Good morning. My name is Candice, and I will be your conference coordinator at this time. I would like to welcome everyone to the Aaron's Company Fourth 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 would now like to turn the call over to Mr. Michael Dickerson, Vice President of Corporate Communications and Investor Relations for Aaron's. You may now begin your conference. Thank you, and good morning, everyone. Welcome to the Aaron's Company Fourth Quarter and Full- Year 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 last evening. 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 forward-looking statements related to our financial performance outlook for 2022 and our recently announced agreement to acquire BrandsMart U.S.A. 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 and the release announcing the proposed BrandsMart acquisition. The safe harbor provision identifies risks that may cause actual results to differ materially from the content of our forward-looking statements. Also, please see our Form 10-K for the year ended December 31, 2021, 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, non-GAAP EPS, and free cash flow, 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 and the supplemental investor presentation posted to our website. With that, I will now turn the call over to our CEO, Douglas Lindsay. Thanks, Mike. Good morning, everybody, and thank you for joining us today. I'm very pleased to report another quarter of strong operating performance and continued positive momentum at The Aaron's Company as we completed our first full- year as a standalone public company. Before I dive into a discussion about our financial performance, I wanna let you know how thrilled I am about last night's announcement of our agreement to acquire BrandsMart U.S.A. Upon closing the transaction, we look forward to welcoming BrandsMart's associates to the Aaron's family and to working with their experienced management team to grow the BrandsMart business. We expect this acquisition to provide meaningful value creation opportunities, expand our addressable market, and create an additional platform for accelerated growth. We believe that the consolidated Aaron's and BrandsMart businesses will deliver double-digit adjusted EBITDA growth over the next five years and beyond. I'll share more detail about this exciting opportunity after I provide an update on the Aaron's business. Aaron's 2021 financial performance once again exceeded our expectations with revenues and adjusted EBITDA for the full- year coming in well ahead of our latest outlook and ahead of the long-term strategic plan we communicated at the time of our spin. For the full- year 2021, revenues were more than $1.8 billion, while adjusted EBITDA came in at $234 million, which is well above the latest annual outlook provided in connection with our third quarter 2021 earnings. Annual same-store revenue growth was 9.3%, the fourth consecutive year of same-store revenue improvement. Our same-store lease portfolio size continued to grow at a healthy pace, ending the fourth quarter up 5.4% 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. As a result of our strong performance in 2021, we were able to return approximately $113 million to shareholders in the form of cash dividends and share buybacks, which totaled more than 10% of the company's outstanding shares. Over the last several years, we have transformed Aaron's go-to-market strategy. The investments we have made in people, technology, and processes, both at our stores and at our store support center, have yielded great results. Our investments in digital solutions for customer payments, self-service account management and centralized lease decisioning are providing an improved customer and team member experience. They are also driving operating efficiencies, which are meaningfully contributing to the company's earnings. Since 2018, we have increased total revenue per store by 25%, increased total lease portfolio size per store by 20%, and reduced labor hours per store by over 10%. Through this transformation, we have built a set of assets and capabilities that provide unique value creation opportunities and position us for growth. These assets and capabilities include expertise in digital shopping and customer service technology, store design and construction, data analytics, centralized lease decisioning, payment optimization, and supply chain and reverse logistics. We are leveraging these assets and capabilities to grow our current business through our e-commerce and successful GenNext store concept. Through our e-commerce platform, we are providing an enhanced shopping experience driven by personalization and richer product content. Our aarons.com, digital marketing and supply chain teams are winning in the market each day by attracting more customers to our website, generating higher customer conversion rates, lowering our effective acquisition costs, and improving customer satisfaction. Our e-commerce channel reported revenue growth of 20% in 2021, and in the fourth quarter of 2021 represented 14.6% of total lease revenues. In addition to investments in our e-commerce platform, we continue to transform the customer's in-store experience through our GenNext strategy. As a result of strong performance of these GenNext stores, we accelerated the pace of our openings in the fourth quarter, ending 2021 with 116 locations. In 2022, we plan to add an additional 120 GenNext stores, which would bring the total to more than 20% of our store count by the end of the year. As discussed in previous quarters, our portfolio of GenNext stores is generating results that are exceeding our targeted 25% internal rate of return and five-year payback period. Further, monthly lease originations in GenNext stores open for less than one year continued to grow at a rate of more than 20 percentage points higher than our average legacy stores. The EBITDA contribution from these new stores has become a meaningful portion of our overall results with each passing month. In 2021, the GenNext per store EBITDA contribution was roughly 20% higher than our legacy stores, and this delta is expected to increase as these stores mature. Importantly, we are utilizing the assets and capabilities built through our transformation journey to successfully grow our e-commerce and GenNext platforms. We believe these same assets and capabilities put us in a unique position to create incremental value through new growth opportunities as well. Last night, we announced an agreement to acquire BrandsMart U.S.A., a leading regional appliance and consumer electronics retailer that operates 10 stores in Florida and Georgia and a growing e-commerce channel. BrandsMart stores average $75 million in revenue per store and have an average store size of more than 100,000 sq ft. BrandsMart attracts a loyal and diverse customer base by offering hundreds of brands and thousands of products with best-in-class pricing. In the 12 months ended December 2021, BrandsMart generated revenues of $757 million and adjusted EBITDA of $46 million. The acquisition of BrandsMart broadens our customer reach and significantly expands our total addressable market. The combined company will have annual revenues of more than $2.5 billion, 11,000 team members, and the ability to provide a full spectrum of payment and financing options. After closing, we expect to operate Aaron's and BrandsMart as separate business segments, each operating under their current brand. We believe the acquisition of BrandsMart strengthens Aaron's ability to deliver on our mission of enhancing people's lives by providing easy access to high-quality products through affordable lease and retail purchase options. This transaction is expected to provide many compelling strategic and financial benefits. It broadens our customer reach and significantly expands our total addressable market. It leverages Aaron's strengths to create an in-house lease-to-own solution, and it significantly increases the product assortment available to Aaron's customers. The transaction also yields significant purchasing power and cost synergies and enhances Aaron's financial profile while providing significant revenue and earnings growth opportunities. Let me expand on a couple of these items. First, Aaron's intends to use our existing know-how and assets to provide an in-house lease-to-own solution to BrandsMart's customers. This solution will be supported by our proprietary centralized lease decisioning technology, customer service expertise, and last mile reverse logistics capabilities. We believe that these advantages, combined with wholesale pricing, will allow us to grow the lease-to-own program available to BrandsMart's customers and capture incremental earnings. Through the in-house lease solution, we will offer BrandsMart customers easy access to great products through affordable and flexible terms. Second, Aaron's expects to create a leading direct-to-consumer lease-to-own marketplace by offering Aaron's customers access to much of BrandsMart's extensive product catalog. This broad assortment of products purchased at wholesale will expand Aaron's existing value proposition and is expected to produce significant revenue growth opportunities. Finally, we believe the BrandsMart customer value proposition and store model has a right to win outside of its current markets. We plan to open one to two stores per year beginning in 2023 in adjacent geographic areas where BrandsMart enjoys strong brand recognition. Similar to our GenNext strategy, we will be disciplined in executing the BrandsMart new store opening initiative as we explore the many markets that could support their store model. Of course, none of this would be possible without top talent in both Aaron's and BrandsMart's organizations. Upon closing, we expect BrandsMart's current management team to remain with the company and expect that BrandsMart will report into Aaron's as a separate line of business through our president, Steve Olsen. Steve has held senior leadership positions at some of the nation's largest retailers, and over his tenure at Aaron's, we have benefited from his expertise in areas such as merchandising, marketing, supply chain, and e-commerce. With Steve's strong retail background and success in leading strategic initiatives at Aaron's, we are confident that Aaron's and BrandsMart's teams will be able to achieve our collective mission and deliver earnings growth over the next five years. This is an exciting day for our company as we have a new opportunity to drive long-term value for shareholders, create opportunities for our team members, and enhance our compelling value proposition. With this transaction, we believe that Aaron's will deliver more than $3 billion in total annual revenue and more than $300 million in adjusted EBITDA by 2026. With that, let me turn the call over to Kelly to discuss our fourth quarter earnings and 2022 outlook. Thank you, Douglas. For the fourth quarter of 2021, total revenues were $444.8 million, compared with $430.2 million for the fourth quarter of 2020, an increase of 3.4%. Similar to the third quarter, the increase in total revenues was primarily due to the growth of our lease portfolio size, partially offset by the expected lower customer payment activity during the quarter and the reduction of 72 franchise stores during the 15-month period ended December 31, 2021. Lease revenues in the fourth quarter also benefited from an increase in average ticket size or monthly rent per agreement that has been offsetting the continuing high inflation we are experiencing in the cost of lease merchandise. On a same-store basis, lease and retail revenues increased 4.8% in the fourth quarter compared to the prior year quarter. This is our seventh consecutive positive quarter of same-store revenue increases. Leases originated in both our e-commerce and in-store channels contributed to this growth, which was again driven by a larger same-store lease portfolio size, partially offset by the expected lower customer lease renewal rates in the quarter. In the fourth quarter of this year, our customer lease renewal rate activity was 87.7%. This is approximately 100 basis points lower than the fourth quarter of 2020. As you may recall, we have discussed the benefits to our customers from government stimulus programs on prior earnings calls. As we continue to comp over stimulus-aided periods for the next two to three quarters, we expect that this normalization will continue to result in lower customer lease renewal rates when compared to the same prior year periods. We continue to believe that customer payment activity is benefiting from our investment in centralized lease decisioning. As we have reviewed before, we estimate that this technology has improved lease renewal rates by over 100 basis points while also materially improving the customer experience and reducing the labor hours needed to carry out the day-to-day activities at our stores. E-commerce revenues continued to grow at a double-digit pace, increasing 13% in the fourth quarter of 2021 after growing 39% in the same quarter the prior year. E-commerce also has continued to represent an increasing percentage of our total lease revenues, increasing to 14.6% in the fourth quarter of 2021 from 13.2% in 2020. The company ended the fourth quarter with a lease portfolio size for all company-operated stores of $136.3 million, an increase of 4.7% compared to a lease portfolio size of $130.2 million on December 31, 2020. We believe that the strong lease merchandise inventory levels that we carried into the fourth quarter of 2021 contributed to this increase as we were well-positioned to meet customer demand during our important holiday season. Personnel costs increased $1.6 million in the fourth quarter as compared to the prior year, primarily due to higher wages for in-store team members, additional personnel to support our key strategic initiatives, and higher stand-alone public company costs. Similar to the third quarter of 2021, staffing levels in the fourth quarter at our stores remained below our operational targets due to the ongoing challenges in the U.S. labor market for retail-based hourly employees. Total other operating expenses, excluding restructuring expenses and separation-related costs, were up $10 million in the quarter as compared to the prior year period. This increase is due primarily to higher occupancy, shipping and handling costs, and other operating costs and expenses. These increases were partially offset by lowering advertising costs. The provision for lease merchandise write-offs as a percentage of lease revenues and fees for the fourth quarter was 5.7% compared to 4.3% in the prior year period. We believe that this expected increase in write-offs was primarily due to lower lease renewals following several quarters in which our customers received financial assistance in the form of government stimulus payments and supplemental federal unemployment benefits, lease merchandise cost inflation, and the increased cost of living our customers are facing in the current high inflation environment. We believe that the continued normalization in write-offs was partially offset by the favorable impact of technology investments, which include our centralized lease decisioning and enhanced customer payment platforms. Adjusted EBITDA for the company was $41.3 million for the fourth quarter compared with $53.7 million for the same period in 2020. As a percentage of revenues, adjusted EBITDA margin was 9.3% compared to 12.5%. This decline in adjusted EBITDA and adjusted EBITDA margin was due to the expected lower lease renewal rates and expected higher provision for lease merchandise write-offs compared to the stimulus-aided levels in the fourth quarter of 2020 and also higher personnel, transportation, and other operating expenses. On a non-GAAP basis, diluted earnings per share were $0.60 compared with non-GAAP diluted earnings per share of $0.79 for the same quarter in 2020. Cash generated from operating activities was $45.6 million, an increase of $27.1 million year-over-year, primarily due to lower purchases of lease merchandise in the quarter. Turning to the full- year 2021, consolidated revenues were $1.846 billion, an increase of 6.4% compared to the full- year 2020. This increase is primarily due to a 9.3% increase in same-store revenues, which was driven by a larger same-store lease portfolio size and strong customer payment activity, including retail sales and early purchase option exercises, particularly in the first half of the year. Adjusted EBITDA for the full- year 2021 was $234.1 million, an increase of $25.3 million or 12.1% compared to the full- year of 2020. As a percentage of revenues, adjusted EBITDA was 12.7% compared to 12%, an increase of 70 basis points over the prior year. This increase in adjusted EBITDA is primarily due to higher lease renewal rates and a larger lease portfolio size. Partially offset by higher personnel, advertising, shipping and handling, and occupancy costs. Write-offs were 4.2% of lease revenues in 2021 and 2020. Annual non-GAAP EPS was $3.75 in 2021, an increase of 24.2% compared to $3.02 for prior year 2020. In 2021, we repurchased 3,572,000 shares of the company's common stock for approximately $103 million. This represents over 10% of the shares outstanding at the beginning of 2021. As of December 31, we had approximately $47 million remaining under our $150 million share repurchase authorization that was approved by our board last March and ends December 31, 2023. Additionally, we have returned approximately $13 million to shareholders through our regular quarterly cash dividends. You may have also seen that on Monday, February 21, the company announced that our board of directors approved its first quarter cash dividend of $0.1125 per share. This is an increase of 12.5% from the previous quarterly cash dividend of $0.10 per share. As of December 31, 2021, the company had a cash balance of $23 million and debt of $10 million. Our total available liquidity was $246 million, which includes $223 million available under our unsecured revolving credit facility. Turning to our 2022 outlook. We currently expect total revenues of between $1.775 billion and $1.825 billion and adjusted EBITDA of between $180 million and $190 million. This decline in total revenues and adjusted EBITDA for 2022 versus 2021 is attributed primarily to the continued normalization of customer payment activity, consistent with what we described earlier and what we have discussed on prior earnings calls. The outlook for adjusted EBITDA is also expected to be impacted by continued high inflation and current macroeconomic trends. For the full- year of 2022, we are assuming an effective tax rate of 26%, depreciation and amortization of between $70 -75 million, and a diluted weighted average share count of 32.5 million shares. We have not assumed any additional share repurchases in 2022 for purposes of this outlook. We also expect full- year 2022 same-store revenues of -3% to -1%. Write-offs are expected to be at the high end of our previously discussed annual range of 4%-5%, with higher write-offs in the first half of 2022 versus the second half of the year. We expect capital expenditures in the range of $100 -125 million, with this increase resulting from opening 120 GenNext stores in 2022, which is approximately 50 more than 2021. We expect that at the end of 2022, over 20% of the company's own stores will be under the new GenNext format. Free cash flow for 2022 is expected to be in the range of $45 -50 million, which reflects the increased investment in GenNext openings and the impact of inflation on lease merchandise purchases. Additionally, this outlook does not include the expected benefit of the proposed BrandsMart acquisition. We expect to update our full- year 2022 outlook for the acquisition subsequent to the closing of the transaction. Before I wrap up my prepared remarks, I want to review a few additional details of our proposed acquisition of BrandsMart U.S.A. The transaction is structured as a stock purchase, and we expect to pay $230 million in cash, subject to certain customary post-closing adjustments. This represents a purchase multiple of approximately 5x adjusted EBITDA before synergies, and we expect it will be immediately accretive to EPS and adjusted EBITDA after closing. Additionally, we are forecasting annual net run rate synergies of $20 -25 million by the end of 2024, and we expect that number to double by the end of 2026. When combined with the expected e-com, GenNext, and other growth platforms at Aaron's, we believe that the consolidated business can deliver consistent revenue growth and double-digit annual adjusted EBITDA growth over the next several years. 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 keypad. If for any reason you would like to remove your question, please press star followed by two. Again, to ask a question, it is star followed by one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly while questions are count, um, counted. Operator, we're ready to take questions. Thank you. Our first question comes from Brad Thomas of KeyBanc. Your line is now open. Please go ahead. All right. Thank you. Good morning, everyone, you know, congratulations on the announcement of the BrandsMart deal. I was hoping maybe just to ask a couple questions. Thanks, Douglas. A couple questions on the Aaron's business and then one question maybe on BrandsMart. First, I was hoping you could talk a little bit about trends in the business that you've been seeing recently. We get a lot of questions about how much trends have changed as we've lapped stimulus payments and as Omicron has hit and started to subside. Just curious broadly what you're seeing in the business and how you're baking that into your thoughts for 1Q. Sure. Yeah, happy to say. You know, we've been talking about this for a long time, in terms of the normalization. As you know, all sorts of forms of stimulus were in the economy, last year, and, as expected, those have begun to dissipate or have dissipated, and the normalization that we expected last call has occurred. I would say it's occurring kind of as we expected. As you know, we now are talking about our renewal rates, and we've said we believe those renewal rates will come down or normalize, but we think they'll settle about 100 basis points above historic averages because of the centralized decisioning we put in place. I would say that's as expected. We do think there is inflationary pressure going on with our consumer, particularly the lower credit scored consumer, who has less disposable income, and that appears in the beginning of the year to be impacting just the demand there. Seeing a bit of softening early on, but that is baked into our outlook, and that $185 million of EBITDA takes that into account. We're really excited. I think the things we've done in the business to drive efficiency in our cost structure is helping us, and we're being able to keep up with inflation in terms of the underlying product costs and the price we're passing on to our consumer to preserve margin. The team's doing a great job of effectively managing macro trends. That's very helpful. I'm just trying to reconcile how to connect, you know, the healthy portfolio that you had at the end of the year with the guidance for, you know, same store revenue of -3% to -1%. How should we think about the cadence of the year and, you know, some choppiness in one Q affecting what had been a pretty good portfolio at the start of the year? How should we think about the cadence through the year? Hey, Brad, it's Kelly. Great question. While for the year, our lease portfolio size will be up higher on average through the course of the year, that helps kind of put some upward pressure on comp, but the comps. Offsetting that is this normalization of lease renewal rate. You know, we've talked about before in the first half of last year that we were running 300-400 basis points higher in lease renewal rate than what we were experiencing pre-pandemic. You know, that came down in the back half of last year to between 100 and 200 basis points higher. You know, with stimulus out of the market, we, you know, are seeing our lease renewal rates are right where we expected them, maybe a little bit lower kind of coming into the year because of the softness that that Douglas mentioned in demand, kind of at the start, particularly in January. You know, how that rolls through the year, what I would say is at top line, the seasonality of our revenue will be very similar to what we've seen in prior years. You know, the first half and the back half will be balanced, right? In terms of adjusted EBITDA, you know, last year, the mix was, call it, 60% weighted to the front half, 40% to the back half. This year, that will be more balanced, and you'll see that showing up in particular in Q1, where our lease renewal rate comp year-over-year will be the highest spread in terms of, you know, the largest decline. At the same time, you know, write-offs have normalized. When write-offs normalize and the charge-offs come back to you know, kind of expected long-term levels, there's two impacts through that provision line, right? One is the higher absolute charge-off. The second is the reserve that increases as we look forward. You know, there will be an increase in the write-off as a percentage of lease revenues in Q1. Typically, that's not the high point of the year, and I'm not saying it's necessarily gonna be the high point of 2022, but you're not gonna see, you know, kind of that the normal activity if you're using prior year quarters to kind of model out quarter- to- quarter the impact on write-offs to profitability. Yeah. The last thing I'd say, Brad, just as a high level is, when we last spoke last quarter, we sized the impact of this renewal rate normalization. On a $1.6 billion lease portfolio, every 100 basis points of renewal rate normalization and every 100 basis points of write-offs is roughly $16 million. The guidance that we're giving this year reflects the normalization to above pre-pandemic levels, and that math tracks. Yeah. The last thing I would add from an EBITDA margin perspective, I mean, we're still on track to, you know, grow over a long-term basis margin to somewhere in kind of that 11.5%-12.5%, consistent with what we outlined over a year ago when we were separating the two businesses. I would expect Q1, I mean, if you're competing against last year, which was a very abnormal Q1 for us in terms of how strong EBITDA was and the margin was, you really wanna look more at kind of that average of 17, 18, 19 if you're trying to kind of key in on what Q1 EBITDA margin is gonna look like. Got you. Really helpful, Kelly. I don't wanna hog the call here, but a lot to talk about, so maybe just two quick ones on BrandsMart. The first, you know, there seems to be a tremendous amount of synergy opportunity here, one that's unique to, you know, Aaron's would be the ability to bring in your own lease-to-own solution within the BrandsMart stores. I was hoping, Douglas, you could just talk a little bit more about what you need to do to make that happen and what the timeline could look like, and how big of a percentage of sales is lease-to-own today for BrandsMart, and how big you think it could be. Sure. All right. Let me just start by saying this deal is very exciting for us. I mean, I really think it aligns our assets and capabilities that we've built through our transformation at Aaron's with sort of the growth opportunities at BrandsMart. I mean, we see this as really just right down the middle in alignment with our mission and our strategy. You know, their price and selection and our value prop of expansion of footprint, which we're good at, and digital capabilities, and all of those sort of collide in this value creation opportunity, which is really cool. I think the other thing is we are able to diversify our TAM and diversify our revenue streams, which is great. We're gonna be offering products to a broad assortment of customers, having financing and payment options out there beyond what we have today and really expanding our retail footprint, which is super exciting. In terms of synergies, you're absolutely right. Great synergies. One compelling synergy, and I think it's really important for the continuation of our Aaron's strategy is we have thousands of products at BrandsMart that we can offer to the Aaron's customer, which is great and broaden our product selection. That's something we've been trying to do, but internally, and this is an accelerator of that. As you point out, Brad, lease-to-own in their stores is a very big opportunity. We think we do that very well. When we can do that, in sort of a fast way, because of our embedded infrastructure, we can approve deeper, and we believe we can service better. Most importantly, you know, we're gonna be offering products at wholesale cost, that allows so great value for the customer and margin capture for us, unlike, you know, using a third-party lease-to-own provider. We think that's great. You know, we're gonna work over time to implement that. The capture rate we think will be strong. We're not gonna size right now the size of their lease-to-own business, how much share in the BrandsMart store is lease-to-own, but we will communicate that when we get to closing and beyond. Really excited about the opportunity. I think there's a lot of value creation here. Steve mentioned the procurement opportunity as well, and the e-commerce opportunity, which is, we believe, also at large. Great. That's really helpful, Douglas, and certainly seems like an exciting opportunity. Thank you all so much. Thanks, Brad. Thank you. Thank you. Our next question comes from Kyle Joseph of Jefferies. Your line is now open. Please go ahead. Hey, good morning, guys. Congrats on the exciting announcement. I guess we'll start there. I just want to get a sense for kind of the mix of their sales and kind of, you know, what sort of the category mix is and eligibility of categories for LTO, and just get a better understanding of the financing options available currently at BrandsMart. Do they have a full waterfall in place, and how do you think about the Aaron's LTO kind of integrating into that? Sure. Hey, Kyle. This is Steve. I'll be glad to start, and then I'll hand over the waterfall question to Douglas. Just as a reminder, there is an investor deck that we posted on our website that has a lot of details about BrandsMart. Similar to what Douglas said about commenting on their lease-to-own, we will definitely talk more about their category mix post-close. I would say this, that we believe they have an extremely strong assortment and merchandising strategy. Their broad assortment of over 15,000 items is incredible because it covers both from the opening price point all the way up through the high end in each category. They have hundreds of brands, and many of those key brands are some of the leading brands in these categories. Their category mix of appliances, consumer electronics, home goods is one that we think fits really well into our assortment strategy. When you talk about pricing, you can't forget their compelling value proposition, and that really, that value proposition is covered across all these categories. Truly, they are the destination or that value leader in their markets. Yeah. Kyle, in terms of the waterfall within their stores, as you might expect, you know, with this customer base, really this addressable market for BrandsMart is everyone, right? Everyone looking for something for their home. These stores are $75 million in revenue per store, which is big even for, you know, in comparison to big box retailers out there that I'm sure you all are aware of. There's a lot of volume there. They've got a lot of cash and credit customers. They've got an in-house first look credit option with Synchrony, and then they've got a second look, and then they've obviously got a lease-to-own beyond that, which we believe we can grow. Okay. Got it. Very helpful. Shifting back to the Aaron's business, can you guys give us a sense for your expectation for kind of the timing and magnitude of tax refunds and what you've seen so far this year? Yeah, I'd say, you know, as expected, the refunds or the size of the refunds is coming in. They're impacted by the early child tax credits. While a little bit smaller, they're also a little bit slower. We're seeing, I think, just because of the administration of all that, a bit of a slower tax season. I'd say as it begins to materialize more and more, I would expect it to be steady. That's benefiting our portfolio, as you might imagine, as we've pointed out, a little bit slower demand, but a little bit more or less churn in our portfolio. We expect over time that that will normalize. I always say tax season's never over till it's over, and I think at the end of this quarter when we give you results, we'll have more clarity. Kyle, I would also add that this kind of delay that we're seeing in tax season as well as our expectation that the returns will be slightly lower, that's all factored into the outlook and the numbers that we shared in the earnings release. Yeah. Thanks, Kelly. Then just last follow-up from me, I think I missed it, but I think you guys gave a range for expected write-offs in 2022, and I just missed it. I apologize, if you don't mind giving us that again. No, it's okay. What we referenced was that we expect write-offs to be in the same range that we've been communicating really for the last, I guess, 12 to 13 months now since we completed the spin. You know, our view is this business should operate at 4%-5% lease write-offs at 4%-5% of lease revenues. We were obviously at the low end at 4.2% in 2021. We'd expect to be closer to the high end for 2022. Great. That's it for me. Thanks a lot for answering my questions. Thank you. Our next question comes from Bobby Griffin of Raymond James. Your line is now open. Please go ahead. Good morning, everybody. Thanks for taking my questions, and congrats on finishing up a good year and the announced acquisition. Thank you. Thanks, Bobby. I wanted to just drill in a little bit on the renewal rates that we saw here in Q4 versus what we're expecting to roll forward into 2022. Are we at the normalized level now, or is there still some more room down that we have to go? The second part really of that question is just trying to get to the implied margin, EBITDA margin in 2022 versus what we did in Q4 of roughly 9.93%. If renewal rates have to go down and losses have to tick up, where does the other savings come from or the other offsets to kind of get margins up a little bit versus the Q4 margins? Got it. Okay. Lot to unpack there, Bobby, so I'll do the best I can to be efficient, right? Lease renewal rates were 87.7% in Q4, as we discussed. You know, we would expect that, lease renewal rates, if you go back to Q1, Q2, Q3, Q4, think about this year relative to 2021, they will all be lower, right? We had mentioned before in Q3, and then Douglas stated, I think, a little bit at the beginning as well, if you just kind of use the math, last year ran in the first half call it 300-400 basis points higher than a normalized level. We also are expecting that to be offset some by a 100 basis point improvement, given that we are recognizing the benefit of all the technology investments we've made, and in particular, the benefits of the centralized lease decisioning. That'll kind of guide you around that margin through the course of the year. Again, in the back half of the year, last year, we saw kind of 100 to 150 basis points improvement over a normalized level and lease renewal rate. As that normalizes and then benefits from being up 100 from the technology investments, that kind of helps you model out the back half. Okay. So- So- I think your question. I'll just say from the current run rate right now, you'll have another 50 or so, 50 to 100 basis points or so to go to normal, is what I was getting at, from the 4Q ending run rate. No, you have to Yeah, Bobby, the way I think about it big picture is pre-pandemic, our normalized level of renewal rates were 87%-88%. We expect this year. Okay to average about 100 basis points above that. You can do that math. I mean, we're not gonna lead the- Yeah We're not gonna sort of dictate on timing, but it should be, you know, continued normalization to get to those levels. Okay. Kelly, the second part. Sorry about that. From a margin perspective, I know you were using Q4 as a proxy for the full- year. What I would say there is if you look back at prior periods, you know, and take into account kind of the impact of the lease renewal rate activity that we've said before, I would suggest that that's not the right kind of period to use as you're setting that margin rate. I think we did a 12.7% margin in 2021. We'd expect obviously to come down from that off of based on the renewal rate activity we're talking about and any increase in operating expense in other areas that we're seeing. You know, if you... When you net it all out, I would go back to kind of our pre-pandemic three-year average and assume some benefit from centralized decisioning. That would kind of take your margin up from those periods, and that should give you a good proxy for this year. Okay. No, yeah, I wasn't necessarily gonna take the 4Q all the way, but it was just kind of, you know, 4Q wasn't just how unique the 9-three was if we're still having further pressure to come is I guess what I was getting at. Yeah. Q3 is unique because of, you know, just higher operating costs in that period relative to what we would expect kind of going forward, as well as the higher increase in write-offs as a percentage of revenue as you were comping year-over-year as well. There's, you know, a lot going on in that quarter, which points to it not being good, as a proxy for what we'd expect next year. We do expect margin- Okay ... to be higher in the first half versus the second half, though. Okay. That's helpful. I guess lastly, just we've hit a lot of the good parts about the BrandsMart. It's a very interesting, you know, acquisition with, you know, looks like good potential synergies for you guys. How is their business versus pre-COVID? You know, how does their business in 2021 versus pre-COVID? You know, there is concern that the categories just in general that you participate in and that BrandsMart does and other companies I cover have just seen a big level of pull forward. Do you see that in their results when you look back over a couple of years and the due diligence that you guys have done, and how do you think about that? Hey, Bobby, this is Steve. I'd be glad to talk about that. As you'd expect, in any retailer, you know, during the COVID period, yeah, there absolutely was an increase in demand that flowed through revenue in the BrandsMart business. But what I'd point to and what we're really excited about truly is the markets that they operate in, you know, Florida and Georgia. These markets are some of the leading markets in housing starts as well as population growth. They have a very strong brand awareness in the markets that they operate today. We believe, combined with their compelling value proposition, that they're gonna have a nice growth trajectory going forward. Okay. I appreciate the details and walking through all the numbers. Best of luck here getting it closed and in 2022. Thanks, Bobby. Thank you very much. Thank you. Our next question comes from Anthony Chukumba from Loop Capital Markets. Your line is now open. Please go ahead. Good morning. Thanks for taking my question. Congrats on a strong finish to the year and also the BrandsMart acquisition. So, my question is specifically on BrandsMart. You know, you talked about the potential to offer some of that product assortment to Aaron's customers. I just want to get more sort of granular on that. Would that be, you know, those products that are offered at BrandsMart in their merchandise assortment, but now they would also be offered to Aaron's customers through online, or would you also potentially have some of those, you know, BrandsMart sort of brands and products in Aaron's stores? Thank you. Sure. Hey, Anthony, this is Steve. Be glad to answer that question. First and foremost, as Douglas mentioned in the prepared remarks, we feel strongly about this combined direct-to-consumer marketplace that we're able to create and grow with the combination of BrandsMart in the Aaron's business. Think about it in a way of an e-commerce platform that both Aaron's customers and BrandsMart customers can share into that offer much of that assortment that BrandsMart has. You know, that 15,000 items, those hundreds of brands. Additionally, as we work through the integration, there'll be opportunity for select items that BrandsMart carries that maybe Aaron's does not today, mixing them into the Aaron's assortment. The number one point that we're most excited about is this combined direct-to-consumer marketplace. Got it. With that I'll let you guys go 'cause I have to attend to this other blowup call that starts in four minutes. All right. Well, thank you, Anthony. Thanks for participating. I know we're running a little long. We had a lot of content today. I think we've got another question. Operator? Thank you. Our next question comes from Bill Chappell of Truist. Your line is now open. Please go ahead. Thank you. That's a new one, Truist. I like that. Or Truist. But it's still wearing on me, too. Two quick questions. One, on the same-store sales outlook, you know, -3% to -1%, I'm assuming you're passing off, you know, pricing that's kind of mid- to high-single digits% on the portfolio of products you have in the store. Does that imply kind of the, a volume growth of close to double-digit declines? Just as I'm trying to think about that. Yeah, you know, Bill, it's Douglas. How you doing? Good. If you think about it, you know, we've ended the year with the same-store portfolio size up, you know, roughly 5%. We start with a lead. As we think about normal or normalizing churn in our portfolio, that comes down a little bit. Most of the down on our range is this normalizing of renewal activity, which we've talked about on this call. You know, while our portfolio is still large and healthy, we just think, you know, we don't expect to collect on it through our renewal rates as well as we did the prior year, which is what we've been talking about. Within our sales numbers that are in the portfolio, what we sell into the portfolio, there is inflationary pressure, as you mentioned, in a good way. Inflationary increases that we're passing on to the customers to preserve margin, and that's in the mid-single digits. All that is taken into account. The main comping down is just comping over a high renewal rate last year. Just to be clear, like, the positive, let's say 5% pricing is a net benefit to your same-store sales number. It's then being offset by the lease portfolio too, commentary. Yeah. It is a benefit. Remember, we sell into our portfolio, so the majority of our portfolio are deals we've written in the prior years, and that's how we recognize revenue unlike retail. Gotcha. Just wanted to double-check. It isn't like 5% up and a bunch down because of traffic. It's 5% up, and that only represents a small portion of our portfolio in the year. Most of that benefit comes in 2023 and 2024. That's what I was kind of getting at, yeah, that there would be a lagging benefit in 2023 and 2024 from this. Correct. In terms of BrandsMart, just give us a little more color around kind of, you know, how this came about, the genesis of it in terms of it's a private company that's been private for a long period of time, you know. Would you look at other similar type transactions? I know BrandsMart's fairly unique, but you know, there might be other regional plays that you could expand and then just a little bit better understanding of where the first $20 million of synergies comes from. I'm just trying to understand, you know. I understand the efficiencies and the growth potential. I'm just trying to understand where the cost savings come from. Thanks. Sorry, there's a lot there. Yeah, that's all right. Let's get to the why BrandsMart. You know, as we looked about, we've articulated our capital allocation strategy, which is first to invest in our business, to return capital to shareholders, but also to opportunistically look at M&A, which we do all the time. I mean, when we look at M&A, we're looking for things that align with our assets and capabilities, which we believe have advanced greatly over the last six years, and also things that are a platform for growth. BrandsMart sort of checked both of those boxes. It's a growth platform that we can layer on top of our GenNext platform and our e-commerce platform. Equally as important, we're looking for things that generate benefits for not only the business we buy in terms of value add, but the business we own today, which is Aaron's. This does both of those things. It's cross-synergistic. It helps Aaron's in many ways through expanded assortment, but it also helps BrandsMart with all the value that we can bring to that. You know, we're hoping to layer on top of that also footprint expansion, which would be growing BrandsMart's presence not only in Florida but outside of Florida ultimately. We'll do that as we begin to refine the BrandsMart model, and I think we'll, as we articulated, do one to two stores a year in short order. Lastly, the growing of the LTO business. We think the LTO business is an interesting opportunity within retailers, and if we can put our own rent-to-own solution in and buy at wholesale prices, not retail prices, and put the technology in place that we have. But most importantly, we've been talking for a long time now about our stores and our infrastructure as hubs, distribution and supply chain and reverse logistics hubs, and when we can leverage that infrastructure in an in-store retail lease-to-own solution, we can approve deeper, capture more margin, and create better customer satisfaction, and we think that is an overall win. Got it. No, I appreciate that color. Just on the last one on the genesis of the deal, was this something that was on the market, or you just had conversations in the past and it came to fruition? Hey, Bill, it's Kelly. We had an advisor that brought the idea to us. Obviously, all of us around the table, given that we live in Atlanta, very familiar with the brand, and we spent a lot of time last year getting to know that team, understanding their culture, how well we would all fit and work together. It was an idea that was brought to us, and as we studied it more, it, you know, it made a ton of sense, again, given all the things that Douglas just outlined. Yeah, Bill, you also asked me about synergy capture. Sorry I didn't get to that. Yeah, obviously the synergies are lease to own and their stores marketplace for both sets of customers, expansion opportunities in terms of footprint growth, procurement synergies. I mean, you know how much we buy a year, and they are, you know, also a high revenue business, and so we've got purchasing synergies there. I expect in the first year we're gonna be investing in the business, putting in the foundations in place for it to be a public company, making sure that we're building block foundations for offering all these synergies and capturing them in a very significant way going forward. I do think, you know, day one there are operational things that we can work on together. BrandsMart has a fabulous team. They've got deep experience. It's a merchant-driven culture, and we're really excited about retaining their management team and working together, kind of putting our expertise together with their expertise to extract value. One of the opportunities we talked about is e-com. I would say they're in an earlier stage in e-com than we are. We think that's an immediate sort of a value-enhancing opportunity as well as some operational and analytics capabilities that we can bring to the business. I think in year two, we begin to really sort of beginning to capture some of the larger synergies, and we've articulated by year three, it's sort of $20 -25 million of synergies doubling by year five. Great. Thank you so much for the color. Thank you. Thanks, Bill. Thank you. As there are no questions registered at this time, I will pass the conference over to Douglas Lindsay for closing remarks. Thank you, everybody, for joining us. You know, 2021 was another outstanding year for Aaron's. It allowed us, because of our performance, to accelerate investments in growth initiatives and to return a large amount of capital to our shareholders, which we're really happy with. None of that could have been possible without all the hard work and contributions of the entire Aaron's family. I wanna thank our teams and our stores and our SOC have done a phenomenal job. We continue navigating this challenging macro environment, but I think we're doing a great job, and we're nimble, and we're reacting, and I'm proud of how we've come through 2021. Our team members remain focused on innovation and delivering exceptional value and service to our customers, which is paramount to us, and we remain confident in the continued execution and focus of our strategy. Moreover, we really look forward to working with the entire BrandsMart team to deliver enhanced value to their customers, to their team members, and most importantly, to our shareholders. Thank you for being with us today, and we'll look forward to talking to you soon. Thank you. This now concludes today's conference call. Thank you for your participation. You may now disconnect your line.