Welcome to The Aaron's Company Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's prepared remarks, there will be a question-and-answer session. Instructions will be provided at the time. Thank you. I'd like to hand the conference call over to Keith Hancock, Senior Director of Corporate Affairs for The Aaron's Company. Mr. Hancock, you may proceed. Thank you, and good morning, everyone. I'm Keith Hancock, Senior Director of Corporate Affairs at The Aaron's Company. Welcome to our fourth quarter and full -year 2022 earnings conference call. Joining me today are Aaron's Chief Executive Officer, Douglas Lindsay, President Steve Olsen, and Chief Financial Officer Kelly Wall. After our prepared remarks, we will open the call for questions. Yesterday, after the market closed, we posted our earnings release on the Investor Relations section of our website at investor.aarons.com. We also posted a slide presentation that provides additional information about the fourth quarter and full year 2022 results, our full -year 2023 outlook, and an update on our multi-year strategic plan. During today's call, certain statements we make may be forward-looking, including those related to our outlook for this year. For more information, including important cautionary notes about these forward-looking statements, please refer to the safe harbor provision that can be found at the end of the earnings release. 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, 2022 and other 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 and in the release, we refer to certain non-GAAP financial measures, including EBITDA and Adjusted EBITDA, non-GAAP net earnings, non-GAAP EPS, and adjusted 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 on our website. With that, I will now turn the call over to our CEO, Douglas Lindsay. Thanks, Keith. Good morning, everyone. Thank you for joining us today and for your interest in The Aaron's Company. I'm pleased to report that our consolidated company results for the fourth quarter were in line with internal expectations for both revenue and adjusted earnings, and that we delivered both consolidated company and segment results for the full year 2022 that were within the revised outlook we provided on October 24th. While high inflation and other challenging economic conditions continued to impact our customers in the fourth quarter, we saw improvement in customer demand during the holiday season at both Aaron's and BrandsMart. Despite macroeconomic pressures, our teams have done a great job generating customer demand through well-executed marketing and merchandising strategies designed to increase our market share. Our top priority remains optimizing profitability in both businesses. In the Aaron's business, we continue to benefit from ongoing investments in lease decisioning and digital payment and servicing platforms. For example, enhancements made to our lease decisioning model earlier in 2022 resulted in quarter-over-quarter improvements to lease merchandise write-offs. We expect those benefits to carry forward into 2023 as leases initiated under our Titan model begin to reflect a greater percentage of the total portfolio. We are also benefiting from execution of our cost reduction initiatives announced in Q3. We expect to generate approximately $35 million-$40 million in cost savings in 2023. In the quarter, we also made progress on execution of our strategic growth initiatives at both Aaron's and BrandsMart. At Aaron's, we remain focused on enhancing and growing our e-commerce business and on executing our real estate repositioning and market optimization program. At BrandsMart, we remain confident in our growth potential and are optimistic about capturing the synergies we announced last April with the acquisition. As we look ahead into 2023, our outlook assumes that high inflation and other macroeconomic factors experienced in 2022 will continue to pressure customers across the credit spectrum. In both businesses, we expect continued softness in customer demand in the first half of the year for our core product categories of appliances, furniture, and electronics. When our customers do shop, we expect they will continue to trade down to lower-priced products. Our outlook reflects these challenging customer demand trends as well as higher lease agreement payouts in the first half of the year, and the fact that our lease portfolio size was 7% lower at the beginning of 2023. Our outlook also reflects our expectations that the second half of the year will benefit from improved customer demand and payment activity, as well as ongoing cost reductions. As we look to 2023 and beyond, I'm excited to provide an update to our multi-year strategic plan, which is designed to grow revenue, reduce costs, and strengthen our operating margins. The three pillars of our updated strategic plan include, first, transforming the Aaron's business through investments in market optimization, e-commerce, marketing initiatives, and enhancements to our lease decisioning and servicing platforms, all designed to increase our market share. Second, enhancing and growing BrandsMart through achieving our transaction synergies, opening new stores, and investing in e-commerce. Third, optimizing our cost structure through rationalizing our physical infrastructure and support functions. While we expect 2023 to be a reset year, we believe in the long-term strength of customer demand in both our Lease-to-Own and Retail businesses. We are confident that our ongoing strategic investments will continue to enhance our distinct competitive advantages at both Aaron's and BrandsMart. This will allow us to increase our market share and enable us to deliver long-term growth and meaningful shareholder returns. I will now turn the call over to Steve Olsen. Thank you, Douglas. I will start with a recap of the fourth quarter for the Aaron's business. While our Aaron's customers continue to face inflationary pressures impacting their household budgets, they continue to choose Aaron's for their shopping needs. In the quarter, our teams developed and executed strong promotional and merchandising strategies across our store and e-commerce channels. For example, our Black Friday and Cyber Monday promotions drove the highest recurring revenue written in our e-commerce channel since we launched aarons.com. Merchandise deliveries in all channels steadily improved throughout the quarter, including a strong end to the holiday season in December. Our lease renewal rate came in line with our internal expectations at 85.8% for all company-operated Aaron's stores, which was down 190 basis points year-over-year. Lease portfolio size is a key driver for future revenue. Although our lease portfolio size for all company-operated stores ended the fourth quarter ahead of our internal expectations at $126.5 million, our lease portfolio size ended the fourth quarter 7.2% lower than the prior year quarter. Shifting to our important growth strategies in the Aaron's business. We are pleased with the ongoing growth of our e-commerce channel. We ended the year with over 8,300 products on aarons.com, an increase of 137% versus the prior year quarter. Recurring revenue written into the portfolio from e-commerce lease originations increased 17.6% compared to the prior year quarter, while revenues increased 7.3% year-over-year. The e-commerce business continues to represent an increasingly higher percentage of our revenues. In the fourth quarter, e-commerce represented 16.7% of our total lease revenues, up from 14.5% in the prior year quarter. We continue to be pleased with our investments in our Aaron's real estate repositioning and market optimization program. As part of that program, we continue to invest in our GenNext stores, which now account for more than 25% of Lease and Retail revenues, up from 11.6% last year. Lease originations in GenNext stores open less than one year continue to grow at a rate of more than 20 percentage points higher than our average legacy stores. We ended 2022 with 211 GenNext stores, and we plan to open up to 50 additional locations in 2023. These larger GenNext stores have enabled us to expand our market optimization program to include a new hub and showroom model. In this new model, we designate one store to operate as a full-service hub within a market and convert the other nearby stores into showrooms. Our showrooms focus on sales activities while receiving product delivery and servicing support from the hub. In 2022, we created 29 pairs of hubs and showrooms. We plan to convert or open approximately 100 additional showrooms in 2023. This new model allows us to continue providing market-leading services to our customers while improving working capital and reducing costs. In the long term, we believe this model will allow us to more efficiently open new locations and reduce real estate costs in our existing markets. Turning to BrandsMart. As a result of weaker traffic and softer average transaction value, our product sales were down 10.8% for the fourth quarter as compared to the prior year quarter, but up 1% as compared to Q4 2020. Although we faced challenges at the beginning of the quarter, product sales improved during our Black Friday promotion and through the end of December. Despite lower product sales in the quarter, our team optimized profitability through procurement savings, strategic pricing actions, and expense management. Through these actions, we improved product growth margin by approximately 45 basis points versus the prior year quarter. Turning to our strategic initiatives for BrandsMart. E-commerce remains a long-term growth opportunity. We continue to enhance our digital marketing strategies and improve the online user experience. We are pleased with the redesign of our website launched in the quarter. Consistent with our overall performance in product sales, e-commerce product sales were down 5.1% as compared to the prior year. However, in the quarter, e-commerce product sales grew to 10.5% of total sales. We also continue to make progress in executing our integration and synergy initiatives related to the BrandsMart acquisition. We are pleased that we ended 2022 well ahead of our internal expectations for procurement synergies. In addition, we added over 250 items from BrandsMart to aarons.com, and we are making progress with our lease-to-own solution offered in BrandsMart stores. As we look ahead into 2023, we are excited to open our first new BrandsMart store in Q4. We believe that we have a compelling customer value proposition, and we look forward to expanding this brand into new markets. I'll turn things over to Kelly to provide further details on our financial performance. Thank you, Steve. Let's start with the fourth quarter. Unless stated otherwise, my comparisons to prior periods will be on a year-over-year basis. Consolidated revenues for the fourth quarter of 2022 were $589.6 million, compared with $444.8 million, up primarily due to the BrandsMart acquisition and offset by lower revenues at the Aaron's business. Consolidated Adjusted EBITDA was $27.7 million compared with $41.3 million, down primarily due to a decline in Adjusted EBITDA for the Aaron's business, offset by the contribution of BrandsMart. As a percentage of total revenues, Adjusted EBITDA was 4.7% compared to 9.3%. On a non-GAAP basis, diluted earnings per share were $0.09 compared with non-GAAP diluted earnings per share of $0.60. Adjusted free cash flow was $24.7 million, up $1.1 million or 4.7% due to higher cash provided by operations, primarily driven by lower inventory purchases at the Aaron's business to align with demand trends. During the quarter, we continued to return capital to shareholders through our dividend and share repurchases. We declared $3.4 million in dividends and repurchased approximately 219,000 shares for $2.3 million. I'll dive into the financial results for Q4 at the business segments. First, the Aaron's business. Total revenues decreased 9.1% from the prior year to $404.3 million, primarily due to lower lease revenues, the result of both a lower lease portfolio size and a decline in customer payment activity. Gross profit was $248.6 million, down 10.3%, driven by lower lease renewal rates, lower new lease originations, and higher inventory purchase costs. As a percentage of total Aaron's business revenues, gross profit declined to 61.5% compared to 62.3%. Operating expenses decreased $5 million due primarily to lower performance-based compensation, partially offset by a higher provision for lease merchandise write-offs and other operating expenses. The provision for lease merchandise write-offs as a percentage of leased revenues and fees was 7.1% compared to 5.7%. This was a 40 basis point improvement from the third quarter, and we expect to see continued sequential improvement into the beginning of 2023. Adjusted EBITDA at the Aaron's business was $36.2 million compared with $58.1 million, due primarily to a decrease in gross profit and a higher provision for lease merchandise write-offs, partially offset by lower personnel expenses. As a percentage of revenue, Adjusted EBITDA was 8.9% compared to 13.1%. Before I move to the full year consolidated results, here are the key BrandsMart metrics for the quarter. Retail sales were $187.7 million. Gross profit was $37.4 million, or 20% of Retail sales, and Adjusted EBITDA was $5.3 million. Adjusted EBITDA margin was 2.8%. I'll summarize the key points in our full year 2022 consolidated financial results. Again, comparisons here are year-over-year. Consolidated revenues were $2.25 billion compared with $1.85 billion, up 21.9% due to the inclusion of three quarters of BrandsMart, offset by lower revenues at the Aaron's business. Adjusted EBITDA was $165.8 million, down from $234.1 million due primarily to the same factors that impacted the fourth quarter year-over-year performance that I discussed earlier. The provision for lease merchandise write-offs as a percentage of leased revenues was in line with our expectations at 6.4% compared to 4.2%. On a non-GAAP basis, diluted earnings per share were $2.07 compared with $3.75. During 2022, the company also repurchased 735,000 shares of the company's common stock for $13.4 million. At the end of 2022, the company had a cash balance of $27.7 million and total debt of $242.4 million. This represents a $21.5 million reduction in our net debt balance from the end of the third quarter. Turning to our 2023 outlook. Our full- year 2023 outlook for total revenues at the consolidated company is $2.2 billion-$2.3 billion and Adjusted EBITDA is $140 million-$160 million. As noted in our materials, starting with the first quarter of 2023, we will add back stock-based compensation expense to our reported Adjusted EBITDA for the consolidated company. We are making this change to better align our reporting with peer companies. For comparability, Adjusted EBITDA in 2022, excluding stock-based compensation expense, was $177.1 million. Our 2023 non-GAAP EPS outlook is $0.70-$1.10 per share, which has been impacted by lower Adjusted EBITDA in both segments, higher depreciation expense, higher interest expense, and a higher effective tax rate versus last year. For the full- year 2023, we are assuming an effective tax rate of 25%-26%, a diluted weighted average share count of 31.5 million shares, and no share repurchases. The primary factors influencing our 2023 outlook include starting the year with a 7% lower lease portfolio size at the Aaron's business and lower customer demand, which is driven by expected lower traffic and lower average ticket size at both business segments. Both partially offset by improving customer payment activity and cost savings we are achieving through our operational efficiency and optimization program. We believe an ongoing high inflationary environment in the first half of the year for both the company and our customers will continue to negatively pressure average ticket size in both businesses. Aaron's lease portfolio size and the provision expense for leased merchandise write-offs, as well as other segment level and corporate expenses. The second half of the year is expected to improve as we benefit from stronger customer demand trends and year-over-year improvement in payment activity at the Aaron's business, along with greater contributions from Aaron's GenNext Stores & E-commerce at both business segments. For the cost savings, which we expect will be recognized primarily at the Aaron's business segment and within unallocated corporate expenses, we have identified several areas to improve efficiencies across our stores, supply chain network, and corporate functions. Through these various initiatives, we expect to achieve between $35 million-$40 million in total expense reductions in 2023, with additional savings expected in 2024 and 2025. We are well underway with these initiatives and look forward to updating you in the future. As we think about performance over the course of the year, we expect Adjusted EBITDA to be spread roughly evenly by quarter, with the first half of the year slightly higher than the second half of the year. Our 2023 outlook includes a full year contribution of BrandsMart U.S.A. and a return to more normal seasonal payment trends in the Aaron's business. As a result of this and our cost reduction initiatives, we expect Adjusted EBITDA in the second half of 2023 to be higher than the second half of 2022. We also expect net earnings to follow a similar spread and to be slightly higher in the first half of 2023, due in part to an increase in depreciation expense. Finally, our capital allocation priorities are investing in Aaron's and BrandsMart U.S.A. growth initiatives, maintaining a conservative leverage profile of 1 to 1.5 x net debt to Adjusted EBITDA, returning capital to shareholders through dividends and share repurchases, and evaluating acquisitions on an opportunistic basis. As it relates to returning capital to shareholders, yesterday, we announced an increase to our quarterly dividend. We will pay $0.125 per share on April 4th to shareholders of record as of close of business on March 16th. Now we'll move to Q&A. Operator, are you there? Thank you. If you would like to ask a question, please press star then one on your telephone keypads. If you change your mind, please press star two. We have the first question on the phone lines from Kyle Joseph of Jefferies. Your line is open. Hey, good morning, guys. Thanks for taking my questions. Just for 2023, you kind of described it as a reset year, I think, Douglas. You know, in terms of demand, how are you thinking about the prospects for a recovery there? Is it as simple as we just need to get inflation under control? Is it we need to get further from 2020 and 2021 when there were so many, you know, durable goods acquired by consumers? You know, how are you thinking about that and give us kind of a high-level timeline? 'Cause obviously you think you expect demand to recover based on, you know, ongoing store build outs and whatnot, but any sort of sense in terms of timing there? Yeah, Kyle. Thanks. I mean, as we've mentioned in Q4, while we had sequential improvement demand was down year-over-year, and we continue to see that downward pressure really both in store traffic and average ticket. Steve mentioned average ticket across both brands, both Aaron's and BrandsMart. You know, we're expecting some challenges going into the first quarter in our core categories, furniture, electronics and appliances in both businesses. This is really based on industry outlook as we talk to vendors in our industry and others out there, what we've seen so far in our numbers, and then really the lasting effects of a pull forward in demand we've seen over the past few years. We do anticipate some continued trade down in pricing in both businesses, and we've seen that. We have a little bit more ability to overcome this at the Aaron's business because we're advertising weekly and monthly prices, and we can push price a little bit more there and also push bundles in that in that brand. In Aaron's specifically, in the first quarter, we're seeing a slightly smaller tax season so far, which is putting some pressure on demand. Due to fewer payouts, that could result in our portfolio size being up because the portfolio will hold better than it does when we see larger tax refunds. We have all that factored in. I think importantly, we have not seen any impact of credit tightening above us in our guide, and we believe we're well positioned to benefit from that and capture that if it does occur, but we are not anticipating that in our, in our guide. As we think about the year, I think we said it in our prepared comments, softer demand at the beginning of the year and then improving demand trends in the second half of the year. I would say in terms of the whole portfolio, we do expect churn in the first half of the year really related to be higher than the second half, really related to the lease originations that we did at the peak of stimulus in 2021. The average term of our lease is about 20 months. We expect those to have a higher impact on churn the first half of the year. Our decisioning and all the things that we put in place in 2022 kicking in in the second half of the year. The last thing I'd say, just to put a wrapper around 2023, is we do expect renewal rates and customer payment improvements over the course of the year, including improvements in write-offs. We see that in our business in the first quarter, really encouraged with what we're seeing in our delinquency rates in the first quarter. We're excited to take the business forward. We are really focused in both businesses on taking share right now and really driving our value prop. We think we're really well positioned to do that and, which you'll see that in our marketing and customer acquisition activities going forward. Got it. Thank you. Got it. [crosstalk]...in terms of overall store count, obviously recognizing the GenNext build and then apologies if I butcher this, but the hub, not the hub and spoke, but the hub and showroom model. In terms of overall store count, I mean, where do you see that trending in coming years? Yeah. Hey, Kyle, it's Kelly. I mean, I would expect we'd see that to trend down some. Not as much as what we were thinking when we approached GenNext strategy. With this hub and showroom model, we're keeping more locations open. I would say we're probably gonna close, you know, 10-20 stores this year and less than that going forward. That's net, again, against any new stores we may open as we're pushing out this new strategy. Got it. Thanks very much for answering my questions. Thank you. Thank you. We now have Bobby Griffin of Raymond James. Your line is open. Hey, good morning, everybody. Thanks for taking the questions. I guess, Kelly, first, let's maybe just follow up on your comments there. That is a little bit different of a store count than we talked about post-spin. Just curious to unpack, you know, kind of that change in trajectory. Is it just what you're seeing out there in the market? Potential, you know, you see a better opportunity for market share gains or the customer's changed a little bit? Anything to help us understand, you know, the change in trajectory on the store count? Hey, Bobby, this is Douglas. I'll take that. I mean, you know, we're coming off a really strong 2020 and 2021, where profitability spiked in our business, and we were really encouraged there. We slowed down the pace of our store closures to be there for our customers, and we were pleased with the profitability in our stores. I think as we look forward, we do feel like we should have fewer larger stores and a more efficient market presence. We're doing that in a number of ways. We're doing that through repositioning our GenNext stores and making them larger and capturing more market share. We're also doing that through this new hub and showroom concept. This is really designed to drive market profitability and grow our share in the market, while still ensuring the great customer experience that our customers have come to expect. We're historically, and this has morphed over time and really been enabled by this new GenNext store concept, where historically, we may have closed, merged two or three stores into one. We're now able, because of the GenNext store concept and our digital servicing platforms and payments platforms, we're now able to service larger adjacent markets with one big hub store that can do servicing, warehousing, and delivery. Then having smaller sales stores around that hub that are really focused on selling. Many of these stores can have smaller footprints, so it really increases our efficiency in the market and drives further market reach. We believe if we do that, not only will the customer count stay sort of larger than when we had anticipated at the time of the spend, we can more efficiently expand our market presence at the same time. We're really encouraged about that. We're super excited about that. As we've mentioned, we have 29 hub and showroom store locations open so far this year, and we plan to convert 100 showrooms next year with 50 GenNext stores. Bobby, I just wanna add that, while, you know, on a net basis, it is fewer closed stores, with this hub and showroom strategy, we are achieving cost savings on the personnel side, the occupancy side, as well as, working capital free up from reduced inventory. 'Cause these showroom locations, while they do have, merchandise on the floor, we don't need to keep a back room full of inventory for delivery, so that's done at the hub. Okay. I appreciate that. I guess next I wanted to switch over maybe to BrandsMart and just maybe kind of look... Obviously, the environment for that business is tough right now. You know, one of the big electronic competitors kind of released earnings this morning, also talked about, you know, demand pressure going forward into 2023. What do you think the long-term margin profile is of that business? I guess I'm just asking in the context of, you know, for 2023, the guide implies EBITDA down versus 2022, despite having one more quarter in the results. Just curious, you know, of rebuilding that profile and kind of what you think when synergies are flowing through the long-term margin profile is of the BrandsMart business. No, great question, Bobby. It's Kelly. First to address 2023, what we're seeing in 2023 and what's reflected in the outlook is that we're planning to open up to two new stores here in the fourth quarter. As you're aware, as you're opening new stores, there tends to be a loss in the 1st year. We're no different. Opening those stores is putting some pressure, particularly in Q4, on earnings and impacting margin. As we take into account, right, the impact of those new store openings, we're looking over the next three years and we're gonna average probably, you know, 3.5% or so EBITDA margins. Again, I wanna highlight that's impacted by the downward pressure from opening new stores. As we look at opening new stores, you know, we do expect, and we included this in the presentation material, that we provided on our website for the quarter, we are anticipating four-wall economics and margins there of about 8% at the store level. You know, again, would be a loss in the first six months, turning a positive thereafter and then getting to full maturity, with an EBITDA range of call it $3 million-$7 million per store in the third year. Okay. I appreciate the details. Best of luck here in 2023. Thanks, Bobby. Thank you. Thank you. We now have Scot Ciccarelli of Truist Securities. Please go ahead when you're ready. Hey, guys. This is Joe on for Scot. I was just wondering if you can talk about, you know, any new trends you're seeing in centralized decisioning and, you know, if any concerns might cause you to further tighten credit standards like you did last year, and how much of that, if any, is baked into the guidance. Thank you. Yeah. Joe. Hey, this is Douglas. We're really pleased with the results we're seeing. In our decisioning, we continue to optimize it. We get a lot Because we're a direct to consumer business, we have a lot of levers to play with. That really benefits us. We continue to look at it. I would say right now we're leaning slightly defensive due to the macroeconomic environment. I think that's paid off for us. We're seeing improving trends in Q4, and we're really encouraged, as I said before, of what we're seeing in Q1. Our delinquencies are trending down, and right now we are trending towards pre-pandemic write-off levels by the end of Q1, which is really good. As of right now, where I stand today, we expect write-offs to reduce sequentially going into the first quarter by approximately another 100 basis points. That's really encouraging. All the actions we've taken in 2022 are paying off, and we'll continue to optimize it and decide whether we tighten or expand approval rates on an ongoing basis. Yeah. To expand on that, our 2023 outlook does not include any further adjustments to our decisioning. Obviously, as macro economic conditions and the activity we're seeing from our customers directly change through the course of the year, we could adjust that either, you know, whether it means loosening or tightening as we go forward. Got it. Thanks. Then when you said 100 basis points sequential improvement, is that's just, 4Q to 1Q, or does that have to do with seasonal factors as well? It takes both into account, so it's a sequential improvement. It's taking into account both the benefits we're seeing from decisioning and the seasonal changes. Got it. Great. Thank you. Thank you. To ask any further questions, hit star followed by one. We now have Jason Haas of Bank of America. Hey, good morning, and thanks for taking my questions. I'm curious if you can give us an update on how lease-to-own is performing at BrandsMart. I know that was rolled out somewhat recently, so I'm curious how that's been progressing. Thanks. Hey, Jason, this is Steve Olsen. Thanks for the question. We continue to make progress on our BrandsMart Leasing Solution that is in our BrandsMart stores. Just to remind you, we launched this solution in the May-June timeframe of last year. I'm still really early in the process. Teams are working very well together between the BrandsMart stores and our BrandsMart leasing team, and we continue to refine the business processes, procedures, and the necessary tools to run that business. It's a small percentage of the overall pie, but we're pleased with the progress we're making. That's great. Thank you. Then Douglas, I wanted to follow up on your comments, just earlier about, you're seeing an improvement in write-offs in 1Q. Do you think that's largely reflecting, tighter decisioning and those leases that were decisioned later with tighter standards, is bringing the write-offs down? Or are you seeing any signs that the customers may be stabilizing, with inflation rates like moderating at least a little bit here? Just curious if there's any sort of signs of the macro improving or if that was more internally driven. Yeah. You know, I think it's a little of both. I think our customers are acclimating to a new normal in terms of inflation rates, although, you know, we still do see some pressure. I think the majority of the improvement we're seeing are the decisioning changes and enhancements to our models we've made over the last year. We continue to look at it and make sure that we're always solving for risk-adjusted margin and really trying to set the customer up for success. We've done that actively in the fourth quarter, as well as enhancing our processes and, as I said, models. I think what we're seeing is a little acclimation, but a lot of proactive management in terms of our lease decisioning. We're really encouraged with the results. I think that we've got momentum on that going into the year despite the demand trends. Yeah. Jason, it's Kelly. You know, what I would add is that, you know, we are expecting for the full year of 2023 to write-offs to improve relative to 2022. You know, for 2023, we're expecting write-offs to come in kind of a range of 5.5%-6.5%. That's about a 50 basis point improvement from the range that we gave in 2022. As we continue to make progress through the course of the year, both the benefits from our decisioning activities as well as improvement in customer activity in the back part of the year, as we go into 2024 and beyond, we'd expect to be down into that kind of 4%-5%. Sorry, excuse me, that 5%-6% range going forward long term. Great. Thank you. If I could squeeze one more in. I think you've mentioned that you're not factoring in any benefit from credit tightening in the guidance. I'm just curious what your thoughts are in terms of, you know, we have seen some others, you know, talk about that are higher in the credit stack talk about, you know, tightening. I don't think a lot of your peers have, you know, meaningfully seen the tightening yet. Just curious to get your thoughts on, you know, even though it's not in guidance, any thoughts on like when we may see some benefit from credit tightening? Yeah. You know, right now, we're not seeing any increase in demand from higher credit scores coming into either Aaron's or BrandsMart leasing. It's really tough to gauge what's going on with the consumer right now. I know we're all looking at rising debt balances and lower savings rates, et cetera, with our customers. The only thing I would say is we don't have that baked into our guidance, any benefit for that during the year. Should default rates continue to rise and prime credit get restricted, we believe our market will expand and we'll be the beneficiaries. We're continuing to look at external data sources and our own internal data sources to see if that's happening both at BrandsMart and at Aaron's. So far, we've seen no strong signs of it, but we'll continue to monitor it. I mean, Jason, what I'd say is we're ready for it, and we feel like we'll be the beneficiary, and we feel like we've positioned our stores & our e-com business to capture that. That's great. Thank you. Thank you. We have no further questions, so I'd like to hand it back to Douglas Lindsay for any final remarks. Thank you, operator. As we wrap up, I wanna thank our team members in particular and our franchisees who continue to deliver exceptional value and service to our customers while innovating our business. We here at Aaron's and the whole team remain focused on executing our multi-unit plan by investing in growth strategies and executing on the cost savings initiatives that we laid out for you today. I wanna thank you for your interest in Aaron's and joining us today, and we look forward to talking to you soon. Thanks so much.