Author Topic: RCII - Rent-A-Center  (Read 12459 times)

flesh

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Re: RCII - Rent-A-Center
« Reply #50 on: April 16, 2018, 02:58:13 PM »
Core sales of rcii are decreasing slower than aaron's. Trying to figure out how much of acceptance now's sales are included in core's top line number (when inventory is repossessed/resold) for each company. Trying to isolate core and answer what's different vs aarons core. Acceptance now's sales increased concurrently with core's declines. For me this is the crux. Help here would be nice.

Is it a melting ice cube or a credit cycle play getting cheap. Did mgmt party top of cycle when they should have pondered? I don't believe core goes away, slowly shrinking for decades imo... need to get closer on pace of entropy.



MrB

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Re: RCII - Rent-A-Center
« Reply #51 on: April 26, 2018, 01:17:43 AM »
Rumor mill -- "Rent-A-Center deal expected next week"


https://seekingalpha.com/news/3348662-rent-center-deal-expected-next-week

LowIQinvestor

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Re: RCII - Rent-A-Center
« Reply #52 on: May 01, 2018, 10:15:32 AM »
Earnings Out!
Solid deleveraging & just 2 months until a potential sale:

For the three months ended March 31, 2018, the Company generated $84.5 million of cash from operations, ended the first quarter with $81.4 million of cash and cash equivalents, and reduced its outstanding debt balance by $77.6 million. Subsequent to quarter end, debt on the revolver was reduced to a zero balance as of April 30, 2018.

https://www.businesswire.com/news/home/20180430006461/en/Rent-A-Center-Reports-Quarter-2018-Results

LowIQinvestor

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Re: RCII - Rent-A-Center
« Reply #53 on: May 01, 2018, 12:29:17 PM »
Does any here Allan Mecham's thesis on RCII?

It appears to be a very large position for Arlington Value.

The last time I followed him into an investment was Cimpress! And I owe him one!

Foreign Tuffett

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Re: RCII - Rent-A-Center
« Reply #54 on: May 01, 2018, 12:44:44 PM »
Rumor mill -- "Rent-A-Center deal expected next week"


https://seekingalpha.com/news/3348662-rent-center-deal-expected-next-week

Any idea on who is leaking all the info. And why?

flesh

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Re: RCII - Rent-A-Center
« Reply #55 on: May 02, 2018, 10:02:49 AM »
q1 adj ebitda 25m = 100 m run rate plus 75m (low end of run rate savings) gets you to 175m ebitda assuming it doesnt melt and they can hit low end of guidance. 935m end of cy 18 EV at 9.43/share, adding 85m remaining fcf for year to current cash, 81m.

175m
-50m capex (high end guided)
-36m interest
= 94m pre tax
-25% tax
=70.5m
fcf/ev end of cy 18 = 13x
fcf + I /ev= 9x
fcf/mkt cap = 7x

I'd say it's too cheap IF it doesn't melt or melts very slowly and/or D and A are lower than 50m run rate and/or tax rate is lower than 25% and/or run rate savings are larger than above and closer to high end of guidance. Need to triangulate the variables.

If you apply the end of cy 18 cash to debt, lower capex a bit, hit closer to high end of run rate savings, flat line sales, lower tax a bit, you have a double pretty easy.

They sold 31 stores for 9.5m claiming they were in the "third quartile" @ 306k per store. On their franchisee link, they claim a minimum startup expense of 350k. 2450 stores x 350k = 857m, or you get ANOW almost for free, including end of cy 18 cash.

« Last Edit: May 02, 2018, 10:31:14 AM by flesh »

LowIQinvestor

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Re: RCII - Rent-A-Center
« Reply #56 on: May 02, 2018, 10:09:11 AM »
q1 adj ebitda 25m = 100 m run rate plus 75m (low end of run rate savings) gets you to 175m ebitda assuming it doesnt melt and they can hit low end of guidance. 935m end of cy 18 EV at 9.43/share, adding 85m remaining fcf for year to current cash, 81m.

175m
-50m capex (high end guided)
-36m interest
= 94m pre tax
-25% tax
=70.5m
fcf/ev end of cy 18 = 13x
fcf + I /ev= 9x
fcf/mkt cap = 7x

I'd say it's too cheap IF it doesn't melt or melts very slowly and/or D and A are lower than 50m run rate and/or tax rate is lower than 25% and/or run rate savings are larger than above and closer to high end of guidance. Need to triangulate the variables.

If you apply the end of cy 18 cash to debt, lower capex a bit, hit closer to high end of run rate savings, flat line sales, lower tax a bit, you have a double pretty easy.



Yes, If things continue to improve (FCF) then I think you are right about it being a double.

AND

52% SHORT INTEREST could add some extra juice in the short term.


given2invest

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Re: RCII - Rent-A-Center
« Reply #57 on: May 02, 2018, 10:29:55 AM »
Rumor mill -- "Rent-A-Center deal expected next week"


https://seekingalpha.com/news/3348662-rent-center-deal-expected-next-week

Any idea on who is leaking all the info. And why?

I can guess who - Engaged Capital.  The Deal/Street.com author writes regularly leaks from companies where Engaged PM is on the board.  In just the last 12 months he has written leaks on HAIN, TIVO, and RCII. 

The why is a better question...if deals are going smoothly you don't need to leak.   You leak to try and get interest from other parties/get the price higher so the bids are higher.  It's not a good sign.

BeerBBQ

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Re: RCII - Rent-A-Center
« Reply #58 on: May 02, 2018, 11:06:46 AM »


They sold 31 stores for 9.5m claiming they were in the "third quartile" @ 306k per store. On their franchisee link, they claim a minimum startup expense of 350k. 2450 stores x 350k = 857m, or you get ANOW almost for free, including end of cy 18 cash.

Didn't they also say that the royalty keeps Ebitda the same?  Does that mean they could franchise all of their stores for similar proceeds and maintain current level of EBITDA?
« Last Edit: May 02, 2018, 11:12:59 AM by BeerBBQ »

writser

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Re: RCII - Rent-A-Center
« Reply #59 on: May 02, 2018, 11:29:02 AM »
Rumor mill -- "Rent-A-Center deal expected next week"


https://seekingalpha.com/news/3348662-rent-center-deal-expected-next-week

Any idea on who is leaking all the info. And why?

I can guess who - Engaged Capital.  The Deal/Street.com author writes regularly leaks from companies where Engaged PM is on the board.  In just the last 12 months he has written leaks on HAIN, TIVO, and RCII. 

The why is a better question...if deals are going smoothly you don't need to leak.   You leak to try and get interest from other parties/get the price higher so the bids are higher.  It's not a good sign.

Good stuff, thanks.
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