Good morning. My name is Brianna, and I will be your conference coordinator. At this time, I would like to welcome everyone to the Aaron's Company third quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. I will now turn the call over to Mr. Michael Dickerson, Vice President of Corporate Communications and Investor Relations for Aaron's. You may begin your conference. Thank you, and good morning, everyone. Welcome to the Aaron's Company third quarter 2021 earnings conference call. Joining me this morning are Douglas Lindsay, Aaron's Chief Executive Officer, Steve Olsen, Aaron's President, and Kelly Wall, Aaron's Chief Financial Officer. After our prepared remarks, we will open the call for questions. Many of you have already seen a copy of our earnings release issued this morning. For those of you that have not, it is available on the investor relations section of our website at investor.aarons.com. During this call, certain statements we make will be forward-looking, including our financial performance outlook for 2021. I want to call your attention to our safe harbor provision for forward-looking statements that can be found at the end of our earnings release. The safe harbor provision identifies risks that may cause actual results to differ materially from the content of our forward-looking statements. Please see our Form 10-K for the year ended December 31, 2020, and other subsequent periodic filings with the SEC for a description of the risks related to our business that may cause actual results to differ materially from our forward-looking statements. On today's call, we will be referring to certain non-GAAP financial measures, including EBITDA and adjusted EBITDA, non-GAAP net earnings and non-GAAP EPS, which have been adjusted for certain items which may affect the comparability of our performance with other companies. These non-GAAP measures are detailed in the reconciliation tables included in our earnings release. With that, I will now turn the call over to our CEO, Douglas Lindsay. Thanks, Mike, and thank you for joining us today to discuss our third quarter results. I'm pleased to report another quarter of strong operating performance and continued positive momentum at The Aaron's Company. In the nearly one year since our separation, we have significantly strengthened our leadership position in the direct-to-consumer lease-to-own market and are tracking well ahead of our long-term strategic plan. Continued investments in our best-in-class e-commerce channel, predictive lease decisioning engine, and our high-performing Gen Next stores are driving greater productivity and growth in our business. Through the tremendous efforts of our team, we continue to transform Aaron's go-to-market strategy by delivering customer-friendly digital solutions, easy lease approvals, and an enhanced shopping experience. Since 1955, Aaron's has been committed to serving a customer base that has too often been overlooked or excluded from preferred retail experiences. Today, we are leveraging our long and deep understanding of this customer segment to say yes when others say no. To provide our customers with access to great products on flexible and affordable terms, and to deliver a seamless customer experience, not only across our distributed store network, but also digitally through our award-winning e-commerce platform. Whether our customers interact with us in one of our beautiful new Gen Next stores or via their mobile device, we continue to provide a growing assortment of products they want and need, with low monthly payments that fit their budget and best-in-class customer service. I'm pleased to announce that our third quarter 2021 results have again exceeded our expectations through continued growth in the size of our lease portfolio, same-store revenues and e-commerce revenues. As a result, we returned another $37.5 million to shareholders in the quarter in the form of share repurchases. This brings us to a total of nearly $100 million of capital returned to shareholders thus far this year. With strong third quarter results, we are again raising our revenue and earnings outlook for the full year 2021. In the third quarter, same-store revenues grew 4.6% compared to the prior year, the sixth consecutive quarter of positive same-store revenue growth. The improvement was primarily driven by an 8.7% larger lease portfolio size entering the third quarter, partially offset by a lower level of customer payment activity compared to the prior year. Our same-store lease portfolio size continues to grow at a healthy pace, ending the third quarter up 6.1% compared to the prior year. We attribute this growth primarily to strong demand for our products, higher average ticket, the favorable impact of centralized lease decisioning, and the residual impact of government stimulus on the portfolio. As discussed previously, our predictive lease decisioning engine is working very well and enables us to better match the customer's lease payment with their financial position, with the goal of helping more customers achieve ownership and lowering our overall cost to serve. In addition, our lease decisioning algorithms allow us to be flexible in responding to changes in the macroeconomic environment and to optimize outcomes that drive profitability. As of the end of the third quarter, more than 83% of our total lease portfolio is comprised of lease agreements that were originated through our centralized decisioning platforms. This compares to approximately 60% at the beginning of 2021. As we mentioned last quarter, lease payment activity in 2021 has exceeded historical levels due to the government stimulus provided to our customer, leading to higher lease renewal rates and lower write-offs. As we saw in the third quarter and expect to see over the next three,four quarters, customer payment activity continues to normalize. Because of investments we've made in centralized decisioning and lease servicing technologies, we expect 2022 lease renewal rates to ultimately settle above pre-pandemic levels, but below the level we expect for the full year 2021. We also expect lease merchandise write-offs in 2022 to settle below pre-pandemic levels, but above the level we expect for full year 2021. In addition to investments in our decisioning technology, we also continue to invest in our e-commerce channel and our Gen Next strategy. Our e-commerce channel continues to grow at double-digit rates, representing 14.3% of total lease revenues in the quarter. The growth in our portfolio of leases generated online is driving improvements to our overall margin performance as we leverage the fixed cost structure of our store and supply chain assets to serve customers that are seeking a virtual shopping experience, low monthly payments, and free delivery. Ongoing investments in digital marketing and our customers' online experience are driving growth in this important channel. Specifically, e-commerce investments are leading to an enhanced shopping experience driven by personalization and richer product content, improved customer visibility into products that are available for same or next-day delivery, and a broader assortment that includes new product categories. Today, we have more than 3,000 products on aarons.com, which has doubled from a year ago. Our express delivery program accounts for approximately 30% of e-commerce volume. Because of this, we're generating a higher customer conversion rate, lowering our effective acquisition costs, and delivering higher customer satisfaction. I could not be happier with the efforts of our team and the growing marketplace we're creating on aarons.com. As we discussed last quarter, our Gen Next stores continue to perform at a high level. During the third quarter, we increased the size of our Gen Next store set by 22 to end the quarter with 86 locations, and we believe we remain on track to have more than 100 Gen Next stores by the end of the year. To date, our portfolio of Gen Next stores is generating results that are exceeding our targeted 25% internal rate of return and five year payback period. Equally as encouraging, monthly lease originations in Gen Next stores opened for less than one year, again, grew at a rate of more than 20 percentage points higher than our average legacy stores. As we accelerate the rollout of new Gen Next stores, we continue to maintain a disciplined approach around our execution of this strategy. Before I turn the call over to Kelly, let me reiterate how pleased I am with the company's strong performance in the third quarter. Our merchandising and supply chain teams have performed exceptionally well by getting ahead of market disruptions by procuring inventory and expanding output from our Woodhaven manufacturing facilities. As a result, we are entering the holiday season with strong inventory levels in both our stores and distribution centers, and we've been increasing prices to respond to inflationary pressures and maintain product margins. I remain encouraged by the underlying performance of both our store and e-commerce channels as we're tracking well ahead of our five-year plan on revenue and earnings. I'll now turn the call over to Kelly to discuss our financial results. Thank you, Douglas. For the third quarter of 2021, total revenues were $452.2 million, compared with $441 million for the third quarter of 2020, an increase of 2.5%. The increase in revenues was primarily due to the increased size of our lease portfolio, partially offset by the expected lower customer payment activity during the quarter and the reduction of 79 franchise stores during the 15-month period ended September 30, 2021. Lease revenues in the third quarter of this year also benefited from an increase in ticket size or monthly rent per agreement that is offsetting the inflation we are experiencing in the cost of lease merchandise. On a same-store basis, lease and retail revenues increased 4.6% in the third quarter compared to the prior year quarter. As Douglas mentioned, this is our sixth consecutive positive quarter of same-store revenue growth. Leases originated in both our e-commerce and in-store channels contributed to our revenue growth, which was primarily driven by a larger same-store lease portfolio size, partially offset by the expected lower customer payment activity in the quarter. More specifically, in the third quarter of this year, our customer lease renewal rate was 89.7%, which was approximately 230 basis points higher than the three-year third quarter pre-pandemic average, but was approximately 130 basis points lower than the third quarter of last year. For any period, the customer lease renewal rate is calculated by dividing the amount of customer payments recorded on an accrual basis as of the end of such period by the amount of total customer lease payments due for renewal during that period. As discussed on our last earnings call, the benefits to our customer from government stimulus programs declined in the third quarter and, as expected, resulted in lower customer payment activity as compared to the prior year. We expect customer payment activity to continue to decline year-over-year for the next three or four quarters. I will point out that a 100 basis point change up or down in customer lease renewal rates or write-offs on a $1.6 billion annual portfolio of total collectible customer lease payments results in a $16 million change in EBITDA. Additionally, we continue to expect that customer payment activity will benefit from our investments in centralized decisioning. We estimate that this technology has improved lease renewal rates by over 100 basis points compared to the pre-pandemic levels, while also materially improving the customer experience and simplifying the day-to-day activities at our stores. E-commerce revenues increased 13.3% versus the third quarter of 2020 and represented 14.3% of overall lease revenues compared to 13.1% in the third quarter of the prior year. We continue to make investments in this important channel that we believe will continue to drive long-term growth for the company. The company ended the third quarter of 2021 with a lease portfolio size for all company-operated stores of $132.2 million, an increase of 5.8% compared to a lease portfolio size of $125 million on September 30 of last year. As a reminder, lease portfolio size represents the next month's total collectible lease payments from our aggregate outstanding customer lease agreements. Management believes this is one of the metrics that is important in understanding the drivers of future lease revenue. Total operating expenses, excluding restructuring expenses and spin-related costs, were up $15.7 million in the quarter as compared to the third quarter of last year. This increase is due primarily to higher personnel costs and a higher provision for lease merchandise write-offs. Personnel costs increased $5.1 million in the third quarter of 2021 as compared to the prior year, primarily due to higher wages in our stores, additional personnel to support our key strategic initiatives and higher stand-alone public company costs. Additionally, personnel costs were lower than anticipated during the third quarter this year as staffing levels in our stores remain below our operational targets due to the current challenges in the U.S. labor market for retail-based hourly employees. Other operating expenses were relatively flat to the prior year period due to higher occupancy, shipping and handling costs, professional services, and bank and credit card-related fees. These increases were partially offset by lower advertising costs in the third quarter of 2021 versus the prior year period. The provision for lease merchandise write-offs as a percentage of lease revenues and fees was 4.9% for the three months ended September 30, 2021, compared to an all-time low of 2.4% in the comparable period in 2020. The increase in write-offs in the third quarter of this year compared to last year was primarily due to lower customer payment activity following several quarters where our customers received financial assistance in the form of government stimulus payments and supplemental federal unemployment benefits. This normalization in write-offs was partially offset by the continued favorable impact of our technology investments, which include decisioning algorithms and customer payment platforms, as well as our team's strong operational execution. As we discussed on prior earnings calls, we continue to expect that annual write-offs will be between 4%-5% of lease revenues and fees. Adjusted EBITDA for the company was $53.6 million for the third quarter of 2021, compared with $64.3 million for the same period in 2020, a decrease of $10.7 million or 16.6%. As a percentage of revenues, adjusted EBITDA margin was 11.9% in the third quarter of 2021, compared to 14.6% for the same period in 2020. This expected decline in adjusted EBITDA and adjusted EBITDA margin was due to lower customer payment activity, higher lease merchandise write-offs, and higher personnel costs compared to the prior year levels. On a non-GAAP basis, diluted earnings per share were $0.83 in the third quarter of 2021, compared with non-GAAP diluted earnings per share of $1.10 for the same quarter in 2020. Cash generated from operating activities was $30.2 million for the third quarter of 2021, a decline of $92.6 million compared to the third quarter of 2020. This decline was primarily due to incremental purchases of lease merchandise to meet increased customer demand and to mitigate the impact of anticipated supply chain challenges ahead of the upcoming holiday season. In addition, the cost of our lease merchandise was adversely impacted by inflationary pressure. During the third quarter, the company purchased approximately 1,333,000 shares of Aaron's common stock for a total purchase price of approximately $37.5 million and through a 10b5-1 plan, continued to repurchase shares into the first month of the current quarter. For the year-to-date period ended October 22, 2021, the company has repurchased 3,034,000 shares for approximately $90.4 million. As of October 22, we had approximately $60 million remaining under the company's $150 million share repurchase program that was approved by our board in March of this year and ends December 31, 2023. Additionally, the company's board of directors declared a regular quarterly cash dividend in August of $0.10 per share, which was paid on October 5. As of September 30, 2021, the company had a cash balance of $15 million, no outstanding debt, and total available liquidity of $248 million, which includes $233 million available under our unsecured revolving credit facility. Douglas highlighted in his remarks, we have again raised our full year revenue and adjusted EBITDA outlook for 2021. For the full year, we have increased our outlook for total revenues to between $1.82 billion and $1.83 billion. We also increased our outlook for adjusted EBITDA to between $225 million and $230 million. For the full year of 2021, we have maintained our outlook for an effective tax rate of 26%. We expect depreciation and amortization of approximately $70 million, and we expect the diluted weighted average share count for full year 2021 to be 34 million shares. We have not assumed any additional shares repurchased beyond what has been discussed earlier on the call. We have also increased our full year same store revenues outlook from a range of 6%-8% to a range of 7.5%-8.5%. This increase is primarily a result of the continued year-over-year growth in our lease portfolio size. We have maintained our expected capital expenditure range of $90 million-$100 million. We have reduced our free cash flow outlook for 2021 to $30 million-$40 million, primarily to reflect the significant investment in lease merchandise inventory the company has made to mitigate the impact of global supply chain challenges and the related inflationary pressures. Based on our current inventory levels, we do not anticipate any material challenges in meeting our customers' product demand as we end 2021 and head into 2022. As I have previously described, benefits to our customer from government stimulus programs have moderated in the third quarter. Our revised outlook continues to assume customer lease payment activity remains higher in the fourth quarter of 2021 when compared to pre-COVID-19 pandemic levels, but lower than the fourth quarter of 2020. At the same time, we believe the favorable impact of centralized lease decisioning, our digital servicing platforms, and other operational enhancements are contributing to a sustainable improvement in customer payment and write-off activity. Additionally, we expect write-offs will continue to be lower in the fourth quarter of 2021 when compared to pre-COVID-19 pandemic levels, but higher than the fourth quarter of 2020. Finally, our updated outlook assumes no significant deterioration in the current retail environment, state of the U.S. economy, or global supply chain as compared to their current conditions. With that, I will now turn the call over to the operator, who will assist with your questions. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypads. We have the first question on the phone lines from Kyle Joseph of Jefferies. Kyle, please go ahead. Hey, good morning, guys. Thanks for having me on. Congratulations on a good quarter. I just wanted to talk about, you know, your outlook for payment levels. I think and sorry, I missed it, but I think you gave the write-off levels for the quarter, and then you talked about kind of the long-term outlook. Just remind us about where that long-term outlook is versus kind of the historical range, kind of before centralized underwriting. Yeah. Hey, Kyle, it's Kelly. That's a great question. As we talked about you know, write-offs were up in the quarter, as we expected. Customer payment activity in the quarter was also not as strong as what we saw in the back half of last year and the first half of this year. Again, we covered that on our earlier call. As it relates to kind of what we expect going forward, you know, we did include some language in the earnings release, and we've also covered this in prior discussions and on the call last quarter. You know, as we move forward, the customer is no longer benefiting from the customer stimulus that they've enjoyed the last four quarters, you know, they're gonna be less liquid. We've talked about in the past, when our customer's less liquid our customer payment activity is lower. We do expect over the next three t o four quarters that the customer payment activity will be lower than what we've seen in the last four quarters, but higher than what we experienced pre-pandemic. The real driver there is centralized decisioning and the other operational changes that we've made. The centralized decisioning, you know, we estimate has added 100 basis points or better to our customer improvement is worth about $16 million on a. As we move forward and, you know, coming out of this, we'd expect to see just that, right? Customer payment activity lower and that reflected in lower lease renewal rates, as well as higher write-offs. We're encouraged again by the impact of centralized lease decisioning and the other operational changes we've made, which are having long-term positive benefits on the business. Great. Kelly will start, I'll just add one thing to that. Just this metric that we've provided this quarter, renewal rates at 89.7%. As we look at that historically, those rates have been pre-pandemic in kind of the 87%-88% range. We renew about that many of our customers. The remaining balance up to 100% of what we could collect would be, you know, product that we return and charge offs and then us working with the customer to ultimately sort of get them to ownership, and that's kind of what we do every month when we go to work. When the pandemic hit and stimulus began to roll out after the pandemic, we saw those renewal rates increase roughly 200 basis points -300 basis points in the second half of 2020. That elevated even further in the first half of 2021. Now what we're seeing in the third quarter, what Kelly just described, is a normalizing of our renewal rates, albeit to a higher level, we believe ultimately, because of centralized decisioning once we return to normalized levels over the next three t o four months. I just want to give you the timeline of kind of how that played out and what we're seeing, as we move forward to support Kelly's comments. Got it. Appreciate the color. A follow-up on that. How do you see demand for new leases trending with stimulus in the rearview, obviously, and inflationary environment on consumer goods, and you know, broadly a normalizing credit environment out there as well? Sure. I mean, in the quarter, we've seen strong demand both in our stores and our e-commerce channel. Our e-com channel in particular because of our inventory position in e-com at 13%. We're really happy with that. In terms of demand, obviously, there's been strong demand over the last few quarters as people are investing in their homes. We continue to see steady demand going into the fourth quarter. While we don't have a crystal ball, you know, we're optimistic about our inventory position and where we stand entering the fourth quarter. In terms of forecasting demand, it's we'll wait and see in the fourth quarter. Got it. One last one from me. Sounds like the Gen Next stores are doing very well. You know, has the performance there kind of shifted the outlook for the overall store count you guys provided when at the initial spin time? You know, it's interesting. The stores are doing really well. As I said, we're exceeding our pro forma, as we compare it to control groups. Our sales or what we deliver under our portfolio are up 20 points above our control group with a larger population of stores, now 86 stores in Gen Next. That's really, really encouraging. We've got a full pipeline. We're gonna do 100, roughly 100 stores this year. I would expect we do roughly the same, next year. I think what's changed is maybe our outlook on, store closures. The pace of store closures of what we've merged into other stores, bigger e-com and a more efficient cost structure, and so that's still our long-term objective. We're encouraged about the demand trends and the overall progress against our strategic plan. Got it. Thanks very much for answering my questions and congrats on a good quarter. Thanks, Kyle. Thank you. Thank you. The next question comes from Vincent Caintic from Stephens. Vincent, please go ahead. I've opened your line. Thank you. Good morning. Thanks for taking my questions. First, two questions. First a kind of a broad question and then second on the fourth quarter expectations. First just maybe if you could talk about and touch again on the inflationary pressures and how that's, how you think that would, you know, that might affect your business or how you're handling it, going forward. It's nice to see that you've, you know, placed those orders and built your inventory ahead of the holiday sales season. Just sort of how you're thinking about it, you know, broadly in terms of how we should think about gross profit margins and then also, labor costs and anything of that nature. Thank you. Sure. Vincent, I'll kick off, and then I'm gonna pass it to Steve Olsen to talk about specific product and supply chain issues. We're experiencing the same economic impact as everyone else. We're seeing price increases in our products, components, fuel, transportation, wages. Our merchandising group is doing a phenomenal job of getting ahead of it, keeping pace with cost increases through price increases in our lease rates. In the effort to preserve margin, and we've done a great job of that. As we commented, our fulfillment centers are full, and our stores are full of inventory going into the holiday season, so we've overcome a lot of that disruption and pivoted, which I'll let Steve talk about. As inflation rolls through the economy and the home sector. We can start having on a $1,000 product, you know, an increase of $150 at retail. We can pass a $10 increase to that customer that they can manage within their budgets over a 24-month period. We think based on our experience, credit tightening and inflation expands our market as our customers seek an offering other than a cash offering up front. We think it's a net-net positive as we move forward, and we feel like we've begun to see some of that in the demand trends. I'll kick it to Steve just on what he's seeing on the product side of things. Great. Thanks, Douglas. Good morning, Vincent. I'll first start on the supply chain side. We've been very proactive as Douglas referenced in his prepared remarks. We transitioned early good job on that. We have Woodhaven, which gives us a great view into raw material costs from a furniture standpoint, but allows us to pivot quickly and move to products that we may need to fill our core merchandise. Secondly, I'll talk on the, call it the, pricing side. The team's done a nice job on trends, on raw material costs. We're taking that information. As we receive price increases, as Douglas said, like everyone has, we quickly look at our lease rates, not only in the products that may have received the cost increases, but across the entire assortment. We balance those prices across the entire price ladder to ensure we're maintaining our margins. We continue to work through it, but what I'm pleased so far with how the merchandising team, supply chain teams are handling these inflationary environment. Yeah. Lastly, Vincent, on the labor question you had, we're seeing hourly wage rates increase. You know, it's a very competitive market, but the wage rates so nothing excessive. Okay, perfect. Okay. That's very detailed. Very helpful. Thank you. Just a quick follow-up. When I'm thinking about the fourth quarter, you know, normally a busy holiday sale season sales, Black Friday sales, other things. But you know, still not being in a normal season, and I know, you know, of course, last year we weren't in normal season, but anything that, how you're thinking about the competitive landscape or how basically retail has gone overall for the fourth quarter. Thank you. Hey, guys. This This is Steve again. Not really gonna comment on other retailers, but I will say, as Douglas mentioned in his prepared remarks, and I mentioned a few minutes ago, we're in a great inventory position. We're pleased with the demand across our categories, whether it's furniture, appliances, or electronics. We've put together a great marketing plan to really drive our business in the fourth quarter, which really includes a further investment in digital marketing. Those investments really go out and find new customers, engage with them, and then drive them to our website to you know, experience that great user experience they have on our website, as well as drive them into our stores. We're ready for the fourth quarter. A couple questions. First one, very nitpicky. But I have in my notes at one point you said lease portfolio was up 6.1% year-over-year and in the fourth quarter, then somewhere else I have it, 5.8%. I'm trying to reconcile the two. Maybe I just heard, just misheard what you said. Yeah. Hey, Anthony, it's Kelly. I'll clarify that for you. The 5.8%, that's the total lease portfolio size, right? Where the 6.1%, that is on the same store set. Got it. Okay. That's helpful. Just in terms of wondering if, you know, if you were seeing any in terms of lease originations, any sort of significant variation between your different major product categories. In other words, like as, you know, appliances really strong, consumer electronics, furniture. Just wondering is the strength kind of broad-based, or are you seeing any particular outperformance or underperformance from a product category perspective? Hey, Anthony, this is Steve again. I'll be glad to answer that. So we did see strong results across all three major categories. To give you a little more specifics, in furniture, upholstery had a really nice Q3. Appliances, laundry continues to be a strong category with great demand. It's been that way throughout the last year. On the electronics side, we saw some rebound in TVs and continued performance in gaming. Got it. That's helpful. Then if I can just sneak one last one in. I know in the past you've talked about some of the new product categories that you've been testing in your stores and rolling out to your stores. I'm just wondering if we could get a quick update on that. Thank you. Sure. Anthony, it's Steve again. We continue to expand our product assortment, as Douglas mentioned in his prepared remarks. Our e-commerce business in this growing marketplace is over 3,000 items. Specifically about what new categories, those new categories include exercise equipment, small appliances, power tools, home office, and electric bikes. With that, I'll say we're constantly testing new categories, new items, and you'll see us going forward continue to expand out our assortment and into new categories that even we're not in today. Thanks, Anthony. We now have a question from Bradley Thomas of KeyBanc Capital Markets. Please go ahead when you're ready. Hi, good morning, everybody, and congrats on a good quarter. I wanted to ask a few follow-up questions here. Maybe first, just starting with the inventory, I apologize if I missed it, but just wondering if you could give us a little bit more color on, maybe in percentage terms, how much inventory will be up here as you head into the fourth quarter, into the holiday season. You know, how you're thinking about that, you know, sort of at a per store level, how you're thinking about it at a unit level, given that we have seen some inflation, just some more color around that investment in inventory would be great. So Brad, it's Kelly. You know, as we mentioned, we did buy ahead, right? We're running at higher than normal inventory levels at both our FCs and in our stores. You know, I'd say that on a percentage basis, we're probably running about 15% higher than our target levels. We really manage it across both our FCs and our stores because, you know, as we've talked about in the past, our stores serve as mini distribution hubs across the U.S. You know, right now we're pretty full. We anticipated, as we mentioned, there'd be some challenges in the fourth quarter. We've had some opportunities to buy inventory kind of ahead of our typical cycle. That combined with the inflationary comments we talked about before has put us in this higher position. You know, we expect that'll normalize over time. You know, we're in a really good position from a balance sheet perspective and a liquidity position. You know, we've taken advantage of that here. We were able to flex up in what we were able to buy. We're gonna kind of err on the side of being a bit heavy going into the end of the fourth quarter. As we see, you know, our customer payment activity and the world hopefully start to normalize a little bit more, right? Then we'll look at optimizing those levels going forward. Hey, Brad, this is Steve. Just to add, a little more color. You know, that strong inventory position is across our key categories. We feel good about where we stand in appliances, where we stand in electronics, and where we stand in upholstery, excuse me, furniture. We're ready for the fourth quarter and, you know, as we look into, you know, the end of the fourth quarter and into Q1, we'll see how we, you know, what our inventory position will look like as we get into the holiday season. But the team's very proactive, and as Kelly said, we're pleased with our inventory position. Great. Just to follow up on all this and connecting the dots. I think your guidance, you know, your implied guidance for the fourth quarter would have revenues, you know, flat to slightly down year-over-year, down about 2% if my math is right, and inventory is now up a lot. You just mentioned its core category. Connect these dots. Was this more catch-up on inventory, just strategic investments because of how tough the world is to get things? You know, for an investor that might ask, you know, are we concerned that we may need, may have risk of discounting in the future? You know, how would you know, address those questions? Yeah. Brad, it's Kelly again. It's really the normalization of our customer payment activity, right? You know, as we go from, you know, we turn back to kind of the 87%-88% range plus the benefit of the centralized decisioning that we're enjoying, right? It's gonna be, you know, a decline from what we've seen over the last four quarters. That's really the driving impact of this as you think about the impact on the top line, as we continue to kind of manage the cost of goods, and the flow through there. Yeah. Brad, just to say another way, we're not expecting a significant decline in the overall size of our portfolio. It's the rate at which we're renewing that portfolio each month, that's where the pressure will be on the top line. That's really helpful. Thanks, everybody. If I could ask one more question just around, you know, expenses. Obviously, 2021 has been a year where you're growing against a year where expenses were really lean. Kelly, can you help us get a better sense of what OpEx should grow at as we look out to next year in kind of a more normal environment? Yeah. From an OpEx perspective, right, the key driver there is gonna be labor, right? We continue to run pretty tight, right, and not to kind of our optimal levels. I think a lot of folks in the retail environment are facing these types of challenges. You know, as we look forward, right now, Brad, it's difficult to estimate kind of into next year specifically what that's gonna look like through a combination of, you know, getting our stores back to normal staffing levels combined with we expect to continue to see some wage pressure, right? That's gonna be a big driver, you know, next year as we think about guidance that we'll provide here at the next call. We have one additional comment on labor. If you look at the personnel increase we've experienced in this quarter versus prior year quarters, most of that is wage rate, not hours in our stores. Really proud of what we've been able to do over the last few years of making investments to streamline our store labor costs. Centralized decisioning has taken a lot of the burden off of our team members in our stores and a lot of the hours that we would spend you know sort of manually validating. We've also put in servicing platforms. We're now taking over 77% of our payments outside of the store, and so that's really saved on labor. We've had other operational efficiencies through self-service and our e-com site that are allowing us to be more efficient and more productive in the way we go about business. While we expect to see more hours in our store, particularly next year as customer payments normalize and there's more effort put into that, we do not believe we'll return to historic levels of store staffing. Great. Very helpful. Thank you so much. We have another question on the phone lines from Jason Haas of Bank of America. Jason, please go ahead. I've opened your line. Great, thanks. Good morning, and thanks for taking my questions. The first one I wanted to ask about is just on the cadence that you saw through the quarter, both in terms of originations and write-offs. I'm curious to know what you saw as it relates to the Child Tax Credit continuing to go out and then also as the unemployment, the extra unemployment insurance was stopped at the beginning of September. Yeah. Hey, Jason, it's Kelly. I'd say, you know, we did expect to see, you know, a slowdown in the customer payment activity through the course of the quarter, tied to, as you mentioned, the end of the, you know, unemployment stimulus that was provided. You know, that was offset to some degree by the Child Tax Credit. As you play through the quarter, it, you know, as we look at our lease renewal rates, it appears that, you know, there was a benefit clearly at the beginning of the quarter, but that benefit continued to tail, all right, as we moved through Q3. You know, as we somewhat expected, because again, you've got, our customer as we're coming out of a very heavy stimulus-aided environment, right? It wasn't just the checks that they've been receiving from the state and federal government. It's also, you know, rent they haven't paid and other forms of assistance they received through that period of time. As their life is returning back to somewhat normal from a financial perspective, they're seeing other challenges as well. We continue to see our customer payment activity normalize. Great, thanks. As a follow-up question, I'm curious. It sounds like you're in a pretty good position in terms of inventory, all things considered. I'm curious if you're thinking about maybe potentially picking up some share, if maybe some other retailers are less in stock, you feel like there's some opportunity there in fourth quarter and maybe even beyond. Yeah, this is Douglas, Jason. We definitely think it's an opportunity. Like, anytime you can have product in your stores, and particularly our customer who wants and needs that product that day, there's an advantage. I'm really happy with the fact that we've got a lot of product to offer, particularly during our peak season in the fourth quarter. What I'm equally as optimistic about is the inventory levels that we have in our fulfillment centers, which serve our e-com business. I think we're up. You know, last year's supply chain was very challenging this time. We're up over 80% in our fulfillment centers, in terms of inventory levels over last year, and we are ready for the holidays with housewares. That bodes well for the demand side of the business. It's great to hear. Thank you. As a reminder, to ask any further questions, please press star one on your telephone keypads. We now have the next question from Bobby Griffin of Raymond James. Bobby, I've opened your line. Please go ahead when you're ready. Thank you, and good morning, everybody. Hope everybody's doing well. Doug and Kelly, I just kinda wanted to talk maybe high level and a little bit more long term, but you guys have called out a few different times that you're tracking well ahead of the long-term strategy or plan that you outlined at the spin. When you think about, you know, for instance, merchandise loss ratios normalizing in the next year, are they normalizing better than you would have expected when you kinda spun out and we originally talked? I guess where I'm getting at is the long-term EBITDA guidance or target out there now maybe more conservative as we sit here and look at the business today, with some of the progress you've made? Hey, Bobby, it's Kelly. What I'd say is that from that write-off perspective, you know, we continue to expect on the same levels of write-offs, this 4%-5% that we've talked about pretty consistently since just kind of the pre-spin roadshow, right? So there's no changes there. I'd say where we're really ahead is we've grown the business pretty significantly. So our lease portfolio size as we go into 2022 is well ahead of where we had anticipated on the, you know, in that longer term outlook we've provided before. We're also continuing to see really good results. You know, our. As Douglas has mentioned on a few different occasions, and when you know as that continues and that gives us even more confidence right in that longer term strategy and plan that we laid out. Those are really the kind of key drivers as we think about getting ahead of the plan from a financial performance perspective. You know, I'd say that from you know a margin standpoint, we're still you know I believe that longer term we're in this 11.5%-12.5% range. There's no change there. It's really kind of accelerating the growth and the overall kind of revenue and EBITDA we're gonna achieve in the earlier years here. Bobby, one last thing I'd say is our centralized decisioning platform has been a huge asset for us, and we continue to sort of optimize outcomes in that area. While the 4.5%, Kelly's exactly right, 4.5%-5% we think is the normalized state of our charge-offs. We continue to be able to find opportunities to optimize for our customer and react to market conditions, which has been a huge asset for us over the last 12 months. Okay. That's helpful. Kelly, just to make sure It's the size of the portfolio is getting to your target level quicker than you originally anticipated? Or is the reason the margin's not potentially a little bit higher is just that the labor cost or somewhere else in the P&L has increased a little bit faster given our current environment? I mean, I don't think any of us would have predicted labor the way it is today, you know, 18 months ago or 12 months ago. Yeah. Bobby, great question. I'd say it's really more the growth in the business, not the increase in our labor cost of labor. As Douglas mentioned, right, that through centralized decisioning and other investments we've made from a technology perspective, you know, we're seeing that we can operate the stores with less hours than what we had done kind of pre-rolling out of RCO. You know, while wage pressures can continue to impact the business going forward, right now we're not seeing, you know, expecting it to have any material impact relative to what we were thinking kind of pre-spend. It's again the growth in the business, it's not changes in margins at this point. Okay. Very helpful. I guess lastly, just inflation. I understand, you know, you guys will price and then the advantage of your business is it's low monthly payments, so it doesn't hit the consumer as much, you can spread it out. Has that started to show up in the comps yet or is that more gonna be a 4Q, 1Q 2021, 1Q 2022 type benefit to comps where, you know, more products are gonna be getting repriced a little bit higher monthly payments? Bobby, this is Douglas. We have you do see in our revenue line, and what we're writing into the portfolio, higher ticket this year versus last. You know, we're probably up, you know, 3%-4% in ticket year-over-year, and that translates. Remember, what we write into our portfolio is only a fraction of what's in our portfolio. The revenue we recognize is the overall portfolio's ticket versus what we're experiencing now. You'll begin to see more and more of that sort of translating through to revenue and the same store revenues as we move forward. Okay. Very helpful. I appreciate that, the detail on the 3%-4%, Doug. Best of luck here in Q4 and into 2022. All right. Thanks, Bobby. Thank you. We have no further questions, so I'll hand it back to Douglas Lindsay to close. Well, thank you for joining us today. Our outstanding performance would not be possible without the hard work and dedication of our entire Aaron's family. As we continue to navigate the ever-changing macro environment, our team members remain focused on continuous innovation, which I hope you heard today, in delivering exceptional value and service to our customers. I remain confident in the execution of our strategy, and we're excited to enter our peak fourth quarter season. Thank you all for joining us today. Have a great day.