | |||||||||||
| Unrealized Gain on Fuel Hedge Derivative Instrument | |||||||||||
| Foreign Currency Translation Adjustment | |||||||||||
| Total Other Comprehensive Income | |||||||||||
| Comprehensive Income | $ | $ | |||||||||
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| (In Thousands) | |||||||||||
| OPERATING ACTIVITIES: | |||||||||||
| Net Earnings | $ | $ | |||||||||
| Adjustments to Reconcile Net Earnings to Cash Provided by Operating Activities: | |||||||||||
| Depreciation of Lease Merchandise | |||||||||||
| Other Depreciation and Amortization | |||||||||||
| Provision for Lease Merchandise Write-Offs | |||||||||||
| Accounts Receivable Provision | |||||||||||
| Stock-Based Compensation | |||||||||||
| Deferred Income Taxes | |||||||||||
| Impairment of Assets | |||||||||||
| Non-Cash Lease Expense | |||||||||||
| Other Changes, Net | ( | ( | |||||||||
| Changes in Operating Assets and Liabilities: | |||||||||||
| Lease Merchandise | ( | ( | |||||||||
| Accounts Receivable | ( | ||||||||||
| Prepaid Expenses and Other Assets | ( | ||||||||||
| Income Tax Receivable | |||||||||||
| Operating Lease Right-of-Use Assets and Liabilities | ( | ( | |||||||||
| Accounts Payable and Accrued Expenses | ( | ||||||||||
| Customer Deposits and Advance Payments | ( | ( | |||||||||
| Cash Provided by Operating Activities | |||||||||||
| INVESTING ACTIVITIES: | |||||||||||
| Purchases of Property, Plant, and Equipment | ( | ( | |||||||||
| Proceeds from Dispositions of Property, Plant, and Equipment | |||||||||||
| Acquisition of Businesses and Customer Agreements, Net of Cash Acquired | ( | ( | |||||||||
| Proceeds from Other Investing-Related Activities | |||||||||||
| Cash Used in Investing Activities | ( | ( | |||||||||
| FINANCING ACTIVITIES: | |||||||||||
| Repayments on Revolving Facility, Net | ( | ||||||||||
| Repayments on Debt | ( | ||||||||||
| Dividends Paid | ( | ( | |||||||||
| Acquisition of Treasury Stock | ( | ( | |||||||||
| Issuance of Stock Under Stock Option Plans | |||||||||||
| Shares Withheld for Tax Payments | ( | ( | |||||||||
| Cash Used in Financing Activities | ( | ( | |||||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | |||||||||||
| Decrease in Cash and Cash Equivalents | ( | ( | |||||||||
| Cash and Cash Equivalents at Beginning of Period | |||||||||||
| Cash and Cash Equivalents at End of Period | $ | $ | |||||||||
| Stores as of March 31 (Unaudited) | 2022 | 2021 | |||||||||
| Company-operated Stores | |||||||||||
| Franchised Stores | |||||||||||
| Systemwide Stores | |||||||||||
| Three Months Ended March 31, | |||||||||||
| (Shares In Thousands) | 2022 | 2021 | |||||||||
| Weighted Average Shares Outstanding | |||||||||||
| Dilutive Effect of Share-Based Awards | |||||||||||
| Weighted Average Shares Outstanding Assuming Dilution | |||||||||||
| (In Thousands) | March 31, 2022 | December 31, 2021 | |||||||||
| Customers | $ | $ | |||||||||
| Corporate | |||||||||||
| Franchisee | |||||||||||
| $ | $ | ||||||||||
| Three Months Ended March 31, | |||||||||||
| (In Thousands) | 2022 | 2021 | |||||||||
| Beginning Balance | $ | $ | |||||||||
| Accounts Written Off, net of Recoveries | ( | ( | |||||||||
| Accounts Receivable Provision | |||||||||||
| Ending Balance | $ | $ | |||||||||
| Three Months Ended March 31, | |||||||||||
| (In Thousands) | 2022 | 2021 | |||||||||
| Bad Debt (Reversal) Expense | $ | ( | $ | ( | |||||||
| Provision for Returns and Uncollectible Renewal Payments | |||||||||||
| Accounts Receivable Provision | $ | $ | |||||||||
| (In Thousands) | March 31, 2022 | December 31, 2021 | |||||||||
| Merchandise on Lease, net of Accumulated Depreciation and Allowances | $ | $ | |||||||||
Merchandise Not on Lease, net of Accumulated Depreciation and Allowances1 | |||||||||||
| Lease Merchandise, net of Accumulated Depreciation and Allowances | $ | $ | |||||||||
| Three Months Ended March 31, | |||||||||||
| (In Thousands) | 2022 | 2021 | |||||||||
| Beginning Balance | $ | $ | |||||||||
| Merchandise Written off, net of Recoveries | ( | ( | |||||||||
| Provision for Write-offs | |||||||||||
| Ending Balance | $ | $ | |||||||||
| (In Thousands) | March 31, 2022 | December 31, 2021 | |||||||||
| Prepaid Expenses | $ | $ | |||||||||
| Insurance Related Assets | |||||||||||
| Company-Owned Life Insurance | |||||||||||
| Assets Held for Sale | |||||||||||
| Deferred Tax Asset | |||||||||||
| Other Assets | |||||||||||
| $ | $ | ||||||||||
| (In Thousands) | March 31, 2022 | December 31, 2021 | |||||||||
| Accounts Payable | $ | $ | |||||||||
| Estimated Claims Liability Costs | |||||||||||
| Accrued Salaries and Benefits | |||||||||||
| Accrued Real Estate and Sales Taxes | |||||||||||
| Other Accrued Expenses and Liabilities | |||||||||||
| $ | $ | ||||||||||
| Treasury Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
| (In Thousands, Except Per Share) | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | ( | $ | ( | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Cash Dividends, $ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Issuance of Shares under Equity Plans | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
| Acquisition of Treasury Stock | ( | ( | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Net Earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Unrealized Gain on Fuel Hedge Derivative Instrument | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Foreign Currency Translation Adjustment | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | ( | $ | ( | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| Treasury Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
| (In Thousands, Except Per Share) | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | ( | $ | ( | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Cash Dividends, $ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Issuance of Shares Under Equity Plans | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Acquisition of Treasury Stock | ( | ( | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Net Earnings | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Foreign Currency Translation Adjustment | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2021 | ( | $ | ( | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| (In Thousands) | March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||
| Deferred Compensation Liability | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| (In Thousands) | March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||
| Assets Held for Sale | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Three Months Ended March 31, | ||||||||
| (In Thousands) | 2022 | 2021 | ||||||
| Lease Revenues and Fees | $ | $ | ||||||
| Retail Sales | ||||||||
| Non-Retail Sales | ||||||||
| Franchise Royalties and Fees | ||||||||
| Other | ||||||||
Total1 | $ | $ | ||||||
| Three Months Ended March 31, | |||||||||||
| (In Thousands) | 2022 | 2021 | |||||||||
Right-of-Use Asset Impairment | $ | $ | |||||||||
| Operating Lease Charges | |||||||||||
| Fixed Asset Impairment | |||||||||||
| Severance | |||||||||||
| Other Expenses | |||||||||||
| Net Gain on Sale of Store Properties and Related Assets | ( | ||||||||||
Total Restructuring Expenses, Net | $ | $ | |||||||||
(In Thousands) | Severance | ||||
Balance at January 1, 2022 | $ | ||||
Restructuring Severance Charges | |||||
| Payments | ( | ||||
| Balance at March 31, 2022 | $ | ||||
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| (In Thousands) | 2022 | 2021 | $ | % | |||||||||||||||||||
| REVENUES: | |||||||||||||||||||||||
| Lease and Retail Revenues | $ | 421,925 | $ | 444,087 | $ | (22,162) | (5.0) | % | |||||||||||||||
| Non-Retail Sales | 27,827 | 29,949 | (2,122) | (7.1) | |||||||||||||||||||
| Franchise Royalties and Other Revenues | 6,330 | 7,018 | (688) | (9.8) | |||||||||||||||||||
| 456,082 | 481,054 | (24,972) | (5.2) | ||||||||||||||||||||
| COSTS OF REVENUES | |||||||||||||||||||||||
| Cost of Lease and Retail Revenues | 145,779 | 151,495 | (5,716) | (3.8) | |||||||||||||||||||
| Non-Retail Cost of Sales | 25,356 | 26,491 | (1,135) | (4.3) | |||||||||||||||||||
| 171,135 | 177,986 | (6,851) | (3.8) | ||||||||||||||||||||
| GROSS PROFIT | 284,947 | 303,068 | (18,121) | (6.0) | |||||||||||||||||||
| Gross Profit % | 62.5% | 63.0% | |||||||||||||||||||||
| OPERATING EXPENSES: | |||||||||||||||||||||||
| Personnel Costs | 121,110 | 124,863 | (3,753) | (3.0) | |||||||||||||||||||
| Other Operating Expenses, Net | 104,359 | 108,366 | (4,007) | (3.7) | |||||||||||||||||||
| Provision for Lease Merchandise Write-Offs | 21,957 | 13,417 | 8,540 | 63.7 | |||||||||||||||||||
| Restructuring Expenses, Net | 3,335 | 3,441 | (106) | (3.1) | |||||||||||||||||||
| Separation Costs | 540 | 4,390 | (3,850) | (87.7) | |||||||||||||||||||
| Acquisition-Related Costs | 3,464 | — | 3,464 | nmf | |||||||||||||||||||
| 254,765 | 254,477 | 288 | 0.1 | ||||||||||||||||||||
| OPERATING PROFIT | 30,182 | 48,591 | (18,409) | (37.9) | |||||||||||||||||||
| Interest Expense | (350) | (344) | (6) | (1.7) | |||||||||||||||||||
| Other Non-Operating (Expense) Income, Net | (927) | 402 | (1,329) | nmf | |||||||||||||||||||
| EARNINGS BEFORE INCOME TAXES | 28,905 | 48,649 | (19,744) | (40.6) | |||||||||||||||||||
| INCOME TAX EXPENSE | 7,373 | 12,326 | (4,953) | (40.2) | |||||||||||||||||||
| NET EARNINGS | $ | 21,532 | $ | 36,323 | $ | (14,791) | (40.7) | % | |||||||||||||||
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| (In Thousands) | 2022 | 2021 | $ | % | |||||||||||||||||||
| Lease Revenues and Fees | $ | 409,318 | $ | 427,641 | $ | (18,323) | (4.3) | % | |||||||||||||||
| Retail Sales | 12,607 | 16,446 | (3,839) | (23.3) | |||||||||||||||||||
| Non-Retail Sales | 27,827 | 29,949 | (2,122) | (7.1) | |||||||||||||||||||
| Franchise Royalties and Fees | 6,118 | 6,710 | (592) | (8.8) | |||||||||||||||||||
| Other | 212 | 308 | (96) | (31.2) | |||||||||||||||||||
| Total Revenues | $ | 456,082 | $ | 481,054 | $ | (24,972) | (5.2) | % | |||||||||||||||
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| (In Thousands) | 2022 | 2021 | $ | % | |||||||||||||||||||
| Depreciation of Lease Merchandise and Other Lease Revenue Costs | $ | 136,664 | $ | 140,976 | $ | (4,312) | (3.1) | % | |||||||||||||||
| Retail Cost of Sales | 9,115 | 10,519 | (1,404) | (13.3) | |||||||||||||||||||
| Non-Retail Cost of Sales | 25,356 | 26,491 | (1,135) | (4.3) | |||||||||||||||||||
| Total Costs of Revenues | $ | 171,135 | $ | 177,986 | $ | (6,851) | (3.8) | % | |||||||||||||||
| Three Months Ended March 31, | Change | ||||||||||||||||||||||
| (In Thousands) | 2022 | 2021 | $ | % | |||||||||||||||||||
| Occupancy Costs | $ | 45,682 | $ | 43,309 | $ | 2,373 | 5.5 | ||||||||||||||||
| Shipping and Handling | 15,253 | 13,265 | 1,988 | 15.0 | |||||||||||||||||||
| Advertising Costs | 10,700 | 17,385 | (6,685) | (38.5) | |||||||||||||||||||
| Intangible Amortization | 764 | 1,684 | (920) | (54.6) | |||||||||||||||||||
| Professional Services | 3,488 | 3,035 | 453 | 14.9 | |||||||||||||||||||
| Bank and Credit Card Related Fees | 5,562 | 5,382 | 180 | 3.3 | |||||||||||||||||||
| Gains on Dispositions of Store-Related Assets, net | (4,450) | (1,223) | (3,227) | (263.9) | |||||||||||||||||||
| Other Miscellaneous Expenses, net | 27,360 | 25,529 | 1,831 | 7.2 | |||||||||||||||||||
| Other Operating Expenses, net | $ | 104,359 | $ | 108,366 | $ | (4,007) | (3.7) | % | |||||||||||||||
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 1 | ||||||||||
| January 1, 2022 through January 31, 2022 | — | $ | — | — | $ | 46,901,691 | ||||||||
| February 28, 2022 through February 28, 2022 | — | — | — | 46,901,691 | ||||||||||
| March 1, 2022 through March 31, 2022 | 261,924 | 21.84 | 261,924 | 141,181,756 | ||||||||||
| Total | 261,924 | 261,924 | ||||||||||||
| EXHIBIT NO. | DESCRIPTION OF EXHIBIT | |||||||
| 2.1 | ||||||||
| 10.1 | ||||||||
| 10.2 | Loan Facility Agreement and Guaranty, dated as of April 1, 2022, among Aaron’s, LLC, as the sponsor, The Aaron’s Company, Inc., the several banks and other financial institutions from time to time party thereto and Truist Bank, in its capacity as administrative agent (incorporated herein by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on April 1, 2022). | |||||||
| 31.1* | ||||||||
| 31.2* | ||||||||
| 32.1* | ||||||||
| 32.2* | ||||||||
| 101.INS | XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. | |||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | |||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | The cover page from this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL (included in Exhibit 101) | |||||||
| *Filed herewith. | ||||||||
THE AARON’S COMPANY, INC. | |||||||||||
| (Registrant) | |||||||||||
| Date: | April 25, 2022 | By: | /s/ C. Kelly Wall | ||||||||
| C. Kelly Wall | |||||||||||
| Chief Financial Officer | |||||||||||
| (Principal Financial Officer) | |||||||||||
| Date: | April 25, 2022 | By: | /s/ Douglass L. Noe | ||||||||
| Douglass L. Noe | |||||||||||
| Vice President, Corporate Controller | |||||||||||
| (Principal Accounting Officer) | |||||||||||
| I, Douglas A. Lindsay, certify that: | |||||||||||||||||
| 1. | I have reviewed this quarterly report on Form 10-Q of The Aaron's Company, Inc.; | ||||||||||||||||
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||||||||||||||||
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||||||||||||||||
| 4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have: | ||||||||||||||||
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||||||||||||||||
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||||||||||||||||
| c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||||||||||||||||
| d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and | ||||||||||||||||
| 5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): | ||||||||||||||||
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | ||||||||||||||||
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. | ||||||||||||||||
| Date: | April 25, 2022 | /s/ Douglas A. Lindsay | ||||||
| Douglas A. Lindsay | ||||||||
| Chief Executive Officer and Director | ||||||||
| (Principal Executive Officer) | ||||||||
| I, C. Kelly Wall, certify that: | |||||||||||||||||
| 1. | I have reviewed this quarterly report on Form 10-Q of The Aaron's Company, Inc.; | ||||||||||||||||
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||||||||||||||||
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||||||||||||||||
| 4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have: | ||||||||||||||||
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||||||||||||||||
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||||||||||||||||
| c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||||||||||||||||
| d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and | ||||||||||||||||
| 5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): | ||||||||||||||||
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | ||||||||||||||||
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. | ||||||||||||||||
| Date: | April 25, 2022 | /s/ C. Kelly Wall | ||||||
| C. Kelly Wall | ||||||||
| Chief Financial Officer (Principal Financial Officer) | ||||||||
| Date: | April 25, 2022 | /s/ Douglas A. Lindsay | |||||||||
Douglas A. Lindsay | |||||||||||
| Chief Executive Officer and Director | |||||||||||
| (Principle Executive Officer) | |||||||||||
| Date: | April 25, 2022 | /s/ C. Kelly Wall | |||||||||
| C. Kelly Wall | |||||||||||
| Chief Financial Officer (Principal Financial Officer) | |||||||||||
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Accounts receivable, allowances | $ 5,251 | $ 7,163 |
| Lease Merchandise, accumulated depreciation and allowances | $ 432,842 | $ 439,745 |
| Common stock, par value (in dollars per share) | $ 0.50 | $ 0.50 |
| Common stock, shares authorized (in shares) | 112,500,000 | 112,500,000 |
| Common stock, shares issued (in shares) | 35,968,806 | 35,558,714 |
| Treasury shares (in shares) | 5,005,788 | 4,580,390 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Statement of Comprehensive Income [Abstract] | ||
| Net Earnings | $ 21,532 | $ 36,323 |
| Other Comprehensive Income: | ||
| Unrealized Gain on Fuel Hedge Derivative Instrument | 154 | 0 |
| Foreign Currency Translation Adjustment | 238 | 127 |
| Total Other Comprehensive Income | 392 | 127 |
| Comprehensive Income | $ 21,924 | $ 36,450 |
Basis and Summary of Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis and Summary of Significant Accounting Policies | BASIS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES As described elsewhere in this Quarterly Report on Form 10-Q, the novel coronavirus ("COVID-19") pandemic led to significant market disruption in 2020 and 2021 and has continued to impact various aspects of our operations, directly and indirectly on a moderated basis. Throughout these notes to the condensed consolidated financial statements, the impacts of the COVID-19 pandemic on the financial results for the three months ended March 31, 2022 and comparable prior periods have been identified to the best of our ability under the respective sections. For a discussion of trends that we believe have affected our business as a result of the COVID-19 pandemic, see Part I, Item 2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations", including the "Recent Developments and Operational Measures Taken by Us in Response to the COVID-19 Pandemic," "Results of Operations" and "Liquidity and Capital Resources", below, and Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission on February 24, 2022 (the "2021 Annual Report"). Description of Spin-off Transaction On November 30, 2020 (the "separation and distribution date"), Aaron's Holdings Company, Inc. completed the previously announced separation of the Aaron's Business segment (the "Aaron's Business") from Progressive Leasing and Vive and changed its name to PROG Holdings, Inc. (referred to herein as "PROG Holdings" or "Former Parent"). The separation of the Aaron's Business was effected through a distribution (the "separation", the "separation and distribution", or the "spin-off transaction") of all outstanding shares of common stock of a newly formed company called The Aaron's Company, Inc., a Georgia corporation ("Aaron's", "The Aaron's Company" or "the Company"), to the PROG Holdings shareholders of record as of November 27, 2020. Upon the separation and distribution, Aaron's, LLC became a wholly-owned subsidiary of The Aaron's Company. Unless the context otherwise requires or we specifically indicate otherwise, references to "we," "us," "our," "the Company," and "Aaron's" refer to The Aaron's Company, Inc., which holds, directly or indirectly, the Aaron’s Business prior to the separation and distribution date. Further details of the spin-off transaction are discussed in Part I, Item 1, of the 2021 Annual Report. BrandsMart U.S.A. Acquisition On April 1, 2022, the Company completed the previously announced transaction to acquire a 100% ownership of Interbond Corporation of America, doing business as BrandsMart U.S.A. ("BrandsMart"). Founded in 1977, BrandsMart is one of the leading appliance and consumer electronics retailers in the southeast United States and one of the largest appliance retailers in the country with ten stores in Florida and Georgia and a growing e-commerce presence on brandsmartusa.com. The Company paid total consideration of approximately $230 million in cash under the terms of the agreement and additional amounts for working capital adjustments and transaction related fees, subject to certain closing adjustments. Refer to subsequent events further described in Note 6 to these condensed consolidated financial statements for additional information. The Company's financial results for the three months ended March 31, 2022 and comparable prior period do not include the results of BrandsMart, which will be included in the condensed consolidated financial statements during the second quarter of 2022. Management believes that the acquisition will strengthen Aaron’s ability to deliver on its mission of enhancing people’s lives by providing easy access to high quality furniture, appliances, electronics, and other home goods through affordable lease-to-own and retail purchase options. Management believes that value creation opportunities include leveraging Aaron’s lease-to-own expertise to provide BrandsMart's customers enhanced payment options and offering a wide selection of BrandsMart product assortment to millions of Aaron’s customers. Description of Business Aaron's is a leading, technology-enabled, omni-channel provider of lease-to-own ("LTO") and retail purchase solutions of appliances, electronics, furniture, and other home goods. Since its founding in 1955, Aaron's has been committed to serving the overlooked and underserved customer with a dedication to inclusion and improving the communities in which it operates. Through our portfolio of approximately 1,300 stores and our Aarons.com e-commerce platform, we provide consumers with LTO and purchase solutions for the products they need and want, with a focus on providing our customers with unparalleled customer service and an attractive value proposition, including competitive monthly payments and total cost of ownership, as compared to other LTO providers, high approval rates, and lease plan flexibility. In addition, the Company's business includes the operations of Woodhaven Furniture Industries ("Woodhaven"), which manufactures and supplies the majority of the bedding and a significant portion of the upholstered furniture leased and sold in Company-operated and franchised stores. The following table presents store count by ownership type:
Basis of Presentation The financial statements for the three months ended March 31, 2022 and comparable prior year period are consolidated financial statements of the Company and its subsidiaries, each of which is wholly-owned, and is based on the financial position and results of operations of the Company. Intercompany balances and transactions between consolidated entities have been eliminated. These condensed consolidated financial statements reflect the historical results of operations, financial position and cash flows of the Company in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The preparation of the Company's condensed consolidated financial statements in conformity with U.S. GAAP for interim financial information requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. Generally, actual experience has been consistent with management's prior estimates and assumptions. However, as described above, the extent to which the normalization of business trends since the start of the COVID-19 pandemic, and the resulting measures taken by the Company and federal and state governments will impact the Company's business will depend on future developments. These developments are uncertain and cannot be precisely predicted at this time. In many cases, management's estimates and assumptions are dependent on estimates of such future developments and may change in the future. The accompanying unaudited condensed consolidated financial statements do not include all information required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in the 2021 Annual Report. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of operating results that may be achieved for any other interim period or for the full year. Reclassifications Certain reclassifications have been made to the prior periods to conform to the current period presentation. For previously reported interim and annual periods prior to December 31, 2021, the Company reported the additions to lease merchandise and the book value of lease merchandise sold or disposed as separate lines within operating activities in the condensed consolidated statements of cash flows. Effective with the year ended December 31, 2021, the Company revised its presentation of changes to lease merchandise to separately present the provision for lease merchandise write-offs, and combine the remaining operating activity-related changes in lease merchandise, with the exception of depreciation of lease merchandise, in a single line under changes in operating assets and liabilities in the condensed consolidated statements of cash flows. This revised presentation and the related adjustments to the prior period presentation do not have an impact on cash provided by operating activities. Accounting Policies and Estimates See Note 1 to the consolidated and combined financial statements in the 2021 Annual Report for an expanded discussion of accounting policies and estimates. Discussions of accounting estimates and application of accounting policies herein have also been updated as applicable to describe the uncertainty associated with any impacts of the COVID-19 pandemic described above. Earnings Per Share Earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. The computation of earnings per share assuming dilution includes the dilutive effect of stock options, restricted stock units ("RSUs"), restricted stock awards ("RSAs"), performance share units ("PSUs") and other awards issuable under the Company's employee stock purchase plan ("ESPP") (collectively, "share-based awards") as determined under the treasury stock method, unless the inclusion of such awards would have been anti-dilutive. The following table shows the calculation of weighted-average shares outstanding assuming dilution:
Approximately 0.5 million and 0.1 million weighted-average shares-based awards were excluded from the computation of earnings per share assuming dilution during the three months ended March 31, 2022 and March 31, 2021, respectively, as the awards would have been anti-dilutive for the periods presented. Revenue Recognition The Company provides lease merchandise, consisting of appliances, electronics, furniture, and other home goods to its customers for lease under certain terms agreed to by the customer. Our stores and e-commerce platform offer leases with flexible ownership plans that can be renewed monthly up to 12, 18 or 24 months. The Company also earns revenue from the sale of merchandise to customers and its franchisees, and earns ongoing revenue from its franchisees in the form of royalties and through advertising efforts that benefit the franchisees. See Note 3 to these condensed consolidated financial statements for further information regarding the Company's revenue recognition policies and disclosures. Accounts Receivable Accounts receivable consist primarily of receivables due from customers on lease agreements, corporate receivables incurred during the normal course of business (primarily for vendor consideration and real estate leasing activities) and franchisee obligations. Accounts receivable, net of allowances, consist of the following:
The Company maintains an accounts receivable allowance, under which the Company's policy is to record a provision for returns and uncollectible contractually due renewal payments based on historical payments experience, which is recognized as a reduction of lease and retail revenues within the condensed consolidated statements of earnings. Other qualitative factors are considered in estimating the allowance, such as current and forecasted business trends. The Company writes off customer lease receivables that are 60 days or more past due on pre-determined dates twice monthly. The Company also maintains an allowance for outstanding franchisee accounts receivable. The Company's policy is to estimate future losses related to certain franchisees that are deemed to have a higher risk of non-payment and record an allowance for these estimated losses. The estimated allowance on franchisee accounts receivable includes consideration of broad macroeconomic trends, such as the uncertainty surrounding the impacts of the normalization of current and future business trends associated with the COVID-19 pandemic on the franchisees' ability to satisfy their obligations. Accordingly, actual accounts receivable write-offs could differ from the allowance. The provision for uncollectible franchisee accounts receivable is recorded as bad debt expense in other operating expenses, net within the condensed consolidated statements of earnings. The following table shows the components of the accounts receivable allowance:
The following table shows the components of the accounts receivable provision, which includes amounts recognized for bad debt expense and the provision for returns and uncollected payments:
Lease Merchandise The Company’s lease merchandise is recorded at the lower of depreciated cost or net realizable value. The cost of merchandise manufactured by our Woodhaven operations is recorded at cost and includes overhead from production facilities, shipping costs and warehousing costs. The Company begins depreciating merchandise at the earlier of 12 months and one day from its purchase of the merchandise or when the item is leased to customers. Lease merchandise depreciates to a 0% salvage value over the lease agreement period when on lease, generally 12 to 24 months, and generally 36 months when not on lease. Depreciation is accelerated upon early payout. The following is a summary of lease merchandise, net of accumulated depreciation and allowances:
1 Includes Woodhaven raw materials, finished goods and work-in-process inventory that has been classified within lease merchandise in the condensed consolidated balance sheets of $19.1 million and $20.2 million as of March 31, 2022 and December 31, 2021, respectively. The Company's policies require weekly merchandise counts at its store-based operations, which include write-offs for unsalable, damaged, or missing merchandise inventories. Monthly cycle counting procedures are performed at both the Company's fulfillment centers and manufacturing facilities. Physical inventories are also taken at the manufacturing facilities annually. The Company also monitors merchandise levels and mix by division, store, and fulfillment center, as well as the average age of merchandise on hand. If obsolete merchandise cannot be returned to vendors, its carrying amount is adjusted to its net realizable value or written off. Generally, all merchandise not on lease is available for lease or sale. On a monthly basis, all damaged, lost or unsalable merchandise identified is written off. The Company records a provision for write-offs using the allowance method, which is included within lease merchandise, net within the condensed consolidated balance sheets. The allowance method for lease merchandise write-offs estimates the merchandise losses incurred but not yet identified by management as of the end of the accounting period based primarily on historical write-off experience. Other qualitative factors are considered in estimating the allowance, such as seasonality and uncertainty surrounding the impacts of the normalization of current and future business trends associated with the COVID-19 pandemic. Therefore, actual lease merchandise write-offs could differ from the allowance. The provision for write-offs is included in provision for lease merchandise write-offs in the accompanying condensed consolidated statements of earnings. The Company writes off lease merchandise on lease agreements that are 60 days or more past due on pre-determined dates twice monthly. The following table shows the components of the allowance for lease merchandise write-offs:
Prepaid Expenses and Other Assets Prepaid expenses and other assets consist of the following:
Assets Held for Sale Certain properties, consisting of parcels of land and commercial buildings, and certain company-owned vehicles met the held for sale classification criteria as of March 31, 2022 and December 31, 2021. Assets held for sale are recorded at the lower of their carrying value or fair value less estimated cost to sell and are classified within prepaid expenses and other assets in the condensed consolidated balance sheets. Depreciation is suspended on assets upon classification to held for sale. Gains and losses related to the sale of assets held for sale are recorded in other operating expenses, net or restructuring expenses, net (if the asset is a part of the Company's restructuring programs further described in Note 5 to these condensed consolidated financial statements) in the condensed consolidated statements of earnings. Such gains and losses were not significant for the three months ended March 31, 2022 and March 31, 2021. Management estimated the fair values of real estate properties using the market values for similar properties. Real estate properties represent $1.6 million and $1.2 million as of March 31, 2022 and December 31, 2021, respectively. These properties are considered Level 2 assets as defined below. The carrying amount of all assets held for sale as of March 31, 2022 and December 31, 2021 is $1.9 million and $1.6 million, respectively. Sale-Leaseback Transaction During the three months ended March 31, 2022, the Company entered into a sale and leaseback transaction related to three Company-owned store properties. The Company received net proceeds of $5.7 million, which were presented within proceeds from dispositions of property, plant and equipment in the condensed consolidated statements of cash flows and recorded a gain of $3.8 million related to the sale and leaseback transaction, which was classified within other operating expenses, net in the condensed consolidated statements of earnings and was presented within other changes, net in the condensed consolidated statements of cash flows. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following:
Estimated Claims Liability Costs Estimated claims liability costs are accrued primarily for workers compensation and vehicle liability, as well as general liability and group health insurance benefits provided to team members. These liabilities are recorded within estimated claims liability costs within accounts payable and accrued expenses in the condensed consolidated balance sheets. Estimates for these claims liabilities are made based on actual reported but unpaid claims and actuarial analysis of the projected claims run off for both reported and incurred but not reported claims. This analysis is based upon an assessment of the likely outcome or historical experience and considers a variety of factors, including the actuarial loss forecasts, company-specific development factors, general industry loss development factors and third-party claim administrator loss estimates of individual claims. The Company makes periodic prepayments to its insurance carriers to cover the projected claims run off for both reported and incurred but not reported claims, considering its retention or stop loss limits. In addition, we have prefunding balances on deposit and other insurance receivables with the insurance carriers which are recorded within prepaid expenses and other assets in our condensed consolidated balance sheets. Segment Reporting As of March, 31 2022, management concluded that the Company has one operating and reportable segment based on the nature of the financial information regularly reviewed by the chief operating decision maker to assess performance and allocate resources. We have also concluded that the Company has one reporting unit due to the fact that the components included within the operating segment have similar economic characteristics, such as the nature of the products and services provided, the nature of the customers we serve, and the interrelated nature of the components that are aggregated to form the sole reporting unit. The Company evaluates performance and allocates resources as a single operating segment based on revenue growth and pre-tax profit or loss from operations. Goodwill The Company’s goodwill is not amortized but is subject to an impairment test at the reporting unit level annually as of October 1 and more frequently if events or circumstances indicate that an impairment may have occurred. An interim goodwill impairment test is required if the Company believes it is more likely than not that the carrying amount of its reporting unit exceeds the reporting unit's fair value. The Company determined that there were no events that occurred or circumstances that changed during the three months ended March 31, 2022 that would more likely than not reduce the fair value of its reporting unit below its carrying amount. The Company completed acquisitions of certain franchisees and third party rent-to-own stores throughout 2020 and 2021, which resulted in a goodwill balance of $13.0 million and $13.1 million as of March 31, 2022 and December 31, 2021, respectively. Stockholders' Equity Changes in stockholders' equity for the three months ended March 31, 2022 and 2021 are as follows:
Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets. Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3—Valuations based on unobservable inputs reflecting the Company's own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. The Company measures a liability related to its non-qualified deferred compensation plan, which represents benefits accrued for participants that are part of the plan and is valued at the quoted market prices of the participants' investment election, at fair value on a recurring basis. The Company measures assets held for sale at fair value on a nonrecurring basis and records impairment charges when they are deemed to be impaired. The fair values of the Company's other current financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their carrying values due to their short-term nature. The Company's outstanding debt borrowings as of December 31, 2021 were subject to a variable interest rate and short term maturities. Therefore, the fair value of these borrowings also approximates its carrying value. These assets and liabilities are measured within Level 2 of the fair value hierarchy. The Company also measures certain non-financial assets at fair value on a nonrecurring basis, such as goodwill, intangible assets, operating lease right-of-use assets, and property, plant, and equipment, in connection with periodic evaluations for potential impairment. Recent Accounting Pronouncements Adopted In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). The standard provides temporary guidance to ease the potential burden in accounting for reference rate reform primarily resulting from the cessation of the publication of certain tenors of the London Interbank Overnight ("LIBO") rate on December 31, 2021, with complete elimination of the publication of the LIBO rate by June 30, 2023. The amendments in ASU 2020-04 are elective and apply to all entities that have contracts referencing the LIBO rate. The Company's outstanding debt borrowing as of December 31, 2021 included an election of a LIBO rate that has not yet eliminated. Also, as further described in Note 6 to these condensed consolidated financial statements, the Company modified its debt agreement in conjunction with the acquisition of BrandsMart. Borrowings under the new debt agreement bear interest at a rate per annum equal to, at the option of the Company, (i) the forward-looking term rate based on the Secured Overnight Financing Rate ("SOFR") plus an applicable margin ranging between 1.50% and 2.25%, based on the Company's Total Net Debt to EBITDA Ratio (as defined in the debt agreement), or (ii) the base rate plus an applicable margin, which is 1.00% lower than the applicable margin for SOFR loans. Therefore, there is no impact on the consolidated financial statements of the Company related to the adoption of ASU 2020-04.
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Fair Value Measurement |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurement | FAIR VALUE MEASUREMENT Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table summarizes financial liabilities measured at fair value on a recurring basis:
The Company maintains The Aaron's Company, Inc. Deferred Compensation Plan, which is an unfunded, nonqualified deferred compensation plan for a select group of management, highly compensated employees and non-employee directors. The liability represents benefits accrued for plan participants and is valued at the quoted market prices of the participants’ investment elections, which consist of equity and debt "mirror" funds. As such, the Company has classified the deferred compensation liability as a Level 2 liability, which is recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets. Non-Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The following table summarizes non-financial assets measured at fair value on a nonrecurring basis:
Assets classified as held for sale are recorded at the lower of carrying value or fair value less estimated costs to sell, and any adjustment is recorded in other operating expenses, net or restructuring expenses, net (if the asset is a part of the Company's restructuring programs as described in Note 5 to these condensed consolidated financial statements) in the condensed consolidated statements of earnings. The highest and best use of the primary components of assets held for sale are as real estate land parcels for development or real estate properties for use or lease; however, the Company has chosen not to develop or use these properties, and plans to sell the properties to third parties as quickly as practicable.
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Revenue Recognition |
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| Revenue Recognition | REVENUE RECOGNITION The following table disaggregates revenue by source:
1 Includes revenues from Canadian operations of $4.9 million and $5.9 million during the three months ended March 31, 2022 and 2021, respectively, which are primarily lease revenues and fees. Lease Revenues and Fees The Company provides lease merchandise, consisting of furniture, appliances, electronics, computers, and a variety of other products and accessories to its customers for lease under certain terms agreed to by the customer. The Company’s stores and its e-commerce platform offer leases with flexible ownership plans that can be renewed monthly up to 12, 18 or 24 months. The Company does not require deposits upon inception of customer agreements. The customer has the right to acquire ownership either through an early purchase option or through payment of all required lease payments through the end of the ownership plan. Our store-based operations also offer customers the option to obtain a membership in the Aaron’s Club program. The benefits to customers of the Club program are separated into three general categories: (a) product protection benefits; (b) health & wellness discounts; and (c) dining, shopping and consumer savings. Lease agreements and Aaron's Club program memberships are cancelable at any time by either party without penalty, and as such, we consider these offerings to be month-to-month arrangements. Lease revenues related to the leasing of merchandise and Aaron's Club membership fees are recognized as revenue in the month they are earned. Payments received prior to the month earned are recorded as deferred lease revenue, and this amount is included in customer deposits and advance payments in the accompanying condensed consolidated balance sheets. Lease payments due but not received prior to month end are recorded as accounts receivable in the accompanying consolidated balance sheets. Lease revenues are recorded net of a provision for returns and uncollectible renewal payments. All of the Company's customer lease agreements are considered operating leases. The Company maintains ownership of the lease merchandise until all payment obligations are satisfied under sales and lease ownership agreements. Initial direct costs related to customer agreements are expensed as incurred and have been classified as other operating expenses, net in the condensed consolidated statements of earnings. The statement of earnings effects of expensing the initial direct costs as incurred are not materially different from amortizing initial direct costs over the lease ownership plan. Substantially all lease revenues and fees were within the scope of ASC 842, Leases, during the three months ended March 31, 2022 and 2021. The Company had $7.0 million and $6.2 million of other revenue during the three months ended March 31, 2022 and 2021, respectively, within the scope of ASC 606, Revenue from Contracts with Customers, which is included in lease revenues and fees above. Lease revenues and fees are recorded within lease and retail revenues in the accompanying condensed consolidated statements of earnings. Retail and Non-Retail Sales Revenues from the retail sale of merchandise to individual consumers are recognized at the point of sale. Generally, the transfer of control occurs near or at the point of sale for retail sales. Revenues for the non-retail sale of merchandise to franchisees are recognized when control transfers to the franchisee, which is upon delivery of the merchandise. Sales of lease merchandise to franchisees and to other customers are recorded within non-retail sales and lease and retail revenues, respectively, in the accompanying condensed consolidated statements of earnings. All retail and non-retail sales revenue is within the scope of ASC 606, Revenue from Contracts with Customers, during the three months ended March 31, 2022 and 2021. Franchise Royalties and Fees Franchisees pay an ongoing royalty of 6% of the weekly cash revenue payments received, which is recognized as the fees become due. The Company guarantees certain debt obligations of some of the franchisees and receives guarantee fees based on the outstanding debt obligations of such franchisees. Refer to Note 4 to these condensed consolidated financial statements for additional discussion of the franchise-related guarantee obligation. The Company also charges fees for advertising efforts that benefit the franchisees, which are recognized at the time the advertising takes place. Substantially all franchise royalties and fee revenue is within the scope of ASC 606, Revenue from Contracts with Customers. Of the franchise royalties and fees, $4.9 million and $5.3 million during the three months ended March 31, 2022 and 2021, respectively, is related to franchise royalty income that is recognized as the fees become due. The remaining revenue is primarily related to advertising fees charged to franchisees. Franchise royalties and fees are recorded within franchise royalties and other revenues in the accompanying condensed consolidated statements of earnings.
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2022 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Guarantees The Company has guaranteed certain debt obligations of some of its franchisees under a franchise loan program (the "Franchise Loan Facility") as described in further detail in Note 9 to the consolidated and combined financial statements of the 2021 Annual Report. The Company has recourse rights to franchisee assets securing the debt obligations, which consist primarily of lease merchandise and fixed assets. Since the inception of the franchise loan program in 1994, the Company's losses associated with the program have been insignificant. However, such losses could be material in a future period due to potential adverse trends in the liquidity and/or financial performance of the Company's franchisees resulting in an event of default or impending defaults by franchisees. At March 31, 2022, the maximum amount that the Company would be obligated to repay in the event franchisees defaulted was $7.5 million. The Company is subject to financial covenants under the Franchise Loan Facility as detailed in Note 9 to the consolidated and combined financial statements of the 2021 Annual Report. At March 31, 2022, the Company was in compliance with all of these covenants. The Company records a liability related to estimated future losses from repaying the franchisees' outstanding debt obligations upon any possible future events of default. This liability is included in accounts payable and accrued expenses in the condensed consolidated balance sheets and was $2.0 million and $2.2 million at March 31, 2022 and December 31, 2021, respectively. The balances at March 31, 2022 and December 31, 2021 included qualitative consideration of potential losses, including uncertainties surrounding the normalization of current and future business trends associated with the COVID-19 pandemic, and the corresponding unknown effect on the operations and liquidity of our franchisees. As further described in Note 6 to these condensed consolidated financial statements, the Company entered into a new Franchise Loan Facility agreement on April 1, 2022. This new agreement reduced the total commitment under the Franchise Loan Facility from $15.0 million to $12.5 million and extended the commitment termination date to March 31, 2023. Legal Proceedings From time to time, the Company is party to various legal and regulatory proceedings arising in the ordinary course of business, certain of which have been described below. The Company establishes an accrued liability for legal and regulatory proceedings when it determines that a loss is both probable and the amount of the loss can be reasonably estimated. The Company continually monitors its litigation and regulatory exposure and reviews the adequacy of its legal and regulatory reserves on a quarterly basis. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters due to the inherent uncertainty in litigation, regulatory and similar adversarial proceedings, and substantial losses from these proceedings or the costs of defending them could have a material adverse impact upon the Company’s business, financial position, and results of operations. At March 31, 2022 and December 31, 2021, the Company had accrued $1.7 million for pending legal and regulatory matters for which it believes losses are probable and is management’s best estimate of its exposure to loss. The Company records these liabilities in accounts payable and accrued expenses in the condensed consolidated balance sheets. The Company estimates that the aggregate range of reasonably possible loss in excess of accrued liabilities for such probable loss contingencies is between zero and $3.0 million. At March 31, 2022, the Company estimated that the aggregate range of loss for all material pending legal and regulatory proceedings for which a loss is reasonably possible, but less likely than probable (i.e., excluding the contingencies described in the preceding paragraph), is between zero and $0.5 million. Those matters for which a reasonable estimate is not possible are not included within estimated ranges and, therefore, the estimated ranges do not represent the Company's maximum loss exposure. The Company's estimates for legal and regulatory accruals, aggregate probable loss amounts and reasonably possible loss amounts, are all subject to the uncertainties and variables described above. Regulatory Inquiries In the first quarter of 2021, Aaron's, LLC, along with a number of other lease-to-own companies, received a subpoena from the California Department of Financial Protection and Innovation (the "DFPI") requesting the production of documents regarding the Company's compliance with state consumer protection laws. The Company is cooperatively engaging with the DFPI in response to its inquiry. Although the Company believes it is in compliance with all applicable consumer protection laws and regulations in California, this inquiry ultimately could lead to an enforcement action and/or a consent order, and substantial costs, including legal fees, fines, penalties, and remediation expenses. Other Contingencies Management regularly assesses the Company's insurance deductibles, monitors litigation and regulatory exposure with the Company's attorneys, and evaluates its loss experience. The Company also enters into various contracts in the normal course of business that may subject it to risk of financial loss if counterparties fail to perform their contractual obligations.
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Restructuring |
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| Restructuring | RESTRUCTURING Real Estate Repositioning and Optimization Restructuring Program During the first quarter of 2020, the Company initiated a real estate repositioning and optimization restructuring program. This program includes a strategic plan to remodel, reposition, and consolidate our Company-operated store footprint over the next to four years. We believe that such strategic actions will allow the Company to continue to successfully serve our markets while continuing to utilize our growing Aarons.com shopping and servicing platform. Management expects that this strategy, along with our increased use of technology, will enable us to reduce store count while retaining a significant portion of our existing customer relationships as well as attract new customers. Since initiation, the program has resulted in the closure, consolidation, or relocation of 164 Company-operated stores during 2020, 2021 and the first three months of 2022. As of March 31, 2022, we have identified approximately 63 remaining stores for closure, consolidation, or relocation that have not yet been closed and vacated, nearly all of which are expected to close during 2022. We also further rationalized our store support center staff, which resulted in a reduction in employee headcount in those areas to more closely align with current business conditions. Total net restructuring expenses of $3.3 million were recorded for the three months ended March 31, 2022, primarily all of which were incurred under the real estate repositioning and optimization restructuring program. Restructuring expenses were comprised mainly of operating lease right-of-use asset and fixed asset impairment charges related to the vacancy or planned vacancy of stores identified for closure, continuing variable occupancy costs incurred related to closed stores and severance charges related to reductions in store support center headcount. As management continues to execute on its long-term plan, additional restructuring charges are expected to result from our real estate repositioning and optimization initiatives, primarily related to operating lease right-of-use asset and fixed asset impairments. However, the extent of future restructuring charges is not estimable at this time as the specific relocation sites, with the exception of those sites noted above, have not yet been identified by management. Additionally, we expect future restructuring expenses (reversals) due to potential future early buyouts of leases with landlords, as well as continuing variable occupancy costs related to closed stores. The following table summarizes restructuring charges for the three months ended March 31, 2022 and 2021, respectively, under the Company's restructuring programs:
To date, the Company has incurred charges of $44.7 million under the real estate repositioning and optimization restructuring program. These cumulative charges are primarily comprised of operating lease right-of-use asset and fixed impairment charges, losses recognized related to contractual lease obligations, and severance related to reductions in store support center and field support staff headcount. The following table summarizes the activity for the three months ended March 31, 2022 and the corresponding accrual balance as of March 31, 2022 for the restructuring programs:
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2022 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | SUBSEQUENT EVENTS BrandsMart U.S.A. Acquisition On April 1, 2022, the Company completed the previously announced acquisition of all of the issued and outstanding shares of capital stock of BrandsMart. BrandsMart is one of the leading appliance and consumer electronics retailers in the southeast United States and one of the largest appliance retailers in the country, with ten stores in Florida and Georgia and a growing e-commerce presence on brandsmartusa.com. The Company paid total consideration of approximately $230 million in cash under the terms of the agreement and additional amounts for working capital adjustments and transaction related fees, subject to certain closing adjustments. The Company is in the process of completing the preliminary purchase price allocation associated with the BrandsMart acquisition and expects to establish preliminary fair values of intangibles, goodwill, and other assets and liabilities acquired by the end of the second quarter of 2022. Debt Arrangements To finance the BrandsMart transaction, on April 1, 2022 the Company entered into a new unsecured credit facility (the "Credit Facility") which replaced its previous $250 million unsecured credit facility dated as of November 9, 2020 (as amended, the "Previous Credit Facility"). The Previous Credit Facility is further described in Note 7 to the consolidated and combined financial statements of the 2021 Annual Report. The Credit Facility provides for a $175 million term loan (the "Term Loan") and a $375 million revolving credit facility (the "Revolving Facility"), which includes (i) a $35 million sublimit for the issuance of letters of credit on customary terms, and (ii) a $35 million sublimit for swing line loans on customary terms. The Company pays a commitment fee on unused balances related to the revolving facility, which ranges from 0.20% to 0.30% as determined by the Company's ratio of total net debt to EBITDA (as defined by the agreement). The Company borrowed $175 million under the Term Loan and $117 million under the Revolving Facility to finance the BrandsMart U.S.A. acquisition. On April 1, 2022, the Company utilized the proceeds from the $175 million Term Loan and $117 million of borrowings under the Revolving Facility to finance the purchase price for the BrandsMart acquisition and other customary acquisition and financing-related closing costs and adjustments. The Company expects that additional borrowings under the Revolving Facility will be used to provide for working capital and capital expenditures, to finance future permitted acquisitions and for other general corporate purposes. Borrowings under the Revolving Facility and the Term Loan bear interest at a rate per annum equal to, at the option of the Company, (i) the forward-looking term rate based on SOFR plus an applicable margin ranging between 1.50% and 2.25%, based on the Company's Total Net Debt to EBITDA Ratio, or (ii) the base rate plus an applicable margin, which is 1.00% lower than the applicable margin for SOFR loans. The loans and commitments under the Revolving Facility mature or terminate on April 1, 2027. The Term Loan amortizes in quarterly installments, commencing on December 31, 2022, in an aggregate annual amount equal to (i) 2.50% of the original principal amount of the Term Loan during the first and second years after the closing date, (ii) 5.00% of the original principal amount of the Term Loan during the third, fourth and fifth years after the closing date, with the remaining principal balance of the Term Loan to be due and payable in full on April 1, 2027. Franchise Loan Facility Amendment On April 1, 2022, the Company also entered into a new $12.5 million unsecured franchise loan facility (the "Franchise Loan Facility"), which replaced its previous $15.0 million amended and restated unsecured franchise loan facility dated as of November 10, 2021. The Franchise Loan Facility operates as a guarantee by the Company and certain of its existing and future direct and indirect U.S. subsidiaries of certain debt obligations of some of the sales and lease ownership franchisees of the Company under a franchise loan program. In the event these franchisees are unable to meet their debt service payments or otherwise experience an event of default, the Company would be unconditionally liable for the outstanding balance of the franchisees’ debt obligations under the Franchise Loan Facility, which would be due in full within 90 days of such event of default. Borrowings under the Franchise Loan Facility bear interest at a rate per annum equal to SOFR plus an applicable margin ranging between 1.50% and 2.25%, based on the Company's Total Net Debt to EBITDA Ratio (as defined in the Franchise Loan Facility). The Franchise Loan Facility is available for a period of 364 days commencing on April 1, 2022, and permits Borrower to request extensions for additional 364-day periods. The Credit Facility and the Franchise Loan Facility contain customary financial covenants including (a) a maximum Total Net Debt to EBITDA Ratio of 2.75 to 1.00 and (b) a minimum Fixed Charge Coverage Ratio of 1.75 to 1.00.
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Basis and Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2022 | |
| Accounting Policies [Abstract] | |
| Description of Business | Description of BusinessAaron's is a leading, technology-enabled, omni-channel provider of lease-to-own ("LTO") and retail purchase solutions of appliances, electronics, furniture, and other home goods. Since its founding in 1955, Aaron's has been committed to serving the overlooked and underserved customer with a dedication to inclusion and improving the communities in which it operates. Through our portfolio of approximately 1,300 stores and our Aarons.com e-commerce platform, we provide consumers with LTO and purchase solutions for the products they need and want, with a focus on providing our customers with unparalleled customer service and an attractive value proposition, including competitive monthly payments and total cost of ownership, as compared to other LTO providers, high approval rates, and lease plan flexibility. In addition, the Company's business includes the operations of Woodhaven Furniture Industries ("Woodhaven"), which manufactures and supplies the majority of the bedding and a significant portion of the upholstered furniture leased and sold in Company-operated and franchised stores. |
| Basis of Presentation | Basis of Presentation The financial statements for the three months ended March 31, 2022 and comparable prior year period are consolidated financial statements of the Company and its subsidiaries, each of which is wholly-owned, and is based on the financial position and results of operations of the Company. Intercompany balances and transactions between consolidated entities have been eliminated. These condensed consolidated financial statements reflect the historical results of operations, financial position and cash flows of the Company in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The preparation of the Company's condensed consolidated financial statements in conformity with U.S. GAAP for interim financial information requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. Generally, actual experience has been consistent with management's prior estimates and assumptions. However, as described above, the extent to which the normalization of business trends since the start of the COVID-19 pandemic, and the resulting measures taken by the Company and federal and state governments will impact the Company's business will depend on future developments. These developments are uncertain and cannot be precisely predicted at this time. In many cases, management's estimates and assumptions are dependent on estimates of such future developments and may change in the future. The accompanying unaudited condensed consolidated financial statements do not include all information required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements. These financial statements should be read in conjunction with the financial statements and notes thereto included in the 2021 Annual Report. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of operating results that may be achieved for any other interim period or for the full year.
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| Reclassifications | ReclassificationsCertain reclassifications have been made to the prior periods to conform to the current period presentation. For previously reported interim and annual periods prior to December 31, 2021, the Company reported the additions to lease merchandise and the book value of lease merchandise sold or disposed as separate lines within operating activities in the condensed consolidated statements of cash flows. Effective with the year ended December 31, 2021, the Company revised its presentation of changes to lease merchandise to separately present the provision for lease merchandise write-offs, and combine the remaining operating activity-related changes in lease merchandise, with the exception of depreciation of lease merchandise, in a single line under changes in operating assets and liabilities in the condensed consolidated statements of cash flows. This revised presentation and the related adjustments to the prior period presentation do not have an impact on cash provided by operating activities. |
| Accounting Policies and Estimates | Accounting Policies and Estimates See Note 1 to the consolidated and combined financial statements in the 2021 Annual Report for an expanded discussion of accounting policies and estimates. Discussions of accounting estimates and application of accounting policies herein have also been updated as applicable to describe the uncertainty associated with any impacts of the COVID-19 pandemic described above.
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| Earnings Per Share | Earnings Per ShareEarnings per share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period. The computation of earnings per share assuming dilution includes the dilutive effect of stock options, restricted stock units ("RSUs"), restricted stock awards ("RSAs"), performance share units ("PSUs") and other awards issuable under the Company's employee stock purchase plan ("ESPP") (collectively, "share-based awards") as determined under the treasury stock method, unless the inclusion of such awards would have been anti-dilutive. |
| Revenue Recognition | Revenue Recognition The Company provides lease merchandise, consisting of appliances, electronics, furniture, and other home goods to its customers for lease under certain terms agreed to by the customer. Our stores and e-commerce platform offer leases with flexible ownership plans that can be renewed monthly up to 12, 18 or 24 months. The Company also earns revenue from the sale of merchandise to customers and its franchisees, and earns ongoing revenue from its franchisees in the form of royalties and through advertising efforts that benefit the franchisees. See Note 3 to these condensed consolidated financial statements for further information regarding the Company's revenue recognition policies and disclosures. |
| Accounts Receivable | Accounts Receivable Accounts receivable consist primarily of receivables due from customers on lease agreements, corporate receivables incurred during the normal course of business (primarily for vendor consideration and real estate leasing activities) and franchisee obligations. The Company maintains an accounts receivable allowance, under which the Company's policy is to record a provision for returns and uncollectible contractually due renewal payments based on historical payments experience, which is recognized as a reduction of lease and retail revenues within the condensed consolidated statements of earnings. Other qualitative factors are considered in estimating the allowance, such as current and forecasted business trends. The Company writes off customer lease receivables that are 60 days or more past due on pre-determined dates twice monthly.The Company also maintains an allowance for outstanding franchisee accounts receivable. The Company's policy is to estimate future losses related to certain franchisees that are deemed to have a higher risk of non-payment and record an allowance for these estimated losses. The estimated allowance on franchisee accounts receivable includes consideration of broad macroeconomic trends, such as the uncertainty surrounding the impacts of the normalization of current and future business trends associated with the COVID-19 pandemic on the franchisees' ability to satisfy their obligations. Accordingly, actual accounts receivable write-offs could differ from the allowance. The provision for uncollectible franchisee accounts receivable is recorded as bad debt expense in other operating expenses, net within the condensed consolidated statements of earnings.
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| Lease Merchandise | Lease Merchandise The Company’s lease merchandise is recorded at the lower of depreciated cost or net realizable value. The cost of merchandise manufactured by our Woodhaven operations is recorded at cost and includes overhead from production facilities, shipping costs and warehousing costs. The Company begins depreciating merchandise at the earlier of 12 months and one day from its purchase of the merchandise or when the item is leased to customers. Lease merchandise depreciates to a 0% salvage value over the lease agreement period when on lease, generally 12 to 24 months, and generally 36 months when not on lease. Depreciation is accelerated upon early payout. The Company's policies require weekly merchandise counts at its store-based operations, which include write-offs for unsalable, damaged, or missing merchandise inventories. Monthly cycle counting procedures are performed at both the Company's fulfillment centers and manufacturing facilities. Physical inventories are also taken at the manufacturing facilities annually. The Company also monitors merchandise levels and mix by division, store, and fulfillment center, as well as the average age of merchandise on hand. If obsolete merchandise cannot be returned to vendors, its carrying amount is adjusted to its net realizable value or written off. Generally, all merchandise not on lease is available for lease or sale. On a monthly basis, all damaged, lost or unsalable merchandise identified is written off. The Company records a provision for write-offs using the allowance method, which is included within lease merchandise, net within the condensed consolidated balance sheets. The allowance method for lease merchandise write-offs estimates the merchandise losses incurred but not yet identified by management as of the end of the accounting period based primarily on historical write-off experience. Other qualitative factors are considered in estimating the allowance, such as seasonality and uncertainty surrounding the impacts of the normalization of current and future business trends associated with the COVID-19 pandemic. Therefore, actual lease merchandise write-offs could differ from the allowance. The provision for write-offs is included in provision for lease merchandise write-offs in the accompanying condensed consolidated statements of earnings. The Company writes off lease merchandise on lease agreements that are 60 days or more past due on pre-determined dates twice monthly.
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| Assets Held for Sale | Assets Held for Sale Certain properties, consisting of parcels of land and commercial buildings, and certain company-owned vehicles met the held for sale classification criteria as of March 31, 2022 and December 31, 2021. Assets held for sale are recorded at the lower of their carrying value or fair value less estimated cost to sell and are classified within prepaid expenses and other assets in the condensed consolidated balance sheets. Depreciation is suspended on assets upon classification to held for sale. Gains and losses related to the sale of assets held for sale are recorded in other operating expenses, net or restructuring expenses, net (if the asset is a part of the Company's restructuring programs further described in Note 5 to these condensed consolidated financial statements) in the condensed consolidated statements of earnings. Such gains and losses were not significant for the three months ended March 31, 2022 and March 31, 2021. Management estimated the fair values of real estate properties using the market values for similar properties. Real estate properties represent $1.6 million and $1.2 million as of March 31, 2022 and December 31, 2021, respectively. These properties are considered Level 2 assets as defined below.
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| Estimated Claims Liability Costs | Estimated Claims Liability Costs Estimated claims liability costs are accrued primarily for workers compensation and vehicle liability, as well as general liability and group health insurance benefits provided to team members. These liabilities are recorded within estimated claims liability costs within accounts payable and accrued expenses in the condensed consolidated balance sheets. Estimates for these claims liabilities are made based on actual reported but unpaid claims and actuarial analysis of the projected claims run off for both reported and incurred but not reported claims. This analysis is based upon an assessment of the likely outcome or historical experience and considers a variety of factors, including the actuarial loss forecasts, company-specific development factors, general industry loss development factors and third-party claim administrator loss estimates of individual claims. The Company makes periodic prepayments to its insurance carriers to cover the projected claims run off for both reported and incurred but not reported claims, considering its retention or stop loss limits. In addition, we have prefunding balances on deposit and other insurance receivables with the insurance carriers which are recorded within prepaid expenses and other assets in our condensed consolidated balance sheets.
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| Segment Reporting | Segment ReportingAs of March, 31 2022, management concluded that the Company has one operating and reportable segment based on the nature of the financial information regularly reviewed by the chief operating decision maker to assess performance and allocate resources. We have also concluded that the Company has one reporting unit due to the fact that the components included within the operating segment have similar economic characteristics, such as the nature of the products and services provided, the nature of the customers we serve, and the interrelated nature of the components that are aggregated to form the sole reporting unit. The Company evaluates performance and allocates resources as a single operating segment based on revenue growth and pre-tax profit or loss from operations. |
| Goodwill | The Company’s goodwill is not amortized but is subject to an impairment test at the reporting unit level annually as of October 1 and more frequently if events or circumstances indicate that an impairment may have occurred. An interim goodwill impairment test is required if the Company believes it is more likely than not that the carrying amount of its reporting unit exceeds the reporting unit's fair value. |
| Fair Value Measurement | Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets. Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3—Valuations based on unobservable inputs reflecting the Company's own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. The Company measures a liability related to its non-qualified deferred compensation plan, which represents benefits accrued for participants that are part of the plan and is valued at the quoted market prices of the participants' investment election, at fair value on a recurring basis. The Company measures assets held for sale at fair value on a nonrecurring basis and records impairment charges when they are deemed to be impaired. The fair values of the Company's other current financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their carrying values due to their short-term nature. The Company's outstanding debt borrowings as of December 31, 2021 were subject to a variable interest rate and short term maturities. Therefore, the fair value of these borrowings also approximates its carrying value. These assets and liabilities are measured within Level 2 of the fair value hierarchy. The Company also measures certain non-financial assets at fair value on a nonrecurring basis, such as goodwill, intangible assets, operating lease right-of-use assets, and property, plant, and equipment, in connection with periodic evaluations for potential impairment.
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| Recent Accounting Pronouncements | Recent Accounting Pronouncements Adopted In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). The standard provides temporary guidance to ease the potential burden in accounting for reference rate reform primarily resulting from the cessation of the publication of certain tenors of the London Interbank Overnight ("LIBO") rate on December 31, 2021, with complete elimination of the publication of the LIBO rate by June 30, 2023. The amendments in ASU 2020-04 are elective and apply to all entities that have contracts referencing the LIBO rate. The Company's outstanding debt borrowing as of December 31, 2021 included an election of a LIBO rate that has not yet eliminated. Also, as further described in Note 6 to these condensed consolidated financial statements, the Company modified its debt agreement in conjunction with the acquisition of BrandsMart. Borrowings under the new debt agreement bear interest at a rate per annum equal to, at the option of the Company, (i) the forward-looking term rate based on the Secured Overnight Financing Rate ("SOFR") plus an applicable margin ranging between 1.50% and 2.25%, based on the Company's Total Net Debt to EBITDA Ratio (as defined in the debt agreement), or (ii) the base rate plus an applicable margin, which is 1.00% lower than the applicable margin for SOFR loans. Therefore, there is no impact on the consolidated financial statements of the Company related to the adoption of ASU 2020-04.
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Basis and Summary of Significant Accounting Policies (Tables) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule Of Company Operated Store Activity | The following table presents store count by ownership type:
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| Calculation of Dilutive Stock Awards | The following table shows the calculation of weighted-average shares outstanding assuming dilution:
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| Accounts Receivable Net of Allowances | Accounts receivable, net of allowances, consist of the following:
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| Components of the Accounts Receivable Provision | The following table shows the components of the accounts receivable allowance:
The following table shows the components of the accounts receivable provision, which includes amounts recognized for bad debt expense and the provision for returns and uncollected payments:
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| Schedule of Lease Merchandise | The following is a summary of lease merchandise, net of accumulated depreciation and allowances:
1 Includes Woodhaven raw materials, finished goods and work-in-process inventory that has been classified within lease merchandise in the condensed consolidated balance sheets of $19.1 million and $20.2 million as of March 31, 2022 and December 31, 2021, respectively.
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Allowance for Lease Merchandise | The following table shows the components of the allowance for lease merchandise write-offs:
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| Schedule of Prepaid Expenses and Other Assets | Prepaid expenses and other assets consist of the following:
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| Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following:
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| Schedule of Stockholders Equity | Changes in stockholders' equity for the three months ended March 31, 2022 and 2021 are as follows:
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Fair Value Measurement (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table summarizes financial liabilities measured at fair value on a recurring basis:
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| Assets Measured at Fair Value on Nonrecurring Basis | The following table summarizes non-financial assets measured at fair value on a nonrecurring basis:
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Revenue Recognition (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disaggregation of Revenue | The following table disaggregates revenue by source:
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Restructuring (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and Related Costs | The following table summarizes restructuring charges for the three months ended March 31, 2022 and 2021, respectively, under the Company's restructuring programs:
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| Schedule of Restructuring Reserve | The following table summarizes the activity for the three months ended March 31, 2022 and the corresponding accrual balance as of March 31, 2022 for the restructuring programs:
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Basis and Summary of Significant Accounting Policies - Narrative (Details) $ in Millions |
Apr. 01, 2022
USD ($)
store
|
Nov. 30, 2020 |
Mar. 31, 2022
store
|
Mar. 31, 2021
store
|
|---|---|---|---|---|
| Significant Accounting Policies [Line Items] | ||||
| Number of retail stores | 1,306 | 1,336 | ||
| BrandsMart U.S.A. | Subsequent Event | ||||
| Significant Accounting Policies [Line Items] | ||||
| Percentage of interests acquired | 100.00% | |||
| Consideration transferred | $ | $ 230 | |||
| Number of retail stores | 10 | |||
| PROG Holdings | ||||
| Significant Accounting Policies [Line Items] | ||||
| Shares issued per entity share, conversion ratio | 0.5 |
Basis and Summary of Significant Accounting Policies - Store Count by Ownership Type (Details) - store |
Mar. 31, 2022 |
Mar. 31, 2021 |
|---|---|---|
| Significant Accounting Policies [Line Items] | ||
| Number of retail stores | 1,306 | 1,336 |
| Company-operated Stores | ||
| Significant Accounting Policies [Line Items] | ||
| Number of retail stores | 1,070 | 1,089 |
| Franchised Stores | ||
| Significant Accounting Policies [Line Items] | ||
| Number of retail stores | 236 | 247 |
Basis and Summary of Significant Accounting Policies - Earnings Per Share (Details) - shares shares in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Accounting Policies [Abstract] | ||
| Weighted Average Shares Outstanding (in shares) | 31,062 | 34,262 |
| Dilutive Effect of Share-Based Awards (in shares) | 698 | 657 |
| Weighted Average Shares Outstanding Assuming Dilution (in shares) | 31,760 | 34,919 |
| Anti-dilutive securities excluded from the computation of earnings per share assuming dilution (in shares) | 500 | 100 |
Basis and Summary of Significant Accounting Policies - Revenue Recognition (Details) - Sales And Lease Ownership |
Mar. 31, 2022 |
|---|---|
| Agreement One | |
| Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
| Lease agreement period | 12 months |
| Agreement Two | |
| Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
| Lease agreement period | 18 months |
| Agreement Three | |
| Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
| Lease agreement period | 24 months |
Basis and Summary of Significant Accounting Policies - Accounts Receivable Net of Allowances (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
|
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
| Accounts receivable, net of allowances | $ 26,930 | $ 29,443 |
| Threshold period past due for write-off of trade accounts receivable | 60 days | |
| Customers | ||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
| Accounts receivable, net of allowances | $ 7,343 | 8,635 |
| Corporate | ||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
| Accounts receivable, net of allowances | 10,603 | 11,478 |
| Franchisee | ||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
| Accounts receivable, net of allowances | $ 8,984 | $ 9,330 |
Basis and Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
| Beginning Balance | $ 7,163 | $ 7,613 |
| Accounts Written Off, net of Recoveries | (8,665) | (7,456) |
| Accounts Receivable Provision | 6,753 | 3,763 |
| Ending Balance | $ 5,251 | $ 3,920 |
Basis and Summary of Significant Accounting Policies - Components of the Accounts Receivable Provision (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Accounting Policies [Abstract] | ||
| Bad Debt (Reversal) Expense | $ (175) | $ (700) |
| Provision for Returns and Uncollectible Renewal Payments | 6,928 | 4,463 |
| Accounts Receivable Provision | $ 6,753 | $ 3,763 |
Basis and Summary of Significant Accounting Policies - Allowance for Lease Merchandise Write-offs (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Components of the allowance of leases merchandise write-offs: | ||
| Beginning Balance | $ 12,339 | $ 11,599 |
| Merchandise Written off, net of Recoveries | (22,183) | (14,849) |
| Provision for Write-offs | 21,957 | 13,417 |
| Ending Balance | $ 12,113 | $ 10,167 |
Basis and Summary of Significant Accounting Policies - Components of Prepaid Expenses and Other Assets (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Prepaid Expenses | $ 19,870 | $ 14,651 |
| Insurance Related Assets | 26,249 | 30,757 |
| Company-Owned Life Insurance | 14,862 | 15,808 |
| Assets Held for Sale | 1,910 | 1,550 |
| Deferred Tax Asset | 8,013 | 7,994 |
| Other Assets | 26,895 | 15,240 |
| Prepaid Expense and Other Assets | $ 97,799 | $ 86,000 |
Basis and Summary of Significant Accounting Policies - Assets Held for Sale (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
|
| Accounting Policies [Abstract] | ||
| Restructuring costs | $ 1,600 | $ 1,200 |
| Assets Held for Sale | $ 1,910 | $ 1,550 |
Basis and Summary of Significant Accounting Policies - Sale-Leaseback Transactions (Details) $ in Millions |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
USD ($)
store
| |
| Lessee, Lease, Description [Line Items] | |
| Number of company operated stores | store | 3 |
| Proceeds from sale and leaseback transactions | $ 5.7 |
| Operating Segments | |
| Lessee, Lease, Description [Line Items] | |
| Gain related to the sale and leaseback transaction | $ 3.8 |
Basis and Summary of Significant Accounting Policies - Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Accounts Payable | $ 83,865 | $ 83,118 |
| Estimated Claims Liability Costs | 58,847 | 57,381 |
| Accrued Salaries and Benefits | 52,141 | 57,837 |
| Accrued Real Estate and Sales Taxes | 21,528 | 22,754 |
| Other Accrued Expenses and Liabilities | 26,321 | 23,580 |
| Accounts Payable and Accrued Liabilities | $ 242,702 | $ 244,670 |
Basis and Summary of Significant Accounting Policies - Segment Reporting (Details) |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
segment
| |
| Accounting Policies [Abstract] | |
| Number of operating segments | 1 |
| Number of reportable segments | 1 |
| Number of reporting units | 1 |
Basis and Summary of Significant Accounting Policies - Goodwill (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Goodwill | $ 13,022 | $ 13,134 |
Basis and Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - Credit Facility |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
| Basis spread, base rate below SOFR | 1.00% |
| Minimum | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |
| New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
| Debt instrument, basis spread on variable rate | 1.50% |
| Maximum | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |
| New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
| Debt instrument, basis spread on variable rate | 2.25% |
Fair Value Measurement - Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair value on a recurring basis - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Level 1 | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Deferred Compensation Liability | $ 0 | $ 0 |
| Level 2 | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Deferred Compensation Liability | (9,646) | (10,930) |
| Level 3 | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Deferred Compensation Liability | $ 0 | $ 0 |
Fair Value Measurement - Assets Measured At Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Assets Held for Sale | $ 1,910 | $ 1,550 |
| Level 1 | Fair value on a nonrecurring basis | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Assets Held for Sale | 0 | 0 |
| Level 2 | Fair value on a nonrecurring basis | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Assets Held for Sale | 1,910 | 1,550 |
| Level 3 | Fair value on a nonrecurring basis | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Assets Held for Sale | $ 0 | $ 0 |
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Disaggregation of Revenue [Line Items] | ||
| Revenues | $ 456,082 | $ 481,054 |
| Lease Revenues and Fees | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenues | 409,318 | 427,641 |
| Lease Revenues and Fees | Canada | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenues | 4,900 | 5,900 |
| Retail Sales | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenues | 12,607 | 16,446 |
| Non-Retail Sales | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenues | 27,827 | 29,949 |
| Franchise Royalties and Fees | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenues | 6,118 | 6,710 |
| Other | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenues | $ 212 | $ 308 |
Revenue Recognition - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Disaggregation of Revenue [Line Items] | ||
| Revenues | $ 456,082 | $ 481,054 |
| Leases | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenues | 7,000 | 6,200 |
| Franchise Royalties and Fees | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenues | 6,118 | 6,710 |
| Franchise Royalties and Fees | Transferred over Time | ||
| Disaggregation of Revenue [Line Items] | ||
| Revenues | $ 4,900 | $ 5,300 |
| Sales and Lease Ownership and HomeSmart | ||
| Disaggregation of Revenue [Line Items] | ||
| Royalty payment rate | 6.00% | |
| Agreement One | Sales And Lease Ownership | ||
| Disaggregation of Revenue [Line Items] | ||
| Lease agreement period | 12 months | |
| Agreement Two | Sales And Lease Ownership | ||
| Disaggregation of Revenue [Line Items] | ||
| Lease agreement period | 18 months | |
| Agreement Three | Sales And Lease Ownership | ||
| Disaggregation of Revenue [Line Items] | ||
| Lease agreement period | 24 months | |
Commitments and Contingencies (Details) - USD ($) |
Apr. 01, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|---|
| Other Commitments [Line Items] | |||
| Portion that company might be obligated to repay in the event franchisees defaulted | $ 7,500,000 | ||
| Fair value of franchisee-related borrowings | 2,000,000 | $ 2,200,000 | |
| Loan facility to franchisees, maximum commitment amount | 15,000,000 | ||
| Loss contingency accrual | 1,700,000 | $ 1,700,000 | |
| Subsequent Event | |||
| Other Commitments [Line Items] | |||
| Loan facility to franchisees, maximum commitment amount | $ 12,500,000 | ||
| Minimum | |||
| Other Commitments [Line Items] | |||
| Range of possible loss not accrued | 0 | ||
| Maximum | |||
| Other Commitments [Line Items] | |||
| Range of possible loss not accrued | 3,000,000 | ||
| Estimate of possible loss | $ 500,000 |
Restructuring - Narrative (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | ||||
|---|---|---|---|---|---|---|
|
Mar. 31, 2022
USD ($)
store
|
Mar. 31, 2021
USD ($)
|
Mar. 31, 2020 |
Dec. 31, 2022
store
|
Dec. 31, 2021
store
|
Dec. 31, 2020
store
|
|
| Restructuring Cost and Reserve [Line Items] | ||||||
| Restructuring expenses, net | $ 3,335 | $ 3,441 | ||||
| Real Estate Repositioning and Optimization Restructuring Program | ||||||
| Restructuring Cost and Reserve [Line Items] | ||||||
| Number of store closures | store | 164 | 164 | 164 | |||
| Restructuring expenses, net | $ 3,300 | |||||
| Restructuring and related cost incurred to date | $ 44,700 | |||||
| Real Estate Repositioning and Optimization Restructuring Program | Forecast | ||||||
| Restructuring Cost and Reserve [Line Items] | ||||||
| Number of store closures | store | 63 | |||||
| Real Estate Repositioning and Optimization Restructuring Program | Minimum | ||||||
| Restructuring Cost and Reserve [Line Items] | ||||||
| Strategic plan, term | 3 years | |||||
| Real Estate Repositioning and Optimization Restructuring Program | Maximum | ||||||
| Restructuring Cost and Reserve [Line Items] | ||||||
| Strategic plan, term | 4 years | |||||
Restructuring - Summary of Restructuring Charges (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Restructuring Cost and Reserve [Line Items] | ||
| Restructuring Expenses, Net | $ 3,335 | $ 3,441 |
| Right-of-Use Asset Impairment | ||
| Restructuring Cost and Reserve [Line Items] | ||
| Restructuring Expenses, Net | 1,178 | 1,871 |
| Operating Lease Charges | ||
| Restructuring Cost and Reserve [Line Items] | ||
| Restructuring Expenses, Net | 1,442 | 1,091 |
| Fixed Asset Impairment | ||
| Restructuring Cost and Reserve [Line Items] | ||
| Restructuring Expenses, Net | 245 | 321 |
| Severance | ||
| Restructuring Cost and Reserve [Line Items] | ||
| Restructuring Expenses, Net | 418 | 37 |
| Other Expenses | ||
| Restructuring Cost and Reserve [Line Items] | ||
| Restructuring Expenses, Net | 113 | 121 |
| Net Gain on Sale of Store Properties and Related Assets | ||
| Restructuring Cost and Reserve [Line Items] | ||
| Restructuring Expenses, Net | $ (61) | $ 0 |
Restructuring - Summary of Accruals of Restructuring Programs (Details) - Severance $ in Thousands |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
USD ($)
| |
| Restructuring Reserve [Roll Forward] | |
| Balance at January 1, 2022 | $ 0 |
| Restructuring Severance Charges | 418 |
| Payments | (32) |
| Balance at March 31, 2022 | $ 386 |